"We believe the IRS owes him money," Newton's lawyer, A. Lavar Taylor, said Tuesday, adding the singer was entitled to $2.2 million in unclaimed deductions over the same period.
The dispute was outlined in tax court filings in Washington. An April 13 notice of deficiency accused Newton and his wife, Katherine, of failing to report the sale of an Arabian horse, wrongfully claiming losses on antique car sales, failing to report income and taking improper deductions.
Newton, 63, filed a 32-page response July 6 in Tax Court in Washington. The government has until next month to file an answer.
Newton and his wife issued a statement in Las Vegas saying they relied on the advice of their accountants and tax lawyers.
"We have paid millions of dollars in taxes, so obviously it is not a matter of money but a matter of principle," the statement said.
IRS regional spokesman Raphael Tulino in San Diego said department policy was not to comment on a specific case.
Newton has had previous disputes with the IRS. In 1992, he filed for Chapter 11 bankruptcy protection to reorganize an estimated $20 million in debts, including a $341,000 IRS lien for back taxes.
He has become a Strip icon, best known for his signature song, "Danke Schoen."
Newton is scheduled to perform at the Las Vegas Hilton later this month.