Sport Clips Challenges IRS Tax Bill Over Insurance Premiums

The men’s barber chain Sport Clips Inc. sued the IRS over a nearly $260,000 tax bill because it says the agency shouldn’t have disallowed deductions for insurance premiums.

The Texas-based firm filed a petition with the US Tax Court May 26 to negate this bill, which includes penalties and interest. Sport Clips said the agency erroneously found that its premiums didn’t have “economic substance” and, as a result, the company’s income in 2020 was inappropriate inflated by over $1 million.

The IRS also erred by determining that Sport Clips didn’t establish that the claimed expenses weren’t ordinary and necessary to ...