The United States Tax Court is a judicial forum for the resolution of a variety of federal tax disputes, including disagreements regarding the results of an IRS audit.
The IRS will send the taxpayer a ’90 day letter’ also called a ‘Notice of Deficiency’ giving the taxpayer the ability to file a petition in US Tax Court following an appeal to IRS in which the taxpayer and IRS cannot settle.
After the filing of the Tax Court petition, the matter is usually sent back to IRS Appeals for resolution without going to trial. If the parties cannot settle at this level, then a trial is held in Tax Court.
The primary advantage to litigating a proposed deficiency in this court is that a taxpayer may file a petition in the U.S. Tax Court without first paying the proposed tax or penalty in dispute.
Trials before the U.S. Tax Court are subject to “de novo” review of the IRS determination where the liability is in dispute. This means that taxpayer is afforded a fresh review. In that court, the taxpayer can offer evidence concerning their tax matters, even if that evidence was not submitted during the original income tax audit.
How the U.S. Tax Court System Works
The U.S. Tax Court has its own set of rules of practice and procedure that are distinct from the rules in U.S. District Courts or state courts.
The U.S. Tax Court is based in Washington, D.C., but holds trial sessions in major cities throughout the country. In California, trial sessions are held in San Francisco, Fresno, Los Angeles and San Diego.