The IRS assessed a penalty against the couple for not paying tax on Social Security income. They produced letters from the Social Security Administration showing it hadn’t paid the benefit. After a long battle, the IRS conceded there was an error.

The taxpayers went to court to recoup costs involved in the case and to propose a rule that would require the IRS to follow certain procedures when its information is contradicted by information from another federal agency. The U.S. Tax Court awarded the taxpayers $155 but stated it didn’t have the authority to adopt their proposed rule. (TC Memo 2019-114)