Tax Litigation & Tax Court Representation

Written by Sam Brotman, J.D., LL.M., MBA
Updated April 15, 2026  ·  ~10 min read

When Litigation Becomes the Only Path Forward

Tax litigation is the legal process of resolving a tax dispute in court when administrative remedies have been exhausted or the IRS has refused to negotiate a reasonable outcome. Unlike audit defense, where the goal is to control information and narrow the scope of an examination, litigation involves filing a formal petition, presenting evidence under the Federal Rules of Evidence or the Tax Court Rules of Practice and Procedure, and arguing your case before a judge.

Most tax disputes never reach court. The IRS Office of Appeals resolves the majority of contested cases through administrative settlement. But when the IRS issues a statutory notice of deficiency proposing additional tax you do not owe, when a Collections Due Process hearing is denied without a fair review, or when IRS Appeals offers a settlement that does not reflect the law or the facts — litigation becomes necessary. Not as a threat, but as the mechanism the tax code provides for taxpayers to challenge the government's position.

The distinction between tax litigation and audit defense is fundamental. Audit defense is administrative — you are working within the IRS itself, responding to an examiner who has the discretion to adjust or accept your position. Tax litigation is adversarial — you are in a courtroom, the IRS is represented by counsel from the Office of Chief Counsel or the Department of Justice Tax Division, and a judge applies the law to the facts. The burden of proof, the rules of discovery, and the consequences of procedural error are entirely different.

U.S. Tax Court: The Prepayment Forum

The United States Tax Court is the only federal court where a taxpayer can challenge an IRS determination without first paying the disputed tax. This makes it the most common forum for tax litigation, particularly for individuals and small businesses that cannot afford to pay the full amount before challenging it.

To invoke the Tax Court's jurisdiction, you must file a petition within 90 days of the date on the statutory notice of deficiency (also called a "90-day letter"). This deadline is jurisdictional — it cannot be extended, and missing it by even one day eliminates the Tax Court as an option. If you received a notice of deficiency, the clock is already running.

The Tax Court also has a Small Tax Case Division (the "S" cases) for disputes involving $50,000 or less per tax year. Proceedings in the small case division are less formal — simplified rules of evidence apply, and hearings are conducted by Special Trial Judges. The trade-off is that small case decisions cannot be appealed by either party.

For cases above the small case threshold, regular Tax Court proceedings follow a structured litigation timeline: a petition, an answer from IRS Chief Counsel, discovery (interrogatories, document requests, depositions), pre-trial memoranda, and trial. Cases are tried without a jury. The Tax Court holds trial sessions in cities across the country, including San Diego, which means you do not need to travel to Washington, D.C. to have your case heard.

Court of Federal Claims: The Post-Payment Forum

The United States Court of Federal Claims in Washington, D.C. hears tax refund cases after the taxpayer has paid the disputed amount in full and filed an administrative claim for refund with the IRS. Under the Flora full-payment rule, you must pay the entire assessed deficiency before the Court of Federal Claims will accept jurisdiction.

The Court of Federal Claims is often the right forum when the amount in dispute is large enough that a favorable ruling justifies the cost of full payment, or when the legal issue involves a question on which the Court of Federal Claims has established precedent more favorable than the Tax Court. Unlike the Tax Court, the Court of Federal Claims is not bound by the decisions of the U.S. Circuit Courts of Appeals — it applies its own body of precedent, which in some areas of tax law produces different outcomes.

Refund claims must be filed within two years of paying the tax or three years of filing the return, whichever is later. If the IRS denies the refund claim or fails to act within six months, you can file suit. Cases are tried before a single judge without a jury.

Federal District Court: The Jury Trial Option

Federal district courts also hear tax refund suits after full payment, but with one significant advantage: the right to a jury trial. In cases involving sympathetic facts — a struggling small business, a misguided but good-faith tax position, an overly aggressive IRS collection action — a jury can be a powerful forum. District court is also the only option if your case involves both tax and non-tax federal claims that should be heard together.

The procedural requirements mirror the Court of Federal Claims: full payment, an administrative refund claim, and either a denial or six months of IRS inaction. District court cases follow the Federal Rules of Civil Procedure, which are broader than Tax Court rules and allow for more extensive discovery.

Collections Due Process Hearings and Appeals

When the IRS files a Notice of Federal Tax Lien or issues a Final Notice of Intent to Levy, you have the right to request a Collections Due Process (CDP) hearing before the IRS Office of Appeals within 30 days. A CDP hearing allows you to challenge the underlying tax liability (if you have not previously had an opportunity to do so), propose alternative collection methods such as an installment agreement or offer in compromise, and argue that the IRS failed to follow proper collection procedures.

If the CDP hearing results in an unfavorable determination, you have 30 days to petition the Tax Court for judicial review. The Tax Court reviews CDP cases under an abuse-of-discretion standard for collection-related issues and de novo for underlying liability disputes. This is a critical safeguard — without it, the IRS could seize assets and garnish wages without any independent judicial review.

If criminal exposure is a concern, the litigation strategy must account for the risk that statements or positions taken in a civil proceeding could be used in a parallel criminal investigation. Coordinating civil litigation with potential criminal exposure requires careful sequencing that protects Fifth Amendment rights.

What Distinguishes Tax Litigation from Audit Defense

Audit defense operates within the IRS's own administrative framework. You are responding to an examiner, providing documentation, and negotiating adjustments — all before the IRS issues a final determination. The goal is to resolve the dispute before it ever reaches a courtroom, and the vast majority of cases end at this stage.

Tax litigation begins where audit defense ends. Once the IRS issues a statutory notice of deficiency, the administrative process is over. The case moves from internal IRS proceedings to an independent federal court with formal rules, sworn testimony, and binding precedent. The IRS is no longer the decision-maker — a judge is.

The practical implications are significant. In litigation, you can compel the IRS to produce documents through discovery. You can depose IRS agents. You can present expert testimony on valuation, industry practice, or accounting methodology. And the IRS must prove its position under the applicable standard — it cannot simply issue an assessment and shift the burden to you.

For clients who have been through an audit and received an unfavorable result, IRS Appeals offers an alternative to litigation that resolves most disputes. But when Appeals fails, or when the legal issue requires a precedential ruling, litigation is the taxpayer's final and most powerful remedy.

Tax Litigation Forums We Practice In

Sam Brotman

Owner & Managing Attorney · J.D., LL.M. Taxation, MBA

Sam founded Brotman Law in 2013 with a singular focus on tax controversy. He leads the firm's litigation practice, representing taxpayers in U.S. Tax Court and federal refund proceedings. Every litigation engagement is personally overseen from petition through resolution.

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