The Impact of Code Sec. 7491 Burden-Shifting in Tax Controversy Litigation

By Megan L. Brackney
Journal of Tax Practice & Procedure
August - September 2007 Edition, Vol. 9 No. 4

Megan L. Brackney analyzes the impact of Code Sec. 7491 on tax controversy litigation.

As part of the IRS Restructuring and Reform Act of 1998,1 Congress enacted Sectlon 7491 of the Internal Revenue Code ("the Code"), which provides that where a taxpayer introduces cred­ible evidence with respect to any factual issue relevant to ascertaining the taxpayer's liability, and has com­ plied with various substantiation and record-keeping requirements, the burden of proof with respect to such issue shifts to the IRS. This article analyzes the impact of Code Sec. 7491 on tax practice so far. First, I will briefly outline the requirements of Code Sec. 7491. Second, I will discuss the judicial view as to when Code Sec. 7491 is even relevant. Finally, I will argue how, thus far, Code Sec. 7491 has had a negligible impact on the outcome in civil tax cases.


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