United States Tax Court - Jurisdiction of The Tax Court

Jurisdiction of The Tax Court

The Tax Court provides a judicial forum in which affected persons can dispute tax deficiencies determined by the Commissioner of Internal Revenue prior to payment of the disputed amounts. The jurisdiction of the Tax Court includes, but is not limited to the authority to hear:

1. tax disputes concerning notices of deficiency
2. notices of transferee liability
3. certain types of declaratory judgment
4. readjustment and adjustment of partnership items
5. review of the failure to abate interest
6. administrative costs
7. worker classification
8. relief from joint and several liability on a joint return
9. review of certain collection actions

Congress amended the Internal Revenue Code, now codified in Internal Revenue Code section 7482, providing that decisions of the Tax Court may be reviewed by the applicable geographical United States Court of Appeals other than the Court of Appeals for the Federal Circuit. (See Article I and Article III tribunals).

"Small Tax Cases" are conducted under Internal Revenue Code section 7463, and generally involve only amounts in controversy of $50,000 or less for any one tax year. The "Small Tax Case" procedure is available "at the option of the taxpayer." These cases are neither appealable nor precedential.

At times there have been efforts in the Congress and the Tax Bar to create a single national Court of Appeals for tax cases (or make Tax Court decisions appealable to a single existing Court of Appeals), to maintain uniformity in the application of the nation's tax laws (the very reason underlying the creation of the Tax Court and the grant of national jurisdiction to the Tax Court), but efforts to avoid "hometown results" or inconsistent results due to a lack of expertise have failed.

An important reason for the movements to create a single national Court of Appeals for tax cases is that the United States Tax Court does not have exclusive jurisdiction over tax cases. In addition to the Tax Court, federal tax matters can be heard and decided in three other categories of courts: U.S. District Courts, the Court of Federal Claims, and the Bankruptcy Court. In the first two instances, the taxpayer bringing the claim generally must have first paid the deficiency determined by the IRS. For the Bankruptcy Court, the tax matter must, of course, arise as an issue in a bankruptcy proceeding. Bankruptcy Court appeals are initially to the U.S. District Court. Appeals beyond the U.S. District Courts and the Court of Federal Claims follow the same path as those from the U.S. Tax Court as described above.

With this number of courts involved in making legal determinations on federal tax matters including all 13 United States Courts of Appeals exercising appellate jurisdiction (the 11 numbered Circuits, the Federal Circuit (for appeals from the U.S. Court of Federal Claims), and the D.C. Circuit), some observers express concern that the tax laws can be interpreted differently for like cases. Thus arises the movement on the part of some for a U.S. Court of Federal Tax Appeals, though the merits of this are a matter of much discussion.