How the Tax Court Process Works for Individual Tax Disputes

Quick overview

The U.S. Tax Court provides a formal, judicial forum where individuals can contest IRS determinations of tax liability without first paying the disputed amount. It is a specialized court with judges trained in tax law (U.S. Tax Court). The process is structured and rule‑bound: missing deadlines or failing to supply key evidence can be fatal to a case.

Who can use the Tax Court and when?

• If you receive a statutory notice of deficiency from the IRS (often called a “90‑day letter”), you generally have 90 days to file a petition in the U.S. Tax Court (150 days if the notice was mailed to you outside the United States). This deadline is statutory and strict—late petitions are usually dismissed (U.S. Tax Court, notice of deficiency guidance).
• Individuals, sole proprietors, and many pass‑through entities can use the Tax Court to contest income, deductions, credits, and many other adjustments. Certain issues (like collection matters) may be handled elsewhere.

In my practice I’ve seen taxpayers delay after a deficiency notice because they feel intimidated. Filing the petition promptly preserves the right to litigate; it does not mean you can’t settle later.

Step‑by‑step: How the Tax Court process typically unfolds

1. Filing the petition

• The petition starts the case. It must be filed with the U.S. Tax Court and should identify the year(s) in dispute, the adjustments being challenged, and a concise statement of facts and law supporting your position.
• File within the 90/150‑day statutory period. If you are close to the deadline, file a petition and sort the details later—courts accept amended petitions in many cases.

1. IRS answer and case assignment

• After the petition is filed, the IRS will file an answer. The case is then assigned a docket number and scheduled for the next available trial session, which may be held in person or, more commonly now, by remote means.

1. Pretrial procedures and discovery

• The Tax Court has rules governing discovery, pretrial conferences, and exchanges of evidence. Parties exchange documents, identify witnesses, and sometimes submit stipulations to narrow issues.
• Parties usually file pretrial memoranda (briefs) explaining legal positions and key evidence. Know the Court’s rules on exhibit numbering and record submission early—improperly formatted evidence can be excluded.

1. Trial or hearing

• Trials are less formal than federal district court but are still courtroom proceedings. Tax Court judges often ask direct, technical questions.
• You may present documentary evidence, witness testimony, and expert reports. Tax‑focused testimony (e.g., accountants) is commonly persuasive.

1. Decision and post‑trial motions

• The Tax Court issues a written decision. There are two main types: Memorandum Opinions (usually involve established law applied to facts) and Regular Opinions (often involve new legal interpretations). In small tax cases (under the Court’s simplified procedures), taxpayers get a faster result but that decision is generally not appealable.

1. Appeal

• If you disagree with the Tax Court decision, you may appeal to the U.S. Court of Appeals for your circuit. Appellate process and timelines differ from the Tax Court; consult counsel promptly.

How the Tax Court differs from other options

• Administrative appeals: Before filing a petition you can often work with the IRS Office of Appeals to settle the case without litigation.
• Pay‑then‑sue options: If you pay the tax, you can sue for a refund in U.S. District Court or the Court of Federal Claims. Those courts require prepayment but may provide a jury (district court) or different remedies.
• Small tax case (Section 7463) procedures: These offer simpler, faster handling for certain disputes, but rulings are typically final and not precedent‑setting.

What to prepare: evidence and organization

• Keep contemporaneous records: tax returns, bank statements, invoices, receipts, contracts, and communications with third parties.
• Create an organized exhibit book and a clear trial timeline. Judges appreciate a concise presentation that answers the central question: why is the IRS wrong on this adjustment?
• Use witness statements or expert reports where appropriate; for complex valuation or business‑income issues, expert testimony can be decisive.

If you’re preparing documentation for an IRS audit before litigation, our guides on preparing an audit response packet and on when to appeal an audit determination explain practical document checklists and decision points (see Preparing a Concise Audit Response Packet and When to Appeal an IRS Audit Determination).

Burden of proof and common legal issues

• Generally, the taxpayer initially bears the burden of proof to show that the IRS’s determinations are incorrect. However, under Internal Revenue Code section 7491, the burden can shift to the IRS in certain circumstances if the taxpayer has kept required records and cooperated with the IRS.
• Common Tax Court issues include whether income was correctly reported, whether expenses were ordinary and necessary, classification of workers vs. independent contractors, and timing or basis disputes.

Practical timeline expectations

• From petition filing to decision, a typical case can take several months to more than a year, depending on complexity and court scheduling. Small tax cases usually resolve faster. If your matter is urgent (e.g., collection action looming), consider concurrent administrative tools such as offers in compromise or collection due process (CDP) appeals.

Costs and representation

• You are allowed to represent yourself (pro se), but Tax Court rules and tax law are technical. Many taxpayers benefit from representation by a tax attorney, enrolled agent, or CPA experienced with Tax Court practice.
• Costs to litigate include attorney or representative fees, expert witness fees, and the cost of preparing exhibits and briefs. If you qualify based on ability to pay, fee waivers or limited‑scope representation may be options—ask potential counsel about payment arrangements.

Note: verify current fee and filing policies on the U.S. Tax Court website before filing (U.S. Tax Court).

Common mistakes taxpayers make

• Missing the 90/150‑day deadline—this usually ends the right to sue in Tax Court.
• Failing to organize and authenticate records—unsigned or poorly documented exhibits are often disregarded.
• Underestimating the need for legal strategy—tax litigation is law‑driven, not only fact gathering.

Frequently asked questions (short answers)

• Can I settle after filing a petition? Yes. Many cases settle at any stage through negotiation with IRS counsel.
• Is the Tax Court free? There is no substitute for checking the court’s current filing rules and fees; procedural rules evolve, so consult the U.S. Tax Court website before you file.
• What if I lose? If you lose, you can appeal to a federal circuit court. If you paid the tax after the decision and still disagree, you may have additional refund remedies depending on the circumstances.

Practical tips from practice

• File the petition if the 90‑day window is closing; you can often amend to add clarity later.
• Build a one‑page chronology for the judge that tells the case’s story in date order.
• Focus your exhibits on the disputed amounts and the direct evidence supporting your position (bank records, signed contracts, contemporaneous notes).

In my 15 years helping clients, the single most common factor in favorable outcomes is early, organized documentation that directly rebuts the IRS’s adjustments.

Where to learn more (authoritative sources)

• U.S. Tax Court official site: https://www.ustaxcourt.gov/
• IRS general guidance on disputes and appeals: https://www.irs.gov/

For practical audit and appeal checklists that help prepare for potential Tax Court issues, see these related guides on FinHelp:

• When to appeal an IRS audit determination: https://finhelp.io/glossary/when-to-appeal-an-irs-audit-determination-a-decision-guide/ (decision guide and red flags)
• Preparing a concise audit response packet: https://finhelp.io/glossary/preparing-a-concise-audit-response-packet-checklist-of-documents/ (document checklist and organization tips)
• Understanding IRS audits: https://finhelp.io/glossary/understanding-irs-audits-types-process-and-outcomes/ (audit types and likely outcomes)

Disclaimer

This article is educational and does not constitute legal or tax advice. Case specifics vary—consult a qualified tax attorney, enrolled agent, or CPA for advice tailored to your situation.