Tax Court Appeals: When to Take Your Case to the U.S. Tax Court

Quick overview

The U.S. Tax Court is a federal trial court that hears disputes between taxpayers and the Internal Revenue Service (IRS). It traces its roots to the U.S. Board of Tax Appeals (created in 1924), which became the Tax Court of the United States in 1942 and was later renamed the United States Tax Court in 1969 (U.S. Tax Court). The court provides a venue to challenge IRS deficiency determinations, some collection actions, and other tax issues—often without requiring payment of the disputed tax before filing (U.S. Tax Court, https://www.ustaxcourt.gov).

This article explains when you should consider taking your case to the Tax Court, the deadlines and practical steps to prepare, the pros and cons of litigation, and common mistakes that cost taxpayers time or rights.

When you should consider Tax Court (practical triggers)

• You received a notice of deficiency (sometimes called a 90-day letter). This notice tells you the IRS proposes additional tax. Filing a petition in the Tax Court within the deadline lets you contest the proposed deficiency before paying it (IRS; U.S. Tax Court).
• You disagree with an IRS collection action and want a hearing in Tax Court (e.g., certain Collection Due Process (CDP) matters under IRC §§6320/6330).
• You want to litigate legal issues where precedent or a declaratory ruling from a federal court will matter for future tax treatment.
• You cannot reach a fair settlement in the IRS Appeals Office and need to preserve litigation rights.

In my practice I advise clients to evaluate the strength of the documentation and the legal issue before filing. If the IRS’s case rests on a simple math error or a missing form, an administrative appeal or supplementing the return is often quicker. If the disagreement is about a legal interpretation, the Tax Court may be appropriate.

Key deadlines and jurisdiction rules (must-knows)

• Deadline to file a petition: generally 90 days from the date the notice of deficiency is mailed to a U.S. address; 150 days if the notice was mailed to a foreign address (IRC and Tax Court rules; see U.S. Tax Court site). Missing this deadline usually means you lose the right to challenge the deficiency in Tax Court.
• Small Tax Case (S case): The Tax Court offers a simplified “small case” procedure for certain disputes where the amount in controversy does not exceed $50,000 for the tax period in dispute (check current limit on the U.S. Tax Court site). Small case decisions are informal and generally are not precedential and may be final without appeal.
• Collection Due Process (CDP): Separate short deadlines and procedures apply if you’re challenging a lien or levy; you generally must file a CDP petition within 30 days after the IRS mails the notice of your right to a hearing (IRC §§6320/6330; IRS Appeals).

Always confirm deadlines against the controlling notices and the Tax Court’s rules or consult a tax professional immediately on receipt of adverse IRS notices.

How to prepare a Tax Court petition (step-by-step)

1. Read the notice carefully. The IRS notice will identify the tax years, the proposed adjustments, and the appeal rights (including the 90-day/150-day deadline).
2. Try IRS Appeals first if appropriate. The IRS Appeals Office can settle many issues without litigation. Use the Appeals process for negotiation and documentation exchange; preserving evidence can strengthen a later Tax Court case if needed (IRS Appeals, https://www.irs.gov/appeals).
3. Gather and organize documentation. Typical evidence includes returns, ledgers, W-2s, 1099s, bank records, receipts, contracts, and contemporaneous notes. Create a timeline of events and an issues list.
4. Draft the petition or get help. The petition must be filed with the Tax Court Clerk and contain specific required elements (names, filing status, tax years, and a clear demand for relief). Consider using a tax attorney, CPA, or an enrolled agent—self-representation is allowed but the rules are technical.
5. Consider whether a Small Tax Case petition is appropriate. If eligible, S case procedures are quicker and less formal but decisions are final and not precedential.
6. Serve the petition properly and follow the court’s procedural rules (pleadings, discovery, pretrial memoranda). The Tax Court’s Rules of Practice and Procedure dictate form, timing, and discovery processes (U.S. Tax Court).

Pros and cons of taking your case to Tax Court

Pros:

• You can litigate without paying the disputed tax first (protects cash flow).
• A neutral federal forum with experience in tax law.
• Potential for a published decision that may help other taxpayers with similar issues.

Cons:

• Litigation can be slow—cases often take months or years to resolve.
• Attorney and expert costs can be significant.
• The burden of proof often rests with the taxpayer; even where it shifts (IRC §7491), strict documentation and cooperation requirements apply.
• Risk that an unfavorable Tax Court decision can be appealed to the U.S. Court of Appeals.

Evidence, burden of proof, and strategy

• Burden of proof: Generally, a taxpayer must prove that the IRS’s determination is incorrect. However, IRC §7491 provides for burden-shifting in certain circumstances (the taxpayer must introduce credible evidence and meet substantiation and cooperation requirements). Discuss strategy with counsel early, because the ability to shift the burden can hinge on pretrial steps and thorough documentation (see IRS guidance and Tax Court cases).
• Expert witnesses: For complex valuation or business disputes, properly qualified expert testimony can be decisive; consult the Tax Court’s rules on expert disclosure (see our related piece on “Using Expert Witnesses in Tax Court Appeals”).

Common mistakes that jeopardize a case

• Missing the filing deadline. This is the most common and most unforgiving error.
• Filing without adequate documentation or a clear legal theory.
• Attempting to litigate a case better resolved administratively through Appeals.
• Choosing Small Tax Case without understanding that the decision will not be binding precedent and may be final.

What happens after filing: timeline and outcomes

• Case starts with the Clerk’s filing and service.
• Preliminary conference and pretrial orders are common; parties exchange pleadings and evidence.
• Settlement discussions may continue up to and during trial; many cases settle before trial.
• A trial may be held in person or by telephone (Tax Court offers remote procedures); the judge issues a decision after taking evidence and briefs.
• If the judge issues a decision adverse to the taxpayer, appeals typically go to the U.S. Court of Appeals for the taxpayer’s federal circuit.

FAQs (brief answers)

• What if I miss the 90-day deadline? Missing it generally eliminates Tax Court jurisdiction over that notice; you lose that forum but may still be able to pay the tax and sue for refund in U.S. District Court or the Court of Federal Claims after paying the tax.
• Can I represent myself? Yes. Many taxpayers do. But the Tax Court’s procedures and evidentiary rules are technical; professional representation often improves outcomes.
• Is there a filing fee? Check the Tax Court’s current filing and electronic-filing rules; fee policies can change. Do not rely on an outdated fee amount.

Practical checklist before deciding to sue

• Confirm the exact deadline on the notice.
• Exhaust or attempt to resolve the issue with IRS Appeals (if appropriate).
• Assemble primary records and any expert reports.
• Decide whether an S case is appropriate and acceptable given the finality and limits.
• Consult a tax attorney or experienced tax professional for case evaluation and estimated costs.

Useful authoritative resources

• U.S. Tax Court — official site and filing information: https://www.ustaxcourt.gov
• IRS Appeals process and Collection Due Process guidance: https://www.irs.gov/appeals
• Taxpayer Advocate Service — independent help for taxpayers: https://taxpayeradvocate.irs.gov

For site-specific how-to steps, see our guides: How to Petition the U.S. Tax Court (https://finhelp.io/glossary/how-to-petition-the-u-s-tax-court/), The Small Tax Case Division of the Tax Court (https://finhelp.io/glossary/the-small-tax-case-division-of-the-tax-court/), and Tax Court vs Appeals Office: Where to Take Your Dispute (https://finhelp.io/glossary/tax-court-vs-appeals-office-where-to-take-your-dispute/).

Final tips from my practice

In 15+ years advising taxpayers I’ve seen strong, organized files change outcomes. If you receive a notice of deficiency, act quickly: calendar the deadline immediately, assemble your evidence, and consider Appeals before filing if settlement is realistic. If you do litigate, focus early on whether you can meet the documentation and cooperation tests to shift the burden of proof—this often changes case strategy and settlement posture.

Disclaimer

This article is for educational purposes only and does not constitute legal or tax advice. Tax rules and procedures change; consult a qualified tax attorney or enrolled agent about your specific case.