The trial stage in U.S. tax litigation is the formal bench trial where the case is heard before a judge in one of the three primary tax litigation forums. These forums are U.S. Tax Court, U.S. Court of Federal Claims and U.S. District Court.
The trial stage in U.S. tax litigation generally occurs after administrative exhaustion, where the parties are unable to reach a settlement. Thereby, the case proceeds to a hearing or trial before a judge of the forum in which it is presented. This involves a formal bench trial in one of the three primary forums.
This stage focuses on evidentiary presentation, witness examination, and expert testimony. It centres on legal arguments to determine whether the IRS’s position is correct or if the taxpayer’s claimed treatment is accurate.
During the trial, both sides have the right to the following:
After considering the evidence and arguments presented, the judge gives an opinion, followed by a formal ruling. In uncomplicated situations, the judge can give a verdict from the bench or a short summary opinion. In more complex matters, there may be a detailed written opinion that thoroughly clarifies the reasoning. The ruling indicates the final result, for example, the amount of tax and penalty, if any, that is owed for each disputed year.
Please note that the above discussion provides a general overview of the pre-trial stage for tax litigation cases in the United States.
Next, let’s understand the trial procedure in a U.S. Tax Court.