United States Tax Court
Congress created the United States Tax Court to specialize in tax matters. The U.S. Tax Court is a lesser court than the Supreme Court and is aided by the IRS.
Taxpayers have the option to bring their tax disputes to other courts but only in the U.S. Tax Court can they litigate without first paying the disputed tax amount. If the party files a claim with the U.S. District Court or U.S. Court of Federal Claims they must pay the tax in full before appearing. The litigant then must file a lawsuit to have the taxes refunded.
Due to increased complexity in the tax litigation in 1924, Congress created the first tax court called the U.S. Board of Appeals. Instead of justices, the board was made up of sixteen “members” who then appointed a chief member to be the chairman.
Formerly housed in the Internal Revenue Services building, the U.S. Board of Appeals was an independent agency connected to the executive branch, not the judicial branch of government.
In 1942 Congress reviewed the structure and with the Revenue Act of 1942, decided to change the name to the Tax Court of the United States, the members to judges and the chairman to the presiding judge.
Congress also decided that the new agency needed a building of their own and that it be independent of the executive branch. The President, however, can still remove a judge from this court.
Due to the war, plans for a new building were delayed until 1972. The agency was again renamed to its current moniker of the United States Tax Court and moved into their newly constructed building in 1974.
The mission of the U.S. Tax Court is to hear tax disputes from people nationwide. Some of the types of cases, which appear in this court are:
- Tax disputes concerning notices of deficiency
- Notices of transferee liability
- Readjustment and adjustment of partnership items
- Review of the failure to abate interest
- Relief from joint and several liabilities on a joint return
- Review of certain collection actions
Judges who preside over the U.S. Tax Court serve a 15-year term and are overseen by the President who can remove a judge for “inefficiency, neglect of their duties or malfeasance.” The court is comprised of 19 judges.
Life Cycle of a Tax Court Case
A petitioner must file their claim with the Tax Court as soon as possible. They must name the “respondent” (the defendant in district cases) the “Commissioner of Internal Revenue.” The Internal Revenue Service, the Secretary of Treasury and the Department of Treasury cannot be named the respondent in these cases.
The petitioner will file, then pay a $60 fee. Their tax liability is postponed during the trial process.
Each trial is scheduled as quickly as possible and proceeds with one judge and no jury. A Taxpayer may act as their own attorney if they want. Most cases, however, are agreed upon without the need for a trial.