Most IRS disputes settle. The ones that don't end up in one of three courtrooms, and which courtroom you pick can decide the case before a single argument is made. That choice — forum selection — is the first real strategic decision in federal tax litigation.
Three Courts, Three Different Games
United States Tax Court is the default for most taxpayers because of one feature: you do not have to pay the tax first. File a petition within 90 days of a Notice of Deficiency and the IRS cannot assess or collect while the case is pending. Tax Court judges hear nothing but tax, and the court holds trial sessions right here in Tampa.
Federal district court — for us, the Middle District of Florida — and the Court of Federal Claims are refund forums. Under the full-payment rule from Flora v. United States, you pay the disputed tax, claim a refund, and sue when it's denied. That sounds backwards, but it buys you two things Tax Court can't offer: a jury in district court, and a bench with different precedent when the case law in one forum runs against you.
Litigation Is Leverage, Even When You Settle
Here's the truth: most cases I docket never see trial. The IRS Office of Chief Counsel settles the overwhelming majority of petitions, because government lawyers weigh hazards of litigation the same way I do. A well-built petition changes who you're negotiating with — from a collection employee working a queue to an attorney who has to defend the file in front of a judge.
I'm admitted to practice before the United States Tax Court, and I build cases assuming they'll be tried. That assumption is usually why they don't have to be.