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Tax Court Corner: How a Case Gets to the US Tax Court

May 13th 2016
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In the coming weeks and months, I will be writing a series of articles regarding the US Tax Court. But first, I want to review how a case gets to the Tax Court and the process for filing a case with the court.

First of all, to fully represent your client before the court, you have to have a US Tax Court Bar License. However, if you don’t have that license, it doesn’t mean you can’t participate in the process. For example, if you don’t have a bar license, you can file a petition and appear before the court with your client. You just can’t act on the client’s behalf.

It is important to point out that most cases filed before the Tax Court are just a means to get the case to appeals. For example, one way to get to Tax Court is to file a petition before the court when your client receives a notice of deficiency. Typically, after you file a case based on a notice of deficiency, the case will get kicked down to appeals. Another way to get to Tax Court is after an audit closes, you will receive a 90-day notice to file a petition before the court. Those requests are typically sent back to appeals. The final way to get to Tax Court is to go through an audit, go through appeals, and then file a petition before the court. Those cases will be decided by the court.

After a petition is filed before the court, the court will assess the petition and check to see if it needs to go to appeals first. If it has already been to appeals, the court will then send a notice to appear. When you appear, and before the case is heard, there is a conference where the government tries to settle the case before the court hears it. Typically, 95 percent of all cases are settled before they are heard by the court.

If you don’t have a bar license, you can appear with your client in the settlement phase. The settlement officer will actually appreciate it if you did. If you can’t settle – and I never have not settled – then your case will be heard before the court. If you do not have a bar license, you can work with your client in the proceeding, but you can’t speak in court without permission of the judge.

If I ever have a case that can’t be settled before the settlement division of the court, I would hire an attorney whom I work with. The reason for that is I have a basic understanding of the Federal Rules of Evidence, but to be honest, I didn’t go to law school, and I don’t know the rules inside and out. So, for the client’s sake, I would bring in an attorney who would handle that part of the case. The IRS will present evidence, and your side will present evidence. Then the judge decides the case. Once the case is decided, it becomes public information.

Types of Court Opinions
The following are different opinions the court will issue:

1. Bench opinion. The judge may issue a bench opinion in a regular or S case (small case) during the trial session. In this situation, the judge orally states the opinion in court during the trial session. The Tax Court will send you a copy of the transcript reflecting the judge’s opinion within a few weeks after the trial. A bench opinion cannot be relied on as precedent. All bench opinions delivered after March 1, 2008, are electronically viewable through the Tax Court’s Docket Inquiry system.

2. Summary opinion. A summary opinion is issued in an S case. A summary opinion cannot be relied on as precedent, and the decision cannot be appealed.

3. Memorandum opinion or Tax Court opinion. The chief judge decides whether an opinion in a regular case will be issued as a memorandum opinion or as a Tax Court opinion. This can be used as precedent.

Furthermore, a memorandum opinion is issued in a regular case that does not involve a novel legal issue. A memorandum opinion addresses cases where the law is settled or factually driven. It can be cited as legal authority, and the decision can be appealed. A memorandum opinion is cited as [Name of Petitioner] v. Commissioner, T.C. Memo. [Year Issued – #].

A Tax Court opinion is issued in a regular case when the Tax Court believes it involves a sufficiently important legal issue or principle. It can be cited as legal authority, and the decision can be appealed. A Tax Court opinion is cited as [Name of Petitioner] v. Commissioner, [Volume of Tax Court Reports] T.C. [Page of the Volume] (Year Issued).

This is the basics of the Tax Court and how the process works.

Replies (5)

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By Concerned For Taxpayers
May 29th 2018 23:44

There are significant problems with this article and information.

Important rules of the Courts exist to protect taxpayers from wrongful information, procedures and other harm. Tax Court Rules of Practice and Procedure 23(a)(3), 24(a)(4) and 24(b) to name a few.

There are reasons for these rules! It’s called qualified and competent representation.

A person not admitted to the U.S. Tax Court Bar cannot sign a petition, they are not admitted to the Tax Court Bar, do not have an active bar number denoting that they are active and in good status with the Court to be recorded on the petition or other documents filed to the Court and do not possess the knowledge or qualifications to render competent advice or representation to a taxpayer.

Competent representation of a taxpayer in a U.S. Tax Court case is much more than filling out the lines on a petition and attending meetings or trial sessions holding the taxpayer’s hand.

Tax cases should not filed to Tax Court merely for the hopes of remand to IRS Appeals. The purpose of a Tax Court case is for the Court to render a fair decision or determination, not for the purpose of delay or another “crack” at appeals.

Knowledge of the rules of the Court, rules of evidence, legal ethics, proper filings, case management, procedure, discovery procedures, motions filings and much more is imperative for competent qualified representation.

The views illustrated in this article are not in the best interest of any taxpayer and illustrates why a substantial amount of Pro Se Tax Court cases do not prevail.

Although this writer has numerous articles published in Accountingweb, such does not mean that they possess the knowledge, expertise or even the credentials to be rendering such advisement to taxpayers or other tax professionals.

“Well-versed” in tax law or U.S. Tax Court cases by reading is not indicative of actual, competent and demonstrated knowledge of the Court or procedure. Advisement such as this is dangerous for both innocent taxpayers and tax professionals whom may rely on this type of inadequate advisement.

I urge Accountingweb to reconsider any further articles posting by this writer relating to Tax Court cases or any other matters that may negatively affect a taxpayer or tax professional.

Thanks (1)
Replying to Concerned For Taxpayers:
Craig Smalley
By Craig W. Smalley, EA
May 30th 2018 15:54

I respectfully disagree with you. This was simply a basic article informing tax pros about how a case gets to Tax Court. Frankly, I have used it quite a bit to the case kicked back down to appeals, which happens quite often. Thanks for reading

Thanks (0)
Replying to Craig Smalley:
By Concerned For Taxpayers
May 30th 2018 16:55

"Basic" information is providing misleading information.

Regardless of what you say you did, these actions are not in the best interest of any taxpayer of a docketed Tax Court case.

Even if the case is re-reviewed by appeals, it is still a docketed case and needs proper representation.

Appeals does retain jurisdiction of a docketed case, but that does not mean that just anyone should be filling out and filing a petition to Tax Court when they don't have proper knowledge of case procedures, rules of the court, rules of evidence or rules of legal ethics and don't have the ability to competently represent the case appropriately before Tax Court, don't have the capability or knowledge to file proper motions or even the capability to file an objection to a motion filed by the IRS Commissioner in the docketed case.

If your belief is that a taxpayer needs professional competent representation before IRS exam, audit and appeals, then why would they not need professional competent representation from a knowledgeable professional whom has demonstrated that competence through their admission to the Tax Court Bar once the case is to be filed to Tax Court?

Your writing fails to express that the IRS will likely have multiple attorney's from Chief Counsel assigned to the case that are extremely versed in tax and case law as well as court procedure.

Your advocating lends to the innocent taxpayer whom has let you fill out their petition ultimately having a pro se docketed case and the burden to challenge the tax matters alone while the IRS sits on the opposite side with a well prepared team.

An unlicensed person just attending the trial session with the taxpayer, as you wrote, will not be any help to the taxpayer. As you also wrote, you cannot advocate on behalf of the taxpayer. That's right, the court will not recognize you as a party whom has entered an appearance in the case because you can't.

Better advisement would be to stick to representing taxpayers at the IRS administrative levels. Then if they receive a Notice of Deficiency or Notice of Determination refer them to a competent professional that is admitted to the Tax Court Bar with the proper knowledge and qualifications that taxpayer needs.

If the taxpayer cannot afford competent representation of an admitted professional, there are Low Income Taxpayer Clinics and Pro Bono Programs that can assist these taxpayers competently and at either no cost or lowered costs.

"Willie-Nillie" filling out petitions to file to Tax Court is not the proper answer or in the best interest of any taxpayer.

You should not be writing articles like this and many of your others appearing in other locations that are leading tax pros and taxpayers down a path of destruction.

Thanks (0)
Craig Smalley
By Craig W. Smalley, EA
May 30th 2018 17:37

Ok, well you know more than me, so perhaps you should be published. It was just a basic article

Thanks (0)
Replying to Craig Smalley:
By Concerned For Taxpayers
May 30th 2018 17:43

Just a basic article of bad information.

Thanks (0)