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Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P.

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Dallas, TX 75202

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Tax Court Petitions and Premature Assessment

By Joel N. Crouch on August 10, 2021
When a taxpayer does not agree with tax adjustments proposed by an IRS examiner, the IRS sends the taxpayer a Notice of Deficiency, which gives a taxpayer 90 days to file a petition with the U.S. Tax Court to dispute the proposed adjustments. If the taxpayer files a timely petition, the IRS cannot assess the proposed tax until the case is resolved by the U.S. Tax Court. If a taxpayer does not file a tax court petition, the IRS assesses the tax and the taxpayer is contacted by the IRS collection division for payment.

When a taxpayer files a tax court petition, the court serves the petition on the IRS and the taxpayer’s case is transferred to IRS Office of Chief Counsel. In addition, the filed petition is noted in the IRS computer so that no assessment is made until resolution of the case. However, since the beginning of 2021, the Tax Court has not been serving taxpayer petitions on the IRS in a timely manner. This is surprising since the Tax Court now allows petitions to be filed electronically. However, I have filed a number of tax court petitions in 2021 that the Tax Court has not served on the IRS for up to 120 days. Because the IRS computer system does not receive timely notice of a petition, it assumes a petition has not been filed and prematurely assesses the tax. Thereafter, the taxpayer starts receiving collection notices.

On July 23rd, the Tax Court issued a Press Release regarding these premature assessments which reads as follows:

“The United States Tax Court has received a significantly higher number of petitions this  year.  The total number filed in a typical year is between 23,000 and 26,000. In contrast, year to date, the Court has received over 24,000 petitions. The Court is processing petitions expeditiously, but the increased volume has caused a delay between when a  petition is received by the Court and when it is served on the Internal Revenue Service (IRS).
The IRS is generally not permitted to assess or collect a tax deficiency when a taxpayer has filed a timely petition with the Court. The Court is alerting the IRS of petitions received    but not yet served. If you have filed a petition with the Court but have been notified of an IRS assessment or collection action, you can email the IRS at taxcourt.petitioner.premature.assessment@irs.gov.” (Emphasis added)
Hopefully, this will resolve these premature assessments, including those for pro se taxpayers which make up a good portion of the petitions filed in the U.S. Tax Court.

For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact Joel Crouch at (214) 749-2456 or jcrouch@meadowscollier.com.