The Tax Court: Fighting the IRS

They are people, too - IRS auditors. Indeed, they might seem like they're merciless and cold. However, they also make mistakes. If they made a mistake and won't consider the proof you present, you might need to take the IRS to court. So now what? What court do you take them to? How do you achieve it? And is this going to cost you lots of money?

If, for any reason you can't agree on a resolution with the IRS, then you'll eventually get what's known as a Notice of Deficiency. This pretty much tells you that you have ninety days to file a petition with the correct court to combat the resolution. This particular court is the Tax Court. Receiving this letter is hightly important because after those ninety days have lapsed, you have definitely no options. You can't request for an extension or make an appeal. That is the end of the story, and the IRS will have triumphed without a battle. You'll need to pay your tax debt. You can sue and receive a refund later, but only after the tax liability is paid off. So when you receive that Notice of Deficiency, make sure you act upon it immediately. You need to file a response declaring that you disagree with the IRS's resolution.

In 1923, the U.S. Tax Court was established. The nineteen judges that comprise it are all authorities in tax law. To handle tax litigation, they routinely travel all over the country. If the IRS committed a mistake, these judges give the last decision.

Most people choose to take their case to the U.S. Tax Court because it is the only court that will actually make a decision on your case before you even pay the taxes that are in question. All of the other courts make it a necessity that the taxes are first paid before the case can be addressed by the court. For those who are unable to pay their tax liability, they won't be able to be heard at any of the other courts. This is also the court you want to handle your case if you are basing your argument on technical facts and details of the tax code. These 19 judges are experts in IRS problems and understand all the tax law details.

Your case is more appropriately addressed by the U.S. District Court rather than the Tax Court, however, if it is something ambiguous like the IRS's fairness. A jury of your peers will make the decisions, and they will be more likely to relate. Other courts also address tax disputes. However, it is still best to prevent IRS problems entirely, so file your taxes the proper way.