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What Are the Most Common Issues Addressed in U.S. Tax Courts?

 Posted on February 14, 2022 in Tax Appeals

san jose tax lawyerThere are a variety of reasons why taxpayers may disagree with decisions made by the IRS. Following a tax audit, the IRS may perform a tax assessment and take steps to collect tax debts. However, if a taxpayer believes that the IRS made errors when determining tax deficiencies, they may file an appeal in the U.S. Tax Court. There are multiple issues that may be addressed during a tax appeal, and understanding the types of cases that are litigated in U.S. Tax Courts can help a taxpayer determine their options for resolving tax-related concerns.

Top U.S. Tax Court Issues in 2021

According to a report submitted to Congress by the Taxpayer Advocate Service, the top issues addressed in U.S. Tax Court litigation in 2021 were:

  • Gross income - Section 61 of the Internal Revenue Code (IRC) details the types of income that may be considered when determining a taxpayer’s gross income, including compensation received for performing services, commissions, fringe benefits, interest, dividends, royalties, business income, pensions, and annuities. However, controversies may arise regarding what constitutes gross income and the taxes that should apply to the income a taxpayer receives.

  • Business expenses - IRC Section 162 describes the types of expenses related to a trade or business that may be deducted from a taxpayer’s gross income. Litigation in U.S. Tax Court may address whether certain types of expenses may be allowed as deductions and whether deductions claimed by a taxpayer may be considered illegal kickbacks, bribes, or rebates. 

  • Collection due process (CDP) - When the IRS issues a tax lien or tax levy, a taxpayer has the right to request a CDP hearing with the IRS Independent Office of Appeals to dispute the amount owed or determine whether alternative options are available. If taxpayers disagree with decisions made in a CDP hearing, they may file an appeal to have these determinations reviewed by the U.S. Tax Court.

  • Charitable contributions - IRC Section 170 describes the types of charitable donations that may be deducted from a taxpayer’s gross income. The U.S. Tax Court may address disputes over whether deductions claimed by a taxpayer were legitimate charitable contributions.

  • Itemized deductions - Taxpayers may claim multiple types of deductions on Schedule A of Form 1040. Litigation in U.S. Tax Court may address whether certain types of deductions should or should not have been allowed.

Other issues that are commonly addressed in U.S. Tax Court litigation include failure-to-file penalties, innocent spouse relief, and filing status based on family relationships. 

Contact Our San Jose, CA Tax Appeals Attorney

There are many reasons why a taxpayer may wish to pursue an appeal in U.S. Tax Court, and doing so may help a person avoid penalties or reduce the amount owed to the IRS. At John D. Teter Law Offices, we can provide you with legal representation during a tax audit and help you determine your options for appealing the IRS’s findings. Contact our San Jose tax lawyer at 408-866-1810 for legal help with tax debts, penalties, or related matters.



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