Audits, Appeals, and the Judicial Process

Question 1

A statutory notice of deficiency explains that the taxpayer has 90 days to either pay the deficiency or else to file a?

Answer 1

If taxpayer disagrees with the appeal or does not respond to the 30 day letter, IRS issues a notice of deficiency (90 day letter). The 90 day letter gives taxpayer 90 days to either pay or file a petition with the US Tax Court.

Question 2

An individual taxpayer rejected the IRS examiner’s findings in an audit of the taxpayer’s tax return. What will the IRS do in response to the taxpayer’s rejection?

Answer 2

The IRS will issue a 30 day letter.

Question 3

Which of the following is a list of courts that are referred to as courts of original jurisdiction, or trial courts for tax matters?

Answer 3

The Tax Court, the US District Courts and US Court of Federal Claims.

Question 4

A taxpayer received a 90-day letter proposing a deficiency. The taxpayer challenged the proposed deficiency in the Small Cases Division of the U.S. Tax Court. If the taxpayer loses the case, then the decision is

Answer 4

The US tax court for small claim is not appealable. Decisions in the small claims division lack precedential value because they are not considered primary authority.

Question 5

What is the US tax court?

Answer 5

This court consists of tax experts and only hear tax cases. This is for small claims only (50,000 or less) and there is no appeals process.

Question 6

US district court

Answer 6

The US district court is the only tax trial court with a jury. You must have paid the deficiency already and then sue the IRS for a refund.

Question 7

US Federal Claims

Answer 7

Same as the US district court, you must have paid the disputed deficiency. This court has 16 judges and is located in washington dc.