While most tax issues are resolved through administrative channels, some issues must be resolved in court. Litigating a tax issue in court requires special attention to court rules, evidence, jurisdiction, and the burden of proof. Examples of federal tax issues that are often resolved in court include:
- Challenging the results of an audit (after a Notice of Deficiency has been issued)
- Defending against lawsuits initiated by the IRS to foreclose property
- Challenging collection action taken by the IRS (after a Notice of Determination has been issued)
- Challenging IRS penalty assessments
- Trust Fund Recovery Penalty
- Tax Return Preparer Penalties
Tax litigation is highly fact-intensive and often involves complex legal issues. It is critical to seek the assistance of an experienced tax attorney when challenging tax matters in court. The skill of a tax attorney can represent the difference between a tax issue being decided on its merits or dismissed on a technicality. Our attorneys regularly litigate tax cases in federal courts (including U.S. Tax Court) and state trial courts. We invite you to request a consultation with a tax attorney if you are interested in resolving a tax issue in court.
We are committed to delivering results for our clients. We invite you to review a sample of cases we have successfully litigated in U.S. Tax Court, federal district courts, and state trial courts. All cases are different and the summaries below should not be interpreted as a prediction or guarantee of success or specific results.
Taxpayer Lawsuit Against the IRS (U.S. District Court)
Represented taxpayer in lawsuit against the IRS seeking a $412,259.00 refund for federal income tax paid. Resulted in Entry of Default against the IRS.
$1,420,838 Tax Liability Reversed to $0 (U.S. Tax Court)
Taxpayer was audited by the IRS after a third-party cryptocurrency exchange reported to the IRS gross proceeds the Taxpayer received from selling cryptocurrency. The IRS proposed additional tax of $1,095,708 plus penalties of $219,142 and interest of $105,988. DeWitt Law represented the Taxpayer and challenged the assessment in U.S. Tax Court. The Court reversed the assessment in full, resulting in $0 of additional tax owed.
IRS Lawsuit Against Taxpayer (Federal District Court)
Taxpayer was sued in U.S. District Court for the Middle District of Florida for over $500,000 owed in back taxes. DeWitt Law represented the Taxpayer and disputed the allegations made by the IRS. The case resulted in a conditional judgment for an amount less than the alleged tax owed. The Taxpayer was able to keep their home.
Professional Gambler Case (U.S. Tax Court)
Taxpayer was audited by the IRS for tax year 2016. The IRS issued a Notice of Deficiency and assessed over $350,000 in taxes, penalties, and interest. DeWitt Law represented the Taxpayer and challenged the tax assessment in U.S. Tax Court. The assessment was reversed and the Taxpayer owed $0 in additional tax.
Unfiled Tax Returns Case (U.S. Tax Court)
Taxpayer failed to file federal income tax returns for several years despite earning substantial self-employment income. The IRS filed substitutes for return ("SFR") and a Notice of Deficiency, assessing tax. DeWitt Law represented the Taxpayer and challenged the tax assessment in U.S. Tax Court. The SFR returns were set aside and the IRS accepted reconstructed tax return filings. The SFR assessment was reversed and the Taxpayer paid the balance due on the reconstructed tax return filings, which was approximately 30% lower than the proposed assessment.
Audit Dispute (U.S. Tax Court)
Taxpayer and his business were audited by the IRS for tax years 2016, 2017, and 2018. The IRS did not accept the documentation the Taxpayer provided in the audit to substantiate the business income and deductions claimed on the tax returns. A Notice of Deficiency was issued, challenging the Taxpayer's claimed business income and deductions. DeWitt Law represented the Taxpayer and challenged the tax assessment in U.S. Tax Court. DeWitt Law challenged the IRS' disallowance and argued that the substantiation provided by the Taxpayer sufficiently proved its claimed income and deductions. The case resulted in a 75% reduction of the assessment.
Fraudulent 1099 Case (Federal District Court)
Taxpayer received a fraudulently-filed 1099 from a former employer for tax years 2016, 2017, and 2018. DeWitt Law represented the Taxpayer and filed suit in U.S. District Court, alleging fraud under I.R.C. Section 7434. The case was settled in mediation and the 1099 filings were withdrawn.
Barbecue Competition Case (U.S. Tax Court)
Taxpayer's 2016 federal income tax return was audited. The IRS proposed additional tax and alleged that the Taxpayer earned hobby income from their participation in the Memphis in May Barbecue Festival. Case was administratively appealed and the IRS affirmed the proposed assessment. DeWitt Law represented the Taxpayer and challenged the tax assessment in U.S. Tax Court, arguing that the Taxpayer operated a trade or business and was entitled to ordinary and necessary business deductions. The case resulted in a 90% reduction in the tax assessment.
Equitable Spouse Claim Granted (U.S. Tax Court)
The Taxpayer's former spouse was self-employed and did not make estimated payments, resulting in a significant tax liability. The Taxpayer had no involvement with the former spouse's business.
DeWitt Law represented the Taxpayer before the IRS and filed a claim for equitable spouse relief. The IRS denied the claim and DeWitt Law filed a Petition in U.S. Tax Court. The court granted the Taxpayer's claim for equitable spouse relief and the tax assessment was reversed.
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Tyler H. DeWitt, Esq., CPA