The IRS was again successful in asserting the ‘bank deposits’
method of reconstructing a taxpayer’s gross income in a recent
Tax Court case. The taxpayer in this case claimed that the
deposits to his bank account in question were actually tax refunds
and wages from his primary employer, but had only his testimony
to corroborate this assertion. The Tax Court ruled in favor of the
IRS, stating that the taxpayer’s unsubstantiated testimony was
insufficient.
Had the taxpayer obtained competent representation in the
examination underlying the court case, he might have been able
to more effectively assert his position and avoid the tax liability
and penalties that he incurred. He also might have been able to
obtain a more favorable result with the IRS Appeals office, rather
than presenting a weak case in the Tax Court. If you have been
selected for an examination by the IRS, please contact one of the
tax attorneys at Fletcher Tilton for assistance.
