“The IRS ought to have been charged with frivolous prosecution.”
This is the norm. They take unreasonable positions and the punishment is that you must defend against them. The system is the punishment.
I have another IRS audit underway right now. I showed the agent all of the errors in her work and agreed to disagree on the unbased assumptions creating assessments. It is very much a system where they make accusations and you must prove them wrong. You are NOT innocent until proven guilty. My client is between a rock and a hard place!
I’ll admit, I do end up with the nightmare cases after other CPAs have screwed them up. These are not returns I have prepared. I’ve even filed amended returns after the audit case was closed and paid, just to have the audit reopened and get my clients their money back. As long as the statute of limitations has not expired they are still open game.
I’m trying desperately to retire and get out of this work, but feel sorry for these people and keep getting sucked back into it.
Perhaps your most virtuous move would be in lending a hand to raising up a successor to take up the cudgel against IRS weirdness like that. At least tax courts are available now and they usually come to sensible conclusions. But the IRS plays games hoping the target will find it too burdensome to appear in a tax court.