Customer Home Products Universal (HPU), DIY products distributed by independent retailers across the country. The management would like to explore the possibility of opening their own home improvement centers. Accordingly commissioned a consulting firm to conduct a feasibility study that will eventually convinces HPU expand into retail sales. The consulting firm bills $ 150,000 HPU, HPU is deducted from the current year's tax return. The IRS disputes the deduction by claiming that the matter of the cost of entering a new business, you may want to take advantage of. HPU & # 39; s management, on the other hand strongly believes that the matter of the cost of expanding HPU & # 39; s existing business, you have to be involved. In planning to take legal action against the IRS, HPU & # 39; s leadership is considering legal precedent in the state: the federal courts HPU & # 39; and the district decided that the cost of expanding distribution into retail sales should be capitalized. The Court of Appeal HPU & # 39; circuit and he said saying that although in some circumstances the marketing shift in product sales product shows a new trade or business, improve customer access to a & # 39; s existing products generally do not. The Federal Circuit Court found that the wholesale distribution and retail sales, even for the same product as separate businesses. In a case, the taxpayer another circuit, the Tax Court ruled that such costs should always take advantage of. HPU & # 39; s chief financial officer approaches you with a question: "What should be a judicial forum HPU lawsuit against the IRS: (1) United States district court (2) of the Tax Court, or (3) of the US Federal Claims Court" What do I tell him?
Universal Home Products (HPU) is a distributor of home improvement products to retailers nationwide. The management of the HPU wants to explore the possibility of opening their own retail centers. HPU hired a consulting firm to study the feasibility of expanding the retail sales. The consulting firm billed $ 150,000 for HPU services. HPU deduct the fee for the current year's tax return. The IRS disputed deduction says that, since they relate to conclude a new business, the costs should be capitalized. HPU & # 39; s leadership argues that, since they relate HPU expand its existing business, the cost will be deducted. The HPU management has considered legal action against IRS. The Federal Court HPU & # 39; and the district decided that if a company is expanding distribution into retail sales, the cost of the expansion should be capitalized. The Court of Appeals concluded that a new commercial in some circumstances be considered as a change in the distribution of product sales coming. A taxpayer with another case in another circuit, the Tax Court found that the costs of the expansion should be capitalized. In considering legal action against the IRS, HPU & # 39; s chief financial officer raised the issue that a judicial forum must be submitted to the lawsuit: the United States District Court, the Tax Court, US Court of Federal Claims or.
The appropriate forum for filing a lawsuit against the IRS would be the United States Tax Court. The US Tax Court, established in 1942, has national jurisdiction and can only hear cases related to taxation. In terms of the IRS lawsuit, HPU did not want to file a lawsuit in the US District Court is due to the fact that the company distributes its products to companies nationwide. Every state in the US District Court and the courts are independent from each other at least. As a result, the decision of the US District Court of a State may not apply in another state. Since HPU distributes products all over the country and wants to expand the country, the company would like to hear the case in court, which is a national competence.
The United States Tax Court specializes in handling tax disputes did occur before the Internal Revenue Service tax official. HPU may decide to file a lawsuit in another court forum. However, the US Tax Court is the only forum where HPU may have heard its case without having to pay the amount at issue. If the case is tried in the United States Court of Federal Claims or the US District Court, the tax must be paid before a lawsuit can be filed. The legislative branch of the US government makes the United States Tax Court and unique individual. By trying to make the case to the US Tax Court, the management of domestic products to the company's Universal & # 39; CPA s & # 39; and represent them in court, although the CPA & # 39; It has no legal training.
US Tax Court, the court of national jurisdiction and no uniform regulations for all regardless of their place of business or residence permit. The Tax Court is not bound by the decisions of the US District Court and the US Court of Federal Claims, even if the US District Court has jurisdiction over the taxpayer. Case to the US Tax Court decides on the judges who are experts in the field of tax law, without jury trials. Judges are appointed by the President and the Tax Court to serve 15-year terms. The US Tax Court looser than other formal court, which will help to promote dispute resolution more collaborators.