When you have worked through available avenues of dispute resolution and still cannot resolve a tax dispute with the IRS, you have options for your next steps, including the U.S. Tax Court or the U.S. District Court. Although most parties wish to resolve tax differences short of litigation, some cases require their day in court.
The choice between the U.S. Tax Court and a U.S. District Court often depends on the facts of the dispute, procedural considerations, and the taxpayer's objectives.
The only matters heard before the U.S. Tax Court involve federal tax disputes. One of the most significant features of matters taken before the U.S. Tax Court is that taxpayers generally do not have to pay the disputed tax liability before filing a petition. This is a critical benefit for many taxpayers who are facing a significant assessment or tax liability of any type.
When fully staffed, there are 19 judges with 15-year terms appointed by the President and confirmed by the Senate to hear tax matters at the U.S. Tax Court in Washington, D.C., and in cities around the country. Many U.S. Tax Court judges have been tax attorneys in private practice or have specialized tax experience working in government service, with the IRS, the U.S. Treasury, or another agency.
Matters brought before the U.S. Tax Court are decided by the judge in a bench trial. Jury trials are not available in a U.S. Tax Court setting.
U.S. District Courts handle a wide variety of federal claims of both a civil and criminal nature. Tax cases brought before the U.S. District Court are initiated after the at-issue tax has been paid. Given that the money has already been paid, the litigation is an attempt to obtain a refund. For taxpayers with sufficient liquidity, this might not prove a barrier.
Judges who hear U.S. District Court cases are appointed by the President, confirmed by the Senate, and are experienced attorneys who generally serve lifetime terms. There are 94 federal judicial districts in the United States.
A taxpayer involved in a federal tax dispute who chooses a U.S. District Court setting can request trial by jury.
Depending on the nature of the tax controversy, there are pros and cons to choosing either of these venues. The appropriate venue depends on the facts of the dispute, the amount at issue, procedural considerations, and the taxpayer's overall objectives.
If you are involved in a disputed tax issue, speak with an experienced tax lawyer for careful review of the controversy, your goals, and a well-examined decision on the best avenue of approach for your legal issue.
Robert J. Fedor, LLC has years of success serving clients internationally on matters involving tax compliance, offshore tax issues, criminal tax allegations, and other tax-related issues. When the IRS comes to call, contact our firm at 440-250-9709. From offices in Chicago and Cleveland, we deliver strong legal representation and service to obtain the best possible outcome for the circumstances of your situation.
Looking for the basics on common tax law questions? Get the information you need to understand when to call for legal help by downloading our guide, Since You Asked: 15 Common and Concerning Tax Law Questions & Answers.