Describe the federal court system and its jurisdiction over tax issues. Identify the appeals and trial-level courts. Then, describe the factors that would go into a taxpayer's decision to bring his or her case in a particular federal court. Finally, explain the basic rules of precedence for tax cases in the federal court system

Answer 1

The U.S. ederal court system has five courts in total: three trial courts and two appellate-level courts. The trial courts are the U.S. Tax Court, the District Courts around the country, and the U.S. Court of Federal Claims. The two appellate-levels are the 13 Courts of Appeal and the U.S. Supreme Court. An appeal from the Tax Court and District Court is to the Court of Appeals where the taxpayer resides or is located. An appeal from the U.S. Court of Federal Claims is to the Court of Appeals for the Federal Circuit. Decisions from the U.S. Circuit Courts of Appeal can be appealed to the Supreme Court, which may not choose to hear the case.

A taxpayer would choose the Tax Court if the taxpayer did not want to pay the deficiency first. The Tax Court is the only trial court in which the taxpayer does not have to pay first and sue for a refund. The taxpayer may also want to choose the Tax Court if the issue is highly technical, since Tax Court judges are tax specialists while District Court judges are generalists. If the taxpayer has an "emotional" issue, the taxpayer could request a jury trial in the U.S. District Court where the taxpayer lives or is located. Jury trials can only be brought in the U.S. District Courts.

A taxpayer would want to bring a case in the U.S. Court of Federal Claims if the Court of Appeals in the taxpayer's circuit has decided the issue in adversely to the taxpayer but the Federal Circuit Court of Appeals, which establishes precedent for the U.S. Court of Federal Claims, has established a rule favorable to the taxpayer.

The Tax Court, under the Golsen rule, must apply the rule established in the taxpayer's Circuit Court of Appeal. If that Circuit has not decided the issue, the Tax Court may make its own decision. Each U.S. Court of Appeals is independent and need not follow the precedents set by other circuits. All courts must follow a Supreme Court precedent.