IRS Is Sanctioned For Taxes Wrongfully Withheld

In the United States District Court Case of Purciello vs. Internal Revenue Service,(U.S. DC., Third Circuit, 35-7-2457, Dec. 9, 2013) the Honorable Dennis M. Cavanaugh granted plaintiffs’ motion pursuant to 26 U.S.C. 7430 for attorney fees, litigation costs and expenses arising from an action brought by plaintiffs against the IRS to recover taxes and other monies that the plaintiffs alleged the IRS had wrongfully withheld.

The court granted plaintiffs’ motion in the modified amount of $53,307.50, finding that plaintiffs have shown that they were the prevailing party where defendant was not justified in contesting the refund claim, defendant’s position that plaintiffs had not filed an informal refund claim was not reasonable, and defendant’s contention that equitable estoppel did not bar its defenses was not substantially justified as defendant provided plaintiffs with a partial refund and thus clearly accepted plaintiffs’ position that they filed an informal claim. The court also found that the award, as modified, is for reasonable administrative and litigation costs.

Reference: New Jersey Law Journal, Case & Analysis 215 N.J.L. 89, January 13, 2014.

Filed Under: Business Litigation; Taxation

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