A common misunderstanding among Tax Court petitioners is who decides what is a small claims case. The $50K number is easy enough, but of what is it comprised?

Well, Section 7463(a) teaches us that it’s the amount of tax and penalties stated in the SNOD, less any concessions made by the petitioner.

So IRS sets the bar for what is a small-claimer, and what is a full-dress Tax Court case.

In John M. Germano & Carol J. Germano, Docket No. 12100-13S, filed 8/1/13, Ch J Colvin elaborates. IRS made a motion to drop the small-claims “S” from the docket number, because the deficiency was $65K. John & Carol answered “no amount Due [sic] in excess of 50,000″, Order, at p. 1.

IRS responded by saying that John & Carol had a loss on a stock sale in the year at issue, and IRS and John & Carol were trying to reach an agreed decision.

OK, says Ch J Colvin, but John & Carol conceded nothing, and IRS claimed $65K, so that’s the amount in dispute, and once the amount in dispute is over $50K, no small-claims treatment.

All is not lost, John & Carol: “We note that removing the small tax case designation does not preclude settlement of this case and that, if for any reason, the case should proceed to trial, petitioners could, prior to trial, move to convert this case to a small tax case upon demonstration that the amount in dispute does not exceed $50,000.” Order, at pp. 1-2.

But until then, it’s not a small-claimer.