Judicial case decisions from the federal court system comprise the third and final source of federal tax law. Legal disputes between taxpayers and the IRS are common. To reduce the burden of long legal battles, the IRS encourages the use of its administrative appeals process. However when a dispute persists beyond available administrative remedies, it can be taken to the federal court system by either the taxpayer, or the IRS. Recall that the Interim Revenue Code is the statutory source for federal tax laws. While the administrative pronouncements of the Treasury Department, provide interpretive guidance as to their meaning and application. However, when controversy arises about the interpretation of these two sources of tax law, the federal judicial system attempts to provide resolution. In doing so, additional tax law is created, which can carry the full force of a statute itself. Often, recurring litigation on a particular issue will result in new legislation, or the formal codification of judicial decisions. There are technically five federal courts with jurisdiction over tax disputes. The U.S. Tax Court, U.S. District Court, U.S. Court of Federal Claims, U.S. Court of Appeals, and the U.S. Supreme Court. Litigation between taxpayers and the federal government began in one of the three trial courts of original jurisdiction listed at the bottom. Note that the U.S. Tax Court also has a small cases division that is not depicted in this figure. A decision of a trial court can be appealed to an appellate court. The scope of the appellate process is typically limited to examining whether a trial court applied the law properly, in arriving at its decision. In an introductory tax course you likely learned about the different attributes of trial courts, and how they contribute to the federal judicial system. Therefore I will simply highlight a few key traits that you should keep in mind. First the U.S. Tax Court is a specialized trial court, that only considers federal tax cases. It's 19 judges are specialists in tax law. If a taxpayer wants to argue a technical tax issue with the IRS, then the tax court is often the way to go. This court does not require the taxpayer to prepay any assessed deficiency, before trial. Second, the U.S. District Courts consider both tax and non tax cases. Taxpayers can obtain a jury trial in this court, which could be helpful, if the dispute is over nontechnical tax issues. However taxpayers must prepay any assessed tax efficiency before trial, and sue the federal government for a refund. District Court decisions only apply in the district in which the court has jurisdiction. You might remember this issue arising in an introductory tax course, when you learned about the Bolton v. commissioner method of allocating vacation rental home expenses. Finally the U.S. Court of Federal Claims created in 1982, is a relatively new court that hears cases involving all types of monetary claims against the federal government. It does not offer a jury trial, and judges are not tax specialists. Although officially located in Washington DC, the judges for the court travel around the United States hearing cases. Like the U.S. District Courts, payment of an assessed tax deficiency is required before trial.