What Is The Alternative To Tax Court

by Bruce Givner on October 10, 2011

Instead of going to Tax Court you can pay the tax, file a refund claim and, when the refund claim is denied, sue for a refund in either the local United States District Court or in the U.S. Court of Claims in Washington, D.C.

Why do sophisticated taxpayers often pay the tax and sue for a refund, instead of going to tax court? Because Tax Court judges are former tax lawyers who see every transaction as tax motivated. District Court judges are former Federal prosecutors. And District Court judges have lifetime tenure. So they have no fear of, or particular loyalty to, the IRS.

Also, the government lawyers in the District Court are all Assistant United States Attorneys who one day try a murder case, or drug trafficking case, and rarely try tax cases. The Assistant U.S. Attorneys do not find tax cases particularly attractive, not the type on which they will build their resume. They will communicate with the IRS in a respectful fashion. However, that is in distinct contrast to the government lawyers who try cases in Tax Court, all of whom work for the IRS and who are often located in the same office with the IRS auditor who worked up your case in the first place.

So, in many situations, it is attractive – if you can afford to do so – to pay the tax, sue for a refund, and stay out of Tax Court.

{ 16 comments… read them below or add one }

Beau October 12, 2011 at 3:28 am

Pretty insightful. Thanks!

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Kameryn October 27, 2011 at 1:50 am

I thought I’d have to read a book for a discoervy like this!

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Lynwood October 13, 2011 at 9:44 am

Came to your website through Bing. You already know I am subscribing to your feed.

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Bruce October 13, 2011 at 2:51 pm

Very nice of you Lynwood.

Best regards.

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Matei October 27, 2011 at 9:40 am

I’m shocked that I found this info so easily.

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Kerryn October 29, 2011 at 6:54 pm

What a neat article. I had no inkinlg.

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Bruce October 13, 2011 at 2:51 pm

Very nice of you Beau.

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Kailan October 29, 2011 at 7:53 pm

You are so asweome for helping me solve this mystery.

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admin October 30, 2011 at 12:17 pm

Our pleasure. Do you have a tax issue?

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Neida October 14, 2011 at 9:01 am

I would really like to give thanks for the work you have made in writing this blog post. I am hoping the same perfect job by you in the future as well.

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admin October 14, 2011 at 11:10 am

Thank you Nedia. That’s very kind.

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Aneisha October 27, 2011 at 8:07 am

Thanks alot – your answer solved all my problems after several days struggling

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Roxanna October 27, 2011 at 3:01 am

Son of a gun, this is so hlpeful!

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Jaycee October 27, 2011 at 8:29 pm

Gosh, I wish I would have had that information earlier!

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Maribeth Canonico November 2, 2011 at 1:21 am

I don’t even know how I ended up here, but I thought this post was good. I do not know who you are but certainly you’re going to a famous blogger if you are not already 😉 Cheers!

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admin November 2, 2011 at 9:36 am

That is very kind.

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