Going to Tax Court? Here’s What to Expect

December 20, 2021
Robert V. Boeshaar

Court is a scary word to many people. The U.S. Tax Court, however, doesn’t send taxpayers to jail or place them on probation. You won’t have to worry about posting bail or paying huge fees.

The U.S. Tax Court is where taxpayers (individuals or businesses) may settle questions about income tax imposed by the IRS. This Court is not directly affiliated with the IRS—you don’t have to worry about playing in the IRS’s “home court.” It is a federal trial court, and you can appeal its decisions to the U.S. Court of Appeals. 

What Types of Cases are Decided in the U.S. Tax Court?

The U.S. Tax Court hears a wide variety of cases involving federal income taxes. A few types of cases commonly heard include (but are not limited to):

  • Disputes over taxes assessed after the IRS send a taxpayer a notice of deficiency;
  • Disagreements over classification/misclassification of workers (employees vs. independent contractors);
  • Disputes over estate and gift taxes; and
  • Controversies relating to an IRS collection action.

Again, the U.S. Tax Court does not hear cases involving criminal tax allegations.

How Does a Tax Court Case Get Started?

The taxpayer must file a petition with the U.S. Tax Court to begin a case. In most cases, taxpayers must wait for the IRS to send a letter (or series of letters). A big advantage of Tax Court is that you do not have to pay the tax in advance to take your case to court.

For example, after many audits, the IRS sends a 30-day letter notifying taxpayers of their new tax deficiency. If taxpayers ignore the 30-day letter, the IRS will send the notice of deficiency. This gives taxpayers the right to file a petition with the Tax Court. In fact, many people refer to the notice of deficiency as the ticket to Tax Court. Taxpayers must file the petition within 90 days after the IRS issues the notice of deficiency.

After the petition is filed, the taxpayer is known in Tax Court as the “petitioner.” The “respondent” is considered to be the IRS Commissioner. The Tax Court will notify the parties when a hearing date is set.

U.S. Tax Court hearings are held without juries. Petitioners and the respondent present their cases to one judge. Taxpayers may be represented by a legal professional admitted to practice in Tax Court.

Many cases in Tax Court settle before trial, but not all. If your case proceeds to trial, the judge will consider the evidence and give a report that details the judge’s finding of fact and opinion.

Small Cases

Disputes over taxes of $50,000 or less may be decided in the Tax Court’s small case tax procedure, which is a simplified version of the normal Tax Court procedure. As a result, taxpayers may get a quicker disposition of their tax dispute. The main disadvantage of a small case is that the judge’s opinion may not be appealed.

Conclusion

The U.S. Tax Court does not hear every type of IRS-related dispute. Sometimes, taxpayers are better served by using an internal IRS procedure to settle their disputes. If, however, a taxpayer does not wish to pay the deficiency handed down by the IRS before getting a resolution, Tax Court could be the best option.

However you decide to move forward with your tax dispute, your best resource is an experienced and knowledgeable tax attorney. Attorney Robert V. Boeshaar has obtained favorable results for clients in almost every venue imaginable. Contact the firm today to get started on a resolution.

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