Courts that hear tax disputes
A federal tax dispute can usually reach one of three trial courts. The US Tax Court hears cases without requiring you to pay the disputed tax first, as long as a petition is filed on time after a notice of deficiency. Federal district courts and the Court of Federal Claims hear refund suits, which generally require paying the tax and filing a refund claim first. Appeals from the Tax Court and district courts go to the regional federal courts of appeals, and the Tax Court generally follows the precedent of the circuit where an appeal would go. A rule settled in one circuit may therefore not apply to a taxpayer in another.
How precedent shifts
Tax law changes through court decisions as well as through Congress. The Supreme Court has ended the practice of courts deferring to agency interpretations of ambiguous statutes, and challenges to Treasury regulations and IRS procedures have become more common as a result. Courts have also set aside some IRS notices for skipping required public comment procedures. Because these changes are continuing, a position that seemed settled a few years ago may now be open, and the reverse can also be true. State tax law has its own body of decisions from state tribunals and courts, which does not always follow federal reasoning.
Using case law in your matter
Case law matters long before a trial. It shapes how strong a position looks during an audit, what Appeals officers weigh as litigation hazards, and whether settling or litigating makes more sense. In a first review, we look at the issue, the authorities on each side, the court where your case would likely be heard, and the facts that make your situation similar to or different from decided cases. Facts often matter as much as law, since many tax cases turn on records and credibility. We then explain the options, including which forum would be available and what each one requires.
