Filing a tax court petition can feel like a major accomplishment—you’ve met the critical 90-day deadline after receiving your notice of deficiency. But what comes next? Understanding the timeline and process that follows is essential for navigating your case successfully.
As a former IRS agent and current tax attorney, I’ve guided clients through the tax court process. In this comprehensive guide, I’ll walk you through every stage of what happens after you file your petition, from the IRS’s initial response to potential settlement or trial.
Immediate Steps After Filing Your Tax Court Petition
The IRS Response Period (60 Days)
Once you file your petition, the first significant event is the IRS’s response. The agency has 60 days to review your petition and file what’s called an “answer.” This document serves as the IRS’s official response to your claims.
In their answer, the IRS will either admit or deny your allegations. Don’t be alarmed if you see phrases like “deny” or “lack sufficient information to respond”—this is standard legal language. The answer is often a short document, though it may include additional details about the IRS’s position on the tax deficiency.
Your Case Gets a Docket Number
During this initial period, the Tax Court will assign your case a unique docket number. This identifier is crucial—you’ll use it on all documents filed with the court, so keep it handy throughout your case.
Collection Activities Stop
Here’s some immediate relief: once your tax court petition is filed, the IRS is legally required to halt all collection activities. This means they cannot:
- Levy your bank account
- Garnish your wages
- Place a lien on your property
While the IRS typically stops collection automatically, I’ve encountered cases where they continued these activities. If this happens to you, you can file a motion with the court to enforce the collection suspension.
Judge Assignment
You’ll also receive notification about which judge has been assigned to your case. Remember, Tax Court judges travel to different cities to hear cases. The city you selected in your petition is where you’ll appear if your case proceeds to trial.
The Settlement Encouragement Period
Understanding Tax Court’s Philosophy
After the IRS files their answer, your case enters what I call a “holding pattern.” This isn’t inactivity—it’s intentional. The Tax Court’s philosophy centers on encouraging settlement, and for good reason: approximately 90% or more of all cases settle before trial.
The court doesn’t want to clog the system with cases that could be resolved through negotiation. This period gives both you and the IRS ample time to discuss and potentially resolve your dispute.
Assignment to an IRS Appeals Officer
During this phase, your case will likely be assigned to an IRS Appeals Officer, and this is generally good news. Appeals Officers are independent from the IRS examination division, meaning they’re not the same people who audited you. Their job is to evaluate cases objectively and find reasonable settlements.
You’ll receive a separate letter from the Appeals Officer about:
- Providing additional information
- Scheduling an appeals conference
- Conference format options (phone, virtual, or in-person)
Preparing for Your Appeals Conference
While you can represent yourself throughout the entire tax court process, hiring a tax attorney or qualified tax professional is generally recommended. Professionals who regularly work with IRS Appeals and Tax Court proceedings can significantly impact your case outcome.
To prepare for your appeals conference, you should:
- Gather all documentation supporting your position
- Organize your evidence clearly and logically
- Develop your argument explaining why the IRS position is incorrect
- Consider settlement options and what you’re willing to accept
While rare, the IRS does occasionally concede all issues and admit they were wrong. However, in most cases, you’ll need to find middle ground.
The Settlement Process: Where Most Cases End
Discussing Hazards of Litigation
During settlement negotiations, you’ll discuss several key factors with the IRS:
- The facts of your case
- Applicable tax law
- “Hazards of litigation” (what could go wrong for either side at trial)
Appeals Officers have authority to settle cases based on these hazards of litigation. For example, if the IRS believes they have a 50% chance of winning at trial, they might offer to settle for 50% of the disputed tax amount.
Reaching a Settlement Agreement
If you successfully negotiate a settlement with IRS Appeals or the IRS attorney, you’ll sign a stipulated decision document. This resolves your case, and the Tax Court will issue an order dismissing it. The case is then closed, and you’ll work with the IRS on any payment arrangements for the settled amount.
Preparing for Trial (If Settlement Fails)
Notice of Trial
If you cannot reach a settlement agreement, your case will be calendared for trial. You’ll receive a “Notice Setting Case for Trial” specifying:
- The city where your trial will be held
- The trial session dates
- Additional procedural information
Remember, Tax Court judges travel throughout the country, so you’ll have your trial in the city you selected on your original petition.
Pre-Trial Preparation
Receiving a trial notice doesn’t guarantee you’ll actually have a trial—many cases still settle during this preparation period. However, you must prepare as if trial will occur. This involves:
Evidence Exchange: Both parties must exchange evidence and documents that will be used at trial.
Trial Memorandums: Written documents outlining your legal arguments and case theory.
Stipulations of Fact: Agreements with the IRS on undisputed facts, which streamlines the trial process.
Exhibits Preparation: Organizing and properly formatting all documents you’ll present as evidence.
Witness Preparation: Identifying and preparing any witnesses, including yourself, for testimony.
The Critical Need for Professional Representation
If you’ve made it to the trial preparation stage without professional help, now is the time to hire a tax attorney. Tax Court has specific rules of evidence and procedures that can significantly impact your case. An attorney familiar with Tax Court can make a substantial difference in your outcome.
The Tax Court Trial Experience
What to Expect in Court
Tax Court trials differ from the dramatic courtroom scenes you see on television. While they can be somewhat less formal, they’re still serious legal proceedings with strict rules of evidence and procedure.
Trials typically last anywhere from a few hours to several days, depending on case complexity. The process is often quicker than other court trials because many facts are stipulated in advance—meaning both sides agree on the basic facts and focus on arguing how the law applies to those facts.
The Decision Timeline
Unlike some courts where judges announce decisions immediately, Tax Court judges take cases “under advisement.” This means the judge will:
- Review all evidence presented
- Research applicable law
- Write a formal written opinion
- Render their decision
This process typically takes anywhere from a few months to over a year. When the decision is ready, you’ll be notified and receive the written opinion explaining the judge’s reasoning.
After the Tax Court Decision
If You Win
Congratulations! The IRS will adjust or eliminate the tax deficiency, and your case is over. Any amounts you may have already paid will be refunded.
If You Lose or Have a Mixed Result
You have several options:
Appeal to Federal Court: You can appeal to a federal appeals court, as can the IRS. However, appeals are expensive and time-consuming. Generally, you can only appeal based on legal errors—appeals courts don’t re-examine factual disputes.
Discuss with Your Attorney: Before deciding to appeal, thoroughly discuss the pros and cons with your tax attorney to determine if an appeal is worthwhile.
Payment Arrangements: If the decision stands and you owe taxes, you’ll need to work with the IRS on payment options, including potential installment agreements.
Key Takeaways for Tax Court Success
Most Cases Settle
With over 90% of cases settling before trial, keep an open mind during negotiations. Being rigid in your position may cost you more in the long run.
Organization is Critical
The quality of your documentation directly impacts your settlement leverage and trial success. Maintain organized records and backup for all your positions.
The Process Takes Time
Tax Court cases typically take 12 to 24 months from start to finish. This isn’t a quick process, but it’s often worth it to contest the IRS’s position and potentially reduce or eliminate the tax deficiency.
Professional Help Matters
Don’t navigate this process alone if you can avoid it. A qualified tax attorney can guide you through each stage and significantly increase your chances of a favorable outcome.
Many tax attorneys, myself included, offer flexible fee arrangements including success-based fees. This means you’re not risking substantial legal fees without some guarantee of results.
Conclusion
Understanding what happens after you file a tax court petition removes much of the uncertainty from the process. From the IRS’s initial response through potential settlement negotiations or trial, each stage has specific procedures and opportunities to resolve your case favorably.
The key is staying organized, keeping an open mind about settlement, and securing qualified professional representation to guide you through this complex process. While the timeline can be lengthy, successfully contesting an IRS determination can result in significant tax savings and peace of mind.
If you’re facing a tax court case or considering filing a petition, consulting with an experienced tax attorney early in the process can help you navigate these stages more effectively and achieve the best possible outcome.