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Tax Court Opinions Are Searchable (Again)

The US Tax Court gave taxpayers and tax practitioners a belated Christmas gift when it announced that the Opinion search feature is back. This news comes on the heels of the Tax Court’s reintroduction of the Order search function earlier this month.

The Opinion search function allows the public to search for specific cases by name or docket number or run general searches by a keyword or phrase, judge, date range or opinion type (see here for an explanation of opinion types). Unlike the Tax Court’s prior case management system, the new system allows the public to search Bench Opinions. Guidance from the Tax Court on using the Opinion and Order search functions can be found here.

Results are available for opinions in the Tax Court’s system for cases filed on or after May 1, 1986. Thus, the public will need to use other resources in order to obtain older cases. Opinions are also available for cases where the docket is sealed, which is an improvement over the Order search function which does not return results for sealed cases.

Practice Point: The return of the Opinion search feature is an exciting development. It is extremely helpful in searching for specific opinions and is also a useful tool when searching whether a particular judge has dealt with certain issues in the past. Unfortunately, the Tax Court still has not fixed the issue where its case management system seals the entire docket and not just the specific items ordered sealed, but we are hopeful this issue will be resolved soon.




Types of Tax Court Opinions and Their Precedential Effect (Updated)

At the end of 2016 we posted “Types of Tax Court Opinions and Their Precedential Effect” and added that document to the Resources tab on the blog. We recently updated this resource and, below, we’ve also provided the updated text.

Most tax cases are decided by the US Tax Court, which issues two categories of opinions: formally published dispositions and unpublished dispositions. The first category consists of opinions that are published in the Tax Court Reports and are technically called “division opinions” but are more commonly referred to as “T.C. opinions.” The second category consists of three sets of unpublished dispositions:

  1. memorandum opinions (commonly referred to as “memo opinions” or “T.C. memos”)
  2. summary opinions
  3. orders.

A common question asked by taxpayers relates to the difference between these forms of dispositions in terms of precedential effect.

T.C. opinions are binding in the Tax Court, precedential and published by the Tax Court. They generally address issues of first impression, issues that impact a large number of taxpayers or matters related to the validity or invalidity of regulations. To the extent there is a T.C. opinion on point, taxpayers should cite to it as primary authority in a Tax Court proceeding.

Memo opinions are not officially published but are reproduced by commercial publishers. They generally address cases that do not involve novel legal issues and the law is settled, or the result is factually driven. Although these opinions are technically not precedential, they are often cited by litigants, and the Tax Court does not disregard these opinions lightly. It is rare to find a non-T.C. opinion that rejects the reasoning of a memo opinion. Indeed, the trend in recent years seems to be that the weight afforded to T.C. opinions and memo opinions is not substantially different. This reflects the fact that there are significantly more memo opinions than T.C. opinions each year (approximately 90% of all Tax Court opinions are memo opinions), providing taxpayers with more authority upon which to provide support for their position.

Summary opinions are also not published by the Tax Court but are reproduced by commercial publishers. They are issued in cases where the amount in dispute is less than $50,000 and the taxpayer elects to have their case tried under the small tax case procedures. Most summary opinions involve run-of-the-mill facts, but some provide insightful discussions of the law that may support a taxpayer’s case. By statute, summary opinions are not precedential, however, the Tax Court does not prohibit the citation of this type of opinion and has noted that it may give consideration to the reasoning and conclusions in a summary opinion to the extent they are persuasive. Thus, in the absence of a T.C. opinion or memo opinion supporting a taxpayer’s position or addressing the issue presented, taxpayers may want to consider citing to a favorable summary opinion.

Finally, the Tax Court issues dozens of orders, some of which involve the discussion of substantive issues that may [...]

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Tax Court Orders Are Searchable (Again)

In late 2020, the US Tax Court transitioned to a new case management system, DAWSON (Docket Access Within a Secure Online Network), which was named after the late Judge Howard A. Dawson, Jr.. We previously discussed DAWSON here and here.

Over the past year, the Tax Court has made improvements to DAWSON in order to provide better access to taxpayers and their representatives. One of the helpful features of the old case management system was the ability to search Orders, however, that feature was not present in DAWSON—until now.

On December 14, 2021, the Tax Court announced that the Order search feature is once again available to the public. In addition to searching for Orders by case name or docket number, the public can also search by keyword or phrase, by judge or by date range. The Tax Court’s DAWSON Release Notes page provides the following additional information:

  • Implemented Order search for public users
    • Includes keyword and phrase search
    • Includes ability to find exact matches with “” (quotation marks) ex: “innocent spouse”
    • Includes ability to combine two or more keywords or phrases with the + (plus sign) ex: “collection due process” + remand
    • Includes ability to find documents with one or more keywords or phrases with the | (pipe character) ex: Lien | levy [Note: this search will return documents that contain the words “lien” or “levy”]
    • Includes ability to filter by date, judge, case title, petitioner name, or docket number
  • Petitions and other documents with form fields now upload correctly for all browsers.

Similar guidance concerning searching for documents is also available on the Tax Court’s website. The Tax Court also updated its Public Guide, Self-Represented (Pro Se) Petitioner Guide and Practitioner Guide for DAWSON. The Public Guide indicates that the ability to search court opinions in DAWSON is coming soon. Additionally, cases that migrated from the prior case management system appear as sealed in DAWSON if there were any sealed documents in the case. It remains to be seen whether unsealed Orders in such cases will be searchable in the future.

The Tax Court’s announcement does not indicate how far back the public can go to search for Orders. Using the Order search function and restricting the date range, the earliest Order we were able to find dates back to May 22, 1980. Based on entering different date ranges, it appears that certain Orders are available back to this date but not all Orders dating back to May 22, 1980, are available. This is not surprising given that Tax Court records are sent offsite to storage after a set period of time. Regardless, the ability to search for Orders back to 1980, at least for those Orders that are available on the website, is an improvement over the prior Order search feature, which [...]

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Tax Court Selects Two New STJs

On December 6, 2021, the US Tax Court announced that Adam B. Landy and Eunkyong Choi have each been selected to serve as Special Trial Judges (STJs). They join the existing members of the Tax Court, which include four other STJs, 17 presidentially appointed Judges, and 10 Senior Judges serving on recall.

STJ Landy was previously in private practice in South Carolina from 2010 to 2016 and was a Senior Attorney with the Internal Revenue Service Office of Chief Counsel (in San Francisco and Baltimore) from 2016 until he joined the Tax Court. STJ Choi was also previously in private practice and spent time both teaching and working at low-income taxpayer clinics and serving as the Taxpayer Advocate in the New York City Department of Finance before she joined the Tax Court.

The purpose of STJs is to lessen the workload of the Tax Court and to allow the judges to hear cases with smaller amounts in controversy. The duties of STJs are wide-ranging and include several activities, as reflected in a prior Position Vacancy Announcement.




Special Trial Judge Receives Tax Court’s Highest Award

On November 21, 2021, the US Tax Court announced that Special Trial Judge Daniel A. Guy, Jr., received the J. Edgar Murdock Award for his distinguished service to the Tax Court. The Murdock Award commemorates Judge John Edgar Murdock, who served on the Tax Court from 1926 to 1968 and has been described as probably the most influential person to serve on it. A story recited in the publication referenced below (and which may be more folklore than fact) is that a taxpayer once concluded their argument before Judge Murdock saying, “as God is my judge I do not owe this tax,” and Judge Murdock retorted, “He isn’t, I am, and you do.” Further background on Judge Murdock can be found here.

The Murdock Award is the highest honor bestowed by the Tax Court. It has been presented only 13 times since its creation in 1973, with the most recent recipients being former Chief Special Trial Judge Peter J. Panuthos (2012), former Judge Robert P. Ruwe (2012) and current Chief Special Trial Judge Lewis R. Carluzzo (2020).

The Tax Court is composed of 19 presidentially appointed members and also includes senior judges serving in recall and special trial judges. As explained in the publication “The United States Tax Court: A Historical Analysis” (2d ed. 2014), the Tax Court established a small tax case division following statutory changes made in the Tax Reform Act of 1969. The purpose of special trial judges is to lessen the workload of the Tax Court and allow these judges to hear cases with smaller amounts in controversy. The range of cases that may be assigned to a special trial judge has expanded over the years, and they play an important role in the tax judicial system.

Special Trial Judge Daniel has served the Tax Court in various roles, ranging from law clerk to general counsel, for more than 30 years. He was appointed as a Special Trial Judge on May 31, 2012. Partners Andrew Roberson and Kevin Spencer worked with Special Trial Judge Daniel when they clerked at the Tax Court and saw the invaluable services he provided firsthand. McDermott congratulates him on this well-deserved honor.




IRS Announces Nonacquiescence in Mayo Tax Regulation Invalidity Holding

We previously wrote here and here about decisions made by the District Court of Minnesota and the US Court of Appeals for the Eighth Circuit in Mayo Clinic v. United States regarding challenges to the validity of certain Treasury Regulations promulgated under Internal Revenue Code (Code) Section 170. In that case, the Eighth Circuit held for the taxpayer in part and the government in part and remanded to the district court to further develop the record and address certain issues.

The Internal Revenue Service (IRS) recently announced in an Action on Decision (AOD) that it will not acquiesce in the Eighth Circuit’s holding, which invalidated Treas. Reg. § 1.170A-9(c)(1)’s requirement that the primary function of an education organization described in Code Section 170(b)(1)(A)(ii) must be the presentation of formal instruction. This means that in all cases not appealable to the Eighth Circuit, the IRS will not follow this holding and will continue to litigate the issue.

The IRS’s policy is to announce at an early date whether it will follow the holdings in certain cases, and it does so by making an announcement in an AOD. A nonacquiescence is not binding on courts or the taxpayers but merely signals the IRS’s position that it disagrees with a court decision. (Sometimes the IRS will acquiesce in a decision.) Given that an AOD is published in the Internal Revenue Bulletin, it could be argued that the IRS’s action constitutes published guidance taxpayers can rely on. The IRS’s list of AODs, with links to each action, can be found here.




Supreme Court Grants Certiorari in One Tax Case, Denies it in Several Others

Historically, the Supreme Court of the United States rarely grants petitions for certiorari in tax cases, and it appears this trend continues in the current term.

On September 30, 2021, the Supreme Court granted the petition for certiorari in Boechler, P.C. v. Commissioner. The case presents the question of whether Internal Revenue Code Section 6330(d)(1), which establishes a 30-day time limit for filing a petition in the US Tax Court to review a notice of determination by the Internal Revenue Service (IRS) in a collection due process matter, is a jurisdictional requirement or a claim-processing rule subject to the equitable tolling doctrine.

On October 4, 2021, the Supreme Court denied petitions for certiorari in Healthcare Distribution Alliance v. James and Taylor Lohmeyer Law Firm PLLC v. United States. The former involved a challenge to a US Court of Appeals for the Second Circuit decision that held that an opioid stewardship surcharge was a tax within the meaning of the Tax Injunction Act. The Court also found that the district court lacked subject matter jurisdiction to rule on the challenge to the payment. The latter case involved a law firm’s challenge to the US Court of Appeals for the Fifth Circuit’s decision that the IRS could use a “John Doe” summons to seek the identifies of taxpayers who it believed may have taken the firm’s advice to hide income offshore.

The Supreme Court also denied petitions for certiorari in the following cases:

  • Perkins v. Commissioner: A case regarding the taxability of income derived from the sale of land and gravel mined from treaty-protected land by an enrolled member of the Seneca Nation
  • Kimble v. United States: A case focused on Report of Foreign Bank and Financial Accounts penalties and
  • Razzouk v. United States: A case involving restitution for tax and bribery convictions

Still pending are petitions in Willis v. United States (which involves the value of collectible coins seized by the government and deposited into an IRS account) and Clay v. Commissioner (which deals with a dispute over whether to follow guidance from the Bureau of Indian Affairs or the IRS).

Practice Point: Although the Supreme Court rarely reviews tax cases, when it does, the decision is usually important because it’s applicable to numerous taxpayers. For example, cases such as Mayo Found. for Med. Educ. & Research v. United States and United States v. Home Concrete & Supply LLC both provided significant guidance for taxpayers regarding the IRS’s scope of regulatory authority. Additionally, non-tax cases from the Supreme Court can contain general principles that are also applicable and impact tax positions taken, or being considered, by taxpayers. Thus, it is important that taxpayers and their representatives stay abreast on what is happening at the Supreme Court.




District Court Broadly Interprets Informal Claim Doctrine

Internal Revenue Code (Code) section 7803(a)(3)(C) provides that taxpayers have “the right to pay no more than the correct amount of tax.” However, there are two relevant considerations to this “right.” First, the Internal Revenue Service (IRS) must take the appropriate steps before it can assess and collect any amount of tax beyond that reported by the taxpayer. Second, taxpayers who believe they overpaid their tax must take affirmative steps to protect their rights to claim a refund before the period of limitations on seeking a refund expires. We recently provided an overview of these steps.

Taxpayers traditionally claim the right to an income tax refund (or credit) by filing a formal amended tax return using the appropriate form prescribed by the IRS (e.g., Form 1040X, Form 1120X, etc.) under IRS procedures and guidelines (e.g., Code section 6402 and the underlying regulations). However, in some situations, taxpayers can assert a valid refund claim through other means such as correspondence or other written communications with the IRS that is not made by filing a formal amended tax return. Courts have consistently recognized the validity of so-called “informal” refund claims and explained that such claims must have a written component that gives the IRS sufficient notice of the fact that the taxpayer believes they have overpaid their income tax and that a refund is due.

Likewise, the IRS acknowledges the propriety of the informal claim doctrine. However, the IRS’s position appears to be inconsistent as Internal Revenue Manual 25.6.1.10.2.6(3) (09-29-2015) references the judicially-created informal claim doctrine noted above, but Publication 5125, which discusses the IRS’s Large Business & International examination process, states that the claim must also be made under penalties of perjury. (See: Internal Revenue Manual 25.6.1.10.2.6.3 (09-29-2015).)

The recent district court decision in Johnson v. United States (No. 2:10-cv-01561-TLN-JDP (E.D. Cal., Sept. 30, 2021) addressed whether correspondence between taxpayers and the Taxpayer Advocate Service (TAS) can give rise to an informal claim. The taxpayers in that case reviewed copies of their tax account transcripts for several years and determined that funds offset by the IRS from tax years 2013 and 2014 and applied to earlier tax years were incorrect because there was no liability remaining in those earlier years. Specifically, the taxpayers argued that they were entitled to refunds for tax years 2009 and 2010 and relied on discussions and correspondence with TAS, including a faxed letter summarizing the timeline of the issues, to support their position that their refund claim was timely under the informal claim doctrine. The IRS argued that the informal claim doctrine did not apply because the letter did not include facts sufficient to apprise the IRS of the factual basis for the claims; the letter only referenced 2009 (and therefore was insufficient for 2010) and was not signed under penalties of perjury.

The district court sided with the taxpayers regarding the year 2009, finding that the letter constituted an informal claim under the judicially-created informal claim [...]

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IRS Acknowledges Limitations on Use of Outside Contractors in Audits

Several years ago, it came to light that the Internal Revenue Service (IRS) had hired a law firm to assist with transfer pricing matters in an ongoing audit of a large corporate taxpayer. Contemporaneous with that hiring, the IRS issued temporary regulations providing that third-party contractors “may receive books, papers, records, or other data summoned by the IRS and take testimony of a person who the IRS has summoned as a witness to provide testimony under oath” and “clarifying that contractors are permitted to participate fully in a summons interview.” We previously discussed this highly controversial position here.

Congress seemingly disapproved of the IRS practice of outsourcing legal and audit services to private law firms. In 2019, it enacted Internal Revenue Code (Code) Section 7602(f) as part of the Taxpayer First Act. That provision prohibits the IRS from hiring outside contractors for purposes other than providing “expert evaluation and assistance” and specifically prohibits non-IRS employees from questioning witnesses under oath. However, no definition was provided as to the meaning “expert evaluation and assistance.”

The IRS recently finalized regulations (applicable to summonses served on after August 6, 2020) providing taxpayer-favorable guidance on the meaning of “expert evaluation and assistance.” Under the final regulations, the IRS may not engage outside legal counsel unless the attorney is hired by the IRS for expertise in (A) foreign, state or local law, (B) non-tax substantive law that is relevant to an issue in the examination, or (C) knowledge, skills or abilities other than providing legal services as an attorney (such as a translator). In addition, the final regulations prohibit IRS contractors from asking a witness (or his or her representative) to clarify an objection or assertion of privilege, as well as from asking questions to witnesses generally, when the witness is under oath.

Practice Point: The final regulations provide helpful guidance to taxpayers regarding the role that outside contractors can play in IRS audits and provide a much-needed deterrent on the IRS’s outsourcing of audits to private law firms. However, taxpayer who believe that the IRS is using outside counsel may want to request in writing a list of all third parties that the IRS contacts during the course of the examination.




Weekly IRS Roundup June 7 – June 11, 2021

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 7, 2021 – June 11, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 7, 2021: The IRS issued a news release announcing it has begun sending letters to inform more than 36 million American families of their potential eligibility to receive monthly Child Tax Credit payments beginning in July, pursuant to the expansion of the Child Tax Credit under the American Rescue Plan Act of 2021 (ARPA).

June 8, 2021: The IRS issued a news release, soliciting applications for 80 vacancies within its Procurement office, including vacancies for contract specialists who assist the IRS in the procurement and administration of third-party contracts.

June 8, 2021: The IRS issued a news release reminding taxpayers who make estimated tax payments that the second installment of estimated taxes for 2021 is due June 15, 2021.

June 9, 2021: The IRS issued a news release announcing the disbursement of more than 2.3 million Economic Impact Payments worth more than $4.2 billion, bringing the total amount of disbursements under ARPA to more than 169 million payments worth approximately $395 billion.

June 10, 2021: The IRS issued Notice 2021-36, announcing that the applicability date for certain regulations under sections 59A and 6038A of the Code, which set forth various reporting requirements with respect to qualified derivative payments (QDPs) for purposes of the base erosion and anti-abuse tax (BEAT), is delayed to the 2023 taxable year.

June 11, 2021: The IRS issued final regulations regarding the new mandatory 60-day postponement of certain tax deadlines due to a federally-declared disaster, enacted as section 7805A(d) of the Code by the Further Consolidated Appropriations Act, 2020.

June 11, 2021: The IRS issued Revenue Ruling 2021-11, providing the semi-annual Standard Industry Fare Level (SIFL) rates and terminal charges used in computing the value of noncommercial flights on employer-provided aircrafts for purposes of the taxation of fringe benefits under section 61 of the Code. The Revenue Ruling provides both unadjusted SIFL rates and SIFL rates adjusted for relief provided to the airline industry by COVID-related legislation.

June 11, 2021: The IRS issued an Action on Decision, announcing it would not acquiesce to TriNet Group, Inc. v. United States, 979 F.3d 1311 (11th Cir. 2020), which held that a professional employer organization (PEO) had “control of the payment of wages” to its clients’ employees and therefore the PEO—not its clients—was the “employer” (under section 3401(d) of the Code) eligible to claim Federal Insurance Contributions Act (FICA) tip tax credits with respect to such wages.

June 11, 2021: The IRS issued a news release and two sets of FAQs, providing assistance to families and small businesses claiming [...]

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