The Court System

Question 1

What are the three courts a taxpayer can take their case to after the IRS appeals process?

Answer 1

1. U.S. Tax Court
2. U.S. District Court
3. U.S. Court of Federal Claims

Question 2

Are the courts independent of the IRS?

Answer 2

Yes, these courts are independent of the IRS.

Question 3

Can taxpayers bypass the IRS appeals process?

Answer 3

Yes, taxpayers may bypass the appeals process, but some cases may still be considered for settlement by the IRS before the court hears them.

Question 4

What penalty can the Tax Court impose for delaying the process or filing a groundless case?

Answer 4

The Tax Court may impose a penalty of up to $25,000.

Question 5

What types of cases does the U.S. Tax Court focus on?

Answer 5

Cases involving tax disputes (income tax, estate tax, gift tax, excise taxes, etc.).

Question 6

Do taxpayers need to pay the tax first to take a case to the U.S. Tax Court?

Answer 6

No, taxpayers do not need to pay the tax first to take the case to Tax Court.

Question 7

What is required to file a case in the U.S. Tax Court?

Answer 7

The IRS must send a 90-Day Notice of Deficiency. Taxpayers have 90 days (or 150 days if overseas) to file a petition.

Question 8

What is the Small Tax Case Procedure in the U.S. Tax Court?

Answer 8

For cases involving $50,000 or less per year. If approved, the decision is final (cannot be appealed). Most cases are settled without a trial.

Question 9

What steps must a taxpayer take to file a case in U.S. District Court or U.S. Court of Federal Claims?

Answer 9

1. Pay the disputed tax.
2. File a claim for a refund with the IRS.
3. If denied (or if the IRS does not act within 6 months), file suit in court.

Question 10

What is unique about the U.S. District Court regarding trials?

Answer 10

The U.S. District Court allows for a jury trial (the only court where this is possible).

Question 11

What does the U.S. Court of Federal Claims handle?

Answer 11

Handles refund claims but does not allow jury trials.

Question 12

How can a taxpayer appeal a trial court’s decision?

Answer 12

Tax Court and District Court decisions can be appealed to the U.S. Court of Appeals in the taxpayer’s circuit. Federal Claims Court decisions can be appealed to the Court of Appeals for the Federal Circuit.

Question 13

Can the losing party request the U.S. Supreme Court to hear their case?

Answer 13

Yes, but this is rare and only happens for cases of significant importance.

Question 14

What is the burden of proof in tax disputes?

Answer 14

The burden of proof is the responsibility to show evidence supporting a position.

Question 15

Who generally has the burden of proof in tax disputes?

Answer 15

Generally, the taxpayer has the burden of proof in tax disputes.

Question 16

When can the burden of proof shift to the IRS?

Answer 16

The burden of proof shifts to the IRS if the taxpayer provides credible evidence, complies with all record-keeping requirements, and cooperates fully with the IRS.

Question 17

Who has the burden of production for penalties and additional taxes?

Answer 17

The IRS always has the burden of production for penalties and additional taxes.

Question 18

What are the requirements for businesses to shift the burden of proof to the IRS?

Answer 18

Businesses (corporations, partnerships, or trusts) must have a net worth of $7 million or less and fewer than 500 employees.