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Information from Court Practice and Procedure Programming at ABA Tax Section Meeting Part 2

Posted on May 26, 2022

In this post I will highlight the slides presented by Mark Cottrell, Branch 6 Chief, IRS (Procedure & Administration) during the committee program as well as some of his other remarks. The slides give a good view of the case statistics for the recent period.

The first slide shows tax dollars in dispute in cases pending before the Tax Court, the district courts and the Court of Federal Claims. Except for a significant anomaly in FY 2021, the Tax Court dominates the dollars in dispute. This is not surprising but you might find the statistics interesting:

Figure: Slide-1.png

The second slide shows case inventories in the same three courts. Here, you really see the high cases numbers in the Tax Court driven by its inventory of pro se, low dollar receipts. You also see the huge jump in cases in FY 2021 and the beginning of FY 2022.

Figure: Slide-2.png

The third slide breaks down the Tax Court’s inventory in 2021. Keep in mind that the these are fiscal year numbers and comparing these numbers with ones the Tax Court occasionally puts out will create some differences because of timing. Here you easily see that a small number of Tax Court cases account for the lion’s share of the dollars in dispute.

Figure: Slide-3.png

The fourth slide also shows the breakdown of the dollars in dispute by dollar amount at issue in the case.

Figure: Slide-4.png

The fifth slide provides a look back over the past decade of the number of Tax Court cases filed by size and type of case. Here, the spike in cases filed in 2021 is easily on display as is the decline prior to and during the pandemic in case receipts.

Figure: Slide-5.png

The sixth slide shows Tax Court receipts and closures over the past decade.

Figure: Slide-6.png

The seventh slide adds to the mix the Tax Court’s ending inventory for each year over the past decade. This slide shows that the current inventory sits well above any year in the past decade. It would probably be necessary to go back to the 1980s to find inventory levels this high.

Figure: Slide-7.png

The eighth slide shows a breakdown of receipts, closures and inventory of the largest cases at the Tax Court.

Figure: Slide-8.png

The ninth slide shows Tax Court settlements by Chief Counsel (I am assuming that this includes all settlements including the ones made by Appeals). Given the high inventory, it’s easy to see where settlements have not keep up as settling cases became more difficult due to the pandemic.

Figure: Slide-9.png

The tenth slide show Tax Court disposals.

Figure: Slide-10.png

In the eleventh slide the material shifts from the Tax Court to refund cases in the district courts and the Court of Federal Claims. There is a clear continued progression downward in the number of refund suits being brought. When I started at Chief Counsel in the late 1970s there were over 1,000 refund suits per year. In FY 2021 there were less than 200 and that does not appear to be a number particularly impacted by the pandemic.

Figure: Slide-11.png

The twelfth slide shows refund case closures over the past decade.

Figure: Slide-12.png

The thirteenth slide shows the inventory of refund cases over the past decade.

Figure: Slide-13.png

In addition to working through the slides, Mr. Cantrell said the IRS is looking closely at Tax Court Rule 36 and discussed challenges the IRS has in obtaining information. He also discussed Rule 36 which addresses answers to a Tax Court petition. We have written several blog posts criticizing the quality of answers. It is great to see that Chief Counsel is looking at this issue. The Clinic just received a very detailed answer from the Boston office that will be helpful in framing the issues in the case. Mr. Cantrell mentioned that one of the major challenges for the attorneys answering Tax Court petitions involves getting the administrative file timely.

He discussed the case of Treece Financial Services Group v. Commissioner, 158 T.C. No. 6. The IRS filed a partial motion to dismiss, arguing that the Tax Court does not have jurisdiction to determine whether the IRS properly denied relief under the IRS’ Voluntary Classification Settlement Program. The Tax Court held it did have jurisdiction over the claim because it has jurisdiction to determine worker classification issues, and acceptance into the program directly affects the liability in an employment tax case. I hope we will have a blog post on this case before too long.

He discussed the guidelines issued by the Attorney General in mid-March 2022 emphasizing the commitment to transparency.

He mentioned that Chief Counsel’s office was looking at the Boechler case and rethinking its position on jurisdiction. I’m sure that when Chief Counsel files its response in the Hallmark case it will accept that the Supreme Court’s reasoning in Boechler also applies to the Tax Court’s jurisdiction, but Mr. Cantrell did not say that.

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