Appealing a Tax Court Decision | Kathryn Meyer Law PC

Yes, in a regular case. You file a notice of appeal, with the appeals court's filing fee, with the Clerk of the Tax Court within 90 days after the decision is entered (IRC 7483). The appeal goes to the federal court of appeals for the circuit where you lived when you filed the petition: for example, the Fourth Circuit for Virginia residents, the Ninth Circuit for California residents, and the D.C. Circuit for residents of the District of Columbia. A small tax case decision cannot be appealed by either side.

An appeal does not automatically stop the IRS from assessing and collecting the tax, and the time limits are strict, so the decision to appeal is usually made quickly after the decision is entered. Appeals are part of Kathryn Meyer's tax litigation practice.

How an appeal from the Tax Court works, step by step

The opinion. The judge issues findings and an opinion. If the result requires figures, the parties file computations under Rule 155 within 90 days, and the court then enters its decision.
Post-trial motions, if any. A motion for reconsideration of the opinion or findings is due within 30 days after the opinion is served (Rule 161). A motion to vacate or revise a decision is due within 30 days after the decision is entered (Rule 162).
The notice of appeal. Under Rule 190 and IRC 7483, you file a notice of appeal and the required filing fee with the Clerk of the Tax Court within 90 days after the decision is entered. If one side files on time, the other may appeal within 120 days after entry. The court's Form 17 is a suggested form of notice.
The fee. The Tax Court's fee page says the notice of appeal fee is set by the Court of Appeals Miscellaneous Fee Schedule; that schedule lists $600 for docketing a case on appeal.
A stay, if you want one. Under IRC 7485(a), the appeal does not stop assessment or collection of the deficiency the Tax Court determined unless, by the time you file the notice of appeal, you file a bond in an amount the court sets, up to double the amount you are appealing, with surety the court approves.
The court of appeals decides. It reviews Tax Court decisions "in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury" (IRC 7482(a)(1)), and it may affirm, modify or reverse. Its judgment can be reviewed by the Supreme Court only if that Court agrees to hear it.

Which court of appeals hears your case?

IRC 7482(b) sets venue. For an individual, it is the circuit of your legal residence; for a corporation, the circuit of its principal place of business or principal office. Residence or place of business is measured as of the time the petition was filed with the Tax Court. If no rule applies, the appeal goes to the D.C. Circuit, and the IRS and the taxpayer may also agree in writing on any circuit (IRC 7482(b)(2)).

Where you lived when you filed	Court of appeals	Source
Virginia, Maryland, West Virginia, North Carolina, South Carolina	U.S. Court of Appeals for the Fourth Circuit	28 U.S.C. 41; Fourth Circuit
California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon, Washington	U.S. Court of Appeals for the Ninth Circuit	28 U.S.C. 41; Ninth Circuit
District of Columbia	U.S. Court of Appeals for the D.C. Circuit	28 U.S.C. 41
No applicable residence, or no rule applies	D.C. Circuit	IRC 7482(b)(1)
Any case, by written agreement	The circuit the IRS and you choose	IRC 7482(b)(2)

Venue matters before trial too. A court of appeals applies its own precedent, so the circuit that will hear an appeal can affect how a disputed legal issue is resolved. That is one reason the choice between courts, explained in Tax Court, district court or the Court of Federal Claims, deserves attention early.

For taxpayers in Northern Virginia, the local courts and agency offices on the way to the Fourth Circuit are described on the page for IRS and tax controversy work in Alexandria, Virginia.

What changes the answer

Small tax case. A decision in a small case "shall not be reviewed in any other court" (IRC 7463(b)); the trade-off is weighed in small tax case or regular case.
The kind of case. Innocent spouse cases, described in whether you can take an innocent spouse denial to the Tax Court, use the petitioner's legal residence for venue (IRC 7482(b)(1)), and collection cases under IRC 6320 or 6330 use an individual's legal residence or an entity's principal place of business (IRC 7482(b)(1)(G)). Collection cases begin as explained in what a Collection Due Process hearing is.
Interlocutory orders. A Tax Court judge may certify a controlling legal question during the case, and the court of appeals may then allow an immediate appeal if asked within 10 days (IRC 7482(a)(2)).
Orders on restraining collection. An order resolving a motion to restrain assessment or collection under IRC 6213(a) is treated as a decision for appeal purposes (IRC 7482(a)(3); Rule 190(b)).
Settlement. A stipulated decision entered by agreement ends the dispute on the agreed terms; settlement is discussed in whether a Tax Court case can settle before trial.
Whether you want collection stopped. Without a bond under IRC 7485, the IRS may assess and collect the deficiency while the appeal is pending.

When does a Tax Court decision become final?

Under IRC 7481(a), a decision becomes final when the time to file a notice of appeal expires without one being filed. If an appeal is taken, finality comes later: for example, when the time to ask the Supreme Court for review expires after the court of appeals affirms or dismisses. Finality matters because, once a decision is final, the tax for that year is generally settled, and collection proceeds on the decided amount. A taxpayer who cannot pay the final amount turns to collection options such as those compared in the IRS payment plan options.

For example: a Virginia resident and a disputed deduction

For example, imagine a Virginia resident who tries a regular Tax Court case over a large business deduction and loses on the main issue. The opinion is served in February; the parties agree on computations under Rule 155, and the decision is entered on May 10. She considers a motion to vacate or revise but decides the dispute is about the law, not the record, and instead files a notice of appeal with the Tax Court clerk, with the appeals fee, well before the 90th day after May 10. Because she lived in Virginia when she filed her petition, the appeal goes to the Fourth Circuit. She does not post the bond allowed by IRC 7485, so the IRS assesses the tax, and she arranges a payment plan while the appeal proceeds. Under IRC 7482(c), the Fourth Circuit may affirm, or, if the decision is not in accordance with law, modify or reverse it, with or without sending the case back. This is a hypothetical, not a real case.

Common mistakes after a Tax Court decision

Counting from the opinion instead of the decision. The 90 days run from entry of the decision, which may come months after the opinion, but post-trial motion deadlines run from service of the opinion or entry of the decision.
Filing the notice in the wrong place. The notice of appeal is filed with the Clerk of the Tax Court, not the court of appeals.
Assuming an appeal stops collection. Only a bond under IRC 7485 does that.
Forgetting the other side's window. If you appeal, the IRS may cross-appeal within 120 days after entry, and the reverse is true.
Expecting a new trial. Under Federal Rules of Appellate Procedure 10 and 14, the record on appeal is the papers, exhibits and transcript from the Tax Court.
Electing small case status without weighing the appeal right. That choice cannot be undone after the decision.

What to do this week

Find the date the decision was entered, not just the date of the opinion, and count 90 days.
Decide whether a motion for reconsideration or to vacate is needed, and note its 30-day deadline.
Confirm which circuit hears the appeal based on where you lived when you filed the petition.
Decide whether to post an appeal bond or arrange payment while the appeal is pending.
Prepare the notice of appeal (the court's Form 17 is a model) and the filing fee.

Frequently asked questions

Can the IRS appeal a Tax Court decision?

Yes, in a regular case, under the same 90-day rule; neither side can appeal a small tax case decision.

Can you add new evidence on appeal?

Generally not. Under Federal Rules of Appellate Procedure 10 and 14, the record on appeal is made up of the papers and exhibits filed in the Tax Court, the transcript and the docket entries, which is why the trial record matters; see who has to prove what in a Tax Court case.

Can a cost award be appealed?

Yes. Under IRC 7430(f), an order granting or denying litigation costs may be part of the decision and is appealable in the same way; see whether you can recover your legal fees if you beat the IRS.

How much is the appeal bond?

The Tax Court fixes it, up to double the portion of the deficiency you appeal, with surety the court approves (IRC 7485(a)).

Can you appeal straight to the Supreme Court?

No. Tax Court decisions go to a court of appeals first; the Supreme Court may then review the court of appeals' judgment if it agrees to.

What if you moved after filing the petition?

Venue is fixed by your legal residence when the petition was filed (IRC 7482(b)(1)), not by the trial city described in where your Tax Court trial will be held. A later move does not change which circuit hears the appeal unless the IRS and you agree in writing on another circuit.

Where does the case start?

With the petition; see how to file a petition in the U.S. Tax Court.

Deciding whether to appeal

An appeal turns on the law and the record, and its deadlines start with entry of the decision. Kathryn Meyer spent more than two decades in the IRS Office of Chief Counsel, which handles Tax Court litigation for the government, and now represents taxpayers. If a Tax Court decision has gone against you, contact the firm or call (571) 560-8674 promptly.

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