How the U.S. Tax Court operates and your path to appeal

The U.S. Tax Court is a specialized federal court focused exclusively on disputes involving federal tax law. Its primary function is to give taxpayers an opportunity to challenge IRS deficiency determinations in a judicial forum without first having to pay the amount the IRS claims is due (U.S. Tax Court). For most deficiency notices, a taxpayer has 90 days from the date the Notice of Deficiency is mailed to file a petition in Tax Court (120 days if the notice is addressed to a person outside the United States) (Internal Revenue Service).

In my practice representing taxpayers, I routinely see how preserving deadlines and assembling clear documentation early changes the path of a case — often moving it from adversarial litigation to an administrative resolution or favorable judgment.

Background and why the court matters

Congress created the Tax Court (formerly the Board of Tax Appeals) to offer an independent forum for taxpayers contested by the IRS. The court is distinct from U.S. District Courts and the Court of Federal Claims because it allows prepayment challenges to IRS deficiency notices; district courts and the Court of Federal Claims generally require that the taxpayer pay the assessed tax and then sue for a refund (U.S. Tax Court). That prepayment option is the Tax Court’s most important feature for many taxpayers.

Who may use the Tax Court?

Any individual, estate, trust, partnership, corporation or other entity that receives an IRS notice of deficiency or similar statutory notice may be eligible to file a petition in Tax Court — provided the petition is filed within the statutory deadline. The notice will usually state the right to petition the Tax Court and the deadline to do so. If you miss that deadline, you generally forfeit the Tax Court forum and must consider alternatives such as filing a refund suit in federal district court or the Court of Federal Claims, or pursuing administrative remedies with the IRS (IRS guidance).

Typical timeline and key deadlines

  • Notice mailed: IRS issues a Notice of Deficiency (sometimes called a 90-day letter).
  • Petition deadline: File within 90 days (or 120 days outside U.S.). This deadline is jurisdictional — missing it usually ends your ability to go to Tax Court for that notice.
  • Answer: After you file, the IRS files an answer, and case scheduling follows local Tax Court rules.
  • Pretrial: Parties exchange information, may engage in settlement discussions, and prepare motions.
  • Trial: If unresolved, a trial occurs (often by judge at a Tax Court seat or in Washington, D.C.).

Exact timelines vary by case complexity and court calendar. The Tax Court’s procedural rules set specific timelines for pleadings and pretrial filings (U.S. Tax Court Rules).

How to prepare a petition — practical steps

  1. Read the notice carefully: Confirm it’s a Notice of Deficiency and note the date mailed and the deadline to petition the Tax Court.
  2. Collect your records: Bank statements, receipts, invoices, canceled checks, payroll records, contracts, and contemporaneous notes are essential. In my experience, tax positions backed by organized, contemporaneous documentation are far more persuasive.
  3. Draft the petition: The petition must state the legal and factual grounds for contesting the IRS determination and identify the tax years at issue. The Tax Court provides forms and guidance for pro se taxpayers, but many taxpayers retain a tax attorney or enrolled agent to avoid procedural pitfalls (U.S. Tax Court — How to File a Petition).
  4. File on time: The petition must be filed in the Tax Court by the deadline. Electronic filing options are available, but confirm current procedures on the Tax Court website.
  5. Serve the IRS: Follow Tax Court rules to ensure the IRS is properly served and the case is docketed.

Discovery, pretrial, and settlement

After the petition is filed and the IRS answers, discovery typically begins. Discovery in Tax Court can include document requests, interrogatories, and depositions — though the court’s rules and judge’s orders shape what is allowed. Many disputes settle during this phase, often through Office of Chief Counsel negotiations or alternative dispute resolution offered by the Tax Court. My clients often resolve complex factual disagreements during pretrial once both sides have exchanged records.

Trial and decision

Trials in Tax Court are usually bench trials — decided by a judge without a jury. The judge will consider pleadings, evidence introduced at trial, witness testimony, and any stipulated facts. The court issues a written opinion that either sustains the IRS determination (in whole or in part) or rules for the taxpayer. The Tax Court may issue either a regular opinion (published) or a memorandum opinion (unpublished) depending on the case’s legal significance.

If you disagree with the Tax Court’s decision, you can appeal to the appropriate U.S. Court of Appeals. The Appeals Court reviews the Tax Court’s legal conclusions and factual findings under applicable standards of review.

When settlement or alternative forums make sense

Going to Tax Court is not always the fastest or lowest-cost option. Many disputes settle during IRS examination or through the IRS Office of Appeals before a petition is filed. If you prefer a jury trial, or if your case presents constitutional issues, you might instead litigate in a U.S. District Court or the Court of Federal Claims — but those forums generally require prepayment of the disputed tax (Courts and legal practice references).

For guidance on audit triggers, evidence handling, and practical audit preparation that often precedes a Tax Court matter, see our article on “Understanding the IRS Audit Process: What Triggers an Audit and How to Prepare” (https://finhelp.io/glossary/understanding-the-irs-audit-process-what-triggers-an-audit-and-how-to-prepare/). If you’re evaluating whether to appeal administratively or litigate, our piece “How Appeals Differ from Audits: Strategy and Outcomes” discusses strategic considerations and is a helpful companion (https://finhelp.io/glossary/how-appeals-differ-from-audits-strategy-and-outcomes/).

Common mistakes and how to avoid them

  • Missing the 90-day deadline: This is the most consequential error. Confirm the date the notice was mailed and calendar your deadline immediately.
  • Weak or disorganized evidence: Courts expect proof, not just assertions. Organize and label documents and maintain a chain-of-custody where appropriate.
  • Underestimating procedural complexity: Tax Court practice has unique rules; retaining counsel or a tax professional often prevents costly procedural missteps.
  • Failing to explore settlement: Early negotiation and mediation can save time and fees.

Costs and representation

Costs vary widely. Representing yourself (pro se) is permitted, but the Tax Court also allows representation by attorneys and certain qualified tax practitioners. In my practice, I typically recommend hiring counsel when issues involve complex legal questions, substantial amounts, or significant records to marshal. Counsel can also handle pretrial strategy, motions, and settlement negotiations.

Example (anonymized)

A small-business taxpayer received a notice claiming $25,000 in unreported income. We filed a timely petition, provided bank reconciliations and third-party invoices, and used a stipulation to narrow contested items. The case settled on favorable terms before trial with a significantly reduced liability. That outcome reflected early organization and willingness to explore settlement.

Practical checklist before filing

  • Confirm the type of notice and the mailing date.
  • Collect and catalog all relevant records.
  • Prepare a timeline of events and transactions.
  • Consult a tax attorney or CPA experienced in Tax Court practice.
  • File the petition and ensure proper service.

Where to find official guidance

Final notes and disclaimer

The Tax Court can be a powerful tool to contest IRS positions without first paying the allegedly owed tax, but it is not a substitute for early, organized case-building and realistic settlement planning. In my practice, I emphasize documentation, deadline protection, and early exploration of settlement. This article provides general information only and is not a substitute for personalized legal or tax advice; consult a qualified tax attorney, CPA, or enrolled agent about your specific situation.

Authoritative resources cited: U.S. Tax Court, Internal Revenue Service. Additional guidance and related topics are available on FinHelp (linked articles above).