Tax Court

A specialized federal or state court that decides cases involving tax-related controversies.

All state governments and the federal government provide a means of adjudicating cases dealing with taxation. Tax courts deal solely with tax disputes, which may involve the valuation of real property, the amount of tax the state or federal revenue agency seeks to collect, or the tax status of a Pension plan or a charitable organization.

The U.S. Tax Court is organized under Article I of the U.S. Constitution (26 U.S.C.A. § 7441). Currently an independent judicial body in the legislative branch, the court was originally created as the U.S. Board of Tax Appeals, an independent agency in the Executive Branch, by the Revenue Act of 1924 (43 Stat. 336) and continued by the Revenue Act of 1926 (44 Stat. 105) and the internal revenue codes of 1939, 1954, and 1986. The court's name was changed to the Tax Court of the United States by the Revenue Act of 1942 (56 Stat. 957), and the Article I status and change in name to U.S. Tax Court were effected by the Tax Reform Act of 1969 (83 Stat. 730).

The court is composed of nineteen judges. Its strength is augmented by senior judges who may be recalled by the chief judge to perform further judicial duties and by fourteen special trial judges who are appointed by the chief judge and serve at the pleasure of the court. The chief judge is elected biennially from among the nineteen judges of the court.The Tax Court tries and adjudicates controversies involving deficiencies or overpayments in income, estate, gift, and generation-skipping transfer taxes in cases where deficiencies have been determined by the commissioner of Internal Revenue. It also hears cases started by transferees and fiduciaries who have been issued notices of liability by the commissioner.

The Tax Court has jurisdiction to redeter-mine excise taxes and penalties imposed on private foundations. It also has jurisdiction over excise taxes with regard to public charities, qualified pension plans, and real estate investment trusts.

At the option of the individual taxpayer, simplified procedures may be used for the trial of small tax cases. In a case conducted under these procedures, the decision of the court is final and is not subject to review by any court. The jurisdictional maximum for such cases is $10,000 for any disputed year.

In disputes relating to public inspection of written determinations by the Internal Revenue Service (IRS), the Tax Court has jurisdiction to restrain disclosure or to obtain additional disclosure of written determinations or background files.

The Tax Court also has jurisdiction to make declaratory judgments relating to the qualification of retirement plans, including pension, profit sharing, stock bonus, Annuity, and bond purchase plans; the tax-exempt status of a charitable organization, qualified charitable donee, private foundation, or private operating foundation; and the status of interest on certain government obligations. Under the Technical and Miscellaneous Revenue Act of 1988 (102 Stat. 3342), the Tax Court also has injunctive authority over certain assessment procedures, authority to review certain assessments and levies, and authority to hear and decide appeals by taxpayers concerning the denial of administrative costs by the IRS.

All decisions, other than those in small tax cases, are subject to review by the U.S. Courts of Appeals and thereafter by the U.S. Supreme Court upon the granting of a writ of certiorari.

The office of the court and all of its judges are located in Washington, D.C., with the exception of a field office located in Los Angeles, California. The court conducts trial sessions at various locations in the United States as convenient to taxpayers as is practicable. Each trial session is conducted by a single judge or a special trial judge. All proceedings are public and are conducted judicially in accordance with the court's rules of practice and the rules of evidence applicable in trials without a jury in the U.S. District Court for the District of Columbia. A fee of $60 is required for filing a petition. Practice before the court is limited to practitioners admitted under the court's rules.

State tax courts are generally part of the executive branch of government. These courts handle cases from taxpayers that are primarily concerned with the valuation of real and Personal Property.

Further readings

Berson, Susan A. 2001. Federal Tax Litigation. New York: Law Journal Press.

Casey, Laurence F. 1997. Federal Tax Practice: A Treatise of the Laws and Procedures Governing the Assessment and Litigation of Federal Tax Liabilities. St. Paul, Minn.: West Group.

Sharp, William M., William T. Harrison III, and Rachel A. Lunsford. 2002. "Settling IRS Examinations and Tax Court Cases." Tax Notes (July 8).

Shores, David F. 2002. "Deferential Review of Tax Court Decisions: Taking Institutional Choice Seriously." Tax Lawyer 55 (spring).

U.S. Government Manual Website. Available online at <www.gpoaccess.gov/gmanual> (accessed November 10, 2003).

tax court

n. a federal agency with courts in major cities which hear taxpayer's appeals from decisions of the Internal Revenue Service. Tax court hears the appeal "de novo," (as a trial rather than an appeal) and does not require payment of the amount claimed by the I.R.S. before hearing the case. Tax court decisions may be appealed to the Federal District Court of Appeals. (See: income tax)