When it comes to the "small case" division in a federal tax court system, it’s no different than a small claims tax court that exists for states. Over fifty percent of cases filed in the small case division of tax court get their taxes reduced. Usually right before trial IRS lawyers try to work out a settlement with you. This is usually a good sign, and you should go along with the flow of things. Going to court when a valid settlement exists will only waste your time.
Qualification for a small division tax court is a tax liability of less than fifty thousand dollars for one year. The tax liability usually consists of taxes owed and penalties that you get on top of them. If you owe $100,000 for two years, you still qualify for the small division tax court because if the money is split over two years you get $50,000 per year. Also a good idea is to get professional advice. Try to hire a tax attorney to represent you either for the settlement or the trial. His or her interjection might help you get off the hook completely. Sometimes you can make mistakes that CPAs or Enrolled Agents don’t see but a tax attorney can pick up on.
If you don’t want to spend the extra cash and you are pretty self-confident about yourself and the case, you are allowed to appear without a lawyer. As I said before this works just like a small claims court. You represent your case with evidence and then sit down and then the lawyer for the IRS states his case. The judge makes his decision and mails it to you.
