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The Room of Lies Part 2

Posted on Aug. 7, 2015

The first part of this discussion about the process of deciding whether to appeal an adverse decision of the Tax Court or District Court focused on Chief Counsel’s office and the role it plays.  Today’s post will focus on the process and the players at the Department of Justice Tax Division in deciding whether to appeal an adverse trial court decision.  Today we get to the Room of Lies.

Trial Section

The trial attorneys in the various trial sections at the Tax Division get involved if the loss came out of the District Court.  As a Chief Counsel attorney I generally stood in awe of the trial attorneys and their ability to carry large dockets and go into often hostile courts around the country arguing for the IRS.  I am not here discussing the special circumstances involved in an adverse decision in a Bankruptcy Court or discussing a criminal case.  If the adverse decision came from the Tax Court, the trial section attorneys and supervisors will ordinarily not get involved in any decision to appeal unless a parallel issue exists at the time in a District Court case.

Assuming an adverse decision from a District Court, the trial attorney will initiate the recommendation to appeal just as the Chief Counsel trial attorney would after a Tax Court loss.  Like Chief Counsel trial attorneys, and trial attorneys around the world, the Tax Division trial lawyers do not like to lose and rarely agree with adverse court decisions.  So, their recommendations generally favor appeal.  After the trial attorney makes the recommendation, it goes to the Section Chief who will review and forward to the front office of the Tax Division.  If the trial section does not recommend appeal, similar to the situation when Chief Counsel’s office does not recommend appeal, the appeal will almost always not occur.  While the trial section, like Chief Counsel’s office, does not have veto power over the decision to appeal, a negative recommendation at this level almost always gets followed.

During the time the Trial Section worked on its recommendation, the field attorney at Chief Counsel’s office who referred the case to the Department of Justice is also busy preparing an appeal recommendation which will go through the same process discussed in Part 1 culminating in a recommendation from Chief Counsel’s office to the Tax Division.  Chief Counsel field attorneys will often coordinate their recommendations with their Tax Division counterparts but not necessarily.

Appellate Section

While the Chief Counsel attorneys worked on the appeal recommendation and, in those cases in which the adverse decision came from the District Court, while the Tax Section trial attorney worked on the appeal recommendation, the Appellate Section assigned an attorney to also work on making an appeal recommendation.  This attorney will generally be the attorney who will make the oral argument so this attorney has a major stake in the decision on whether to appeal.  I will pause to say how impressed I have been by almost every Appellate Section attorney I have encountered – very smart, great writers, great oralist, etc.

The job of the Appellate Section attorney concerns not only figuring out if the lower court got it right legally but also, assuming it did not, whether the record built in the lower court will support a successful appeal.  This second prong of their job involves the most subjective aspect, though certainly the review of the record does not involve only subjective elements, and this prong causes the most friction during the discussions of whether to appeal cases.

Just as trial attorneys generally favor appeal, the Appellate Section attorneys generally favor not appealing.  This is a gross generalization of both sides but usually represents the position of the parties as they enter the Room of Lies.  The trial attorney sees the mistakes of the trial court and the possibilities of rectifying those mistakes while the Appellate Section attorney sees the flaws in the case knowing that overcoming the flaws becomes their responsibility if the case gets appealed.  As with the Trial Section and Chief Counsel’s office, the Appellate Section produces a written product recommending for or against appeal.  If everyone recommends for appeal, the case moves forward (subject to the approval of the Solicitor General [see IRM]) If everyone recommends against appeal, the case stops.  If one or more parties recommends for appeal and others recommend against appeal, the parties may decide to hold a conference in order to discuss the case and come to a resolution.

The Meeting

When the parties hold a meeting to discuss resolution, the meeting generally takes place in the conference room of the Assistant Attorney General, Tax in the main building of the Department of Justice between Constitution Avenue and Pennsylvania Avenue adjacent to the IRS building at 1111 Constitution Avenue.  Unlike the IRS building which is about as ugly as a building can be, the Department of Justice building received a lot of fancy art deco features.  I do not know the history behind the two buildings but can say with certainty that the builders were not working with the same budget.  The accountants controlled the budget in the building of the IRS structure while someone with imagination took charge of the building of DOJ’s digs immediately across the street and constructed at about the same time.

The conference generally consists of attendees from DOJ Trial Section (if their case is on appeal), DOJ Appellate Section, the Assistant Attorney General or someone from the Tax Division front office and attorneys from the Chief Counsel’s national office.  Someone from the Solicitor General’s office may attend.  Field attorneys from Chief Counsel attend on very rare occasion.  The highest ranking person from within the Tax Division generally serves as the host as well as the arbiter.  Each of the various represented parties gets to explain their position for or against the appeal of the case.  Generally, the discourse plays out in a genteel fashion but occasionally tempers flare.  The meeting can go on for some time.

The decision to appeal does not come up for a vote at the meeting.  The decision belongs to the Assistant Attorney General who generally sides with the Appellate Section.  The decision also requires the consent of the Solicitor General who almost always agrees with the decision of the Assistant Attorney General.

Because the Appellate Section attorneys almost always argue for not appealing the case, they also offer insights into what would make the case a better vehicle for appeal assuming this case does not go forward.  This part of the conversation caused me to give the name “Room of Lies.”  The government generally does not need to appeal a specific case because other similar cases will come along thereafter.  The Government can lose the first case or two, or three at the lower level while refining its trial techniques and its arguments and then take a later case to the circuit court once it develops the facets it wants to have in an appeal vehicle.  I get that and appreciate the importance of choosing the right case.

I stuck the room with this name because I found that when the discussion reached this point where the Appellate Section attorney or supervisor would explain to the rest of us the case that should not go forward for one or more reasons the characteristics of the desired case changed from discussion to discussion.  I wanted to bring a recording into the room and play back the previous conversation.  I would listen to the reason(s) not to appeal the first case on an issue where we thought the lower court clearly got the law wrong and the decision created fairly big problems for the client.  I would take the information about the desired case back to my office where I would work with others to find or develop the case with the desired characteristics or in the desired circuit or whatever the Appellate Section attorneys identified as missing from the first case.

After losing the now developed “perfect” case, we would go through the appeal procedures again and again the Appellate Section attorneys would argue against appeal.  This time they had new reasons for not wanting to appeal the case.   We would go back to the pool of cases, develop one with the newly desired traits and come back again.  This happened to me a few times and my frustration built up causing me to create my name for the room where we met.  The Appellate Section attorneys were not necessarily wrong in what they said each time but I felt I was trying to hit a moving target.  The actual appeal of the case often proceeded much smoother than the arguments surrounding whether to appeal.


When you look at a tax case the government has appealed, know that the appeal did not occur automatically but generally after a significant amount of debate and discussion not only about the correct legal result but also about the correctness of this case as the proper litigating vehicle.

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