Pre-Trial refers to the phase in U.S. federal tax litigation that occurs after the case is at issue but before trial begins. During this stage, the parties engage in settlement negotiations, discovery, stipulations, and pretrial conferences to resolve or narrow the disputed issues.
In many civil tax cases, the IRS dispute resolution process occurs at this stage, allowing a settlement without a full trial. In such instances, the settlement is recorded in a court decision.
All three courts, such as the U.S. Tax Court, U.S. District Court and the U.S. Court of Federal Claims have a “pre-trial” phase involving settlement talks and issue narrowing. However, the procedures, rules, and terminology on pre-trial differ significantly between these courts.
After the petition is filed, a period of pretrial activity begins, during which significant progress often occurs. For example, the U.S. Tax Court typically issues a Notice Setting Case for Trial along with a standing pretrial order. This order outlines the steps both parties must take before the trial date, including exchanging information, filing status reports, and preparing a list of undisputed facts.
During this time, the taxpayer and the IRS may negotiate a settlement, sometimes with assistance from IRS Appeals or an IRS attorney.
The parties utilize discovery tools to exchange documents, submit written questions, or request admissions regarding specific facts. They also make stipulations, which are written agreements concerning documents and facts that will not be contested at trial.
Next, let’s understand the pre-trial procedure in a U.S. Tax Court.