People often confuse a Tax Court petition with an IRS appeal. An IRS appeal is an administrative challenge handled within the Internal Revenue Service, usually through the IRS Independent Office of Appeals. A Tax Court petition is a formal filing with the United States Tax Court asking a judge to review an IRS determination, most commonly a proposed tax deficiency, before the tax is paid.

A Tax Court petition matters because it moves a dispute out of the IRS and into a federal court that specializes in tax cases. In many situations, that is the taxpayer's only chance to contest an alleged deficiency without first paying the amount and then suing for a refund. The key trigger is usually a Notice of Deficiency, sometimes called a "90-day letter." Under Internal Revenue Code § 6213, the petition generally must be filed within 90 days after the notice is mailed, or 150 days if it is addressed to a person outside the United States. Missing that deadline usually ends Tax Court review.

This can affect an injury claim when settlement proceeds, lost wages, punitive damages, or interest are taxed differently than expected. If the IRS says part of a personal injury recovery is taxable, a timely Tax Court petition can preserve the right to challenge that position. It can also affect negotiations, penalties, interest, and collection risk while the case is pending.