The United States Tax Court is a specialized federal court that handles most tax disputes. It focuses on tax matters and has judges experienced in complex international issues.
Here, you do not have to pay the tax before filing. IRS collections are paused while the case is pending, although interest and penalties may continue.
In a U.S. Tax Court, Litigation begins when the taxpayer files a Petition against the notice of deficiency. A notice of deficiency is a formal legal notice from the IRS stating that they have determined you owe additional taxes (a “deficiency”), plus any penalties and interest.
A petition before the U.S. Tax Court is filed generally within 90 days of a statutory notice of deficiency or 150 days if the notice was addressed outside the United States. The Petition identifies the adjustments in dispute and the grounds for challenge. The IRS responds with an Answer that admits, denies, or asserts additional matters.
After the petition, the IRS files an Answer admitting/denying the allegations or raising new issues. This starts the formal litigation phase, which may involve discovery, motions, settlement talks, or trial before a Tax Court judge.
Next, let’s understand how a case is initiated before the U.S. District Court.