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An “Elizabeth Nelson Explains” piece

Most people who receive an IRS notice assume the process moves in a straight line: you get audited, you argue your case, someone decides, and it’s over. Having clerked for the U.S. Tax Court before spending her career representing taxpayers, Elizabeth Nelson sees a different picture. An IRS dispute isn’t one event — it’s a sequence of decision points, and the choices a taxpayer makes at the earliest ones often determine how the case ends, long before it ever reaches a courtroom.

An audit doesn’t begin with a disagreement. It begins with a request for records. What happens in that first exchange — what gets sent, what gets left out, how quickly it’s sent — shapes everything that follows.

Nelson’s clerkship gave her a close look at cases after they’d already gone wrong: taxpayers who under-documented a position early on, then spent years and legal fees trying to reconstruct evidence that should have been organized from the start. By the time a case reaches Tax Court, the record is largely fixed. The audit is where a case is actually won or lost, even though it rarely feels that consequential at the time.

A typical IRS controversy moves through a few defined stages:

1. Examination (audit). The IRS reviews a return and proposes adjustments if it disagrees with what was filed.
2. Proposed assessment. The taxpayer receives a written explanation of the changes and a chance to respond before anything becomes final.
3. IRS Appeals. An independent office within the IRS — separate from the examiner — reviews the disputed issues with an eye toward settlement.
4. U.S. Tax Court (or collection). If Appeals doesn’t resolve the matter and the taxpayer wants to contest the amount before paying it, a Tax Court petition is the next formal step. If the taxpayer doesn’t petition, the assessment becomes final and collection begins.

Each stage has its own deadlines, and missing one doesn’t just delay things — it can close off options permanently. A taxpayer who lets the 90-day window to petition Tax Court lapse, for instance, generally loses the ability to dispute the liability before paying it. Understanding this sequence in advance — not learning it after a deadline has already passed — is the single biggest thing Nelson says she wishes more taxpayers knew going in.

Clerking gave Nelson a specific vantage point most tax attorneys never get: watching how a court evaluates a case from the bench, not from either side of the table. A few things stand out from that experience:

• Documentation carries more weight than testimony. Courts are generally more persuaded by contemporaneous records — invoices, bank statements, mileage logs, correspondence — than by a taxpayer‘s account of what happened, however sincere.
• Procedural posture matters as much as the facts. Two taxpayers with identical facts can get different outcomes depending on whether the case was properly preserved at each earlier stage — what was raised at Appeals, what evidence was placed in the administrative record, whether deadlines were met.

Judges see patterns across hundreds of cases. What feels like a unique, sympathetic set of circumstances to a taxpayer is often a fact pattern the court has seen many times before, with a fairly predictable range of outcomes. That’s not discouraging — it’s useful, because it means an experienced practitioner can usually tell early on where a case is likely to land.

The practical implication of all this is that a tax dispute shouldn’t be treated as something to react to only once it reaches its most serious stage. The examination and Appeals stages are where the facts, documentation, and procedural record get built — and that record is largely what a Tax Court judge will eventually be looking at, if the case goes that far. Treating the audit as “not a big deal yet” is one of the more common and costly assumptions Nelson sees taxpayers make.

If you’re currently facing an IRS inquiry, audit, or proposed assessment, the most useful question isn’t “how do I win at the end” — it’s “what does the record need to look like at each stage between now and then.” That’s a different way of thinking about the process than most taxpayers arrive with, and it’s the perspective a Tax Court clerkship makes hard to unlearn.