Sometimes tax issues are forced to be resolved in court. This typically occurs when all administrative appeals with the IRS have been exhausted. For federal income tax assessments (made by the IRS), there are generally two options available to challenge the assessments in court: (1) file a Petition in U.S. Tax Court (no need to pay the tax); or (2) pay the tax and sue for a refund in U.S. District Court or in the Court of Federal Claims.
It is critical to have the assistance of an experienced tax attorney when challenging tax assessments in court. Our attorneys regularly litigate tax cases in both federal and state trial courts. We invite you to review some of our past results below.
- 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.
- IRS Lawsuit Against Taxpayer (U.S. 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 primary residence.
- Fraudulent 1099 Case (U.S. 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.
- Alternative Minimum Tax Dispute (U.S. Tax Court)
Taxpayer's 2009 tax return was audited and a six-figure assessment was proposed, primarily based on the Alternative Minimum Tax (“AMT”). Case was administratively appealed and the IRS affirmed the proposed assessment. DeWitt Law represented the Taxpayer and challenged the assessment in U.S. Tax Court on the basis of incorrect application of the complex AMT deduction, particularly with regard to the AMT Net Operating Loss Deduction. Case resulted in reversal of the AMT assessment and a reduction in the overall assessment.
- 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.
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