Bouncing Documents at the Tax Court

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I wrote about documents bouncing back from the Tax Court last month in connection with the Tax Court policing the timely filing of petitions.  The post caused commenter in chief Bob Kamman to pay careful attention to the orders coming out of the Tax Court and he noticed a particularly bad day for Chief Counsel’s office on June 9, 2021.  Because we do not routinely track all of the Court’s orders each day, it’s a bit hard to say when one day is worse than another.  We can look at each order to try to better understand practice before the Court.

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The Tax Court has always been more likely, at least in my view, to return documents to the IRS rather than to petitioners.  This makes sense from the perspective that the IRS participates in every case.  It generally has the resources and the knowledge to correct mistakes that many petitioners do not.  When the Court sees something in a filing that is wrong or that it just does not like, it can return, or bounce, the document and tell the party, or parties, to start over.  Usually, when it does so, it provides in an order a brief explanation of the problem and how to fix it.  If a Chief Counsel office routinely receives a high volume of bounces, it is an indication that something is wrong at the office.  This can cause phone calls from the attorneys in the national office who monitor the bounces as well as calls from the area office about the problem. 

No office wants this attention.  In addition to those less than pleasant contacts, at gatherings of Chief Counsel attorneys, the national office attorneys in charge of monitoring relations with the Tax Court would occasionally read select documents to the collected group.  These documents would demonstrate serious bloopers in an effort to spur greater attention to detail.  Since Bob has identified the cases, we have the opportunity to look at a form of Tax Court bounce sheet.

Bounce #1

This case presents the same issue discussed in the Villavicencio case blogged on June 3, 2021, and discussed in a brief filed by the Tax Clinic at Harvard with the Supreme Court.  Even though the parties agreed to the outcome of the case, the Tax Court bounces back that agreement saying that it is unconvinced that it has jurisdiction.  It invites the parties to address the jurisdictional issue:

Bounce #2

The notice of deficiency included a penalty under IRC 6662; however, the decision document filed by the parties does not mention the penalty.  The Tax Court sends the document bouncing back for the parties to address all of the issues in the notice of deficiency.  Remember that when you go to Tax Court, the outcome closes out the tax year.  So, the Court wants to make sure that everything gets addressed as it signs the document closing the case.

Bounce #3

This is the kind of bounce you really hate to receive.  Here, a stipulated decision document gets bounced because it describes the IRC 6651 addition to tax as a penalty.  Many of you might think and regularly speak of the liability imposed by 6651 as a penalty.

Bounce #4 (not really a bounce)

This order shows a few things but does not really qualify as a bounce.  An order of dismissal and decision was entered in this case in September 2020, but in October 2020 the IRS moved to vacate the order.  The Court would have written to petitioner to respond to the IRS motion.  Not having received a response from the petitioner, the Court grants the order.  We don’t know why the IRS wanted to vacate the order and finding out the answer to that question would involve ordering the motion from the Court since it is not publicly available otherwise.  We don’t know whether the issue raised in the motion was difficult, causing the Court to pause for almost six months after the stated response date set for the petitioner, or whether this order was just backlogged along with other matters at the court.

Looking at these routine orders provides a glimpse of the day to day action taking place at the Court.  The majority of cases get decided with stipulated decision documents and with orders.  Decisions continue to be a small minority of case dispositions.

Comments

  1. Norman Diamond says

    “Here, a stipulated decision document gets bounced because it describes the IRC 6651 addition to tax as a penalty. Many of you might think and regularly speak of the liability imposed by 6651 as a penalty.”

    26 USC section 6651(b) does too.
    ‘(b) PENALTY imposed on net amount due’
    Emphasis added by Diamond.
    Note that subsection (b) does not impose additional penalties — it reduces amounts specified in subsection (a) when payments have already been made, so that the ‘Penalty’ is calculated only on the net amount due.

    Subsections (d) and (f) increase a ‘Penalty’. Subsection (h) limits a ‘Penalty’.

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