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Tax Litigation


"A tax dispute always involves the same opposing party, the Internal Revenue Service. When an IRS issue cannot be resolved administratively, sometimes it is necessary to go to court."


Pretrial stipulations

Tax Court Requires litigant to submit to extensive pretrial stipulations. The parties are required to stipulate to the fullest extent to which complete or qualified agreement can or fairly should be reached, all non-privileged matters, or application of law to facts that are relevant to the proceedings.

Binding Effect of Pretrial Stipulations. Stipulations made are treated as a conclusive statement of admission by each party and it is considered binding on both parties. Once stipulations are made, no changes or contradictions can be made unless "as justice requires," as determined by the Tax Court.

The binding effect of the stipulations are limited to only binding as to the specific terms reached by the parties. If the terms are vague, ambiguous or subject to different interpretations, the court will construe the meaning of the terms based on the intent of the parties.

Pretrial conference

A pretrial conference is a meeting between the parties that is supervised by the court. In tax litigation, it is the responsibility of the parties to develop the case from pretrial through trial work. The Tax Court will undertake to confer with the parties in pretrial conference for the purpose to narrowing issues. The pretrial conference can provide an opportunity for the taxpayer to gain some strategies advantages over the IRS.

Conditions. A request or motion for pretrial conference shall include a statement containing the reasons for the request. The request or motion should include the subject matter of the underlying request. The Court will not grant a pretrial conference if the purpose of the request is due to frivolous reasons or is made for the purpose of delaying the proceedings.

Trial Preparation

When the trial date is set, the Tax Court issues a Standing Pretrial Order. This pretrial procedure is intended to secure a just, and speedy, trial. The Standing Pretrial Order has very specific instructions about getting ready for trial. One provisions of the Standing Pretrial Order require the parties to file a pretrial memorandum. A pretrial memorandum can be useful in organizing and preparing your case. It can also help the Court understand your position.

Evidence & Testimony. Because taxpayer’s tax liability is based on the taxpayer’s own activities, transactions, and expenditures, the evidence in many Tax Court trial consists of the Petitioner’s own testimony and documents. Where a third party’s documentation is needed, it can be obtained by informal requests. If a third party’s testimony is needed, it can be obtained by asking the person to appear in court. If the third party refuses to cooperate, then a subpoena may be issued to compel the person to appear at court.

Trial Preparation Check List:

  1. Think about what facts you want to tell the Judge.
  2. Organize any documents you have to support your case.
  3. Organize your facts and arguments so you can present your case clearly.
  4. Meet with and talk to people at the IRS who call or write to you.
  5. Provide to the IRS copies of documents that you intend to use at trial.
  6. Agree in writing to facts and documents that are not in dispute.
  7. If the IRS will not agree (stipulate) to your documents, bring three copies of each document to court.
  8. Consider whether you need any witnesses to support your case.
  9. If you need a witness, make sure the witness is available and present in the courtroom at the trial session.
  10. Come to court early so you will be ready when your case is called at the calendar call. You may receive a notice from the Court recommending that you arrive at Court by 9:00 a.m. to have the opportunity to meet with clinical and calendar call attorneys. The Court believes it would be in your interest to comply with this recommendation.

TAx Court Trial

At Trial, the trial clerk will call you case, and both your attorney and the IRS attorney will state their names. The Judge will take care of the preliminary matters such as filing of the stipulation of facts and pretrial memoranda. The Judge may allow each part to make an opening statement which is simply a statement of what party believes the facts of the case and law are and how the Judge should rule on the matter.

After opening statements are completed, the parties may present witnesses. The purposes of the witnesses is to provide relevant information to the Judge and allow the Judge to find facts from the evidence. Oftentimes, first, and sometimes the only, witness is the taxpayer. A taxpayer who is also a witness will take an oath or affirm to tell the truth and the taxpayer's side of the case. If you are represent by a tax attorney, the attorney will ask you questions, this is called direct examination.

After the witness concluded his or her testimony, the IRS attorney will have an opportunity to ask the witness questions, this is called cross-examination. The Court Judge may also ask questions or request clarification of evidence from both parties. After all of witnesses have testified and all documents have been submitted into evidence, the record will be closed and the trial will be over. Once the trial is over, no additional evidence may be submitted to the Court.

The Judge can only consider the evidence admitted into the record of your case which is why it is crucial to provide the Court with all of your documents not already included in a stipulations of facts.

Alternative Dispute Resolution

Arbitration. Parties may move that any factual issue in controversy be resolved through binding arbitration. The motion may be made before trial at any time after the case is at issue. Upon the filing of the motion, the chief judge will assign the case to a judge or special trial judge for disposition of the motion and supervision of any subsequent arbitration. The use of the procedure, in appropriate cases, can result in a more efficient use of judicial and Service resources and assist in reducing the Tax Court’s inventory. The Executive Order 12988 on Civil Justice Reform encourages the use of all alternative dispute resolution techniques (including binding arbitration where warranted) before utilizing any formal Court proceedings.

Mediation. The use of mediation, in appropriate cases, can result in a more efficient use of judicial and Service resources and assist in reducing the Tax Court’s inventory. Nevertheless, Counsel should not attempt to use mediation in lieu of established settlement procedures or when use of mediation would unduly delay discovery or trial. Instead, mediation should be utilized when other standard settlement procedures, such as Appeals consideration, have failed and when, in the opinion of the office, it is cost effective and otherwise appropriate.

United States Tax Court

The U.S. Tax Court is a federal trial court that specializes in adjudicating disputes over federal income tax. The Tax Court is the only forum in which taxpayers may litigate tax matter without first having to pay the disputed tax in full. Taxpayer may choose to litigate tax matter, outside of bankruptcy, in a variety of legal setting, by the disputed tax must first be paid in full.

The Tax Court provides a judicial forum in which taxpayers can dispute tax deficiencies determined by the IRS prior to paying the full disputed amount. The jurisdiction of the Tax Court includes, but not limited  to:

  1. Tax disputes concerning notice of deficiency
  2. Certain types of declaratory judgment
  3. review of the failure to abate interest
  4. Worker classification
  5. Notice of Transferee liability
  6. Readjustment and adjustment of partnership items
  7. Administrative costs.
  8. Relief from joint and several liability on a joint return
  9. Review of certain collection actions

United States federal district court

District Courts are called "Article III" courts because their judicial power is derived fro Article III of the Constitution. The U.S. District Courts are trial courts of the United States federal court system. There are 94 judicial district courts located throughout the nation. The District Courts have jurisdiction, in law, equity, and admiralty under the laws of the United States. The jurisdiction of the District Court include most tax cases.

Cases Heard Only in District Court:

  1. Actions to quiet title, foreclose, partition, condemn, or interpleader with respect to real property on which the United States claims a lien
  2. Wrongful levy actions
  3. Civil damages actions against United States for IRS failure to release lien or certain unauthorized collection actions
  4. Claims for refund of trust fund recovery penalty
  5. Summons enforcement actions filed by United States
  6. Quiet title actions filed by United States
  7. Action to enforce or discharge liens filed by United States
  8. Judicial approval of principal residence levy filed by United States
  9. Erroneous refund suit filed by United States
  10. Tax return preparer and tax shelter injunction suits filed by United States
  11. Summons enforcement actions
  12. Review of jeopardy levy or jeopardy assessment
  13. Civil disclosure damages actions