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.

Supreme Court Agrees to Decide Whether the CDP Petition Filing Deadline Is Jurisdictional

Today the U.S. Supreme Court agreed to hear Boechler v. Commissioner of Internal Revenue, appealed from the Eighth Circuit. The question presented is

Whether the time limit in Section 6330(d)(1) is a jurisdictional requirement or a claim processing rule subject to equitable tolling.

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This is an exciting development for those interested in tax procedure. We have discussed Boechler and the question of jurisdictional time limits often on Procedurally Taxing. Carl Smith blogged about the Eighth Circuit decision here. Carl explained,

In Boechler, P.C. v. Commissioner, 2020 U.S. App. LEXIS 23306, on July 24, [2020], the Eighth Circuit aligned itself with the Ninth Circuit in Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018), and held that, even considering recent Supreme Court case law that generally treats filing deadlines as not jurisdictional, the Collection Due Process (CDP) Tax Court filing deadline at section 6330(d)(1) is jurisdictional.  The majority predicated its holding on an exception that Congress may override the general rule by making a clear statement in the statute that Congress wants the filing deadline to be jurisdictional.  In ruling that Congress had made a clear enough statement in the CDP provision, the Boechler majority rejected the D.C. Circuit’s opinion in Myers v. Commissioner, 928 F.3d 1025 (D.C. Cir. 2019), holding that the similarly-worded Tax Court filing deadline at section 7623(b)(4) for whistleblower award actions is not jurisdictional.  A concurring judge in Boechler said she felt bound to agree with the majority because of prior Eighth Circuit precedent, but if she were presented with the issue without that precedent, she would hold the filing deadline not jurisdictional.

The petition for writ of certiorari emphasizes this clear circuit court split and urges the Court to resolve the matter. Boechler further argues:

Review is also warranted because the Eighth Circuit aligned itself with the wrong side of the split. This Court has made clear that statutory time limits are quintessential claim-processing rules presumptively subject to equitable tolling unless Congress has clearly indicated to the contrary. And Section 6330(d)(1) is not the “rare statute of limitations that can deprive a court of jurisdiction.” United States v. Kwai Fun Wong, 575 U.S. 402, 410 (2015).

The petition cites a line of important non-tax cases including Henderson v. Shinseki and Irwin v. Dept. of Veterans Affairs. As Kristin Hickman observed, the case presents yet another issue at the intersection of tax procedure with important administrative law doctrine. Carl Smith deserves credit as the architect of many of the arguments against strict jurisdictional limits in the Code, going back to the 2016 Tax Court loss in Guralnik.

The issue of jurisdictional time periods is undoubtedly important doctrinally, but it is also of great practical importance. Two amicus briefs, both with PT connections, supported the petition for certiorari. The Center for Taxpayer Rights, represented by the Tax Clinic at the Legal Services Center of Harvard, filed an amicus brief emphasizing the judicial resources consumed by the strict policing of jurisdictional time periods. Keith blogged about one recent example here. The Center’s brief also urges the Court to specifically rule on whether the CDP petition filing deadline is subject to equitable tolling, describing common circumstances and compelling cases in which taxpayers lost their right to judicial review. These include case of taxpayers being actively misled by IRS errors, taxpayers suffering misfortunes such as late-delivered and undelivered mail, and taxpayers who file timely in the wrong forum.

The second amicus brief was filed by the Villanova Federal Tax Clinic and the Seton Hall Center for Social Justice Impact Litigation Clinic, represented by pro bono counsel from Skadden Arps. This amicus brief makes two points. First, the clinics argue that treating section 6330(d)(1) as jurisdictional would undermine Congress’s intent in creating Collection Due Process as a check on IRS collection activity. Second, the brief emphasizes the disproportionate harm to low-income taxpayers effected by treating the filing deadline as jurisdictional.

We will be following the case closely.

Preview of This Week’s ABA Tax Section Virtual Fall Meeting

The ABA Section of Taxation kicked off its Fall Meeting virtually yesterday, with a plenary address by Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation, followed by CLE programs from the Corporate Tax, Employee Benefits, State & Local Tax, and Transfer Pricing committees. A full week of programming follows, starting at 10:30 AM Eastern each day.

I will preview several sessions of interest in this post. The full program is available here, with the “schedule at a glance” here. To register, click here. (Registration is free for J.D. and LL.M. students, and $25 for LITC practitioners.)

Sessions are all held live, but registrants can also view sessions on replay – a major bonus of the virtual format for those of us who like to attend multiple committee meetings and for those with conflicting obligations.

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The CLE sessions presented yesterday are already available for viewing, as is the plenary address, Rewriting the Internal Revenue Code in a Pandemic, presented by Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation. Those curious about the budget reconciliation process, the Byrd rule, and what tax writing looks like on the ground will find it illuminating and thought-provoking. The plenary session also includes remarks by Julie Divola, Chair of the Tax Section, by Wells Hall, Chair-Elect, and by Caroline Ciraolo, Vice Chair of Membership, Diversity & Inclusion.  

Readers of this blog may be interested in the panels happening at the Administrative Practice, Individual & Family Taxation, Civil & Criminal Tax Penalties, Court Procedure & Practice, Diversity, Tax Collection, Bankruptcy and Workouts, and Teaching Tax Committees, as well as the Pro Bono and Tax Clinics Committee. There are too many excellent panels to highlight them all here. Several committees also offer informal networking events, and the week ends with the always excellent Women in Tax Forum. I encourage readers to check out the full program and the schedule at a glance.

The Civil & Criminal Tax Penalties committee offers two programs today, at 12:30 and 2:30 p.m. ET. Part One includes subcommittee reports on important developments, followed by a cutting-edge discussion evaluating taxpayers’ exposure from their participation in COVID relief programs. Part Two presents additional important developments, and a final panel on taxpayer privacy versus the public’s right to know at 3pm, at which PT contributor Nina Olson is speaking.

Taxpayer Privacy v. The Public’s Right to Know. In the wake of the Watergate scandal Congress substantially increased the statutory protections for taxpayer privacy, including imposing criminal penalties for various forms of unauthorized disclosure. At the same time, the First Amendment provides for freedom of the press and journalists are tasked with informing the public on matters of national import. Recently, high profile leaks of tax return information have led to blockbuster reports by ProPublica (on the tax strategies of high net-worth individuals) and the New York Times (on former President Trump’s tax returns), among others. This panel will explore what I.R.C. §§ 6103 and 7213 protect and prohibit, how these laws potentially interact with the First Amendment, how newsrooms think through the legal and ethical questions surrounding the publication of leaked or stolen information, and more.

Moderator: Benjamin Eisenstat, Caplin Drysdale, Washington, DC

Panelists: Jesse Eisinger, Senior Reporter & Editor, ProPublica, Washington, DC; Cara Griffith, President and CEO, Tax Analysts, Washington, DC; Nina Olson, Executive Director, Center for Taxpayer Rights, Washington, DC; Jenny Johnson Ware, McDermott Will & Emery, Chicago, IL

The Administrative Practice committee teams up with the Court Procedure & Practice committee to present three joint sessions tomorrow. The Current Developments program at 10:30 ET is sure to be of interest to PT readers. The second program at 12:30 p.m. ET concerns CIC Services, which PT has covered in many prior posts, several of which can be found here, with Les’s most recent post here. The third session focuses on John Doe Summonses and begins at 2:30 p.m. ET on Wednesday.

Current Developments. This panel will include a report from the Tax Court, as well as a discussion of significant IRS guidance and pending litigation.

Moderators: Kandyce Korotky, Covington & Burling LLP, Washington, DC; Michael J. Scarduzio, Jones Day, New York, NY

Panelists: The Honorable Emin Toro, U.S. Tax Court, Washington, DC; Richard G. Goldman, Deputy Associate Chief Counsel (Procedure & Administration) Office of Chief Counsel, IRS, Washington, DC; Natasha Goldvug, Department of Treasury, Washington, DC (Invited)

CIC Services, LLC v. Internal Revenue Service: Opening the Floodgates to Pre-Enforcement Tax Litigation? In a unanimous decision, the Supreme Court held that the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes did not bar a pre-enforcement challenge under the Administrative Procedure Act of an IRS reporting rule backed by tax penalties. This panel will discuss helpful background regarding the Anti-Injunction Act and Administrative Procedure Act; examine the facts of the case and key arguments presented to the Court by the parties and amici curiae; and debate the implications of the Court’s ruling for pre-enforcement lawsuits challenging the validity of Treasury and IRS rules and regulations.

Moderator: Antoinette Ellison, Jones Day, Atlanta, GA

Panelists: Bryan Camp, Texas Tech University School of Law, Lubbock, TX; Kristin Hickman, University of Minnesota Law School, Minneapolis, MN; David W. Foster, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC; Gil Rothenberg, former Chief of the Justice Department Tax Division’s Appellate Section, Adjunct Professor of Law at American University’s Washington College of Law, Washington, DC

Also on Wednesday afternoon, Teaching Taxation presents an important program on promoting diversity, equity, and inclusion in tax at 12:30.

Promoting Diversity, Equity, and Inclusion in Tax: Ideas and Resources for Mentoring Diverse Students and Leading Discussions of DEI in Tax. (Recommended for Young Lawyers) “We will all profit from a more diverse, inclusive society, understanding, accommodating, even celebrating our differences, while pulling together for the common good.” Ruth Bader Ginsburg. “Diversity requires commitment. Achieving the superior performance diversity can produce needs further action − most notably, a commitment to develop a culture of inclusion. People do not just need to be different, they need to be fully involved and feel their voices are heard.” Alain Dehaze. This panel will document the need for greater diversity in the field of tax law − in practice and in Academia – and share ideas to promote this goal, with a focus on law students and recent law school graduates. The panelists will (1) provide information about existing programs to promote DEI in the tax profession, (2) discuss ways to build the tax profession pipeline, to recruit and retain diverse tax attorneys, and to provide strong platforms for professional success, and (3) solicit audience participation and ideas for new initiatives.

Moderator: Katie Pratt, Professor of Law and Sayre Macneil Fellow, LMU Loyola Law School Los Angeles

Panelists: Professor Alice Abreu, Honorable Nelson A. Diaz Professor of Law and Director, Temple Center for Tax Law and Public Policy, Temple University Beasley School of Law, Philadelphia, PA; Caroline D. Ciraolo, Kostelanetz & Fink, LLP, inaugural Vice Chair, Membership, Diversity, and Inclusion, Tax Section Council, ABA; Professor Steven Dean, Brooklyn Law School; Honorable Juan F. Vasquez, US Tax Court; Lany L. Villalobos, Kirkland & Ellis, LLP, Assistant Secretary, Tax Section Council, American Bar Association (2021-2022), Immediate Past-Chair, ABA Tax Section Diversity Committee

Wednesday afternoon’s programming continues with a Diversity Committee session on return preparer fraud at 2:30 p.m.

Protecting Vulnerable Taxpayers Against Tax Preparer Fraud. (Recommended for Young Lawyers) Many taxpayers turn to paid tax preparers to help them navigate the tax code and accurately prepare their tax returns each year. While most tax return preparers are qualified and professional, unscrupulous tax return preparers do exist and can cause financial hardship and legal problems for the taxpayers who hire them. This is especially true for low-income taxpayers and other vulnerable communities. This panel will provide a comprehensive discussion of tax return preparer fraud and how to help those who have been taken advantage of by unethical tax return preparers. Panelists will identify resources to report tax return preparer fraud and what options are available to taxpayers to help remedy the damage caused by the tax return preparer. Lastly, the panel will discuss regulation of tax return preparers and what steps the tax community can take to reduce the risk of tax return preparer fraud.

Moderator: Shahin Rahimi, Legal Aid Society of San Diego, San Diego, CA

Panelists: Hana M. Boruchov, Boruchov Gabovich & Associates PC, New York, NY; Omeed Firouzi, Philadelphia Legal Assistance, Philadelphia, PA; William Schmidt, Legal Aid of Western Missouri, Kansas City, MO; Patrick W. Thomas, Frost Brown Todd, Louisville, KY

The Pro Bono and Tax Clinics committee presents two programs on Thursday morning. The first panel highlights administrative barriers that often prevent low-income taxpayers from receiving tax benefits to which they are entitled. This discussion is extremely timely as Congress debates whether to extend advance CTC payments.  We have covered problems with the IRS identity verification program here and here. Nina Olson wrote about problems with customer service and return processing recently here.

The second panel on determining a taxpayer’s “last known address” under the Code is a topic that has also prompted many PT posts.

Barriers to Tax Benefits: Resolving ID Verification and Payment Delivery Issues. (Recommended for Young Lawyers) The CARES Act and American Rescue Plan Act expanded numerous important benefits for low-and-middle income individuals delivered through the tax code -for example, the Advance Child Tax Credit and the Recovery Rebate credits. This panel will discuss numerous barriers that have emerged in getting those payments to the rightful recipients including ID verification issues, payments to the unbanked, and working with incarcerated individuals and the housing insecure.

Moderator: Anthony Marqusee, Philadelphia Legal Assistance, Philadelphia, PA

Panelists: Laura Baek, IRS TAS, Washington, DC; Barbara Heggie, Low-Income Taxpayer Project, Concord, NH; Nanette Downing, Director of Identity Assurance, IRS, Washington, DC; Denise Davis, Director of Return Integrity Verification Program Management, Atlanta, GA

A Simple Question with a Complicated Answer: Determining a Taxpayer’s Last Known Address. (Recommended for Young Lawyers) Many IRS notices are required to be mailed to a taxpayer’s “last known address.” Failure of the IRS to properly mail such notices can carry profound consequences. Determining exactly what a taxpayer’s last known address should be, however, is increasingly contentious. This panel will review the regulatory and subregulatory guidance on what is required for a taxpayer to effectively change their address with the IRS. It will also discuss how the recent 3rd Circuit decision Gregory v. Commissioner and the online IRS “portals” may affect this area of law.

Moderator: Briana Fehringer, Partner at Anderson & Jahde, P.C., Littleton, CO

Panelists: Christopher Valvardi, IRS Office of Chief Counsel (P&A), Washington, DC; Audrey Patten, Harvard Legal Services Center, Jamaica Plain, MA

Speaking of IRS customer service, on Friday the Individual & Family Taxation Committee presents a two-part session featuring IRS Wage & Investment Commissioner Ken Corbin.

The Service of the Service: Interacting Now and in the Future. (Recommended for Young Lawyers) This two-part panel will examine the current state of IRS customer service and how technology may transform how the IRS interacts with taxpayers. Part one will focus on common scenarios that taxpayers, practitioners, and IRS personnel have faced with the continuing backlog of correspondence and return processing. The panel will focus on how practitioners have attempted, with varying degrees of success, to resolve these problems. It will bring together viewpoints from private practice, tax clinicians, the Taxpayer Advocate, and the IRS. Part two will focus on strategic IRS initiatives to use Artificial Intelligence (AI) and data analytics to automate core components of customer service – some already in testing. The panel will discuss the IRS’s concierge service initiative, which will be AI-driven with some IRS representative collateral support, and how the initiative interacts with the broader Taxpayer First Act implementation programs. The panel will explore issues of equity in accessing responsive service by different taxpayer populations.

Part One Panelists: Kenneth C. Corbin, Commissioner, Wage & Income Division, IRS, Atlanta, GA; Andrew VanSingel, Local Taxpayer Advocate, IRS, Chicago, IL; Olena Ruth, Ruth Tax Law, Denver, CO; W. Edward (Ted) Afield, Clinical Professor of Law and Director, Philip C. Cook Low Income Taxpayer Clinic, Georgia State University, Atlanta, GA

Part Two: Joshua Beck, Attorney Advisor, Taxpayer Advocate Service, Des Moines, IA; Leigh Osofsky, Professor of Law, University of North Carolina School of Law, Chapel Hill, NC; Joshua Blank, Professor of Law, University of California, Irvine School of Law, Irvine, CA; W. Edward (Ted) Afield, Clinical Professor of Law and Director, Philip C. Cook Low Income Taxpayer Clinic, Georgia State University, Atlanta, GA

Updates for ITIN Holders

Two issues have come up recently for ITIN holders that I’d like to flag. Thanks to Sarah Lora of the Lewis & Clark Low Income Taxpayer Clinic for prompting this post and providing much of the content.

1. Earlier this spring, NTA Erin Collins wrote a blog post highlighting the delays caused by the paper-filing requirement for ITIN seekers. This issue has gone on so long that I almost forgot it seems strange to people seeing it for the first time.

Taxpayers needing an ITIN may not file electronically.  They must always file a paper return, attaching the return to their ITIN application and mailing the package with supporting documents to the IRS ITIN unit. The IRS’s reasoning is that the attached tax return demonstrates the taxpayer’s need for an ITIN. Taxpayers needing an ITIN renewal fare slightly better: they may obtain the renewal prior to the filing season, which then allows for an e-filed return.  However, when taxpayers seek help with both filing their return and renewing their ITIN during the filing season, the renewal application must be attached to a paper tax return.

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The requirement to paper file has resulted in extraordinary wait times for taxpayers needing ITINs for themselves or dependents.

During 2021 through March 27, the IRS had received over 150,000 ITIN applications, with over 125,000 submitted with a tax return. This number is expected to grow – in 2020, the IRS received over a million ITIN applications, including about 470,000 applications from new applicants, meaning they had to apply with a paper tax return if they did not meet one of the narrow exceptions. These taxpayers are facing a double-whammy this filing season – first, the delay in having an ITIN application processed and second, the delay in having a paper tax return processed. For the week ending March 27, 2021, ITIN applications submitted with a return were taking 25 business days on average just to be input into the system. During this same week, the ITIN unit started with inventory of almost 67,000 applications to be worked and ended with an inventory of over 74,000, reflecting a growing backlog.

The NTA points out that many ITIN holders have dependent children that qualify for the Child Tax Credit (CTC) or Recovery Rebate Credit, creating delayed refunds for those families most in need.

In the post, the NTA suggests that ITIN applicants should not be required to attach a tax return if they can prove a filing requirement some other way, for example by submitting wage documents from an employer. She notes that accepting ITIN applications throughout the year would “prevent unnecessary delays, encourage voluntary compliance, and reward these individuals for doing the right thing by filing U.S. tax returns.”

2. ITIN holders with children who qualify for the CTC are entitled to the advanced CTC. The implementation of this provision has come with some glitches.  First, the IRS computers were initially programed to disallow the AdvCTC if the taxpayer or spouse was an ITIN holder. This programing error prevented approximately 1.2 million families from receiving the first monthly advanced CTC payment in July.  Advocates raised the issue with the IRS, and it appears that the glitch has been fixed and these families should begin receiving their payments in August 2021. According to the IRS news release, these taxpayers will receive the full amount of their AdvCTC:

Such families who did not receive a July payment are receiving a monthly payment in August, which also includes a portion of the July payment. They will receive the remainder of the July payment in late August.

Finally, advocates recently flagged the issue that the ITIN unit may reject ITIN applications for individuals with qualifying children filing 2020 returns with no income, seeking the advanced CTC. There were several reports of both private and nonprofit Certified Acceptance Agents (CAAs) refusing to submit ITIN applications for these individuals.

Sarah Lora previously wrote a post here discussing the ITIN unit’s flawed policy of rejecting ITIN applications where the accompanying paper tax return does not show what the IRS deems a federal monetary tax benefit. This policy rejects a century of tax policy that provides favorable tax treatment to citizens Canada and Mexico, as Sarah argues in a Tax Notes State article here. Even though a 2020 return is the ticket to receiving the advanced CTC, the ITIN unit’s current policy of blindly looking at monetary federal tax benefits on the attached return before them could lead them to reject ITINs for 2020 $0 income returns, preventing children with social security numbers, the vast majority of which are U.S. Citizens, from receiving the advanced CTC.

Because of this ITIN policy, it is logical for CAAs to think they would be wasting their time submitting applications for nonfilers who have “only” a 2021 tax benefit. Legal services attorney Jen Burdick submitted the issue to TAS through the Systemic Advocacy Management System (SAMS). Happily, Jen reports that there is a workaround. According to the Systemic Advocacy employee with whom Jen corresponded, a nonfiler’s 2020 tax return should be processed and the ITIN issued if the Form 1040 shows “Rev. Proc. 2021-24” written at the top of the first page.

Revenue Procedure 2021-24 sets out procedures for nonfilers to file 2020 tax returns in order to obtain AdvCTC payments, and it mentions ITINs at § 4.03(4)(b). Hopefully the ITIN unit will process applications attached to such returns. Because of the delays described above, it is difficult to say whether the ITIN unit is aware of the special 2020 procedures. Please reach out to Sarah at sarahlora@lclark.edu if you find taxpayers facing an improper ITIN rejection.

The workaround is good news, but it is discouraging that it has not been publicized by the IRS. The IRS needs to get the word out to all CAAs, so taxpayers stop getting turned away and told to wait until the 2022 filing season. A crush of ITIN applications next spring is the last thing that the IRS or taxpayers need.

Treasury Commits to a Permanent and Accessible Simplified Filing Portal for Child Tax Credit Claimants

One of the main stumbling blocks to full distribution of advance child tax credit (AdvCTC) payments has been the relative inaccessibility of the online sign-up tool for individuals who don’t have a 2019 or 2020 tax return on file with the IRS. Today the Treasury Department announced major improvements to the sign-up tool:

Treasury is announcing its commitment — as part of the Administration’s efforts to extend the expanded CTC program — to create a permanent, multi-lingual, and mobile friendly sign-up tool to help more Americans who do not regularly file taxes to claim their CTC. Treasury will work with Congress to ensure the effort is fully resourced. The Administration will also work with Congress to provide the necessary funding for a multi-year effort — leveraging public sector and community-oriented solutions — to reach and sign up more families and children.

In the meantime, Treasury and the White House are announcing a new, mobile-friendly, bilingual sign-up tool created by Code for America — a civic technology non-profit — which will be available in the coming weeks. The Administration will make an all-of government effort to enroll eligible families in the CTC, while also supporting the type of outreach and assistance needed over the long-term to ensure the Child Tax Credit is lifting up all our nation’s children.

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The “sign-up tool” functions as a simplified filing portal, creating a 2020 tax return which the IRS uses to calculate 2021 advance child tax credit payments pursuant to the American Rescue Plan Act. The inability to get a 2020 return “on file” has been a major source of frustration for some nonfilers with children. A more accessible portal will help, although it is just one piece of the puzzle. Individuals will still need help verifying their identity and resolving problems. Next to identity verification and return processing delays, the most common problem we hear from callers is submitting their information only to have it bounce back as someone else has already claimed them or their children on a tax return. But, improvements to the first step should surface these problems earlier.

The press release also includes information on payments made to date, and the impact that the payments are having:

…more than $15 billion were paid to families that include roughly 61 million eligible children in the second monthly payment of the expanded and newly-advanceable Child Tax Credit from the American Rescue Plan passed in March. The number of payments this month increased and cover an additional 1.6 million children. Eligible families received a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 to 17.

This tax relief is having a real impact on the lives of America’s children. According to the Census Bureau’s Household Pulse Survey data released earlier this week, parents reported having less trouble covering the costs of food and other household expenses after receiving their first CTC payment. The share of families reporting that they sometimes or often did not have enough to eat in the past week dropped to the lowest percentage since the pandemic began. Parents are using their CTC payments to pay for basics for their kids. Roughly half of those who received a July CTC payment reported using it to pay for food and 1 in 4 spent some of their CTC on clothing.

Given the impact on child poverty that the payments appear to be having, the improvements to the simplified filing portal announced today may pave the way for Congress to extend advance CTC payments beyond 2021.

Preview of This Week’s ABA Tax Section Virtual May Meeting

The ABA Section of Taxation kicks off its third full virtual meeting today. A full week of programming follows today’s plenary session. I will preview a few sessions of interest in this post. The full program is available here. To register, click here. (Registration is free for J.D. and LL.M. students.) Sessions are all held live, but registrants can also view sessions on replay – a major bonus of the virtual format for those of us who like to attend multiple committee meetings. New attendees are encouraged to join an orientation reception this afternoon at 4:30 p.m. Eastern, hosted by the Young Lawyers Forum and the Diversity Committee.

The opening plenary today at 11 a.m. Eastern features Kimberly A. Clausing, Deputy Assistant Secretary, Tax Analysis, U.S. Department of Treasury, discussing tax policy priorities within the new administration and how tax policy has been designed to respond to key challenges of today, including economic recovery, social inequality, and climate change.

Also of note, at the plenary session the Tax Section will present two important awards to two extremely deserving people: The Section will present the 2021 Janet Spragens Pro Bono Award to Susan Morgenstern and the 2021 Distinguished Service Award to Hon. Peter J. Panuthos. Susan Morgenstern and Judge Panuthos have long been champions of inclusivity and fair treatment for taxpayers.  They will engage in a longer conversation on Wednesday afternoon at 4:30 p.m. eastern, moderated by Nina Olson.

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Readers of this blog may be interested in the panels happening at the Administrative Practice, Individual & Family Taxation, Court Procedure & Practice, Diversity, Tax Collection, Bankruptcy and Workouts Committee, and Teaching Tax Committees, as well as the Pro Bono and Tax Clinics Committee. There are too many excellent panels to highlight them all here. I encourage readers to check out the full program and the schedule at a glance.

The Administrative Practice committee meets at 10:30 eastern on the morning of Wednesday, May 12, presenting Important Developments and then a panel on refund claims and procedures which is sure to be of interest.

Where, Oh Where Could My Refund Be? Obtaining a tax refund is not limited to simply as filing an income tax return and reporting an overpayment. This panel will discuss various topics with respect to seeking a refund, including informal and formal refund claims, protective refund claims, and tentative refund claims. Discussion will highlight particular issues and procedures in seeking a refund during the COVID pandemic.

Moderator: Sanessa Griffiths, Skadden Arps Slate Meagher & Flom LLP, Washington, DC Panelists: Jorge Castro, Miller & Chevalier, Washington, DC; Bridget Roberts, Deputy National Taxpayer Advocate, Taxpayer Advocate Service, IRS, Washington, DC

On Wednesday afternoon, Court Procedure & Practice presents a session on Best Practices for Virtual Trials before the U.S. Tax Court.

Best Practices for Virtual Trials Before the U.S. Tax Court. Since the COVID-19 pandemic forced the U.S. Tax Court to convert to a virtual trial format on Zoomgov, over 100 cases have gone to trial. The IRS Office of Chief Counsel has developed a series of best practices which they have been using to train their trial attorneys, and have graciously agreed to share those best practices with members of the Tax Section. The panel will discuss the technology and practical issues both parties face in preparing a case for trial in a virtual environment, including the use of “step-aside” consultation rooms. Moderator: Karen J. Lapekas, Lapekas Law PA, Miami, FL Panelists: Honorable Judge Emin Toro, U.S. Tax Court, Washington, DC; Shawna A. Early, Special Trial Counsel, SB/SE, IRS Office of Chief Counsel, New York, NY; W Curtis Elliott, Jr., Culp, Elliott & Carpenter PLLC, Charlotte, NC

Also on Wednesday afternoon, Teaching Taxation presents an important program on the role of law schools in promoting tax justice, and the Diversity Committee presents Part One of a two-part series with the Pro Bono and Tax Clinics Committee focused on addressing discrimination with the IRS.

Law Schools and Access to Tax Justice. How can law schools help improve access to tax justice? Panelists will present models of law school courses through which students provide tax services or representation to taxpayers, or for which access to justice is the primary subject of the course. The panel will engage a variety of perspectives including different areas of tax law, different pedagogical approaches, and different institutional commitments by the law schools. Topics will include Volunteer Income Tax Assistance, Low-Income Taxpayer Clinics, a seminar on Taxes and Social Justice, a Business Tax Practicum, and the Adopt-a-Base program.

Moderator: Michelle Lyon Drumbl, Robert O. Bentley Professor and Director, Tax Clinic, Washington & Lee University School of Law, Lexington, VA Panelists: Alice Abreu, Professor of Law and Director, Center for Tax Law and Public Policy, Temple University Beasley School of Law, Philadelphia, PA; C. Wells Hall III, Partner, Nelson Mullins, Charlotte, NC and Charleston, SC; Matthew T. James, Visiting Practice Professor of Law and Director, Low Income Taxpayer Clinic, Temple University Beasley School of Law, Philadelphia, PA; Francine Lipman, William S. Boyd Professor of Law, William S. Boyd School of Law, University of Nevada, Las Vegas, NV; Manoj Viswanathan, Professor of Law and Co-Director, Center on Tax Law, UC Hastings Law, San Francisco, CA

The Multicultural Taxpayer: How to Address Discrimination with the IRS. Please join us for Part I of a two-panel series, with Part II taking place during the Pro Bono and Tax Clinic Committee session. In advocating for any taxpayer with the IRS, no one should tolerate being discriminated against because of age, sex, color, disability, race, religion, or national origin. The panel will provide an overview of implicit bias against multicultural taxpayers and highlight the IRS’ investment in equity, diversity, and inclusion. Panelists will also discuss how to report discrimination to the IRS, resources available to multicultural taxpayers, and best practices to ensure that tax practitioners, taxpayers, and IRS employees are treated fairly and respectfully.

Moderator: Michael A. Wallace, EA, Agostino and Associates, PC, Hackensack, NJ Panelists: Barbara Kaplan, Esq, Greenberg Traurig, New York, NY; Keisha Clark-Proctor, IRS Office of Equity Diversity and Inclusion, New York, NY; Brenda Stuart-Luke, IRS Communication & Liaison, New York, NY; Darol Tucker, IRS Taxpayer Advocate Service, New York, NY

The Pro Bono and Tax Clinics committee has quite a slate of programming on Thursday, beginning in the morning with a discussion of the American Rescue Plan Act of 2021, and then with a discussion of current tax issues impacting agricultural guestworkers.

Tax Issues on the Horizon. Panelists will discuss the tax provisions of the American Rescue Plan of 2021 including the third stimulus check and changes to the anti-poverty credits. Panelists will discuss both the important policy effects of the new law, including the recurring Child Tax Credit payments, as well as the nuance and specifics of the statutory language within the bill. Moderator: Beverly Winstead, Clinical Professor of Law, Maryland Carey School of Law, Baltimore, MD (Invited) Panelists: Elaine Maag, Principal Research Associate, Urban Institute, Washington, DC; Joshua Beck, Senior Tax Analyst, Attorney Advisor Group, Taxpayer Advocate Service, Des Moines, IA

The Taxation of H2A Workers. Panelists will discuss ongoing efforts to maintain the exemption amount under IRC § 873(b)(3) for non-resident farmworkers, focusing on H-2A workers, including varying results at the administrative level and potential litigation in the Court of Federal Claims.

Moderator: Luz Arevalo, Senior Attorney, Low Income Taxpayer Clinic, Greater Boston Legal Services, Boston, MA Panelists: Robert Nassau, Teaching Professor & Director, Low Income Taxpayer Clinic, Syracuse Law School, Syracuse, New York; Iris Figueroa, Director of Economic & Environmental Justice, Farmworker Justice, Washington D.C. (Invited), IRS Speaker (Invited)

Thursday afternoon PBTC programming continues with its annual U.S. Tax Court Update session, and Part Two of the joint program with the Diversity Committee on discrimination and bias.

U.S. Tax Court Update. Chief Special Trial Judge Carluzzo together with Special Trial Judges Panuthos and Leyden will discuss updates from the Tax Court. Topics include issues associated with the Court’s limited scope agreement, upcoming access to court records, and a summary of new and emerging issues from calendar call participants.

Moderator: Susan Morgenstern, Taxpayer Advocate Service, Cleveland, OH Panelists: The Honorable Lewis R. Carluzzo, Chief Special Trial Judge, US Tax Court, Washington, DC; The Honorable Peter J. Panuthos, Special Trial Judge, US Tax Court, Washington, DC; The Honorable Diana L. Leyden, Special Trial Judge, US Tax Court, Washington, DC

Elimination of Bias in Tax Practice, Part II. This is the second of a two-part discussion of the elimination of bias in tax practice. Attendance in Part I sponsored by Diversity is recommended but not mandatory. This panel will focus on the elimination of bias in the attorney client relationship, and help tax professionals identify implicit and explicit bias in working with low-income clients and focus on best practices for promoting sensitivity to cultural difference. The panel will also raise attorneys’ ethical obligations as it relates to the elimination of bias. It is recommended that attendees take an Implicit Association Test prior to attending the session, https://implicit.harvard.edu/implicit/takeatest.html

Moderator: Terri Morris, Christine Brunswick Fellow, Community Tax Law Project, Richmond, VA (Invited) Panelists: Tamara Borland, LITC Program Director, Taxpayer Advocate Service; Walter May, Assistant to the Bishop of the Evangelical Lutheran Church (Invited); Michelle Ferreira, Greenberg Traurig, San Francisco, CA

On Friday, the Individual & Family Taxation Committee has a star-studded session on the Child Tax Credit.

Expanding the Child Tax Credit: Policy Issues and Legal Issues. Recent studies indicate that nearly 1 in 7 US children live in poverty. Originally enacted in 1997, the child tax credit (CTC) is part of our nation’s patchwork efforts to address the high costs of raising children. In recent months, there have been a number of legislative proposals that modify and expand the CTC, including proposals that would allow for regular distributions of the CTC beyond the current annual mechanism. This panel will focus on the underlying policy issues and legal issues associated with a potential major legislative overhaul of the CTC.

Moderator: Michelle Lyon Drumbl, Robert O. Bentley Professor of Law, Director, Tax Clinic, Washington & Lee University School of Law, Lexington, VA. Panelists: Ken Corbin, Commissioner, Wage & Income Division, Internal Revenue Service, Washington, DC; Margot Crandall-Hollick, Acting Section Research Manager, Congressional Research Service, Washington, DC; Pamela Herd, Professor, McCourt School of Public Policy, Georgetown University, Washington, DC; Rebecca M. Thompson, Director, Field Engagement and Taxpayer Opportunity Network, Prosperity Now, Washington, DC

ABA Tax Section Midyear Meeting This Week

The Tax Section of the ABA is holding its midyear meeting this week in a virtual format. It’s less expensive to register in this format and certainly less costly in time and money to attend. The program kicks off this afternoon with a New Attendee Orientation Reception at 4:00 p.m. and an opening plenary Tuesday at 10:30 a.m. EST, featuring Mark J. Mazur, Deputy Assistant Secretary, Tax Policy, US Department of the Treasury, and Janice Mays, Managing Director, Tax Policy Services at PwC US, exploring tax changes expected from the new administration and the new Congress.

The meeting has several panels addressing issues recently discussed in PT, which are detailed below. In addition, readers of this blog should find interesting the panels happening at the Administrative Practice, Individual & Family Taxation, Court Procedure & Practice, Tax Collection, Bankruptcy and Workouts Committee, and Teaching Tax Committees. There are too many excellent panels to highlight here. The full program is here, and the schedule at a glance is here.

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On Thursday morning January 28, the Pro Bono & Tax Clinics committee is presenting two sessions on the EIP, which we have covered extensively on PT. One of the panels includes Yaman Salahi who was part of the team of attorneys representing incarcerated individuals who won their case to receive the EIP in the fall of 2020.

EIP for Incarcerated Individuals. Panelists will provide lessons learned and an update on the latest from the Scholl et al. v. Mnuchin class action lawsuit ordering that the EIP be disbursed to incarcerated individuals. They will also discuss the process by which inmates may claim the payment, any systemic issues that have arisen since the court ordered that the payments be made, and the ways in which the pro bono and tax clinic community can be helpful.
Panelists: Yaman Salahi, Partner, Leiff Cabraser Heimann & Bernstein, San Francisco, CA; Amy Spivey, Visiting Assistant Professor & LITC Director, UC Hastings Law School, San Francisco, CA

Caleb Smith is a speaker on the second panel, which has a broader focus. Les recently blogged on key differences between the advance payment of the EIP and the recovery rebate credit here.

The National Taxpayer Advocate, EIP Issues and What to Expect in Filing Season. The National Taxpayer Advocate will provide a review of the 2020 Annual Report to Congress, and panelists will troubleshoot some of the most common problems likely to arise with EIPs during the filing season. Topics will include assisting those that the IRS thinks have received the EIP already but never actually did, misdirected deposits, or issues with joint bank accounts and domestic violence. Additionally, the panel will address questions concerning individuals that did receive payments but shouldn’t have and whether IRS can recoup such payments under either assessment/deficiency procedures, as erroneous refunds, or under general offset authority.
Moderator: Terri Morris, Attorney and Christine Brunswick Fellow at Community Tax Law Project, Richmond, VA
Panelists: Erin Collins, IRS National Taxpayer Advocate, Washington, D.C.; Dietra Grant, IRS Wage & Income, Atlanta GA; Nancy Rossner, Attorney Community Tax Law Project, Richmond, VA; Caleb Smith, Clinical Professor University of Minnesota Law School, Minneapolis, MN

If you enjoyed the blog post on premature assessments of Tax Court cases or the mailing of 12 million notices weeks or months after the dates on the notices (and its unfortunate recurrence), you could attend a panel on which Keith will participate, for the Tax Collection, Bankruptcy and Workouts Committee. 

The Impact of Late-Issued Collection Notices in Bankruptcy and Tax-Related District Court Litigation. After the expiration of the hiatus on collection and enforcement under the People First Initiative, the IRS mailed millions of notices with expired action and response dates. In addition, the inability of the IRS and the Tax Court to process mail during the COVID emergency caused the IRS to make premature assessments of some tax liabilities. The panelists will discuss the effect of misdated notices and premature assessments on the validity of assessments and the effect of these notices and assessments in bankruptcy and tax-related collection litigation commenced by the U.S. Department of Justice Tax Division.
Panelists: Janice Feldman, Volunteer Attorney at the Federal Tax Clinic, Harvard Law School, Jamaica Plain, MA; Professor Keith Fogg, Director of the Federal Tax Clinic, Harvard Law School, Jamaica Plain, MA; A. Lavar Taylor, Law Offices of A. Lavar Taylor, Santa Ana, CA

On Thursday afternoon, guest blogger Omeed Firouzi moderates a panel for the Diversity Committee which should be of interest to all tax lawyers.

Inequality, Race, & Tax: Systems, Laws, & Enforcement. The United States exhibits wider disparities of wealth than any other major developed nation. Over the past five decades, wealth has increasingly concentrated among the highest-income households. These households are disproportionately White and male. In 2018, three White men held aggregate wealth greater than the aggregate wealth of one-half of all Americans. The median White household has 41 times more wealth than the median Black household and 22 times more wealth than the median Latinx household. On average women earn less than men in all industries. At the intersection of race and gender, the gaps are even more shocking. Women of color are disproportionately poor, suffering poverty rates of 21.4% Black women, 18.7% Latinas, and 22.8% Native American women, as compared to 7% for White men. Moreover, education, work, marriage and other attributes that fall under the rubric of “personal responsibility” do not remedy these disparities. White heads of household without a high school education have on average more wealth than college educated Black heads of households. White households with a single white parent have more than twice the net worth of two parent Black households. White households with an unemployed head have a higher net worth than Black households with a head who is working full time. In short, something must be done to reverse these racist trends. Tax and spending systems are the most profound fiscal tools under the government’s control. Many aspects of United States tax systems worsen inequality, especially the racial wealth gap. Three nationally recognized expert panelists will provide a deep dive into institutional racism in tax systems. The panel will begin with a broad overview, focusing on racism in tax systems targeting Black and Latinx taxpayers. The focus will then narrow further, looking at the disparate impact of taxpayer audits on communities of color. Finally, panelists will suggest concrete strategies to start to remedy these wrongs.
Moderator: Omeed Firouzi, Staff Attorney, Philadelphia Legal Assistance
Panelists: Donnie Charleston, Director, Public Policy & Advocacy, E Pluribus Unum; Francine Lipman, William S. Boyd Professor of Law, University of Nevada, Las Vegas; Jackie Vimo, Economic Policy Justice Analyst, National Immigration Law Center

Finally, on Friday Les and Nina are participating in a session at the Individual & Family Taxation Committee meeting, which promises a fascinating and important discussion of how best to address tax underreporting by individuals.

Fresh Look at an Old Problem: Reducing the Tax Gap. The tax gap, or the difference between total taxes owed and taxes paid on time, is a longstanding problem. This panel highlights recent proposals to reduce the tax gap, with a focus on the underreporting tax gap associated with individuals.
Moderator: Leslie Book, Professor of Law, Villanova University Charles Widger School of Law, Villanova, PA
Panelists: Mark J. Mazur, who was recently returned to Treasury as Deputy Assistant Secretary, Tax Policy, (he was previously the Director at the Tax Policy Center, Urban Institute, Washington DC); Nina Olson, Executive Director of the Center for Taxpayer Rights, Washington DC; Charles O. Rossotti, Senior Advisor, Carlyle Group, Washington DC; Natasha Sarin, Assistant Professor of Law, University of Pennsylvania Law School & Assistant Professor of Finance at the Wharton School of the University of Pennsylvania, Philadelphia, PA

Navigating Remote Calendar Calls

Two months in to the Tax Court’s new remote practice procedures (blogged by Keith here), there have been by my rough count about 28 calendar calls in 19 cities. Recently I received notices setting cases for trial by Zoom in February, indicating that remote trial sessions will continue for the winter session. This post will describe the new remote calendar call experience and provide some practitioner tips. We welcome others to share their experiences in the comments.

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Accessibility of Remote Proceedings

A recent question from the ABA Tax Section’s LITC listserv is a good place to start:

Our clinic has helped and continues to help a large number of individuals who have no internet access apply for the EIP using the non-filer portal. We are acutely aware of the staggering number of people especially in remote areas who simply have no internet. As we head into our first remote US Tax Court session, I am wondering what people do who either have no internet access or insufficient equipment to access the internet.

What has been the protocol to help those who lack any meaningful access to court because they have no internet access? Is there a protocol that clinics have used?  Is there a protocol that US Tax Court has in place…?

The Tax Court has been sensitive to this issue, but petitioners may not realize this if they only look at their Notice of Trial. The new Standing Pretrial Order says “If you have any concerns about your ability to fully participate in a remote Court proceeding, you should immediately let the Judge know.”

What happens if you let the judge know? It depends somewhat on the judge. Many judges will hold an informal conference call with the parties to discuss technology issues and how the case should go forward. Other judges may issue an order asking for the parties’ written responses. Depending on the circumstances, the case could be continued, or tried by phone, or submitted for decision without trial under rule 122. The court will listen to both parties’ concerns before deciding.

This system does place the onus on the petitioner to reach out to the Court, or at least to Chief Counsel, with any concerns. LITCs can help get the word out that it’s ok for petitioners to ask for accommodations.

What happens if the petitioner does not contact the court ahead of time with technology concerns? Some judges schedule conference calls as a matter of course if a case approaching trial remains unresolved and the petitioner is unrepresented. But some do not, and so the best practice is for petitioners to proactively share their concerns with the court and IRS counsel.

Calendar Call Administrators; Consultation Mechanics

Procedurally, a new feature of remote calendar call is the designation of LITC (or pro bono) calendar call administrators (also called supervisors). Each calendar call now has a designated administrator from the clinic or pro bono contingent as well as from IRS Chief Counsel. The Court shares remote proceeding instructions with the LITCs, which largely summarize the procedures shown in the calendar call videos on the Court’s website and expand on the role of the LITC administrator/supervisor.

The administrators play a “traffic cop” role at the calendar call, remaining in the main courtroom with their videos on to greet new arrivals. If a petitioner wishes to speak to a volunteer, the LITC administrator figures out which volunteers are available, and can escort the petitioner into a breakout room for the meeting. Likewise, if a petitioner wishes to speak with Chief Counsel, the Chief Counsel administrator figures out which attorney is assigned to the case, and can escort the petitioner into a breakout room with that attorney.

It is important that the clinicians and volunteers communicate ahead of time so that the clinic administrator knows about any eligibility or capacity limits. These should include any geographic limitations. At the Philadelphia calendar call on October 5, Judge Leyden had included several cases from her spring 2020 Detroit calendar which had been cancelled. One of those petitioners wanted to speak to a volunteer attorney, and none of the volunteers were from Detroit. Generally speaking, academic clinics do not have strict geographic limitations, whereas nonprofit legal services organizations may have requirements imposed by their grant funding.

The court’s videos and instructions state that volunteers will wait in a breakout room for any petitioners that wish to consult. Some judges have a different practice, however, one that I hope will catch on. At some sessions, students and volunteers have been permitted to remain in the main courtroom instead of waiting in a breakout room. Everyone except the two administrators and the clerk were instructed to keep their cameras off and microphones muted. This worked very well in Philadelphia. I appreciated that it allowed students to observe the interactions between the clerk and administrators and each petitioner who arrived. This also meant that volunteers did not have to keep a separate device connected to the public audio stream, in order to hear what might be going on in the courtroom.

Calendar Call Observations: Everything’s Up to Date in Kansas City

William Schmidt shared this account of the October 5 calendar call in Kansas City:

        As the October 5 virtual calendar call drew closer for Tax Court to hold session in Kansas City, I reached out to Judge Paris’s clerk for a practice session regarding Zoomgov. It turned out to be useful for us to chat about expectations regarding petitioners that were good candidates for advice from the 3 local Low Income Taxpayer Clinics (LITCs). There were 4 cases that she had identified as ones potentially needing assistance from the LITCs.

       To facilitate confidential discussions between such petitioners and LITC personnel, the Tax Court has virtual breakout rooms available. The clerk did a practice session for me regarding the breakout rooms to show me what it would be like to be placed and removed from such a room during the live session.

       When October 5 arrived, the 3 clinics met with the clerk at 9 a.m. This was to facilitate an extra hour for the unrepresented petitioners to talk to the clinicians before the calendar call started at 10 a.m. Central time. However, no petitioners showed up and we made small talk such as reviewing what to expect from the cases at calendar call.

       Once the calendar call started, the petitioners began to appear. I think there was a variety of people appearing electronically by using computer cameras, cell phones, or iPads. There were some delays as the clerk had to identify everyone. She would label the person on the Zoomgov call so you could identify the person’s role (petitioner, LITC, respondent’s counsel, etc.). There were some pauses at that point and later for appearances on the cases as the petitioners had to state their names over the audio. A couple petitioners with iPads had to phone in separately to make appearances. Overall, the technology made things a bit awkward but they eventually worked out.

       One unrepresented person (the intervenor in an innocent spouse case) eventually asked for assistance. Since that individual was a Missouri resident, the director at the University of Missouri-Kansas City LITC met with him in a breakout room and eventually entered an appearance on the case.

       There were 6 cases at calendar call. One was dismissed for lack of prosecution, one was settled (IRS Counsel read the settlement into the record and the parties verbally agreed to the settlement), and the other four cases were continued with joint status reports due in 30 days (innocent spouse, accuracy-related penalties, and substantiation of contract labor and advertising expenses were some of the issues mentioned).

       There was a trial scheduled for October 6 and 7, but the parties filed a stipulation of settled issues and a joint status report. The trial was stricken from the remote trial session and continued. The parties are to file a joint status report or decision by November 6.

Communication, Privacy, and Document Exchange

William provided this tip for communication:

it is best for LITCs or other pro bono attorneys meeting with an unrepresented petitioner in a breakout room should get the phone number of the petitioner in case there is a technical issue that causes someone to be kicked out of the Zoom session.

This is good advice. The Clerk in Philadelphia warned all participants that some people have been kicked out of the session when they’ve attempted to move between the main room and a breakout room.

Privacy has also been raised as a concern for remote proceedings, given the public audio stream on YouTube. The Clerk at the Philadelphia calendar noted that he had the power to mute the public audio stream, and he invited folks to let him know if they needed to share confidential information as part of their case presentation. This seems like a reasonable approach to the problem.

Document review and exchange during calendar call is another concern that has been raised. One of our most useful functions at a calendar call is to quickly review documents from both sides and give an assessment to the petitioner. To state the obvious, this is more difficult over Zoom. At the Philadelphia calendar call on October 5, the chat function in Zoom was disabled, so we could not use that to communicate “on the side” during the calendar call. This is an understandable move by the Court, but it does make document exchange between Chief Counsel and a volunteer more difficult. In the virtual settlement day meetings I attended, the chat function was very useful for sharing documents. At least on Zoomgov, sharing documents through the chat seems much more secure than email, and easier for IRS Chief Counsel attorneys.

Obtaining documents from a petitioner can be much more difficult than obtaining them from IRS Counsel. At the Philadelphia calendar call, one case where the petitioner still needed to provide documents was continued, and I expect this is not unusual. Judge Leyden commended after the session that the hardest part about remote trial sessions is the exchange of documents and submission of last-minute exhibits. Even if the trial is scheduled for several days after the calendar call, it is not easy in many cases for petitioners to provide legible copies of their documents. I have had limited success asking clients to send photographs of their documents – at least half the time they arrive blurry or cropped, and are not usable. Volunteers and clinicians should be prepared to brainstorm creative ways to obtain documents quickly, or to counsel petitioner how to make a reasonable request for additional time. Many judges will continue a case but retain jurisdiction in order to set status report deadlines and keep the case moving forward. This was Judge Leyden’s approach on Oct. 5, and is consistent with how many judges are taking a more active role in their docket this fall, setting frequent status report deadlines even in cases that are not set for trial.

Conclusion

The Tax Court is keeping its docket moving while attempting to ensure that both sides have the opportunity to put on their best case. This is not an easy task. Reaching unrepresented petitioners continues to be a challenge. Both the Kansas City and the Philadelphia calendar calls had several cases dismissed for lack of prosecution. It does not appear to me that more cases were dismissed than last fall, rather it seems to be a continuation of the existing problem.

The Court welcomes feedback on its remote operations. From the Zoomgov Proceedings page:

Recently had a Zoomgov proceeding before the Tax Court? Please share your thoughts on the experience by completing the Zoomgov Proceeding Feedback form.  

I encourage readers to submit their comments below and to the Court as well.

 

Only Tax Court Petitions Filed After July 1, 2019 Are Subject to TFA’s Restricted Scope of Review

In the en banc opinion Sutherland v. Commissioner, the Tax Court held that spousal relief cases petitioned before 7/1/19 are not subject to the Taxpayer First Act’s narrowed scope of review under new subparagraph 6015(e)(7). At this conclusion many practitioners with pending cases breathed a sigh of relief. However, the thorny issues raised by 6015(e)(7) remain to be litigated another day. We have written about these issues on PT several times, both as the Taxpayer First Act (TFA) was pending (here and here), and after it became law (here, here, here, and here).

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It’s worth noting the procedural posture of the Sutherland case, as it involves one of those thorny to-be-litigated issues. Last year Carl Smith wrote a post arguing that, in light of the new subparagraph (e)(7), the Tax Court should revisit its holding in Friday v. Commissioner that it lacks the power to remand standalone 6015(e) cases. In an email to the PT team, Carl explains that in his October 2019 post

I suggested that someone move for remand in a 6015 case.  Only weeks later, on Nov. 11 (three weeks  before a trial set for Boston), the taxpayer’s lawyers in Sutherland moved to remand the case, apparently arguing that Friday needed to be revisited — at least in a case like Sutherland, where the lawyers were counting on a de novo standard of review and standard for introducing evidence in the Tax Court.  The motion was argued at the calendar call, where Judge Lauber struck the case from the calendar and retained jurisdiction to rule on the motion.  Today’s unanimous opinion holds that the effective date of 6015(e)(7) is ambiguous, and the best construction is that it does not apply to this case. 

The Effective Date of TFA § 1203

For a review of the changes made by TFA section 1203 to IRC section 6015(e), see Steve Milgrom’s post from July 9, 2019. Relevant to the Sutherland case, the TFA appears to restrict the Tax Court’s scope of review in standalone spousal relief cases, so that it is now based primarily on the administrative record. In previous posts we have mused about what exactly that might mean.

Starting in July 2019, several judges began to issue orders asking the parties to address the impact of section 6015(e)(7) generally. Later in the fall, other judges issued orders specifically asking the parties to identify the administrative record, any disputes as to its contents, and state whether any newly discovered or previously unavailable evidence would be offered at trial.

In Sutherland, the court takes a step back and considers what the effective date provision really means, rendering many of those pretrial orders moot.

Donna Sutherland’s case is an example of previously sound strategy that no longer works under the Taxpayer First Act. Unlike most spouses requesting relief, Ms. Sutherland was represented in the administrative proceedings. Her counsel thought that the IRS Appeals Officer was misapplying the equitable relief factors and that further submissions would not be productive. So, counsel made a tactical decision to stop trying to persuade the AO and instead move the case to Tax Court. The petition was filed in February 2018.

When the statute changed over a year later, shifting the Tax Court from a de novo scope of review to the administrative record, Ms. Sutherland was left in an unhappy situation. At the time she filed her petition, she had no reason to suspect that her case would not receive a full trial de novo under the Court’s holding in Porter v. Comm’r, 132 T.C. 203 (2009).

Ms. Sutherland’s counsel filed a motion asking the court to remand the case to the IRS for fuller development of the administrative record. But rather than reconsider its ability to remand standalone innocent spouse cases, the court instead scrutinized the effective date provision in the Taxpayer First Act.

Taxpayer First Act section 1203(b) reads:

Effective Date. The amendments made by this section shall apply to petitions or requests filed or pending on or after the date of the enactment of this Act.

The structure of this sentence renders the provision ambiguous from the outset. The Court explains,

“[P]etitions or requests filed or pending” could mean “petitions filed or pending, or requests filed or pending.” Alternatively, it could mean “petitions filed or requests pending.” If the former reading is adopted, so that “pending” modifies both “petitions” and “requests,” subsection (e)(7) likely would apply here because this case was pending in this Court when the amendment was enacted. If the latter meaning is adopted, so that “pending” modifies only “requests” and “filed” modifies only “petitions,” subsection (e)(7) would not apply. Petitioner’s request for innocent spouse relief had been resolved by the IRS, and hence was not “pending,” on or after July 1, 2019. And her petition to this Court was filed before that date.

Judge Lauber gives two hypotheticals illustrating how such compound sentences can be interpreted:

For example, assume a municipal ordinance that is effective for “cars or boats parked or docked” at a city marina after a specified date. This provision would logically be interpreted to refer to “cars parked or boats docked.” That is because each adjective comfortably modifies only one noun.

On the other hand, assume a sales tax that is effective for “cars or trucks sold or leased” after a specified date. Unless the context suggested otherwise, this provision would likely be interpreted to refer to “cars sold or leased, or trucks sold or leased.” Both adjectives comfortably modify both nouns, and it would be odd to have different tax treatment for similar transactions involving similar vehicles.

Looking to the language of the Code, the Court concludes that TFA

sec. 1203(b) more closely resembles the first example above. We have discovered no instance in which Congress, either in the Code or in an uncodified effective date provision, has used the phrase “petition(s) pending” when referring to ongoing matters in our Court. And interpreting Act sec. 1203(b) to refer to “petitions filed [in this Court] or requests pending [with the IRS]” on or after the effective date makes logical sense in light of the statutory context.

The Court finds additional support for this conclusion in the structure of TFA section 1203 and the cannon against superfluity. Finally, the Court notes that this interpretation

also has the merit of preventing inequitable results that Congress presumably would have wished to avoid when prescribing the transition to the amended scope of review ordained by subsection (e)(7).

…[I]f subsection (e)(7) were to apply to cases such as this–where the conclusion of the administrative process and the filing of the petition both preceded July 1, 2019, but the case remained pending in this Court thereafter–a sort of “gotcha” could occur. The taxpayer would have gone through the administrative process believing that the scope of review in this Court was de novo. But she would then learn, once the time came for trial, that the scope of review was not de novo and that she could be prejudiced for not having made a more complete administrative record.

Because the Court finds that subsection 6015(e)(7) does not apply to this case, Ms. Sutherland will be free to introduce new evidence at trial.

The Remand Question Remains

In his email, Carl points out that the Sutherland opinion “goes out of its way to note the issue of Friday”:

Because we hold that section 6015(e)(7) does not apply, the scope and standard of review in this case will remain de novo, consistently with our case law predating the amendment. See Porter, 132 T.C. at 210. Petitioner will thus be free to introduce at trial any competent evidence that she desires. Because the premise for her motion to remand thus disappears, a remand (if we could order one) would serve no useful purpose. We will accordingly deny her motion for that reason. Cf. Burke v. Commissioner, 124 T.C. 189, 194 n.5 (2005) (declining to remand a collection due process case because a remand would not be productive); Whistleblower 23711-15W v. Commissioner, T.C. Memo. 2018-34, 115 T.C.M. (CCH) 1154, 1156 n.7 (declining to remand a whistleblower case because a remand would serve no useful purpose). That being so, we have no need to address her request that we reconsider our holding in Friday as applied to cases that are governed by the amended statute. 

It may not be long before another case squarely presents this issue and asks the Court to consider a remand. The opinion itself concedes, “[s]ome taxpayers might have received a determination letter shortly before July 1, 2019, with their petition to this Court due to be filed thereafter.” Under Sunderland’s interpretation of the TFA, such cases would be subject to the administrative record provision. (Note this is the result even if the requesting spouse had made the exact same strategic gambit as Ms. Sutherland. The Court’s analysis is grounded in textual interpretation, not equity.) In this situation the Court suggests that the requesting spouse could contact the AO and ask to re-open the administrative record. However, if the IRS declined to do so it is unclear what remedy a taxpayer would have, besides requesting a remand from the Court.

The broader concerns raised by Steve Milgrom and Carl Smith also apply to cases pending with the IRS as of July 1, 2019 (and for that matter new requests for relief), particularly when it comes to unrepresented individuals and victims of domestic violence. There will certainly be cases subject to the TFA in which a poor administrative record exists, even if the taxpayer technically had the opportunity to create a full record after July 1, 2019.

As pro se petitioners and practitioners in such cases consider their options, it’s helpful to remember the Tax Court’s May 29 press release which Keith described as a “significant and welcome change in the price structure of documents ordered from the Court.” As a result of that change, anyone interested in obtaining a copy of the motion to remand, response, and reply in Sutherland may obtain them by email for no more than $3 per document. The Court’s pricing change will make it feasible for those without deep pockets to closely follow this litigation and to make well-developed legal arguments in other TFA cases.