Procedurally Taxing nicely summarized the National Taxpayer Advocate's new approach to calculating the most litigated issues in her annual report. You can read about her approach starting on page 183 of the report.
Instead of just looking at the tried cases, which she does capture, she also looks at the cases in which taxpayers filed a Tax Court petition. It’s all in how you define litigation. Is it best measured by the relatively small number of cases that get tried and receive an opinion, i.e., looking at the end of the case where about 1% of the filed cases end up, or by looking at the filed cases in which taxpayers started litigation but for a variety of reasons did not follow it to a conclusion by trial and opinion? Since she gives you both sets of data, it’s hard to complain no matter which set of information you prefer.
Here are the charts, with the first one based on opinions issued and the second one on petitions filed:
Some things come out the same in either measure as the report states:
[Gross income disputes] was the number one issue among those litigated in the Tax Court with 66 substantive opinions issued. It was also the largest category of cases petitioned to the Tax Court. In FY 2021, taxpayers petitioned the Tax Court in 13,558 cases where gross income was an issue during the examination.
In the same vein, trade or business disputes came in second under both methods:
50 opinions where this category of issues was litigated in the Tax Court. Taxpayers petitioned the Tax Court in 2,255 instances where trade or business expenses were an issue during the examination in FY 2021.20 This category is high on our list as the second most prevalent category of opinions issued at the Tax Court and the second most petitioned issue in the Tax Court.
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