The Most Litigated Tax Issues

From Rubin on Tax, the IRS’ “top ten”:

  1. Collection due process hearings;
  2. Summons enforcement;
  3. Trade or business expenses;
  4. Gross income;
  5. Accuracy-related penalties;
  6. Frivolous issue penalties;
  7. Actions to enforce federal tax liens or to subject property to payment of tax;
  8. Failure to file penalty and estimated tax penalty;
  9. Family status issues; and
  10. Relief from joint and several liability for spouses.

As Rubin points out, “…most of these heavily litigated issues are not “sexy” but typically relate only to procedural matters.”  To put it another way, with taxes, just like anything else, the devil is in the details.  Unfortunately small business people and entrepreneurs are the most likely to get put through the wringer.  Leaving out the issue of outright fraud, most small business people aren’t naturally attuned to things like these, so they get tangled up in the formalities.  The expense of keeping up with these formalities can be considerable, which explains another frequent characteristic of tax litigation:

…71% of these cases involved pro se taxpayers who represented themselves.

And the success rate isn’t inspiring either:

Taxpayers prevailed in whole or in part in 14.3% of the cases.  (That’s 1 out of 7.)

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