The United States Tax Court

The United States Tax Court was created by Congress as an independent judicial authority for taxpayers disputing certain Internal Revenue Service (IRS) determinations. The Commissioner of Internal Revenue has the power to determine tax deficiencies for taxpayers, and taxpayers may dispute deficiencies by bringing their issues to the Tax Court. This Tax Court is not controlled by or connected to the IRS.

The United States Tax Court is a federal court of record established by Congress under Article I of the US Constitution. It is made up of 19 presidentially appointed judges. The Court is physically located in Washington, DC. However, the judges travel nationwide and conduct trials in various cities throughout each state. In California, tax cases are heard in Fresno (for small tax cases only), Los Angeles, San Diego, and San Francisco.

Jurisdiction – What can the Court do?

In addition to having the authority to adjust a determined tax liability, the Court can order:

-abatement of interest
-award administrative and litigation costs
-re-determine worker classification
-determine relief from joint and several liability on a joint return
-review certain collection actions
-make certain types of declaratory judgments
-adjust partnership items
-review awards to whistleblowers that provided information to the Commissioner of the Internal Revenue on or after December 20, 2006

What type of cases can be brought before the Tax Court?

A taxpayer can file a regular or a small tax case (“S case”). The main differences are that a regular case is appealable, while an S case is smaller, less formal, and generally a faster process.

Specifically, regular tax cases, unlike S cases, have appeal rights. This means that a decision entered after a regular tax case trial could be appealed by either the taxpayer or IRS representative. Further, unlike with an S case, there is no limit on the disputed amount. Therefore, a taxpayer that has a very large tax liability would most likely have to file a regular case. Also, in step with the formal approach to regular cases, both parties are required to file a pretrial memorandum with the court before the case is heard. This memorandum outlines each party’s case as well as their witnesses, documents, and arguments. The pretrial memorandum is a good display of the dissimilarity between regular and S cases, since petitioners and respondents of S cases do not have to make their witnesses, documents, etc. known until these issues are disclosed at trial.

In contrast, S cases have no appeal rights. Once the case is heard and decided by a judge, the decision is final. The upside is that judges allow simplified procedures (including more relaxed Federal Rules of Evidence), making it easier for taxpayers to represent themselves. Small cases can be heard in an additional 15 cities throughout the US, and are normally resolved faster than regular cases. In California, Fresno is one of the additional cities that can hear S cases.

Are their limits on how much can be disputed?

The tax court does place limits on the disputed amount, and it differs depending upon the type of case. In deficiency cases, the amount of deficiency and any additional penalties (not including interest) must be $50,000 or less for each year. Collection case claims cannot exceed $50,000 for all of the years (including penalties and interest). And for Worker Classification cases, the limit is set at $50,000 for disputed employment taxes for any calendar year.

The Tax Lady Roni Deutch and her law firm Roni Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight tax debts on your behalf.