My case was similar to the one in the article sourcing this post. The government used an assumed formula and based upon that formula they calculated an expected production per hour and used that to determine a rate per hour per employee worked. They compared that to the recorded figures to assess deficiency.
In my case, the government used an assumed formula (recipe) and utilizing quantity of one ingredient in the recipe, they multiplied it through to calculate projected gross receipts and then compared it to recorded receipts to determine a deficiency. Problem is, they used a thin crust recipe which yields a higher revenue per pound of flour used than a Sicilian pizza. While the price of the Sicilian pie is slightly higher, it is not proportionately higher based upon flour differential. I handed the four U S Treasury attorneys the two boxes taped shut so they would notice the weight differential and ask why. The experience spoke for itself and is better than just logically explaining it. Such graphic illustrations speak volumes when you are trying to convince other people, especially juries that you are correct and the opposition is wrong.
I’ve been doing this for over thirty years, quite successfully even where others have failed.
The problem is that the judicial system protects itself and its underlings. I have a tax case in state court right now that is absolutely absurd and it has already been rejected by two inter department revenue hearing boards who just rubber stamped their revenue officers despite the evidence presented. The last hearing board voted against me 3:2 and the hearing board had no idea what they were doing. They didn’t even know their own laws. I will easily win in appeal but it will cost $$$ to get there. This is the reason many attorneys will wave district court cases to county court and refer to the lower level courts as Mickey Mouse Courts.
It is getting harder to get a fair shake in the bureaucratic process. The system is the punishment. I watch the little guys get stomped on and abused constantly. It’s sad.
The answer will have to include politics. This is federal taxes being discussed, or state taxes? The appropriate legislatures will need to be engaged.