Who has to pay when you take the IRS to court? The answer usually is “you do.” The basic rule is that you may recover court costs and attorney’s fees only if you prove that the IRS was acting unreasonably. Otherwise, if the IRS was “substantially justified” in maintaining its position, you must pay the expenses—even if you eventually win.

New case: The IRS claimed the taxpayer did not report income received from his parents and sister. This was evidenced by bank statements showing numerous deposits not included in his taxable income for the year.

At trial, the taxpayer was able to prove that these transfers actually constituted gifts and loans. But the IRS still had acted reasonably based on the evidence in the case. Result: The taxpayer was forced to pay the court-related expenses himself.

If you have legitimate grounds, you may pursue actions against the IRS to their conclusion. However, you cannot expect to avoid related costs for going to court.