Question

Under what circumstances if any, can the Tax Court have jurisdiction over petitioner’s overpayment of tax? Explain how this can occur – give an example that you can see happening with a client. Is there a benefit to the Tax Court having jurisdiction over the overpayment?

Answer 1

The ability of the Tax Court to have jurisdiction of overpayment in refund litigation is subject to three special jurisdictional limitations. First situation is the Tax Courtmay only make such a determination after the assesse has received a statutory notice of deficiency from the IRS.

When the Tax Court gains jurisdiction over a refund litigation, it is generally for the limited purpose of determining the amount of an overpayment when there is a finding that no deficiency exists and the taxpayer made an overpayment. Jurisdiction in Tax Court may also extend to determine an overpayment of additions to tax not subject to deficiency procedures

refund jurisdiction is limited to the district courts However, the Tax Court generally has jurisdiction over deficiency litigations. In some circumstances, the Tax Court may also have jurisdiction over refund litigation as well. The advantages and disadvantages of filing a refund litigation versus a deficiency litigation should be considered, and Tax Court jurisdiction over the matter may play a role in the decision as well.

For example A client agreed to a tax deficiency following an audit but disagreed with certain additions to tax that the IRS determined to exist. As a result, the IRS issued a deficiency notice to the taxpayer and the taxpayers placed the additions to tax in controversy. Even though additions to tax are not subject to the deficiency procedures, the Tax Court was granted jurisdiction over the overpayments of additions to tax. Although the term “overpayment” has not been defined statutorily, it has been administratively interpreted to include “any interest, additions to tax or additional amount.”

BENEFITS

1. The main advantage to going to tax court IS WE NEED not have to pay back taxes if WE won the case
2. 2. rules that govern evidence will be less strict and may be open than in other courts or appeals proceedings.