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Before and After – Tax Court and the Government Shutdown

Posted on Oct. 22, 2013

The Villanova Tax Clinic covers Tax Court calendars in Philadelphia.  The Court comes to Philadelphia about six or seven times a year.  We do a mock trial each semester before we go to Court the first time.  The students get the opportunity to assist people at their most vulnerable moment in the tax determination process.  Over the seven years I have directed the clinic, we have had several cases each year in which I felt we made a difference even if the difference was simply to explain to the taxpayers that they had a losing case.  Having the opportunity to receive an independent view of their tax situation allows taxpayers to feel that the system did not run over them.  If you want to volunteer to assist with a Tax Court calendar call in your city, contact me or contact ABA Tax Section Pro Bono Counsel Laura Newland at and we will help to connect you with the calendar call program in your area.

This fall the Tax Court came to Philadelphia on September 30, the last day before the federal government shutdown, and on October 21, the third business day once the federal Government reopened and the first calendar call day after reopening.  The chance to observe the Court immediately before and after the shutdown offered an interesting perspective on the impact of the event. My students this semester had never attended a Tax Court calendar call before taking the Tax Clinic class.  They have no basis for viewing these calendar calls as different from ordinary Tax Court calendar calls.  Having seen quite a few Tax Court calendar calls over the past 35 years, I noticed the difference and came away impressed.  As the District Counsel in Richmond, Virginia during the shutdowns in the mid-1990s I knew how closing an office for several days, or weeks, disrupted trial preparation including the settlement of cases.

On September 30, Senior Judge Whelan presided over a Small Case Calendar.  He mentioned the upcoming shutdown in his opening remarks letting the parties know that he hoped to take care of as much business as possible before it started.  Several cases needed attention that day.  Judge Whelan went through the calendar quickly and began to try cases.  He scheduled several cases for trial on the Monday of the calendar call so that he could try all of the cases in need of trial that day.  He heard all of the cases that day.  The upcoming shutdown brought some tension to the courtroom that I do not ordinarily feel but despite the uncertainty felt by the Chief Counsel attorneys and the Court everyone worked hard to successfully wrap up the calendar.

On October 21 the courtroom had a different feel which my students noticed and commented upon.  The tension was gone.  Judge Lauber also mentioned the shutdown in his opening remarks for the regular case trial calendar to let the parties know that he would make decisions taking the shutdown into account.  It became immediately evident that both the Court and the Chief Counsel attorneys had worked hard in the two business days available to them before the calendar to make it work.  I had some concerns that holding the calendar so soon after a shutdown that lasted as long as this one did might not work well.  My concerns were misplaced.  The Court and the parties adjusted well.

Some cases were continued that might not have been continued on another day but the continuances were not automatic and were not usually general continuances.  Judge Lauber retained jurisdiction in cases that might normally have received a general continuance.  He also signaled that he would put cases onto the next calendar in Philadelphia which will occur on January 13, 2014.  I like the practice of continuing a case to the next calendar rather than continuing it generally because this keeps pressure on the parties.  Doing this requires coordination between the current judge and the next judge.  The Tax Court does not routinely promote this type of coordination but it existed on October 21.  It was clear that Judge Lauber and the Court had thought about how to mitigate the impact of the shutdown so that it did not adversely affect the parties.

The number of settlements presented on October 21 impressed me given that the last two weeks before a calendar usually produce many settlements but Chief Counsel’s office had only two days to prepare.  One case did go to trial.  The case involved a pro se taxpayer contesting additional income from discharge of indebtedness.  Her only chance of success turned on the insolvency exception but the delay in the submission of the pretrial memo made it unclear that she knew what she needed to prove.  Judge Lauber held the record open to allow her to submit information about her financial situation at the time of the discharge event.  Judge Lauber is one of the few Tax Court judges who regularly hold pre-trial conferences with parties in cases in which a pre-trial memo is submitted.  I love that practice because of the opportunity it provides to assist in resolution or focus before the calendar call.  Since he did not have the opportunity to hold a pre-trial conference in this case due to the shutdown, his decision to hold the record open and allow the taxpayer to submit more information allowed the trial to serve, in some capacity, as the pre-trial conference he was unable to hold.  The taxpayer went away from the trial with a chance to gather the information she needed in order to win her case.  Providing this opportunity served justice, whether or not she prevails, and did not let the shutdown run roughshod over her opportunity to prevail.

I attended the calendar call on October 21 not knowing what to expect.  Having a trial calendar with inadequate time to prepare seemed to offer the prospect for failure to serve the parties as well as a possible waste of the Court’s time.  I came away impressed with the way everyone worked together to make it work despite the obstacles to resolve the vast majority of the cases with little fanfare or difficulty.  It almost makes me wish members of Congress could have attended the calendar call to observe the success that can come from working together.

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