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Daily Tax Report: State

A Refresher on U.S. Tax Court as It Starts Adapting to Covid-19 (1)

March 19, 2020, 8:45 AMUpdated: March 19, 2020, 1:25 PM

As concerns mount about public health, the federal government is taking steps to stop the spread of Covid-19. Last week President Donald Trump declared the pandemic sufficient to warrant an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the “Stafford Act"). Those steps affect the U.S. Tax Court.

To protect employees, the court has closed its building until further notice. Additionally, as of Wednesday, the Tax Court will no longer continue to receive and process mail: mail will be held for delivery until the building reopens.

The court has also canceled several trial sessions through April 30. The court expects that parties will continue to work together to exchange information and address pending issues. Any unresolved cases will be scheduled for trial at a later date.

Petitions and other documents may not be hand-delivered. Taxpayers may comply with statutory deadlines for filing petitions or notices of appeal by timely mailing a petition or notice of appeal to the court. Timeliness of mailing of the petition or notice of appeal is determined by the United States Postal Service’s postmark or the delivery certificate of a designated private delivery service.

No applications for admission to practice or requests for copies of documents will be processed.

Of course, the eAccess and eFiling systems remain operational.

The court advised checking its website for updates.

How the Court Works

The Tax Court was created by Congress under Article I of the U.S. Constitution. Tax disputes that can’t be resolved between taxpayers and the Internal Revenue Service can be addressed here.

The court conducts trial sessions in 74 cities across the country. Trial sessions are held, and work of the court is performed by presidentially appointed judges, senior judges, and special trial judges. Here’s a list.

Typically, when the IRS commissioner has decided there is a tax deficiency, a taxpayer can dispute the deficiency in Tax Court. A taxpayer can file in the court even before paying the disputed amount; in contrast, if a taxpayer wants to bring a tax action in federal court, the taxpayer must typically pay the amounts owed in advance of filing.

The Tax Court also has the authority to hear other tax matters, including the power to make certain types of declaratory judgments, order reduction of interest, award administrative and litigation costs, determine relief from joint and several liability on a joint return, and review collection actions.

Most taxpayers bring an action in Tax Court after receiving a Notice of Deficiency, sometimes called a 90-day letter. Upon receiving the letter, a taxpayer has 90 days (150 days for taxpayers outside of the country) from the date of the notice to file a petition with the court to challenge the tax. The court can’t extend the time for filing.

To bring a case, a taxpayer must file a petition and pay the filing fee. Taxpayers can file pro se, meaning they can represent themselves and don’t have to be represented by an attorney. But they can be represented by an attorney or other tax professional who is admitted to the bar of the Tax Court or has permission to appear to represent a client.

Outside of unusual situations, like the current crisis, cases are regularly scheduled for trial on a first-in/first-out basis. When a case is calendared, the parties are notified of the date, time, and place of trial. Case dockets are updated electronically.

There is no right to a jury: Trials in Tax Court are heard before a judge. While the court is physically located in Washington, judges travel all over the country for trials.

If a dispute involves less than $50,000, the taxpayers can file their case as a simplified small tax procedure. Small tax cases generally are less formal and are resolved much faster. However, unlike a “regular” Tax Court case, outcomes can’t be appealed to a court of appeals.

Most Tax Court cases are settled by mutual agreement without a trial. If a case does go to trial, the judge will issue an opinion:

  • The judge may issue a Bench Opinion in a regular or small tax case during the trial session; a Bench Opinion can’t be relied on as precedent.
  • A Summary Opinion is issued in a small tax case; a Summary Opinion can’t be relied on as precedent.
  • In a regular tax case, the chief judge will issue a Memorandum Opinion or Tax Court Opinion—either can be cited as legal authority and appealed. A Memorandum Opinion is typically issued in a case that doesn’t involve a new legal issue, where the law is settled, or the claim is facts-and-circumstances dependent. In contrast, a Tax Court Opinion is issued when the court believes it involves a sufficiently important legal issue or principle.

Most Tax Court decisions are available online. Copies of particular documents may be obtained, for a fee, by writing to the Copywork Section, United States Tax Court, 400 Second Street, N.W., Washington, D.C. 20217.

This is a weekly column from Kelly Phillips Erb, the TaxGirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.

(Updates with information about Tax Court building closure.)

To contact the reporter on this story: Kelly Phillips Erb at kelly.erb@taxgirl.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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