Disagreeing with the IRS does not always require paying the disputed tax before challenging it. In a deficiency case, U.S. Tax Court generally provides a way to contest a proposed deficiency before payment. But access to the Court depends on the type of dispute and the notice you received, and filing deadlines deserve immediate attention.
1. Identify the notice and the kind of case
A Statutory Notice of Deficiency commonly provides the basis for a petition challenging proposed additional tax. Tax Court also hears other types of cases, including review of certain collection determinations. An audit report, ordinary balance-due notice, or disagreement with the IRS is not necessarily enough to start a case. Determine which notice you have before assuming a procedure applies.
2. Protect the petition deadline
For a notice of deficiency, the general petition period is 90 days after the notice is mailed, or 150 days if the notice is addressed to a person outside the United States. Check the last date shown on your notice and the Court's instructions; special rules can affect the calculation. Other kinds of cases have different deadlines. Do not assume discussions with the IRS or a pending Appeals request extend the time to file.
3. File the petition properly
A petition identifies what you dispute and why. Follow the Court's current filing instructions, including permitted electronic or paper filing methods and any required documents. Protect Social Security numbers and other personal identifiers as directed by the Court. Filing a deficiency petition generally allows you to dispute that proposed deficiency before paying it; it does not erase the proposed tax or resolve unrelated liabilities.
4. Prepare records and consider settlement
After the case is filed, the IRS generally responds through its counsel. The parties prepare the issues and evidence, exchange information as required, and work on agreed facts. Some cases may be considered by IRS Appeals or resolved through settlement. Organize the records that support your position and comply with the Court's orders; settlement is possible, not guaranteed.
5. If the case goes to trial
An unresolved case may proceed to trial before a Tax Court judge. The parties present testimony and evidence, and the judge applies the law to the facts. Preparation can include identifying witnesses, organizing exhibits, and understanding who must prove each issue. The Court's small tax case procedure may be available for qualifying disputes, but choosing it has important consequences, including no appeal from the decision.
6. The decision and what follows
A case can end through settlement or a judicial decision. The result may determine tax and penalties, with interest and implementation handled under applicable rules. Appeal rights and deadlines depend on the procedure and the case. Collection review cases involve separate requirements and should not be treated as ordinary deficiency cases. Review the decision and any remaining obligations with counsel.
If you receive a notice that mentions Tax Court
- Keep the notice and envelope, and write down the mailing date and stated petition deadline.
- Do not wait for an IRS callback before seeking advice about filing.
- Gather the disputed returns, audit reports, correspondence, and supporting records.
- Use the Tax Court's official instructions and protect personal identifiers in filings.
- Discuss the consequences before electing the small tax case procedure.
Get help from someone who has seen it from the inside
Bernie McCarthy served as a trial attorney in the IRS Office of Chief Counsel and has litigated reported tax cases. McCarthy Tax Law, P.A., based in Melbourne Beach and representing taxpayers nationwide, can review your notice, evaluate the issues, and discuss representation in Tax Court. Learn more about our tax court litigation services.
More taxpayer guides
Official references
This article provides general information, not legal advice for your situation.