Tax Research

A number of federal courts have jurisdiction over disputes between taxpayers and the U.S. Government. There are three possible trial courts and two appellate courts. in addition, tax issues may be determined in cases before the Bankruptcy courts. Because the taxpayer is the party that generally initiates the litigation, the forum is usually decided by the taxpayer.  

United States Tax Court: A specialized federal court that only hears tax cases.  It hears tax disputes concerning notices of deficiency, notices of transferee liability, worker classification and other types of disputes. The Tax Court also has Small Case division for disputes of $50,000 or less. A taxpayer can sue in Tax Court without paying the amount in dispute prior to filing. Cases from the United States Tax Court are appealed to the Court of Appeals for the taxpayer's geographical residence.  Appellate decisions can be appealed to the Supreme Court.

There are three different types of Tax Court opinions:

• Regular or Reported Opinions: Opinions that contain important legal issues that are useful as precedent. Some of the Regular opinions may be reviewed by the full court. These are the most precedential Tax Court opinions.
• Memorandum Opinions: These opinions apply well-established law to a factual situation and may be helpful for determining how the court applies a rule of law or illustrating factual situations.  
• Summary Opinion: Issued in cases tried in the Small Case division of the Tax Court. They have no precedential value.

United States District Court: As a court of general jurisdiction the District Courts can and do hear tax matters. Since District Court judges hear a variety of matters, they are not tax specialists. In order for a taxpayer to litigate a matter in the District Court they must pay the amount in dispute and sue for a refund. The District Court is the only court where a jury trial is available to taxpayers. Cases from the United States Tax Court are appealed to the Court of Appeals for the taxpayer's geographical residence. Appellate decisions can be appealed to the Supreme Court.

Court of Federal Claims: The Court of Federal Claims is a specialized court that only hears cases involving monetary claims against the federal government, including tax refunds. Like in the District Courts, a taxpayer must pay the amount in dispute before filing suit in the Court of Federal Claims. Hearings and trials are held before a single justice, no jury trial is available. Cases from the Court of Federal Claims are appealed to the Court of Appeals for the Federal Circuit. Appellate decisions of the Court of Appeals for the Federal Circuit can be appealed to the Supreme Court.

If the IRS looses a major case in the Tax Court, district court, Federal Claims, bankruptcy court or circuit court of appeals, it will prepare a legal memorandum on whether it will acquiescence or nonacquiescence in the result. The memorandum will set forth the legal issue, the facts and the reason for it determination.  There are three potential Actions on Decision (AOD):

• Acquiescence: indicates the IRS accepts the court's holding in a case with the same facts.
• Acquiescence in result only: indicates the IRS disagrees with some of the reasoning in the decision.
• Nonacquiescence: indicates that although no review was sought, the IRS does not agree with the decision but that the IRS recognizes the precedential effect of the decision on courts within that geographical jurisdiction.

For additional information on Actions on Decision, see the IRS Administrative Guidance tab in the Research Guide.

1. If you have a case with which to begin your research, you can locate the case by citation. Most research platforms have tools that allow you to type in the citation and pull the case up quickly.  You can then use a citator service to locate additional relevant cases.

2. If you need to find tax cases interpreting or applying a particular section of the Internal Revenue Code or Treasury Regulation, you can use a citator service such as Westlaw's KeyCite, Lexis Shepard's or Bloomberg's Smart Code, to locate decisions citing a specific section of the Internal Revenue Code. Just remember that you will need to type in the citation to the U.S. Code and Code of Federal Regulations. Checkpoint and VitalLaw have citators that focus specifically on tax materials. These citators will also let you type in the cite to the  Internal Revenue Code section and identify relevant citing case law decisions. 

3. Another good starting point for locating case law decisions when you know what section of the Internal Revenue Code you are researching are the looseleaf services like the Standard Federal Tax Report (VitalLaw) or the United States Tax Reporter (Checkpoint/Westlaw). When you pull up the Internal Revenue Code section in either of these sources, you will have easy access to relevant case law decisions and other interpretive and explanatory material. 

4. Secondary sources, like treatises and the Tax Management Portfolios (Bloomberg Law), discuss significant case law decisions impacting tax law issues. They are heavily footnoted and will provide citations to relevant case law decisions that provide good leads for locating additional cases.  

5. Search in case law databases. Tax cases are available on a number of online research databases. Before running a search take some time to consider what search terms you will use and which jurisdiction you need to search. This will make your searches more efficient and reduce the time you have to spend reviewing and evaluating your results.