As we previously discussed, the United States Tax Court (Tax Court) closed its doors on December 28, 2018, until further notice. However, trial sessions scheduled for the weeks of January 7, and 14, 2019, were to proceed as scheduled. The Tax Court has updated its website to confirm that the trial sessions scheduled for the week of January 14, 2019, will proceed as scheduled, but that trial sessions scheduled for the week of January 28, 2019, in El Paso, Los Angeles, New York, Philadelphia, San Diego, and Lubbock are canceled. A decision regarding the trial sessions for the week of February 4, 2019, will be made on or before January 18, 2019.

As a result of the shutdown, the Tax Court did not issue any Orders or Opinions from December 31, 2018, to January 9, 2019. It started issuing Orders again on January 10, 2019, but no Opinions have been issued since December 27, 2018.

Practice Point: In addition to its impact on governmental agencies, the government shutdown continues to disrupt judicial operations. Some federal courts have continued to issue opinions during this time but activity in many cases has been postponed or canceled.

The United States Tax Court (Tax Court) has announced that it will be shutting down starting today, December 28, 2018 at 11:59 p.m., and will remain closed until further notice. However, trial sessions scheduled for the weeks of January 7 and 14, 2019, will proceed as scheduled. Electronic filing and electronic access to the Tax Court’s docket system will remain available and taxpayers may comply with statutory deadlines for documents required to be paper filed by timely mailing such documents using approved delivery services. Further updates will be provided on the Tax Court’s website.

Practice Point: The government shutdown continues to impact government agencies and the judicial system. For a detailed discussion of the impact of the shutdown on the Internal Revenue Service, see here.

The US Tax Court is alive with action these days. First, two new judges will start soon after they are sworn in. Ms. Elizabeth Copeland and Mr. Patrick Urda were nominated on August 2017 for 15-year terms to fill openings created by retiring tax court judges. They were confirmed on August 28, 2018. Ms. Copeland will replace Judge James S. Halpern, who retired from the court on August 28, 2018, but continues to perform judicial duties as a Senior Judge on recall. Mr. Urda will replace Judge Diana L. Kroupa, who retired from the court in June 2014.

Second, the Tax Court announced that Senior Judge Carolyn P. Chiechi will retire, effective October 19, 2018. Judge Chiechi was appointed by President George H.W. Bush October 1, 1992, and took senior status in 2007. Any cases submitted or assigned to Judge Chiechi will be reassigned.

Finally, Senior Judge David Laro passed away on September 21, 2018. More information about Judge Laro can be found on the TaxProf Blog. Judge Laro started at the Tax Court in 1992 and was involved in several important cases. In addition, he is well known among practitioners for his use of concurrent expert testimony (also referred to as “hot tubbing”). We have previously written about Judge Laro’s use of hot tubbing here.

Prior coverage of Tax Court nominations can be found in our previously shared articles.

Following up on our prior post, Judge Maurice B. Foley takes over today as Chief Judge of the US Tax Court (Tax Court). The term as Chief Judge spans two years and involves several statutory and administrative duties, including but not limited to the assignment of cases, appointment of Special Trial Judges, review of draft opinions, and determination of which cases will be reviewed by the full court. For those interested in a historical analysis of the Tax Court, which was recently revised in 2014, see here.

Tax controversy practitioners are undoubtedly aware of the gradual movement over the years to conform certain Tax Court procedure rules (Tax Court Rules) to those of the Federal Rules of Civil Procedure. In many ways, this makes sense to ensure uniformity of tax cases regardless of whether a taxpayer litigates his tax dispute in a refund forum in the US District Court or the US Court of Federal Claims, or prior to payment of tax in the Tax Court. Below we note a few important areas of divergence between the different rules, and point out situations where the Tax Court Rules do not address a particular matter. These matters were discussed at the recent Tax Court Judicial Conference held in Chicago last week.

Amicus Briefs

As we have discussed before, amicus briefs are not uncommon in other courts. However, the Tax Court does not have specific rules on the topic and, instead, permits each judge to decide a case-by-case basis whether to permit the filing of an amicus brief. Although the Tax Court has discussed standards for filing amicus briefs in unpublished orders, given the nationwide importance of many issues that arise in Tax Court litigation, it may be time for the court to issue specific rules addressing the issue. Continue Reading Are Changes Looming over the Tax Court’s Procedure Rules?

We have all heard the famous quote about doing the same thing over and over again and expecting different results. The Court of Appeals for the Fifth Circuit applied this concept in its March 8 opinion in Annamalai v. Comm’r, No. 17-60255. There, the issue was whether the taxpayers could extend into perpetuity the 90-day deadline to file an appeal by filing successive motions to vacate a Tax Court decision. Under the facts presented, the answer was no.

Taxpayers have 90 days after a decision of the Tax Court to file an appeal. If a party makes a timely motion to vacate or revise the Tax Court’s decision, the 90 days runs from the later of either entry of the order disposing the motion or entry of a new decision.

In Annamalai, the taxpayers filed successive motions to vacate a Tax Court decision. After the Tax Court entered a final decision in favor of the government, the taxpayers unsuccessfully moved to vacate the decision. Rather than filing a notice of appeal within 90 days after the denial, the taxpayers filed another motion to vacate that did not raise any substantially new grounds or arguments. After the Tax Court denied the second motion, the taxpayers filed the notice of appeal. The notice of appeal was filed 117 days after the ruling on the first motion and 83 days after the ruling on the second motion.

The Fifth Circuit dismissed the taxpayers’ appeal, which it noted involved a jurisdictional issue of first impression. The court agreed with the general principle that tolling motions may not be tacked together to perpetuate the prescribed time for appeal. As such, the 90-day period ran from the ruling on the first motion, and the appeal was thereby untimely and dismissed.

The Fifth Circuit declined to address the issue of whether a second motion to vacate on substantially different grounds and new arguments would be acceptable. The court noted that it is acceptable in the civil context, suggesting it may be permitted.

Practice Point: Absent intervening events such as new case law directly on point, motions to vacate or reconsider are rarely granted in tax cases. Indeed, filing a motion to vacate or reconsider may provide an opportunity for the court to bolster its prior opinion and lessen the chances of success on appeal. In a situation where a motion to vacate or reconsider is pursued, taxpayers should take care to ensure that all arguments supporting such a motion are properly placed before the court and that an appeal is filed within the statutory-prescribed period if the motion is denied.

On January 3, 2018, Chief Judge Marvel of the US Tax Court (Tax Court) announced that Senior Judge Robert A. Wherry, Jr. fully retired as of January 1, 2018, and would no longer be recalled for judicial service.

Judge Wherry was appointed on April 23, 2003, by President George W. Bush. In 2014, Judge Wherry took senior status and continued to try cases. By statute, the Tax Court is composed of 19 presidentially appointed judges. Judges are appointed for a term of 15 years and after an appointed term has expired, or they reach a specified age, may serve as a “senior judge” if recalled by the Tax Court. The Tax Court also has several special trial judges, who generally preside over small tax cases. Continue Reading Senior Tax Court Judge Robert A. Wherry, Jr. Retires

On November 8, 2017, Facebook, Inc. and Subsidiaries (Facebook) filed a complaint in the District Court for the Northern District of California asserting that the Internal Revenue Service (IRS) had improperly denied Facebook access to Internal Revenue Service (IRS) Appeals. Facebook’s complaint seeks a declaratory judgment that the IRS unlawfully issued Revenue Procedure 2016-22, 2016-15 I.R.B. 1, and unlawfully denied Facebook its statutory right to access an independent administrative forum. Facebook also requests injunctive relief from the IRS’s unlawful position, or action in the nature of mandamus to compel the IRS to provide Facebook access to an independent administrative forum. Continue Reading Facebook Goes to District Court to Enforce Access to IRS Appeals

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. Continue Reading Tax Court Considering Allowing Remote Testimony