Taxpayer L received a Statutory Notice of Deficiency (90-day letter) from the IRS regarding a tax dispute of $75,000. L wishes to contest the liability in court but does not have the funds to pay the tax in advance. Which court must L petition?

Answer options:

U.S. Tax Court

U.S. District Court

U.S. Court of Federal Claims

U.S. Court of Appeals

How to approach this question

Identify the key distinction between the Tax Court (deficiency jurisdiction) and other courts (refund jurisdiction).

Full Answer

A.U.S. Tax Court✓ Correct

The U.S. Tax Court is the only judicial forum where a taxpayer can contest an IRS deficiency determination without first paying the disputed tax. Both the U.S. District Court and the U.S. Court of Federal Claims are refund tribunals, meaning the taxpayer must pay the tax, file a refund claim, have it denied, and then sue for a refund.

Common mistakes

Thinking District Court is an option because it offers a jury trial (true, but requires payment first).

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