IRS Updates “EZ Answer” Test Procedures for S Cases

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At the recent Low-Income Taxpayer Clinic grantee conference, Keith and I were fortunate to hear from a distinguished panel of Tax Court judges discussing practice before the Court. During the panel, Special Trial Judge Leyden was asked about the most surprising thing she has learned since her 2016 transition from practitioner to judge. She commented that she has been dismayed by the sheer volume of cases that are dismissed for the petitioner’s failure to prosecute, and she encouraged participants in the Tax Court’s clinic program to suggest solutions that the Court might consider. The IRS “EZ Answer Test” may be one step towards ameliorating the problem.  

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In October of 2017, the IRS began a pilot program called EZ Answer Test. (AP-08-1017-0018, 10/20/17.) This test program allows IRS Counsel in certain offices to answer an S case without waiting to receive the Administrative File, if Counsel believes it does not need the administrative file to answer the petition. (The pilot does not apply to CDP cases.) The filing of an EZ Answer automatically transfers jurisdiction of the case to Appeals. Recently the IRS updated its EZ Answer Test procedures, tightening one of the timeframes and specifying additional procedures. (AP-08-1218-0016, 12/12/18).  

We have discussed issues relating to answers in Tax Court on PT before. In August Keith discussed updated guidance on handling premature petitions, which Bob Kamman had previously highlighted. 

The Court and IRS Chief Counsel would prefer to resolve cases on their merits. Unfortunately, the problem of nonresponsive petitioners stubbornly persists despite the combined efforts of the Court, IRS, and LITCs. As Judge Leyden noted, it is all too common for self-represented petitioners to drop out of their Tax Court cases and become nonresponsive at some point before trial. Sometimes previously-nonresponsive petitioners appear at Calendar Call if the case is not dismissed before that date, but other times petitioners seem to take no action at all after filing their petition.  

One notion that has gained some stakeholder support is that petitioners stand a better chance of remaining engaged if they are contacted early and often after filing their petition. Petitioners who do not hear anything about their case for several months at a time may give up or they may run into problems that make it difficult to remain engaged. For example, in many jurisdictions tenants can be evicted with very little notice. In Pennsylvania the law allows residential leases to provide for zero notice before an eviction action is filed in court. For someone facing a crisis like eviction with very little time to respond, the problem of keeping warm and safe may understandably occupy all of their time and energy. If the tenant has to move, documents may be lost or the taxpayer may not remember to update their address with the Court when they are able to find new housing. In other cases, taxpayers say that they  temporarily dropped off the radar due to health problems which consumed all of their attention. There are many other reasons.  

One of the main reasons for pretrial delays in S cases (between the filing of a petition and the IRS answer, and again from the filing of the answer to when Appeals contacts the taxpayer, and again from the time Appeals sends the case back to Counsel and when Counsel contacts the taxpayer) is that the IRS administrative file on the case must be physically moved from one office to another. Counsel needs the administrative file to Answer the petition. Then, most pro se cases are transferred to the Office of Appeals to attempt settlement. If the case does not settle in Appeals, the file is sent back to Counsel to prepare for trial. I do not know why the process of transferring the administrative file takes as long as it does, but I believe IRS Counsel when they say that they simply cannot get the file quickly. The IRM even has procedures for creating dummy files when the administrative file cannot reach Counsel in time to answer the case. (See IRM 8.4.1.8.1 (08-09-2011), Dummy File Procedures.)  

I doubt that increased taxpayer engagement was the only motivation behind the IRS’s “EZ Answer Test” program, but I hope the IRS will study taxpayer engagement in conjunction with the program to see if there is any improvement. Whatever the motivation, it is laudable that the IRS is attempting to reduce the time from when a case is filed to when an Appeals employee contacts the taxpayer and substantively engages them in an attempt to settle the case. Faster pretrial timeframes generally help to keep pro se taxpayers engaged, promoting several of the rights in the Taxpayer Bill of Rights including the Right to Quality Service, the Right to Challenge the IRS’s Position and Be Heard, and the Right to Appeal an IRS Decision in an Independent Forum, not to mention (perhaps most important) the Right to Pay No More than the Correct Amount of Tax.  

Christine Speidel About Christine Speidel

Christine Speidel is Assistant Professor and Director of the Federal Tax Clinic at Villanova University Charles Widger School of Law. Prior to her appointment at Villanova she practiced law at Vermont Legal Aid, Inc. At Vermont Legal Aid Christine directed the Vermont Low-Income Taxpayer Clinic and was a staff attorney for Vermont Legal Aid's Office of the Health Care Advocate.

Comments

  1. One significant reason that so many petitioners never respond in any manner is that they never intended to respond. Taxpayers and many practitioners are aware that simply filing a Tax Court Petition delays the IRS for many months and sometimes longer than that. Unscrupulous tax professionals routinely advise their clients to file a petition for the sole purpose of delay. This is especially true in collection matters.

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