Internal Revenue Service (IRS) Procedures & Appeals

Dispute path

Examination → 30-day letter (protest, Independent Office of Appeals) → 90-day letter (statutory notice of deficiency) → petition Tax Court within 90 days.

Courts

• Tax Court: no prepayment, no jury.
• Small case: ≤ $50,000 per year; no appeal.
• District Court: pay first; jury available.
• Court of Federal Claims: pay first; appeal to the Federal Circuit.

Limitations

• Assessment: 3 years (early return → due date).
• > 25% gross income omitted: 6 years.
• Fraud or no return: unlimited.
• Collection: 10 years after assessment.
• Refund: later of 3 years from filing or 2 years from payment. Bad debts, worthless securities: 7 years.

Burden of proof

Taxpayer, unless credible evidence + records + cooperation. Internal Revenue Service (IRS) proves civil fraud (clear and convincing).

Rulings

Private letter ruling: binds only that taxpayer.

Exam traps

• Signing Form 872 extends the period for assessment.
• The 90-day deadline to petition the Tax Court can't be extended (150 days if the notice is addressed outside the US).
• Revenue rulings apply to all taxpayers; a private letter ruling protects only the taxpayer who requested it.