What Is Tax Court and How Does It Work?

The IRS isn’t perfect.  That shouldn’t be news to anybody.  So when the IRS makes a mistake and a dispute arises between it and a taxpayer, a forum is needed to resolve that dispute.  In many cases, that forum is a United States Tax Court.  Whether you find yourself in tax court or any court of law, you will want to talk with an experienced litigation lawyer before you make any moves.

What is a Tax Court?

A tax court is a federal court that is established specifically to hear cases relating to “tax deficiencies,” or taxes the IRS is claiming a taxpayer still owes the federal government.  This is one of the unique features of the tax court—although there are other courts that can resolve tax disputes, tax court is the only one that will hear a case before the taxpayer pays the taxes in question.  In other courts, lawsuits are typically filed to recover money in situations where the taxpayer claims he or she was overtaxed, and has already given the money in question to the government.

How Does Tax Court Work?

Tax court works slightly differently for large and small cases.  If the amount in dispute is less than $50,000, it generally qualifies as a “small case.”  Small cases have the option of taking advantage of the tax court’s less formal process.  One of the benefits of the small case process is that it is typically faster, but on the other hand negative decisions can’t be appealed.

Cases begin with the filing of a petition challenging the tax in question.  This places the case on the court’s calendar, and in most cases begins some form of negotiation with the IRS.  Like most courts, the majority of tax court cases end up being settled outside of court without a trial.  For cases that do go to trial, cases are heard by one of the 19 presidentially-appointed judges of the tax court; there are no juries in tax court.  In some cases, the tax court will ask a “senior judge” (a recently retired tax court judge) to hear the matter, or sometimes a “special trial judge” in small tax cases.

Do I Need a Lawyer for Tax Court?

Strictly speaking, you do not need a lawyer to initiate a case in tax court.  The court will allow you to represent yourself if you choose to do so.  However, there are many reasons it is usually better to have an experienced tax attorney represent you in tax court and in case negotiations.  First of all, every employee of the IRS is by definition a tax professional, and in most cases the taxpayer is not.  Additionally, you can expect the IRS to be represented by an attorney in court and at negotiations.  Without an attorney of your own, it can be difficult for a taxpayer to find a level playing field.  

Our firm’s attorneys are all experienced tax attorneys who have experience both negotiating reasonable settlements outside of court and winning cases inside the tax court.  If you have a dispute with the IRS about taxes they claim that you owe and would like to speak with an attorney, please contact us today to schedule a consultation.

Posted in: Administrative Appeals And Litigation

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