Tax Litigation Information and Advice

If you are preparing for a Tax Court trial, you likely have many questions regarding what to expect. On the first day of your trial, the Tax Court trial clerk will announce the calendar call, which announces the name of each case that has not settled. At this time, the taxpayer and his or her counsel should be prepared to come forward when called by the trial clerk and announce his or her name to the Tax Court judge.

Receiving a statutory notice of deficiency is a turning point for the taxpayer’s tax litigation case. The IRS cannot collect tax unless the tax has been assessed, and no assessment can be made on a tax until a valid statutory notice of deficiency has been issued by the Service. Once the taxpayer receives a statutory notice of deficiency, there are three options available:

When a taxpayer decides to pursue tax litigation against the IRS, he or she generally has three choices for judicial forum: Tax Court, the Claims Court, and Federal District Court. The different forums have different advantages and disadvantages. Also, certain disputes are only judiciable in specific forums, so that should be a consideration in choice of forum. Additional considerations include burden of proof, discovery government attorneys, the location of trial, and the judges available in each forum.

When facing off against the IRS for whatever reason, there is always a process for escalation wherein if your case is not resolved you can seek the attention of a higher authority. Typically a qualified and experienced tax attorney is recommended to guide you through the process, however you should be aware of what to expect along the way.

Sometimes, it is in the best interest of the taxpayer to make a refund claim instead of file a deficiency action in the Tax Court. The goal of a refund claim is to have the IRS refund the taxpayer for an overpayment of tax. The IRS has the authority to do so, along with any interest and penalties related to the overpayment. The refund is due to “the person that made the overpayment,” and the refund claim “of any overpayment of any tax” must be made by the taxpayer.

When your case is set for trial in the tax court, you will generally receive notice approximately five months prior to the trial date. The Tax Court provides ample notice to litigants so that they are able to pursue out-of-court settlements if they wish.

Litigation in the Tax Court is unique among all other forums in that the process involves various pre-trial stipulations made by both parties. In fact, the Tax Court requires litigant to submit to extensive pretrial stipulations, which are embodied in Tax Court Rule 91.

Although pre-trial conferences are not a typical occurrence in tax litigation, the Tax Court will occasionally allow them to take place to address intractable disputes between the parties. In tax litigation, it is generally the responsibility of the parties to develop the case from pre-trial work through trial, but when disputes arise, the parties can request the Tax Court to officiate over a pre-trial conference.

A tax deficiency is a statutorily defined concept that is essential to planning and proceeding with tax litigation. Specifically, a deficiency is defined as the amount by which the correct tax exceeds the excess of:

The Tax Court is the most typical forum for the resolution of tax litigation controversies. The Tax Court is an Article I court with limited jurisdiction as expressly conferred by Congress.