A small case request, also called an “S case,” is designed by the U.S. Tax Court to help taxpayers resolve tax disputes involving relatively small amounts—$50,000 or less per tax year. This procedure is less formal and faster than typical Tax Court litigation, simplifying the process so taxpayers can represent themselves if they choose. It was developed to ensure that taxpayers with limited resources or lower-value disputes have an affordable and accessible method to challenge IRS determinations without the complexity and cost of full court proceedings.
Understanding Eligibility and Limits
To qualify for a small case request, your tax dispute must involve a deficiency or overpayment claim of $50,000 or less, including penalties, for income, gift, or estate taxes. The same $50,000 limit applies to collection due process cases. Cases exceeding this monetary threshold must be filed under regular Tax Court procedures. The taxpayer must have received a Notice of Deficiency (commonly known as the 90-day letter) from the IRS, which notifies you of the additional tax the IRS asserts you owe and informs you of your right to petition the Tax Court.
Filing a Small Case Request: Step-by-Step
-
Obtain the Notice of Deficiency: This official IRS letter is your gateway to bringing a case to Tax Court. You generally have 90 days from the date on the notice (150 if you reside outside the U.S.) to file your petition.
-
Complete Form 2 (Petition—Small Tax Case): Filed directly with the U.S. Tax Court, this form requires you to specify the tax year(s) involved, the disputed amount, and the reasons why you disagree with the IRS assessment. Clarity and completeness are crucial.
-
Pay the Filing Fee or Request a Waiver: The current filing fee is $60. If you can’t afford it, you may file a Motion to Waive Filing Fee with supporting documentation showing financial hardship.
-
Submit Your Petition and Serve the IRS: Send your petition and fee (or waiver request) to the Tax Court, and a copy of your petition must be served to the IRS Chief Counsel.
What to Expect After Filing
Once your petition is filed, the IRS reviews it and may attempt to settle the dispute before trial. If settlement isn’t reached, the case will be scheduled for a hearing. Small case hearings are informal; a Tax Court judge will ask questions, and both parties can present evidence and arguments. This format allows taxpayers to participate without the procedural complexities of standard court trials.
Advantages and Considerations
- No Prepayment Required: Unlike refund suits, you don’t have to pay the disputed tax amount before going to court.
- Final Decision: Small case decisions are final and cannot be appealed, which streamlines resolution but removes the option for further review.
- Informal Procedure: The process is faster and less intimidating, suitable for individuals representing themselves.
Practical Examples
- A freelance artist disputes the IRS disallowing a $3,000 home office deduction.
- A taxpayer contests income reported incorrectly on a 1099, involving $1,500.
- An individual seeks abatement for a $1,000 penalty due to reasonable cause.
Tips for a Successful Small Case Request
- Organize all relevant documents neatly to support your case.
- Clearly understand and articulate why you disagree with the IRS.
- Communicate your points calmly and respectfully during your hearing.
- Consider consulting a tax professional, such as an Enrolled Agent or CPA, for guidance.
Common Pitfalls to Avoid
- Missing the 90-day deadline to file your petition.
- Assuming the informal setting guarantees a win.
- Failing to bring sufficient evidence.
- Underestimating the IRS’s preparation and representation.
Frequently Asked Questions
Can I appeal a small case decision? No, the Tax Court’s decision in small tax cases is final.
Do I need to pay the disputed tax before filing? No, Tax Court allows you to dispute without prior payment.
How long does the process take? It varies but typically resolves faster than standard cases, ranging from several months to over a year.
What if the IRS and I settle? You can resolve the case without a hearing through a joint stipulation signed by both parties.
Comparison of Small Tax Case vs. Regular Tax Case
| Feature | Small Tax Case | Regular Tax Case |
|---|---|---|
| Max Amount | $50,000 per tax year | No limit |
| Formality | Informal, simplified procedures | Formal rules and evidence required |
| Appealability | No appeal allowed | Can be appealed |
| Legal Precedent | Does not set precedent | Can set precedent |
| Attorney Use | Optional, often pro se | Often necessary |
| Resolution Speed | Generally quicker | Can be lengthy |
For more detailed official guidance, visit the U.S. Tax Court website or the IRS website. Your understanding and preparation are key when pursuing a small case request, making Tax Court accessible to taxpayers with smaller disputes.