Sirote & Permutt Law Firm Successfully Defends Case Against IRS

BIRMINGHAM, Ala., March 13, 2012 /PRNewswire/ -- David Wooldridge and Ronald Levitt, attorneys at Sirote & Permutt, P.C., recently represented former Waffle House waitress and lottery winner Tonda Dickerson against the Internal Revenue Service (IRS) and prevented her from having to pay nearly $700,000 in taxes. On March 7, 2012, the U.S. Tax Court reduced Dickerson's tax payment by more than 87 percent.

The controversy arose after Dickerson attempted to share her winnings with her family prompting the IRS to issue a gift tax bill of nearly $1 million. Dickerson then engaged Sirote's Wooldridge and Levitt to challenge the IRS.

"When defending a client in a tax case, it's important to think outside the box," said Wooldridge. "With the extreme complexity of this case, we had to make sure we were creative and remained focused on the details."

Prior to this lawsuit, Dickerson's lottery winnings brought about another court case. While working at Waffle House, Dickerson was given her winning lottery ticket by a frequent customer. Dickerson's fellow employees sued, claiming they had a verbal contract with Dickerson to share the winnings if any of them received a winning lottery ticket. In this case, where Sirote & Permutt lawyers also represented Dickerson, the Alabama Supreme Court eventually ruled the claims of her former co-workers were invalid since they were based on a contract related to gambling. Since contracts related to gambling were illegal, the claims were not enforceable and the case was dismissed.

The previous claims against Dickerson later proved important in her tax dispute. Wooldridge and Levitt argued that the lottery ticket's value (as claimed by the IRS) should be greatly discounted since Dickerson's coworkers had brought a legal claim that she be required to split the winnings among them. The Tax Court agreed that the existence of that claim reduced the value of the ticket since an independent third party would take the existence of the claim into account to determine the ticket's worth. 

"While we found no case law exactly on point, we knew the value of the lottery ticket would be impacted by the existence of the former co-workers' claims. Happily for Dickerson, the Tax Court agreed," said Levitt. "It was a creative use of theory, and the Tax Court judge saw that it was fair."

For more information on Sirote & Permutt, P.C., visit www.sirote.com.

SOURCE Sirote & Permutt, P.C.