Tax Court pleadings are short. There is the petition, the Commissioner's answer, and sometimes a reply. Together, they define the issues for trial. When the pleadings close, the case is "at issue" and ready to be calendared.

The answer is where you learn whether the IRS is simply defending its notice or planning to expand the case. The reply is where you respond if it is.

Timing of the answer

Tax Court Rule 36(a) gives the Commissioner 60 days from service of the petition to file an answer, or 45 days to file a motion with respect to the petition, such as a motion to dismiss. The same periods apply to an amended petition. In practice, IRS Chief Counsel attorneys file the answer, and the case is then often referred to Appeals for settlement if Appeals has not already considered it.

Motions instead of an answer

Sometimes the IRS files a motion instead of an answer within the 45-day window in Rule 36(a). The most common is a motion to dismiss for lack of jurisdiction, usually because the petition appears to be late or the notice appears not to cover the year petitioned. If you receive one, respond. Jurisdiction motions can be decisive, and the reasons for dismissal matter a great deal. See invalid notices of deficiency for why.

What the answer must contain

Rule 36(b) requires the answer to advise you and the Court fully of the nature of the defense. Specifically:

  • A specific admission or denial of each material allegation in your petition, paragraph by paragraph.
  • If the Commissioner lacks knowledge or information sufficient to form a belief, a statement to that effect, which operates as a denial.
  • A clear and concise statement of every ground, with supporting facts, on which the Commissioner relies and has the burden of proof.
  • Any special matters required by Rule 39.
  • A copy of the notice of deficiency if you did not attach one, or a statement that it is unavailable or was not issued.

Rule 36(c) adds an important consequence: every material allegation in the petition that is not expressly admitted or denied in the answer is deemed admitted. Read the answer against your petition line by line. Admissions narrow the trial.

The routine answer

Most answers deny the assignments of error and the supporting facts, or state lack of knowledge. That is normal. It does not mean the IRS believes your facts are false; it means it is not conceding them yet. These denials are why the stipulation process under Rule 91 exists. See stipulations under Rule 91.

Affirmative allegations: when the IRS has the burden

Under Tax Court Rule 142(a), the burden of proof is generally on the petitioner, except for new matter, increases in deficiency, and affirmative defenses pleaded in the answer, where the burden is on the Commissioner. Rule 142(b) puts the burden of proof on fraud on the Commissioner, by clear and convincing evidence, consistent with IRC 7454(a).

So when the IRS wants to rely on something it must prove, it pleads it affirmatively in the answer with supporting facts. Common examples:

  • Civil fraud penalty under IRC 6663, with specific factual allegations about the alleged fraudulent conduct.
  • An increased deficiency beyond the amount in the notice.
  • New matter, such as a different legal theory requiring different evidence.
  • Affirmative defenses, such as the statute of limitations being open because of fraud or a substantial omission of income.

Increased deficiencies under IRC 6214(a)

IRC 6214(a) gives the Tax Court jurisdiction to redetermine a deficiency greater than the amount in the notice if the IRS asserts the claim at or before the hearing or a rehearing. The IRS generally does this in the answer or an amended answer. If it does, the IRS carries the burden of proof on the increase under Rule 142(a).

Here's the part most people miss: petitioning the Tax Court opens the door to this. The IRS rarely asserts increases, and it must prove them when it does. But if your return has issues the examiner never reached, discuss that risk before you file. It is not a reason to forgo a petition. It is a reason to know your whole return.

Your reply under Rule 37

Rule 37(a) gives you 45 days from service of the answer to file a reply, or 30 days to file a motion with respect to the answer. Rule 37(b) says the reply must specifically admit or deny each material allegation in the answer, and the facts in support, on which the Commissioner has the burden of proof, and must state any ground on which you rely affirmatively or in avoidance.

What happens if you do not reply

Rule 37(c) is the rule to understand:

  • If you file a reply, every affirmative allegation in the answer that you do not expressly admit or deny is deemed admitted.
  • If you do not file a reply, the affirmative allegations are deemed denied, unless the Commissioner, within 45 days after your reply was due, files a motion asking that specified allegations be deemed admitted. That motion may be granted unless you file the required reply within the time the Court directs.

So if the answer contains no affirmative allegations, a reply is usually unnecessary. If it alleges fraud or an increased deficiency, file a reply that responds to every allegation. An unanswered fraud allegation deemed admitted can establish the penalty without a trial on it.

Rule 37(d) says any new material in the reply is deemed denied. You do not need to worry about the IRS answering your reply.

Amending the pleadings

Pleadings can be amended. Tax Court Rule 41 governs amendments, generally allowing amendment by leave of Court, which is given freely when justice requires. If you discover an issue you should have raised, or the IRS discovers one, an amendment is the vehicle. Timing matters: amendments sought close to trial face more resistance, especially if the other side would be prejudiced.

Joinder of issue

The case is at issue when the pleadings close. That date matters because Rule 70(a)(2) says discovery may not begin, without leave, until 30 days after joinder of issue. It is also roughly when the case becomes eligible to be placed on a trial calendar under Rule 131(a). See informal discovery and Branerton for what happens next.

A reading checklist for the answer

  1. Match each paragraph of the answer to the corresponding paragraph of your petition.
  2. Note every admission. Those facts are established.
  3. Note every denial and every "lacks knowledge." Those are your stipulation targets.
  4. Look for an affirmative allegations section, often near the end.
  5. Check for an increased deficiency or new penalty.
  6. Calendar the 45-day reply deadline.

Let's talk

An answer with fraud allegations or an increased deficiency changes the case. If you have received one, call (813) 229-7100 before your reply deadline. Let's talk.