Tax Court: What to Expect If It Goes That Far

The U.S. Tax Court is a specialized federal court that handles disputes between taxpayers and the IRS. The critical advantage of Tax Court over other federal courts: you don't have to pay the disputed tax before filing your case. In district court or the Court of Federal Claims, you pay first and sue for a refund. In Tax Court, you challenge the tax before paying it.

For most taxpayers with significant disputes, Tax Court is the only realistic judicial option.

When Tax Court Makes Sense

You get to Tax Court one of two ways: the IRS sends you a Notice of Deficiency (90-day letter) proposing additional tax, or you receive an adverse CDP determination. In both cases, you have a strict deadline — 90 days for a deficiency notice, 30 days for a CDP determination — to file a petition. Miss it and Tax Court is closed.

Tax Court makes sense when the amount in dispute justifies the cost, when the law is on your side, or when the IRS has been unreasonable in negotiations and you need a judge to intervene. It also makes sense as leverage — many cases settle after the petition is filed but before trial, because the IRS reassesses its position once litigation is real.

Small Tax Case Procedure

For disputes under $50,000 per tax year, you can elect the small tax case procedure (S cases). These are less formal, less expensive, and resolved faster. The trade-off is that the decision cannot be appealed. For many taxpayers, the simplified process is worth the trade-off.

What to Expect

After filing the petition, the case enters a pretrial phase where the IRS Office of Chief Counsel gets involved. This often produces settlement discussions — the IRS attorneys who handle Tax Court cases sometimes take a more pragmatic view than the revenue agents or officers who made the original determination.

If the case goes to trial, Tax Court trials are bench trials — no jury. The judge decides both the facts and the law. Trials are held in cities across the country on a rotating basis, so you may not need to travel to Washington, D.C.

If you're considering Tax Court or have received a 90-day letter, contact me immediately. The filing deadlines are absolute and the preparation takes time.

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