An Overview of U.S. Tax Court Representation

The tax collection process is confusing. One reason is the complexity of the U.S. Tax Code. Another is the due process protections required by the Constitution. These include requirements such as letters and notices, as well as the right to appeal certain tax disputes with the IRS.

One of the biggest due process protections is the right to petition the U.S. Tax Court. While this is something you could do on your own, it’s highly advisable to hire an IRS tax attorney to help. This article discusses why you probably don’t want to represent yourself in the U.S. Tax Court. But before we get to that, let’s examine why you might want to consider going to the U.S. Tax Court and how you get there.

Key Takeaways

• The U.S. Tax Court resolves tax disputes between taxpayers and the IRS.
• You’ll usually petition the U.S. Tax Court after the IRS sends you a notice of deficiency, a notice of determination, or a notice of certification that you disagree with.
• You can also bring legal tax challenges to other federal courts, but you’ll have to fully pay the disputed tax first.
• The U.S. Tax Court process is slightly simpler and more streamlined than other federal courts, but it’s still a good idea to hire a tax attorney to represent you.
• Benefits that come from hiring a tax attorney include attorney-client privilege, reduced risk of self-incrimination, having a tax professional who understands the rules and procedures of the U.S. Tax Court, and the increased chance of a better outcome during settlement negotiations.

What Is the U.S. Tax Court?

Created by Congress, the U.S. Tax Court is an Article I tribunal that exists to resolve legal disputes between the IRS and taxpayers. Most cases before the U.S. Tax Court are the result of a taxpayer challenging one or more IRS determinations.

The United States Tax Court is part of the Federal trial court system, but it’s not an Article III tribunal like District Courts, Courts of Appeals, and the United States Supreme Court. Despite this, it’s a court of record and is independent from other government entities, including the IRS.

Why Petition the U.S. Tax Court?

Besides challenging the IRS, filing a timely petition to the U.S. Tax Court offers several benefits. First, it stops the IRS collection actions (like levies). Generally speaking, once you file a petition to the U.S. Tax Court, the IRS cannot assess or collect the tax that’s subject to your petition.

Second, you don’t have to pay the tax in question in full before filing the petition. There are other federal courts, including the U.S. District Court and the U.S. Court of Federal Claims where you could challenge a tax the IRS is trying to collect from you. However, before you can bring an action in either of those courts, you must first pay the amount due.

If you wanted to litigate your tax case outside the U.S. Tax Court, what would likely happen is that you pay your tax bill in full to the IRS. Then you ask the IRS to refund you. After the IRS rejects your request, you can file your lawsuit in the U.S. District Court or the U.S. Court of Federal Claims.

Third, it’s usually cheaper to file a petition in the U.S. Tax Court compared to the U.S. District Court or the U.S. Court of Federal Claims. For example, the U.S. Tax Court petition has a $60 filing fee while the filing fee for a complaint in the U.S. District Court is upwards of $400.

Finally, the litigation process for the U.S. Tax Court is a little bit easier for pro se litigants (taxpayers who are bringing their case without the help of an attorney) because the litigation rules are a bit more relaxed. Yet given the time and effort required to bring a case to the U.S. Tax Court and the money that’s likely at stake, it’s still recommended you hire an attorney to represent you (more on this later).

When to File a U.S. Tax Court Petition

You’ll start the legal proceeding by filing a petition. A petition is a special court form you fill out that provides information about your case, including your reasons for bringing it. The right to petition the U.S. Tax Court typically arises when:

• The IRS sends you a Notice of Deficiency;
• The IRS sends you a Notice of Determination;
• The IRS sends you a Notice of Certification; or
• You have requested innocent spouse relief, but six months have passed and the IRS hasn’t sent you a determination letter.

If you’re like most taxpayers thinking about going to the U.S. Tax Court, the IRS has most likely refused to allow you to use one or more tax credits, deductions, or exemptions or has charged you penalties or interest that you disagree with.

If you decide to file a petition, you must do so before the applicable deadline. Depending on your tax case, you’ll likely have:

• 30 days from the mailing of the notice of determination (in a collection action).
• 90 days from the mailing of the notice of deficiency.
• 150 days from the mailing of the notice of deficiency if the notice is sent to an address outside the United States.

The IRS should tell you how much time you have to file a petition in the notice they send you. In this notice, you’ll either find the number of days you have from the date of mailing or the last date you can file your petition. It’s critical you don’t miss this deadline, as the U.S. Tax Court will almost always reject a late petition and won’t grant extensions. If you miss the petition filing deadline, our only other potential court-based option will typically be litigating in the U.S. District Court or U.S. Court of Federal Claims.

How to File a U.S. Tax Court Petition

You can file your petition by mail, in person, or electronically using the DAWSON system. In addition to the petition, you’ll need to pay the $60 filing fee, although the U.S. Tax Court may agree to waive this fee if you can’t afford it.

One of the biggest decisions you’ll need to make when filing your petition is whether to request the small tax case procedure (S Case Status). This option is available if your tax dispute involves $50,000 or less and you wish to have a faster and more streamlined litigation process. But beware of its major drawback: if you disagree with the U.S. Tax Court’s decision, you can’t appeal it.

Attorney U.S Tax Court Representation

As mentioned earlier, you aren’t required to hire an attorney to represent you. That being said, you may choose to have anyone represent you as long as they’ve been admitted to practice before the U.S. Tax Court. This often includes attorneys, but non-attorneys may also do so if they’ve completed an application and passed a written exam – non-attorneys who practice in front of the Tax Court are called U.S. Tax Court Practitioners.

One of the biggest questions is whether you should hire an attorney to represent you before the U.S. Tax Court. The short answer is that it depends, but it’s usually a good idea. There are several reasons as to why.

First, the rules and procedures of the U.S. Tax Court are extensive and it takes U.S. Tax Court litigation experience to understand them well and best use them to your advantage. It’s not uncommon for an attorney with no U.S. Tax Court experience to refer their client to an experienced tax attorney when the case involves tax disputes that couldn’t be resolved by the IRS administrative process.

Second, having someone else speak for you before the judge will help avoid self-incrimination. There might be an admission you tell the court without realizing it. Or the judge or opposing counsel might ask you a question you don’t have to answer.

Third, it can save you money. Even though most tax professionals admitted to practice before the U.S. Tax Court charge a fee for their services (although there are tax clinics and pro bono programs that offer representation and legal advice for free), their fees can often be offset by the benefits they can provide.

A great example of this is negotiating a settlement. U.S. Tax Court is like the majority of other courts across the country in that most cases don’t go to trial and instead settle. These aren’t easy settlement negotiations to enter into, as your case most likely already went through an extensive IRS administrative dispute process that you already lost. You’ll need to know the prior U.S. Tax Court cases and have an intimate understanding of the IRS regulations and tax code statutes to best present your position and obtain the most beneficial outcome from the settlement.

Fourth, it can save time. Even if a judge or opposing counsel is willing to let you fix a mistake you make in court, during discovery, or with your pleadings, it’ll take additional time to do so. For instance, imagine you showed up to a court hearing but didn’t prepare or file a motion correctly. The judge might let you refile the motion, but this will require the judge to reschedule the hearing. Now you have to not only redo the motion but also come back to court to argue it at a later date.

Non-Attorney U.S. Tax Court Representation

There are many benefits to hiring a tax attorney to represent you before the U.S. Court. But what about using a non-attorney? That can be an option too, and will usually put you in a better position than if you handled your case by yourself. But there are a few important things to keep in mind.

One of the reasons you might be thinking about hiring a U.S. Tax Court-admitted enrolled agent (EA) or certified public accountant (CPA) is that they’ll charge you less. This isn’t always true, as some EAs and CPAs charge a comparable fee to tax lawyers, depending on the complexity of your case.

Another consideration is that this non-attorney tax professional may not have the same level of experience handling tax cases. If you’re getting free legal representation from a tax clinic, a law student is likely the primary person handling your case. They’ll normally be supervised by a licensed attorney, but there won’t be the same level of attention that you can get if you hire a tax attorney to handle your case.

Then there’s the fact that you’ll enjoy more privileges and rights by hiring an attorney. The most notable is the attorney-client privilege, where your communications with your attorney are confidential. There are exceptions to this privilege, and you’ll enjoy confidentiality protections with a CPA or EA. However, there will be fewer protections with an EA or CPA and these protections will be far easier for a judge or opposing counsel to overcome compared to the attorney-client privilege.

Alternative to Petitioning the U.S. Tax Court

If your case requires review by the U.S. Tax Court, your primary alternative will be filing a lawsuit in the U.S. District Court or the U.S. Court of Federal Claims. But remember that to do this, you’ll first have to pay the disputed tax bill in full.

In some cases, you may have some administrative remedies still available. One of the biggest could be an IRS appeal with the IRS Independent Office of Appeals.

Thinking About Petitioning the U.S. Tax Court?

If so, your best bet will likely come with hiring a tax attorney to handle your case, like Timothy S. Hart of the Timothy S. Hart Law Group. Mr. Hart has years of experience handling a wide array of tax disputes, including those that end up in the U.S. Tax Court. To find out more about how he can help, 518-213-3445 or 917-382-5142 or use the online contact form.