Okay, here is a pretty thorough summary from Uncle Sam (click here
It appears that case law
suggests that filing
fees, in particular, are considered "loans" to clients, not expenses, and that the client is repaying the loan when providing reimbursement
-- in which case, the client would not use a but that IRS
auditors should consider the success rate
of a lawyer who takes contingency cases, to determine whether or not the advance fees are really expenses of the attorney with a reasonable risk of loss, or whether reimbursement is routine, which argues that the payments are a loan.
Note: I never take contingency cases, and I never advance client costs, so, to be frank, this issue is not one I've given much consideration to in the past. Fortunately, the IRS seems to have done most of the background work. If you've been expensing these costs in the past, then your audit
risk probably boils down to whether or not you are fairly certain of reimbursement. If yes, then you've misreported. If not, then you have a reasonable argument to expense the costs.
Hope this helps.