Tax Court Considering Allowing Remote Testimony

By and on October 31, 2017

We have previously reported on the various forums in which taxpayers can litigate tax cases, noting that the vast majority of tax cases are litigated in the US Tax Court (Tax Court). The Tax Court is the preferred forum for several reasons, including that the judges are all tax specialists, and taxpayers can litigate their case without having to pay the tax beforehand. Trial sessions and other work of the Tax court are conducted by presidentially appointed judges, senior judges serving on recall and Special Trial Judges. These judges travel nationwide to conduct trials in designated cities.

We have also previously noted important procedural developments and other news from the Tax Court, such as proposals to changes the Court’s rules: Tax Court Considering Requiring Notice of Non-Party Subpoenas, Tax Court Anticipates Releasing Revisions to its Rules in the Near Future and Tax Court Adopts Rules for Judicial Conduct and Judicial Disability Complaints. According to recent media reports, the Tax Court is currently considering whether to use teleconference technology to take testimony from witnesses remotely, rather than requiring a witness’ physical appearance in Court. This technique could be used where travel is difficult for a witness or the Court, but raises serious questions and concerns. However, it is likely that the Tax Court could work through these issues; we understand that some Tax Court Judges have arranged for videoconferencing that is acceptable to the Court.

Trials in tax cases often require a substantial amount of coordination with counsel, the court and witnesses (both fact and expert). Sometimes witnesses are located outside the United States and it can be difficult to arrange travel to attend and testify at a trial. In this sense, allowing remote testimony would ease the burden on taxpayers and the Court. On the other hand, not being in the same physical location with a witness could potentially impact how the witness is questioned (either on direct or cross-examination) and how the judge observes the witness. In Diaz v. Commissioner, 58 TC 560, 564 (1972), the Tax Court observed that the process of distilling truth from the testimony of a witness, whose demeanor the judge observes and whose credibility is evaluated, “is the daily grist of judicial life.” Moreover, taking testimony remotely outside of the United States raises all sorts of sovereignty issues in the foreign jurisdiction and may run afoul of local law.

Practice Point: We will continue to monitor this development and report back with any additional news. In the meantime, taxpayers should consider whether the judge assigned to their case may want to consider working directly with that judge if they are interested in exploring remote testimony.

Andrew R. Roberson
Andrew (Andy) R. Roberson focuses his practice on tax controversy and litigation matters. He represents clients before the Internal Revenue Service (IRS) Examination Division and Appeals Office and has been involved in over 75 matters at all levels of the federal court system, including the US Tax Court and Federal District Courts, several US Courts of Appeal and the Supreme Court. Andy has experience settling tax disputes through alternative dispute resolution procedures, including Fast Track Settlement and Post-Appeals Mediation, and in representing clients in Compliance Assurance Process (CAP) audits. In addition to representing corporations and partnerships in tax disputes, he also represents high net-worth individuals and assists taxpayers needing to make voluntary disclosures. Read Andy Roberson's full bio.

Kevin Spencer
Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.