The Tax Court is one of the few judicial forums in which per se claimants are common. This article examines the Tax Court and its policy of allowing per se claimants.
Taxpayer vs. IRS
Disputes with the Internal Revenue Service (IRS) can be challenging, especially when you are not represented by an attorney, accountant, or other tax expert. If you have used all the appeals procedures available within the IRS and the IRS has assessed a deficiency, you have to make a decision either to capitulate or to fight on. One option is to pay the deficiency or, if necessary, make arrangements to pay the deficiency in installments. This may be a route to take if the amount of the deficiency is relatively small or if you concede that the arguments supporting your position are weak. The other option is to seek judicial review of the matter. To bring suit in a federal district court or the U.S. Court of Federal Claims, you must pay the disputed amount and request a refund from the court. If you cannot, or are not willing to, pay the deficiency, you can bring the case before the Tax Court.
What is the Tax Court Like?
The Tax Court differs from a federal district court in several respects. One unique feature of the Tax Court is that it only hears federal taxation cases. Another factor that distinguishes the Tax Court is that, unlike other federal judges, the Tax Court judges are all tax law experts, selected for service because of their experience and expertise in taxation. According to the Tax Court’s website, there are 19 Tax Court judges who are assisted by senior judges and special trial judges. A case is generally heard and decided by a single Tax Court judge. Although the Tax Court has its headquarters in Washington, D.C., the Tax Court judges travel to various cities throughout the U.S. to try cases. There are no jury trials in the Tax Court.
Acting Pro Se in the Tax Court
Under the Tax Court Rules of Practice and Procedure, taxpayers are allowed to represent themselves before the Tax Court. Taxpayers may also be represented in the Tax Court by an attorney or other tax professional admitted to the bar of the Tax Court. The Tax Court is a friendlier place than other courts for pro se litigants because there is no jury and the judges are more relaxed in applying the rules of evidence and procedure. In addition, the Tax Court website contains detailed information in an easy-to-understand, question-and-answer format that covers the progress of a Tax Court case from start to finish. The site also has the rules of court, the fees, and contact information.
If you decide to represent yourself in the Tax Court, you should be aware that Tax Court judges do not have unlimited patience with non-attorney petitioners. A pro se litigant should make every effort to comply with the court’s procedures and to respond to requests in a timely manner. The case of Houston v. Commissioner, T.C. Memo 1995-159, could be a manual of what not to do when acting pro se. The amount involved was $9,000 over four taxable years. Throughout the protracted course of the controversy, the taxpayer had changed accountants, filed amended returns, objected to consolidating the cases for the four taxable years, asked for continuances, made unfounded charges of bias, and ignored requests for admissions from the IRS. He even filed a motion to withdraw the case from the jurisdiction of the Tax Court to seek a jury trial in the federal district court. Although Tax Court Judge Cohen left no doubt about the court’s frustration with the proceedings, he stated that the court would decide the case using its best judgment and without regard to its dissatisfaction with the taxpayer’s conduct. The court ultimately ruled in favor of the government and sustained a negligence penalty against the taxpayer.
Simplified Procedure for Small Tax Cases
Pursuant to the Tax Court Rules of Practice and Procedure, if the disputed tax liability is less than $50,000, you can elect to use the Tax Court’s simplified small tax case procedure. Taxpayers usually represent themselves when using the simplified procedure. Trials are conducted in an informal manner; briefs and oral arguments are not required. Evidence is admissible if the trial judge deems it to have probative value. A decision can be obtained more quickly from the simplified procedure than from a regular Tax Court case. The trade-off is that adverse decisions from the simplified procedure cannot be appealed to any court. Thus, both the taxpayer and the IRS must accept the ruling of a judge in a simplified proceeding.
If you have a dispute with the IRS that cannot be resolved after exhausting all appeals, you may wish to consider taking the case to the Tax Court, either in a simplified proceeding or a regular case. You can represent yourself before the court, particularly in a simplified proceeding. If you feel that you understand the tax law involved, that your position is correct, and that you can articulate your position before the court, have a go at defeating the IRS in Tax Court.
Website of the United States Tax Court
United States Tax Court Rules of Practice and Procedure, Uncle Fed’s Tax Board
Howard, “Specialized Federal Courts versus General Courts: Ideology and Expertise in Tax Decisions,” Paper prepared for presentation at Annual Conference of American Political Science Ass’n