Tax Lawyer's Blog

Pappas on Taxation

Tax Lawyer's Blog header image 2
← →

Taxpayers Lose 86% of Tax Court Cases

January 14th, 2010 · 6 Comments

The Blog of Legal Times reports that a taxpayer’s chances of beating the IRS in Tax Court are about 14%:

Your chances of winning a fight with the IRS are about as great as your chances when fighting City Hall.

National Taxpayer Advocate Nina Olson, in her recently-released annual report to Congress, listed the 10 tax issues most litigated in the federal courts. Of the 923 cases involving those issues, taxpayers prevailed in whole, or in part, in 132, or roughly 14 percent.

Taxpayers who had representation generally did better than those who didn’t:

Taxpayers who were represented by counsel did somewhat better when the numbers were broken down—they won 20 percent, or 54 of 265 cases; pro se taxpayers prevailed in 12 percent, or 78 of 658 cases.

Olson reported that the trend of significant numbers of pro se taxpayers continued during the reporting period of June 1, 2008 through May 31, 2009. Taxpayers represented themselves in 71 percent of the 923 cases. The highest percentage of pro se taxpayers went to court over penalties for frivolous issues or positions raised or taken on returns, family status issues, failure to file returns and estimated tax penalties.

Related Posts:

(Hat Tip: Paul Caron)

Tags: Announcements · tax court

6 responses so far ↓

  • 1 tax.someone.else // Mar 9, 2010 at 4:34 am

    I went to observe tax court to see what actually was happening there. Go and see for yourself.

    My observations:

    The judge and IRS lawyers all flew in from DC. The judge acted on behalf of the taxpayers to get all taxpayer testimony and info into the record. There were no verdics rendered on the day of trial, they would be sent later. However, taxpayers and IRS auditors did meet and reach settlements during the day.

    Most of the cases that I witnessed were not winable for the taxpayer. They were really bad cases. The taxpayer either lacked tax knowledge and/or records to prove their case.

    Some of the individual taxpayers representing themselves in tax court must have had a bad experience with the IRS auditor during their tax audit. It’s as if the taxpayer was exercising their right to the court as an opportunity to have the final word in their argument with the IRS auditor. These were also bad cases.

    My guess is that the IRS settles the majority of the good taxpayer cases in pre-trial conference. So, what’s actually making it to the tax court is mostly taxpayer’s making losing arguments.

    I believe that the statistics are a bit misleading. Yes, the IRS wins a super majority of the bad taxpayer cases that the IRS aloows through to the tax court. But, a knowledgable taxpayer with good records and a good argument can win a tax court case.

  • 2 Peter // Mar 9, 2010 at 1:18 pm

    tax-someone-else,

    Excellent comment. I agree with everything you say. Bad cases make bad law. In the great majority of cases, the IRS wants to come to an amicable resolution of the issues.

  • 3 Reality // Aug 11, 2010 at 4:57 pm

    I would add that for some taxpayers, they just want their day in court because they are “fed up” with dealing with layer after layer of the IRS. This is not meant as a knock on the IRS. But, taxpayers have a right to their day in court and some just want a judge (neutral party) to hear them.

    This is one reason mediation is so inefficient or ineffectual in Tax Court. If there was a mediator available to both parties at every Tax Court session, you’d still have the taxpayers who do not understand the law, who do not have the evidence, or still want to get face time with a judge.

    And while most (not all) judges fly in from DC, most Tax Court calendars are handled by local IRS offices. If the IRS is flying into town, it is because they likely do not have an office or attorneys located at the place of trial (like from Atlanta to a smaller town, or from California and Washington State up to Alaska).

    By the way, setting your trial in a location where the IRS attorney is going to have to travel to tends to make them more reasonable about settling a case. No one likes traveling away from home. With unknown trial dates until after calendar call, and possibly 2 trips to town, it tends to make attorneys more flexible.

    I am surprised that more attorneys who represent taxpayers do not set the place of trial at a location that is inconvenient for IRS counsel who is handling the case (i.e., these are represented petitioners, not pro se’s). Talk about easy money.

  • 4 Peter // Aug 12, 2010 at 12:44 pm

    Reality,

    I think it’s gimmicky to set a location that is far from IRS counsel’s office.

    I select my trial locations based on what is convenient for me, which is usually Tampa, Florida.

    You win tax court cases on the merits, not by inconveniencing opposing counsel.

  • 5 Snowlodg // Oct 1, 2011 at 9:28 am

    Peter, I have to disagree with your statement “you win tax court cases on the merits.”
    Your client will win only based on truth and what the boys and girls back at the Tax Court think.

  • 6 Peter // Oct 2, 2011 at 9:51 pm

    Snow,

    Merits = truth.

Leave a Comment