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The Biggest Tax Court Mistake You Can Make

HE UNITED STATES Tax Court is the only place you can go to challenge an alleged tax liability without first paying it in full. This makes the Tax Court accessible to many who would not otherwise have

the financial means to fight an incorrect tax. Everything being equal, ease of access to the courts is good. Tax Court is not a regular court, however. In exchange for playing without paying, the Court places taxpayers at a disadvantage in a number of ways. You give up your right to a trial by jury, for instance, and more importantly, you are forced to carry the burden of proof. That is, the Court presumes what the IRS claims you owe is correct and you must prove it is not. The Tax Court is what is called an administrative court. When it began back in the 1920s it was part of the IRS itself, called the Board of Tax Appeals. Congress created it as an independent agency of the executive branch, but it was housed in the IRS building, and for all intents and purposes it was the IRS arbitration arm, run by the IRS for the IRS. Over time it underwent some changes and in 1969 became a full judicial court, but its purpose has never changed much. It remains part of the tax collection apparatus of the Internal Revenue Service. The IRS wins over 95% of cases before the Court. Any changes in procedure that allegedly give taxpayers a break or increase their chances of success should be examined closely. One such change, the option of having a case tried under Small Case Procedures, came about in 1969 when the Court became a full judicial court. You will find the details at 26 IRC 7463. Under that section you may elect to have your case tried as a small case if the total amount in dispute is under $50,000. The Tax Court website makes it look like there are advantages to the taxpayer for choosing these procedures. But in this writers opinion, selecting
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Small Case Procedures is the single largest mistake any petitioner can make going into Tax Court. The only possible advantage is that there are a few more cities where small cases are heard. The few bucks you might save on gas or a motel will come in handy to help pay the IRS. In exchange for a little convenience you give up your right to appeal and the use of the Federal Rules of Evidence (FRE). Any evidence with probative value is good enough for a Small Case; whereas in a regular case, the FRE apply as they do in other non-jury civil trials. Dont be fooled into thinking that choosing small case procedures will save you the trouble of learning those rules. It only saves you from using them to your advantage. Not knowing the Rules of Evidence will punish you no matter what kind of case you have. When youve read On Your Own in Tax Court you will understand that the Rules of Evidence greatly favor the taxpayer who knows them. And your right to appeal is the only leverage you have over the Court. Choosing Small Case procedures is like inviting the IRS and the Court to drag you into a back room where nobody can hear you so they can beat you senseless. They are happy to oblige. Your case will not be reviewable by any other court. The record of the trial and pleadings wont be available either. The good news is that you can move the Court to switch back to the regular procedures anytime before a decision has been made. If you havent done that already, Id get right on it. The Court should grant your motion. Ive attached a sample motion to give you an idea what one might look like. The chapter on Motion Practice in On Your Own in Tax Court goes into greater detail about how to compose and use motions to get justice from the Court. Refer also to the Tax Court Rules in Title V about filing motions in Tax Court. This my opinion, not legal advice. Do your own research. A good place to start is with my book, On Your Own in Tax Court. Order it at www.TaxCourtHelp.com

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UNITED STATES TAX COURT [PETITIONERS NAME] ) ) Petitioner, ) ) v. ) ) COMMISSIONER OF INTERNAL REVENUE ) ) Respondent. ) Docket No. XXXX-XX

PETITIONERS MOTION TO DISCONTINUE 7463 PROCEDURES

I, [PETITIONERS FULLNAME], petitioner in this case, in accordance with IRC 7463(d), move this Honorable Court to order that further proceedings in this case under 7463 be discontinued. FACTS 1. I filed the above captioned petition on [MM DD, YYYY.] 2. In that petition I chose to have this case conducted under 7463 Small Case Procedures. 3. Respondent Answered the petition on [MM DD, YYYY]. 4. This case [has/has not] been scheduled for trial. 5. Respondent [opposes/does not oppose] this motion.

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LAW AND ARGUMENT 6. The election to conduct Tax Court cases under 7463 is at the option of the taxpayer concurred in by the Tax Court1 7. IRC 7463(d) states: At any time before a decision entered in a case in which the proceedings are conducted under this section becomes final, the taxpayer or the Secretary may request that further proceedings under this section in such case be discontinued. 8. I did not fully understand the differences between Small Case and regular procedures when I filed my petition. I have only recently learned that conducting a case under 7463 precludes an appeal and relaxes the rules under which evidence may be entered into the record. 9. I believe the rules attached to these procedures increase the considerable disadvantages born by pro se petitioners. 10. Justice requires that I be allowed to revoke my choice to conduct my case under 7463 and to proceed under the regular rules. CONCLUSION Therefore, I move this Honorable Court to order that further proceedings in this case under 7463 be discontinued.

Respectfully submitted: MMMMM DD, YYYY

Signature of Petitioner [ PETITIONERS NAME TYPED]

7463(a)
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CERTIFICATE OF SERVICE

This is to certify that a copy of this PETITIONERS MOTION TO DISCONTINUE 7463 PROCEDURES was sent via [NAME THE WAY YOU SENT IT, CERTIFIED MAIL, E-FILED, COURIER ETC] to The Clerk of U.S. Tax Court on [THE DATE YOU SENT IT] as follows:

[THE PERSON YOU SENT IT TO] [THEIR ADDRESS] [CITY, STATE, ZIP] [E-MAIL IF THATS A FACTOR] A copy of this [NAME THE DOCUMENT, MOTION, RESPONSE, WHAT EVER] and exhibits was sent via [NAME THE WAY YOU SENT IT, CERTIFIED MAIL, E-MAIL, COURIER ETC] to Respondents counsel on [THE DATE YOU SENT IT] as follows: [THE PERSON YOU SENT IT TO] [THEIR ADDRESS] [CITY, STATE, ZIP] [E-MAIL IF THATS A FACTOR]

[DATE OF THE CERTIFICATE]

YOUR SIGNATURE GOES HERE [YOUR NAME TYPED], pro se

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