Can you recover attorney’s fees you incur when challenging the IRS in the Courts? The answer is usually “yes” if you prevail in the tax matter. But a new case decided by the Eleventh Circuit Court of Appeals, Price, No. 25989-22, CA-11, 12/12/25, makes it clear that this rule doesn’t apply when you represent yourself in court.
The basics: Generally, attorney’s fees can be recovered when the taxpayer is the prevailing party in a lawsuit. For these purposes, the “prevailing party” is defined as the litigant who succeeds on a significant issue in the case. Thus, if you go up against the IRS in the Tax Court and you the court rules in your favor, it’s a win-win situation.
As usual, however, the law is riddled with exceptions. Even if you’re the prevailing party in the matter, you still must pay the tab if the IRS shows that it was substantially justified in taking its position. In addition, you must have exhausted all other possible administrative appeals before filing a lawsuit against Uncle Sam.
The tax law also limits the amount you can recover in a tax-related lawsuit. Currently, the cap is $260 an hour, plus litigants with a net worth of $2 million or more can’t recoup their out-of-pocket attorney’s fees.
New case: The taxpayer, who filed a joint return with her husband, received a deficiency notice from the IRS in 2022 stating that the couple owed almost $700 in tax on their 2019 return. The husband, who is an attorney and owns a law firm, represented them in court. Both spouses signed a letter of engagement for legal services provided by the law firm.
After the “pro se” appearance in court by the husband, the IRS eventually conceded that they couple didn’t have any tax liability. Accordingly, the husband filed a motion to recover about $6,000 in attorney’s fees and the $60 filing fee. This included charges for legal services over roughly a two-year period. The wife wrote a check to the husband’s law firm for the invoiced amount.
No dice: The Tax Court denied the request. It said that an attorney can’t recover fees for pro se services in a tax case and that the wife didn’t actually pay any fees. The $6,000 payment essentially was returned “back to the same household.” Now the Eleventh Circuit has sided with the Tax Court and upheld the ruling.
At least the couple was able to salvage some tax consolation. The court permitted them to recover the $60 filing fee.
Moral of the story: This strengthens the argument for standing up to the IRS if you’re on firm legal ground. But you have even more to lose if your case is shaky.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
