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“Judging Litigating Hazards – Another View”

Posted on Sep. 24, 2015

Today we welcome guest blogger Sheldon “Shelly” Kay. Shelly practices with Sutherland in Atlanta.  He was the District Counsel in Atlanta when I was the District Counsel in Richmond, and we went to many meetings together.  After leaving Chief Counsel’s office, he returned to the IRS as an executive where he served, during part of that return visit, as the National Director of Appeals.  He is a great manager and leader.  He writes today to present a different view of the state of Appeals than my rather gloomy view published a few months ago.  Because his practice takes him to a different part of the hallway in Appeals or perhaps a different office since I doubt his cases get handled by too many Service Center Appeals employees, we may be describing different experiences based on our different client bases.  I hope his assessment is more correct than mine.  Keith

Like Professor Fogg, I am a former attorney and supervisor for the Office of Chief Counsel of the Internal Revenue Service. Additionally, I was also the Deputy Chief and the Chief of Appeals. Throughout my career, I have had the opportunity to work closely with and across the table from many Appeals Technical Employees (both Appeals Officers and Settlement Officers). Throughout all, I have gained a great respect for their knowledge and have valued their input.

Professor Fogg lists several areas where he has perceived a decline in Appeals, leaving it, in his words, “a very different Appeals Division from the one developed decades ago.” He also suggests that Appeals officers “with little or no knowledge of litigation” cannot properly analyze evidentiary questions or properly evaluate hazards of litigation. I respectfully disagree with his assessment.


In the tax arena, training is vital to being able to keep up with the ever-changing legal landscape. With the significant budget decreases over the last several years, Appeals has had less to spend on training. I have often stated that more funds for training would be advantageous for Appeals, its Technical Employees, as well as the taxpayers, and I continue to believe that. However, given the current budgetary restrictions, Appeals has done an excellent job of addressing several important areas in the training of its employees using in-house experts to fill the gaps in some cases.

For example, with the assistance from attorneys of the Office of Chief Counsel, led by Associate Area Counsel, Mark Miller, Appeals Technical Employees have been offered targeted training classes. Just this year, Miller’s team of attorneys from all Chief Counsel Divisions, taught a web-based, two-day, seven-hour course on topics such as:

  • Rules of evidence
  • The weight to be given taxpayers’ testimony
  • Burden of proof
  • Hazards of Litigation and penalties
  • IRC section 6201(d).

Attending Calendar Calls, Tax Court Trials and Receiving Counsel Settlement Memorandum

Just a couple of years ago, while I was at the Appeals Division, Mark Miller and a group of dedicated and knowledgeable Chief Counsel attorneys, visited Appeals Division’s campuses (Service Centers) to provide a two-day seminar for both Appeals Officers and Settlement Officers that covered technical tax and procedural topics.

I would agree that watching the trial of a case that an Appeals Technical Employee personally considered would be helpful. However, suggesting that such attendance would help in weighing the credibility of witnesses is a little overdone. Analyzing credibility and the weight that a court might give to testimony is something we all can do. I would argue that the amount and nature of an Appeals Officer’s experience, as well as just having the ability to judge credibility, is what’s important.

As for the suggestion that Appeals Technical Employees should learn how Chief Counsel attorneys resolve cases, all Counsel Settlement Memoranda are shared with Appeals. Reviewing the CSMs can provide a useful tool for additional growth by Appeals Technical Employees. I would recommend to all Appeals managers that they use the opportunity for continued training, presented whenever they receive a CSM. This kind of feedback can help in the development of their professionals.

Due to recent policy changes designed to bolster its independence, the Appeals Division is currently working on a docketed examination assistance project. In public statements, Appeals has explained that the project was initiated to develop formal procedures for obtaining examination assistance from Compliance technical employees when taxpayers submit new information or raise new issues in docketed Tax Court cases. Appeals is working closely with Compliance and Counsel to devise procedures that protect Appeals’ independence while getting examiners to review new information submitted on docketed cases.

Understanding Burden of Proof

Not only has the topic of burden of proof been covered in Chief Counsel training for Appeals Technical Employees discussed above, but, as we all know, the determination of who has the burden of proof rarely makes a difference in a court’s opinion. While a discussion of burden of proof will often appear in a Tax Court opinion, the Court usually concludes that determining who has the burden of proof does not impact its opinion.

“Reach the Correct Result”

Professor Fogg suggests that Appeals Technical Employees are trying “to reach the correct result.” I am not sure what is meant by “the correct result,” but Appeals Division’s mission is to “resolve tax controversies, without litigation, on a basis which is fair and impartial to both the government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Internal Revenue Service.” Appeals’ mission directs it to reach principled resolutions of tax disputes based on the law and the relevant facts as developed by Compliance.

Quality Service

If anyone finds that Appeals Technical Employees are not properly performing their duties or understanding the nuances of a particular case, taxpayers and their representatives should elevate their concerns to Appeals management. Discussing issues with Appeals management, just like in the other operating divisions of the IRS, can help both parties (taxpayers and Appeals) better understand the issues and procedures involved and is an accepted way to respond to situations, like those identified by Professor Fogg. The Taxpayer Bill of Rights listed in IRS Publication 1 includes the Right to Quality Service. Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service. I encourage taxpayers and their representatives to elevate concerns to Appeals’ management whenever appropriate.

I am proud to have been the Chief of Appeals. The Appeals Division that I regularly experience is as good today as it was “decades ago.”

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