How Tax Court Works: The Process from Petition to Decision
By Luke Ryan | November 2025
The United States Tax Court is the primary judicial forum for contesting IRS tax assessments before paying the disputed amount. Unlike federal district courts or the Court of Federal Claims—which require taxpayers to pay the tax first and then sue for a refund—the Tax Court allows individuals and businesses to litigate their cases without prepaying. This "pay later" feature makes the Tax Court accessible to taxpayers who cannot afford to pay contested liabilities upfront while pursuing their legal remedies. Understanding how the Tax Court process works is essential for anyone facing a Notice of Deficiency or considering whether to challenge an IRS determination.
I. What Is the Tax Court?
The United States Tax Court is a federal trial court established by Congress under Article I of the Constitution. It specializes in adjudicating disputes over federal income tax, estate tax, gift tax, and certain excise taxes. The Court is composed of 19 presidentially appointed judges who serve 15-year terms, and it maintains its principal office in Washington, D.C., though judges travel to conduct trials in cities across the country.
In FY 2024, the Tax Court issued 234 opinions (205 in regular cases and 29 in small cases) and handled thousands of petitions. The Court operates under its own Rules of Practice and Procedure, which differ from the Federal Rules of Civil Procedure that govern other federal courts.
A recent Supreme Court decision in Commissioner v. Zuch, 605 U.S. ___ (2025), addressed the scope of Tax Court jurisdiction in Collection Due Process cases, reaffirming that the Court's authority is defined by statute and must be carefully observed. The case underscored that when the IRS withdraws a proposed collection action during litigation, the Tax Court may lose jurisdiction over the matter—a reminder that taxpayers must understand both the opportunities and limitations of Tax Court proceedings.
II. Jurisdiction: When the Tax Court Can Hear Your Case
The Tax Court has jurisdiction over several types of disputes, but by far the most common are deficiency cases—disputes over whether a taxpayer owes additional tax beyond what was reported on a return.
a. Deficiency Cases
When the IRS proposes to assess additional tax, it must first issue a statutory Notice of Deficiency (commonly called a "90-day letter" or "ticket to Tax Court"). This notice explains the proposed adjustments and gives the taxpayer 90 days (150 days if the notice is addressed to someone outside the United States) to file a petition with the Tax Court.
The 90-day deadline is jurisdictional and strictly enforced. If a taxpayer misses the deadline, the Tax Court cannot hear the case, and the IRS will assess the tax and begin collection. The Supreme Court has held that the Tax Court lacks authority to extend or equitably toll this deadline, even in extraordinary circumstances such as incapacitation due to illness. Filing a petition is the only way to preserve the right to contest the deficiency in Tax Court before payment.
b. Collection Due Process (CDP) Cases
The Tax Court also has jurisdiction to review IRS determinations in Collection Due Process hearings. These cases arise when the IRS proposes to levy on a taxpayer's property or file a Notice of Federal Tax Lien, and the taxpayer requests an administrative hearing. If the Appeals Officer issues a Notice of Determination sustaining the collection action, the taxpayer has 30 days to petition the Tax Court for review.
CDP jurisdiction is more limited than deficiency jurisdiction. As Zuch clarified, the Tax Court's authority in CDP cases is tied to the existence of an ongoing collection action. If the IRS withdraws the levy or lien during litigation, the Court may lose jurisdiction.
c. Other Types of Cases
The Tax Court also hears innocent spouse relief cases, whistleblower award disputes, partnership audits under the centralized partnership audit regime, and certain worker classification disputes. Each type of case has its own procedural rules and jurisdictional requirements.
III. Filing the Petition
The Tax Court process begins when the taxpayer files a petition. The petition must be filed within the statutory deadline and must include:
The taxpayer's name, address, and taxpayer identification number
The date and symbols from the Notice of Deficiency
A clear statement of each error the taxpayer alleges the IRS made
Facts supporting the taxpayer's position
The amount of the deficiency in dispute
Petitions can be filed by mail or electronically through the Tax Court's DAWSON electronic filing system. There is a $60 filing fee. The petition does not need to be drafted by an attorney, and many taxpayers represent themselves (known as appearing "pro se").
Once the petition is filed, the IRS receives a copy and has 60 days to file an Answer admitting or denying the allegations in the petition.
IV. Small Tax Case Procedure
For cases involving $50,000 or less per tax year, taxpayers can elect to proceed under the Tax Court's simplified "small tax case" (S case) procedures. Small cases are heard more quickly, with relaxed rules of evidence and procedure. The downside is that decisions in small cases cannot be appealed—they are final.
Small case procedures are particularly useful for pro se taxpayers or those with straightforward disputes who want a faster, less formal resolution.
V. Discovery
After the petition and answer are filed, the case enters the discovery phase, during which both parties exchange information and documents. Tax Court discovery is more limited than in other federal courts.
a. Stipulations
The parties are required to stipulate (agree in writing) to facts that are not in dispute. Stipulations streamline the trial by eliminating the need to prove uncontested facts. Judges expect parties to stipulate liberally, and failure to do so can result in sanctions.
b. Document Production
Parties can request documents from each other, and the Tax Court can compel production if a party refuses. However, unlike in district court, the Tax Court does not allow third-party subpoenas for documents before trial or deposition. This limitation sometimes requires creative approaches to obtaining evidence from banks, employers, or other third parties.
c. Depositions
Depositions are allowed but are less common in Tax Court than in other litigation. They must be noticed in advance and are typically used to preserve testimony from witnesses who may be unavailable at trial.
VI. Settlement Discussions
The vast majority of Tax Court cases settle before trial. According to data from the National Taxpayer Advocate, approximately 80 percent of Tax Court cases are resolved through settlement, and only 1 to 2 percent proceed to trial. The remaining cases are dismissed, often because the taxpayer failed to prosecute or the parties reached an informal resolution.
a. Appeals Settlement
After a petition is filed, the case is typically assigned to an IRS Appeals Officer, who has settlement authority. Appeals Officers are independent of the IRS examination function and are tasked with resolving cases based on the "hazards of litigation"—the likelihood that the IRS would prevail if the case went to trial.
Settlement negotiations with Appeals are often the best opportunity to resolve a case favorably without the expense and risk of trial. Appeals Officers can compromise on factual disputes, legal uncertainties, and even concede issues where the IRS's position is weak.
b. Counsel Settlement
If the case is not resolved at Appeals, it is assigned to an IRS attorney from the Office of Chief Counsel. Counsel attorneys also have settlement authority, though they may take a more litigious approach than Appeals Officers. Settlement discussions with Counsel typically occur closer to the trial date.
VII. Pre-Trial Procedures
As the trial date approaches, the parties must complete several procedural steps.
a. Status Reports
The Tax Court requires the parties to file periodic status reports indicating whether the case is likely to settle, whether discovery is complete, and whether the case is ready for trial.
b. Trial Memoranda
Shortly before trial, the parties file trial memoranda summarizing the facts, issues, and legal arguments. These documents help the judge prepare for trial and understand each party's position.
c. Pre-Trial Motions
Either party can file motions before trial, such as motions for summary judgment (arguing that there are no disputed facts and the party is entitled to judgment as a matter of law) or motions to compel discovery. Motions are decided by the assigned judge based on written briefs and, sometimes, oral argument.
VIII. Trial
Tax Court trials are bench trials, meaning they are decided by a judge without a jury. Trials are held in cities across the country on the Tax Court's "calendar," which assigns cases to specific trial sessions based on geographic location.
a. Rules of Evidence
The Tax Court follows the Federal Rules of Evidence, though trials tend to be less formal than in other federal courts. Judges often allow some flexibility in the presentation of evidence, particularly for pro se taxpayers.
b. Burden of Proof
The taxpayer generally bears the burden of proof in Tax Court, meaning the taxpayer must prove that the IRS's determination is incorrect. However, the burden shifts to the IRS in certain circumstances, such as when the IRS failed to comply with procedural requirements or when the taxpayer has substantiated their position and cooperated with the examination.
c. Witness Testimony
Both parties present witnesses, who testify under oath and are subject to cross-examination. Witnesses can include the taxpayer, IRS revenue agents, expert witnesses, and third parties with relevant knowledge.
d. Exhibits
Documentary evidence is introduced through exhibits, which must be authenticated and admitted into evidence. Exhibits can include tax returns, bank statements, receipts, contracts, correspondence, and expert reports.
IX. Post-Trial Briefs
After trial, the parties typically file post-trial briefs summarizing the evidence, analyzing the applicable law, and arguing why the judge should rule in their favor. The IRS files its brief first, followed by the taxpayer's answering brief, and then the IRS's reply brief.
Post-trial briefing is critical. Judges often do not issue a decision for several months after trial, and the briefs are the last opportunity to persuade the court.
X. The Court's Decision
The judge issues a written opinion explaining the facts found, the law applied, and the decision reached. Opinions are typically issued within a year of trial.
Tax Court opinions fall into three categories:
Regular Opinions – Published decisions that address significant legal issues and create precedent
Memorandum Opinions – Unpublished decisions that apply established law to the facts of the case
Summary Opinions – Decisions in small tax cases, which are not precedential and cannot be appealed
If the taxpayer prevails, the IRS is barred from assessing the disputed tax. If the IRS prevails, the Court enters a decision, and the IRS can proceed with assessment and collection.
XI. Appeals
Either party can appeal an adverse Tax Court decision to the appropriate U.S. Court of Appeals. The taxpayer's appeal goes to the circuit court for the circuit in which they resided at the time the petition was filed. The IRS can appeal to any circuit where it believes it has a better chance of success, which sometimes leads to circuit splits on tax issues.
Appealing a Tax Court decision requires filing a notice of appeal within 90 days of the decision becoming final. The taxpayer must typically post a bond to prevent the IRS from collecting the tax during the appeal.
Small tax case decisions cannot be appealed.
XII. Settlement and Closure
If the parties settle at any point before or after trial, they file a stipulated decision with the Tax Court. Stipulated decisions are binding and end the litigation. Once a decision is entered—whether by settlement, trial, or appeal—the case is closed, and the IRS will either abate the proposed assessment or proceed with collection.
XIII. Conclusion
Tax Court litigation is a structured, procedural process that offers taxpayers a meaningful opportunity to contest IRS determinations without prepaying disputed taxes. While the Court's rules and procedures can be complex, the process is designed to be accessible, and many taxpayers successfully represent themselves or obtain representation through Low Income Taxpayer Clinics or pro bono programs.
Understanding how Tax Court works—from filing a petition to post-trial appeals—is essential for anyone facing a significant tax dispute. The majority of cases settle before trial, but for those that proceed to a decision, the Tax Court provides a fair forum in which both parties can present evidence and legal arguments before an independent judge. For taxpayers, the key is to act within the statutory deadlines, engage in discovery and settlement discussions in good faith, and be prepared to present a well-documented case if trial becomes necessary.
