Tax Court Issues Notice Proposing Pilot Electronic Filing Program

Unless otherwise indicated, all section references are to the Internal Revenue Code as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure. The proposed Interim Rule and Interim Procedures are as follows.

I. Interim Rule 22A is added as follows.

The benefits of electronic filing include: 24-hour access to case files over the Internet, automatic e-mail notice of case activity, ability to download and print up-to-date documents directly from the Court system, concurrent access to case files by multiple parties, savings in time and expenditures for attorneys, expanded search and reporting capabilities, elimination of the cost of mail or courier services, faster delivery and easier tracking of case activity, and a reduction in physical storage space needs and document processing times. See http://pacer.psc.uscourts.gov/cmecf.

Proposed Interim Rule 22A permits the filing, signing, and verification of documents by electronic means in cases within the pilot program. The Model Local District Court Rules for Electronic Case Filing in Civil Cases, endorsed by the Judicial Conference of the United States, March 2005 (Model Rules), state that the Federal Rules of Civil Procedure provide that a court may "by local rule" permit filing, signing, and verification of documents by electronic means, and that each District Court is authorized to make and amend rules governing its practice. Fed. R. Civ. P. 5(e), 83(a). The Model Rules further state that each court that intends to allow electronic filing should have at least a general authorizing provision in its local rules. Proposed Interim Rule 22A is derived from the Model Rules' example of a local rule authorizing electronic filing. Under section 7453, the proceedings of the Tax Court are conducted in accordance with the Rules of Practice and Procedure prescribed by the Court and with the rules of evidence applicable in nonjury trials in the District Court for the District of Columbia. There appears to be no statutory prohibition on the Court's providing by Rule for electronic filing.

The majority of the district and bankruptcy courts, the Court of Federal Claims, and the Court of International Trade accept electronically filed documents in accordance with policy and procedures devised and implemented by the Administrative Office of the U.S. Courts (AO). The joint project of the AO and the Federal courts is called CM/ECF (Case Management/Electronic Case Files). The Tax Court will not be a participant in the CM/ECF system.

II. Interim Procedures are issued as follows.

For purposes of these provisions, the term "system" means the Court's system for electronic filing, and the term "user" means an attorney or other individual admitted to practice before the Court to whom the Court has issued a log-in and a password to file documents electronically using the system. Electronic filing and online access to filed documents in the system will be limited to the Court and to the users representing the parties in each case assigned to the electronic filing pilot program.

Section 205(a) of the E-Government Act of 2002 expressly names the Supreme Court, the Courts of Appeals, the District Courts, the Court of Federal Claims, and the bankruptcy courts. Because the Tax Court is not expressly named, the Court has questioned whether this was an oversight and whether it should comply with the provisions of the act. The Court already has in place a Web site which satisfies all requirements of the act except as they relate to providing public online access to documents filed in or converted by the Court to electronic form. Because of privacy and security concerns and the nature of the parties and issues in cases before the Court, the Court is considering whether and to what extent to provide public online access to its electronic records.

In June 1999, before the enactment of the E-Government Act of 2002, the Judicial Conference of the United States, through a subcommittee of its Committee on Court Administration and Case Management, began a study of privacy and security concerns regarding public electronic access to case file information. The subcommittee held numerous meetings and received information from experts and academics, court users, judges, court clerks, and Government agencies. As a result, it developed several policy options and alternatives for the creation of a judiciary-wide electronic access privacy policy; these options were presented to the full Committee on Court Administration and Case Management. A document containing the alternatives was published, and comments were received from a wide range of interested persons, including private citizens, privacy rights groups, journalists, private investigators, attorneys, and representatives of financial services groups. At some point, comments apparently were solicited from the Department of Justice regarding tax cases, but none were received.

Further public hearings were held, after which the subcommittee developed a final set of privacy policy recommendations which were endorsed by the full Committee on Court Administration and Case Management and adopted by the Judicial Conference. The policy provides for public electronic access to case file documents with certain personal identifiers redacted. The policy adopted by the Judicial Conference states that there should be consistent, nationwide policies in Federal courts to ensure that similar privacy protections and access presumptions apply regardless of which Federal court is the custodian of a particular case file. The policy further states that it generally applies to both paper and electronic files, and the availability of case files at courthouses will not be affected or limited.

The Judicial Conference privacy policy places the burden on the parties to exclude from filed documents unnecessary personal data identifiers such as Social Security numbers, names of minor children, birth dates, and financial account numbers, and to file unredacted documents under seal. As the privacy policy states: "Providing remote electronic access equal to courthouse access will require counsel and pro se litigants to protect their interests through a careful review of whether it is essential to their case to file certain documents containing private sensitive information or by the use of motions to seal and for protective orders." http://www.privacy.uscourts.gov/Policy.htm.

With respect to civil case files, the Judicial Conference decided to exclude Social Security cases from electronic access because of the inherently personal nature of the cases. Although there is no indication that they were specifically discussed, tax cases were not excepted by the Judicial Conference.

Bankruptcy cases also were not excepted by the Judicial Conference. However, the Federal Rules of Bankruptcy Procedure were amended in 2003 to provide that a debtor's full Social Security number is no longer required in the caption of the case and in the petition. Fed. R. Bank. P. 1005, 1007, 2002. Congress also has recognized the importance of protecting from improper disclosure tax information received by a bankruptcy court. On April 20, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23, was enacted. Section 315 of the act, 119 Stat. 87, amends the Bankruptcy Code to require debtors in bankruptcy cases to provide tax returns and other tax information to the bankruptcy court, trustee, or creditors. It further provides that the Director of the AO shall, within 180 days after enactment, establish procedures for safeguarding the confidentiality of any tax information required to be provided and, within 540 days after enactment, prepare and submit a report to Congress on the effectiveness of said procedures. On September 20, 2005, the Director issued interim guidance regarding tax information. That guidance provides that no tax information filed with the bankruptcy court will be available to the public electronically. The interim guidance defines tax information to include tax returns, transcripts of returns, amendments to returns, and any other document containing tax information provided by the debtor. The AO is continuing to study these issues. http://www.uscourts.gov/bankruptcycourts/ DirTaxGuidanceJCUSa pproved905.pdf.

The Tax Court is considering the privacy and security issues raised by providing public online access to electronic records in the peculiar context of a Court whose docket consists solely of Federal tax cases and over 75 percent of whose petitioners are pro se individuals, and whether it is unrealistic to expect those pro se individuals to file case documents in a manner that adequately protects their privacy and security interests. Information contained in Court documents can include a great deal of personal data in addition to Social Security numbers and tax information, such as financial account numbers, property descriptions and addresses, names and birth dates of minor children, employment information, medical and health information, and original signatures. The information most often will relate to petitioners but can also relate to witnesses and other third parties. Although section 6103 disclosure restrictions do not apply with respect to returns or return information in a Federal judicial proceeding, see sec. 6103(h)(4)(3), it is believed that there is a distinction to be drawn between public access to information in the Court's records pursuant to section 7461 and publication of the information on the Internet. Consequently, the Court proposes to limit online access to the Court's electronic records at this time to the Court and to the users representing the parties in each case assigned to the electronic filing pilot program. The Court will, however, provide public access to its electronic records at the Clerk's Office during the Court's regular business hours.

(b) Once registration is completed, the user will be notified of his or her log-in and password. The log-in and the password will be issued to an individual and not to a firm. By registering to use the system, the user agrees to protect the security of the password and to notify the Court if the user learns the password has been compromised. No user shall permit the user's password to be used by anyone other than an authorized agent of the user, and the user may be subject to sanctions for failure to comply with the provision.

(c) A user whose address, telephone number, or Internet e-mail address has changed shall file a notice of change of address in accordance with Rule 21(b)(4).

The documents specified in paragraph 3(a) above (with the exception of the designation of place of trial, which is included only because it is filed with a petition) are documents for which there are statutorily prescribed time limits. Filing these documents in paper form will permit verification of their timeliness in the historical manner and prevent any potential section 7502 issues. Filing the documents in paper form is also consistent with Rule 34(a)(1), "No * * * electronically transmitted copy, or similar communication will be recognized as a petition", which was amended to include that language after the issuance of Blum v. Commissioner, 86 T.C. 1128 (1986).

(b) All other documents shall be filed electronically except as hereinafter provided or as ordered by the Court.

(c) An electronically transmitted document requiring leave of the Court for filing, such as an amended pleading, shall be attached as an exhibit to the motion for leave to file. If the Court grants the motion for leave, then the Court will electronically file the document.

(d) Exhibits or attachments, other than those submitted at trial, shall be submitted in electronic form, unless the Court permits otherwise, subject to file size limitations provided by the Court. Excerpted material shall be clearly and prominently identified as such, and either party may submit additional excerpts or the complete document. The Court may require parties to submit additional excerpts or the complete document. Exhibits or attachments that are too large or not in a format that readily permits electronic conversion may be submitted in the conventional manner. Trial exhibits shall be submitted in the conventional manner unless the Court directs otherwise.

(e) An agreed decision document or stipulation of settled issues, bearing the signatures of all parties, shall be submitted to the Court in paper form.

(f) Transcripts shall be filed with the Court in paper form.

(b) Each document that is filed in electronic form shall state on the first page that it has been electronically filed; the document shall also include the typed name of the user under whose log-in and password the document is submitted, preceded by an "s/", the address, the telephone number, and the Tax Court bar number. Alternatively, a party may electronically file a document containing a digitized signature or a scanned document that contains a written signature.

(c) Documents requiring signatures of more than one party shall be filed electronically by: (1) Filing a scanned document containing all necessary signatures; (2) representing the consent of the other parties on the document; or (3) in any other manner approved by the Court. For agreed decision documents and stipulations of settled issues, see supra par. 3(e).

(b) Upon completion of filing of the document, a Notice of Electronic Filing will be generated by the system and e-mailed to the filing party and to any other user authorized to receive service in the case. The document, if filed, shall be filed as of the date of its receipt in the system, consistent with the Court's current practice with respect to paper filings. The Notice of Electronic Filing will indicate the date, the time of filing, the names of the party and the attorney filing the document, the type of document, and the text of the docket entry. Users who receive the Notice of Electronic Filing may view the filed document by clicking on an associated hyperlink embedded in the Notice of Electronic Filing.

(c) Electronic transmission of a document to the system, together with a transmission by the Court of a Notice of Electronic Filing, shall constitute filing of the document for all purposes of the Court and constitute entry of the document on the docket.

(d) When a document has been filed electronically, the official record is the electronic recording of the document as stored by the Court, and the filing party shall be bound by the document as filed.

(e) Filing a document electronically does not alter the filing deadline for that document. An electronic filing shall be complete when it is acknowledged by the Court through the Notice of Electronic Filing. Except in the case of documents that are first filed in paper form, a document filed electronically shall be filed as of the date and time stated on the Notice of Electronic Filing. A document shall be deemed timely filed if it is filed electronically no later than 6 a.m. in Washington, D.C., on the day after the last day for filing. For rules regarding technical failure and correction of errors, see infra par. 8.

The Court is proposing a time of filing that is consistent with UETA and the Court's current practice and is analogous to the timely mailing/timely filing rule of section 7502. Establishing a 6-hour window will provide a uniform, easily administrable rule that will not disadvantage individuals filing electronically from western time zones. In any event, because it is proposed that petitions, notices of appeal, and other documents for which there are statutory deadlines be filed in paper format, see supra par. 3(a), timeliness issues will arise only in situations in which the Court can grant leave to file if it so chooses.

(b) The Notice of Electronic Filing shall constitute service of the filed document on users.

(b) Orders may be issued as "text-only" entries on the docket, without an attached document. Such orders are official and binding.

(c) Immediately upon the entry of a notice, order, or other document on the Court's docket, the Court shall transmit to the parties in the case, in electronic form, a Notice of Electronic Filing.

(d) Dispositive orders and decisions entered by the Court shall be electronically filed by the Court but shall be served on the parties in paper form rather than in electronic form, although an electronic image of each order or decision shall be available to the Court and the parties on the system.

(b) Once a document is filed electronically and becomes part of the case docket, corrections to the docket shall be made only by the Court. A user will not be able to make changes to the document or docket entry once the transaction has been accepted and the Notice of Electronic Filing has been generated and served. As soon as possible after an error is discovered, the user should contact the Court with the docket number and entry number for which the correction is being requested. The Court will make a docket entry, if appropriate, indicating that the document was filed in error and notify the user if the document needs to be refiled.

(b) Paper copies and certified copies of electronically filed documents may be obtained from the Clerk's Office.