Today’s guest post is by Leandra Lederman, the William W. Oliver Professor of Tax Law at Indiana University Maurer School of Law in Bloomington. Professor Lederman is a prolific tax scholar and has written some of the most cited and influential articles on tax procedure and tax compliance, among other topics. In today’s guest post, she discusses Tax Court transparency, a topic she has also written about for many years.
This post originally appeared here on the Surly Subgroup, a blog where she and a number of tax academics write on a variety of tax issues. We highly recommend you adding it to your regular blog reads. Les
Transparency is a widely accepted judicial norm. It increases courts’ accountability and thereby increases the confidence and trust litigants and the general public have in courts’ decisionmaking. The comparatively limited access afforded to Tax Court documents is a longstanding issue. The reason Tax Court transparency differs from that of other courts is partly structural, in that the Tax Court isn’t as neatly situated in the federal government’s org chart as Article III courts, administrative agencies, or even Article I courts such as the Court of Federal Claims. (In fact, even which branch of government the Tax Court is located in has presented a puzzle.) Accordingly, the Tax Court traditionally has created many of its own rules and procedures, such as ones governing access to its documents. This means that the question is also partly cultural. As discussed below, access to Tax Court documents has increased over time, and the appointment of several new Tax Court judges may mean that we see further changes in the future.
In the past, the Tax Court’s more limited transparency has sometimes violated judicial norms and has sometimes created access inequities. For example, although the Tax Court is required by statute to make its reports and evidence “public records open to the inspection of the public,” for years the Tax Court kept its Summary Opinions confidential, which I protested in 1998 in a short Tax Notes article called “Tax Court S Cases: Does the ‘S’ Stand For Secret?”. Although Summary Opinions lack precedential value, they are Tax Court opinions, revealing how the judge deciding the case (typically a Special Trial Judge) thinks about the issues. The Tax Court’s practice of sharing those opinions only with the parties to the case meant that the IRS had a copy of every Summary Opinion but taxpayers typically could not access the opinions in other Small Tax Cases (S cases). This created an uneven playing field. Secrecy can also lead to suspicion of favoritism or other inequities, concerns that existed in an analogous situation, in the era when the IRS did not make Private Letter Rulings (PLRs) public but large firms collected them. Litigation challenging this lack of transparency resulted in legislation, requiring PLRs to be disclosed (with taxpayer information redacted).
In the Tax Court context, at the time I wrote my 1998 article, legislation already required public access to all Tax Court opinions and case files that weren’t under seal. The Tax Court reportedly began making Summary Opinions and the underlying files publicly accessible shortly after that article was published. That change ensures that interested parties can see both if similarly situated taxpayers are being treated similarly, and if S case outcomes differ from those of regular cases (the issue I had wanted to study when I tried to obtain access to S cases before 1998; I ended up having to focus that study only on regular cases).
A more recent example of a Tax Court violation of judicial norms was revealed by Ballard v. Commissioner, which went to the U.S. Supreme Court. (Disclosure: I filed an amicus brief in that case in support of the taxpayers.) In the Ballard litigation, taxpayers’ counsel was attempting to obtain the factfinding report of the judge who had presided over the trial in a consolidated multimillion dollar fraud case. Although the decision the Tax Court had issued after trial said that it “agrees with and adopts” the Special Trial Judge’s report, taxpayers’ counsel had reason to believe that the result in the opinion (that the IRS had proven fraud by clear and convincing evidence) was not what the report had actually found. Such reports were kept confidential following an internal rule change by the Tax Court in 1983. That rule change also resulted in the report being excluded from the record on appeal, as I explained in a 2004 Tax Notes article. So, no one outside the Tax Court could access the trial judge’s report in these (large) Rule 183 cases. In Ballard, the U.S. Supreme Court agreed with the taxpayer that the STJ’s factfinding could not be secret. On remand, the Court of Appeals for the Eleventh Circuit ordered the Tax Court to disclose the original report. That report had in fact found in favor of the taxpayer.
The Tax Court has made tremendous strides in the decades since I first argued for increased transparency. The Tax Court currently provides on its website a searchable database to locate opinions in its cases, and Summary Opinions are available for decisions on or after January 10, 2001. The Tax Court’s TC and memorandum opinions are available there, too, and go back farther—to September 25, 1995. More recently, the Tax Court made available a searchable database containing “all orders issued after June 17, 2011” except for “computer-generated mailings of form orders.” And the Tax Court does not charge for access to its online documents.
The Tax Court’s online Docket Inquiry System was another terrific addition. It allows searches by docket number, individual party name, and corporate name keyword, and it goes back to the 1980s: the website states that “Docket records are available for cases filed on or after May 1, 1986.” It is also very helpful that the Docket Inquiry System now includes a link to the stipulated decision in a settled case, which, when I conducted empirical studies of Tax Court cases, had to be accessed in hard copy from the Tax Court’s public files office in Washington, D.C. The Tax Court states that the Docket Inquiry System provides access to decisions and orders issued after March 1, 2008. (For an example, see the stipulated decision in docket number 4358-10, or the docket entries for that case.)
Unfortunately, however, the Docket Inquiry System has some major limitations. First, for those not logged into the system as a representative, it currently allows access to only two cases in short succession. On searching for the third in a row, it says “Access frequency exceeded. Please try again later.” This restriction presents obvious difficulties for researchers and journalists, among others. While an access frequency limit may be intended to prevent denial-of-service and other cyber-attacks, the limit of two docket numbers seems unnecessarily low. Even password-protected websites following best practices give more than two tries (e.g., ten) before locking out a user.
Second, the Tax Court’s Docket Inquiry System does not provide electronic access to many types of documents. It does currently link both the decision and orders in the case, which is a very helpful feature. However, non-party access to materials from the Tax Court public files, such as other documents listed there, calls for accessing them from the Office of the Clerk of the Court in Washington, D.C. during business hours. This not only limits the access researchers, journalists, and the general public, it restricts the access of attorneys who have not yet entered an appearance. It is not unusual for a taxpayer to petition the Tax Court pro se and seek counsel later, as Keith Fogg has pointed out. This is likely because the time within which to file a petition is short; the “Last date to petition Tax Court” is required by an off-Code provision to be stated on the notice of deficiency; the notice of deficiency does not say that there is also a refund option available (as noted here on pp.902-903); and the Tax Court helps facilitate filing with a simplified petition form that is available online.
It is possible to physically go to the Clerk’s Office to view Tax Court case documents, but, as Keith Fogg has pointed out, that is expensive if you don’t live in the Washington, D.C. area or have a friend there who is willing to do this kind of task for you. Copies obtained from the Tax Court cost 50 cents per page, which is another economic barrier to access. Keith blogged about going to the court and taking photos with his phone of relevant documents in case files. However, he points out in a comment that he later learned that the Tax Court does not permit that.
This limited electronic access to Tax Court filings is in stark contrast with PACER (Public Access to Court Electronic Records), which is managed by the Administrative Office of US Courts. In the words of the PACER website, “PACER hosts millions of case file documents and docket information for all district, bankruptcy, and appellate courts. These are available immediately after they have been electronically filed.” PACER thus facilitates quick electronic access to numerous documents in a case file. PACER also has a fee schedule that is significantly below 50 cents per page:
Access to case information costs $0.10 per page. The cost to access a single document is capped at $3.00, the equivalent of 30 pages. The cap does not apply to name searches, reports that are not case-specific, and transcripts of federal court proceedings.
By Judicial Conference policy, if your usage does not exceed $15 in a quarter, fees are waived.
Of course, this means that PACER starts charging a user to access electronic documents after $15 worth in a 3-month period (equivalent to 150 pages, assuming that no individual document reaches the $3 capped per-document fee). The Tax Court does not charge at all for electronic access, as noted above. However, as Peter Reilly pointed out last year, “In PACER, almost all the docket entries will have a link like that [to documents in the case]. In the Tax Court most of them do not.” It is worth remembering, however, that the Tax Court provides a free, searchable database of its orders, as noted above.
Complaints about the Tax Court’s comparative lack of online access is a longstanding issue, as this 2012 Reuters article by Kim Dixon explains. As I explained in a 2008 article in Wash. U. Law Review titled “Tax Appeal: A Proposal to Make the United States Tax Court More Judicial,” The Tax Court has never been included in PACER or the oversight of the Administrative Office of U.S. Courts (AOUSC). By contrast, the Court of Federal Claims, which is also an Article I court that hears tax cases, is on PACER. In my 2008 article, I proposed to align treatment of the Tax Court with that of the Court of Federal Claims.
The Tax Court has raised the privacy and security of taxpayer information as a concern that raises a potential barrier, and that is an important issue worth serious consideration. Of course, what’s currently at stake isn’t whether public Tax Court documents are available at all, it’s whether they’re available electronically. But providing online access certainly increases the potential exposure for a document. The Tax Court has an undated notice on its website that, in part, “encourage[s parties] to refrain from including or to take appropriate steps to redact” private information, such as Social Security numbers. PACER has had to address this issue, too, of course. Its website states “Certain personal identifiers are removed or redacted before the record becomes public, including Social Security number, financial account numbers, the name of a minor, date of birth, and home addresses in a criminal case.”
The Tax Court also currently does not publish case statistics on its website, although such aggregate statistics do not raise concerns about personal information such as Social Security or bank account numbers. The Tax Court’s opacity in this regards contrasts with the AOUSC and the Court of Federal Claims, both of which make statistical documents available on their websites from drop down menus. Tax Court statistics can be valuable both to litigants and researchers interested in trends over time and differences in results in pro se and other cases, as well as in regular and S cases. I have heard the Chief Judge of the Tax Court provide a Tax Court update at the Court Procedure and Practice Committee session at ABA Tax Section meetings, but these are general statistics and do not seem to be accompanied by documents available in the meeting materials. The Tax Court has produced more detailed statistical documents at times, but there does not seem to be a regularized system for doing so, or for accessing them (as discussed on pages 1213-14 of my 2008 article). Nor can the Freedom of Information Act readily be used to obtain these or other documents from the Tax Court; the Tax Court isn’t subject to statutes governing administrative agencies because it is not an executive agency.
What’s past is prologue, however. The Tax Court’s broad self-governance also means that it has the power to greatly increase its transparency. Les Book has blogged that, at the Tax Court Judicial Conference in March of this year, some of the judges expressed interest in increased electronic access. And the addition of new Tax Court judges could give rise to further cultural changes. Two new judges have been sworn in in the past month or so: Judge Patrick Urda on September 27 and Judge Elizabeth Copeland on October 12. That still leaves the 19-member court with 4 vacancies, but President Trump has announced 4 nominees. With so much new blood, the Tax Court’s self-governance could move in new directions. Perhaps we will see increased Tax Court transparency in the near future. That would be a very welcome development!