The United States Tax Court is a sixteen (16) judge court headed by a Chief Judge. Members are appointed by the President of the United States with the consent of the Senate for 15 year terms. Most of the judges have had extensive backgrounds in taxation, including legal expertise in taxation and other governmental agencies or departments.
The principal office of the Tax Court is in Washington D.C. However, the Tax Court may sit in any city and in practice cases are heard by a single judge in 104 cities throughout the United States.
The jurisdiction of the Tax Court is invoked by a Petition filed by the Taxpayer for a re-determination of a proposed tax deficiency assessed by the Commissioner.
The Taxpayer is always the Petitioner and the Commissioner is always the Respondent.
A statutory notice of deficiency [90 day letter], which is issued by the Commissioner, is critical to the jurisdiction of the Tax Court. Without it, the Tax Court lacks the power to act. Deficiency, in turn is dependent upon non-payment.
A Petition must be filed by the Taxpayer within 90 days after the date of a registered or certified mailing of a deficiency notice and within 150 days if the deficiency notice is addressed to a person residing outside of the United States.
The conduct of a United States Tax Court trial is similar to that of other United States Courts without a jury. The Taxpayer, who has the burden of proof, opens first and closes last, and the order of procedure is usually as follows:
The rest of the proceeding may be concluded with a closing argument by the Commissioner followed by a closing argument by the Petitioner. However, since the rules call for written briefs to be filled within 45 days and reply for briefs within 30 days thereafter, these briefs normally serve as closing statements for both parties.
Since the Tax Court case consists of an action for re-determination of a deficiency, it is a trial de novo. The Taxpayer has the burden to establish by a preponderance of evidence that the deficiency in question is incorrect.
Stated differently, the Commissioner’s determination of a deficiency is presumed to be correct.
Thus, if the Taxpayer is unable to provide the facts needed, he is not excused and his case will fail.
On the other hand, once evidence is introduced in support of the Taxpayer’s proof, a presumption of correctness of the deficiency will no longer control and it will not be given evidentiary value. Further, the Taxpayer’s burden of proof is limited to showing that the deficiency was erroneous and it does not require him to show the correct amount of tax liability.
At the conclusion of the Tax Court’s determination of issues in a case, the computation of the correct amount of deficiency or over payment may be required.
A Tax Court decision is rendered in the form of a division report by the judge who heard the case. Within 30 days of the issuance of a division report, the chief judge can order a review of the report by the entire Tax Court. If such an order is issued a final decision will then be rendered by majority vote of the entire court; if a division report is not reviewed it then constitutes a final decision.