Where Have All the Judges Gone (and Other Information from the ABA May Meeting) Part 2

The Tax Dispute Resolution Clinic at Texas A&M University School of Law in Fort Worth, Texas is hiring for the upcoming academic year. This is a full-time non-tenure Academic Professional Track faculty position (decanal hire rather than through the usual Appointments process) and would work with the current Director, PT’s own excellent Bob Probasco.  They are looking to hire someone who could start this summer, before the beginning of the Fall semester.  The job description and application link is here.

In addition to information about the loss of judges and making changes to the Tax Court’s calendars starting in the fall, Chief Judge Kerrigan gave a number of statistics about the Court during the past year.  I was writing these down as she spoke and need to caveat that mistakes could have been made in my transcription of her statements.  I also mention that the Court runs time frames differently than Chief Counsel and it’s possible that I correctly transcribed what was said but the numbers that appear here will differ from numbers you will see from Chief Counsel, IRS.


In 2022 the Court received 29,000 new petitions.  96% of the petitions sought relief pursuant to the Court’s deficiency jurisdiction.

In 2022 there were 54 in person calendars of the Tax Court taking place around the country and 83 remote calendars.  Judge Kerrigan indicated that she expects the Court to continue to change back to in person calendars but that the Court will not wholly abandon remote calendars.

In 2022 the Court issued 215 opinions broken up as 18 division opinions (I would call these precedential opinions); 131 memo opinions; 28 summary opinions (S cases) and 38 bench opinions.  The number of opinions is significantly down from historical highs.  For a detailed breakdown of court opinions over its years as an Article 1 court see the article by Caitlin Hird and me here.  The number of bench opinions has risen.  See an article on bench opinions by Tyler Moses and me here.  Perhaps the newer judges on the Court have embraced bench opinions in a way that some of the older judges did not.  Perhaps the pandemic had an influence.  Bench opinions do provide a way for the Court to quickly render the opinion; however, the Court’s rules hinder judges from issuing bench opinions by requiring their issuance prior to the end of the calendar on which the case was heard.

In 2023 the Tax Court is on a pace to exceed it decisional output from last year.  At the time of the Tax Section meeting, it had already issued 115 opinions broken down as 11 division opinions, 60 memo opinions, 18 summary opinions and 26 bench opinions.  Just because the number of opinions is down sharply from historical highs does not mean that the Court is less productive.  It now disposes of a significant number of cases through orders.  If you only follow opinions, you miss out on much of the Court’s decision making even though decision making through orders does not create precedent.

Judge Kerrigan said that in 2021 there were 36 limited entries of appearance and in 2022 there were 54.  I anticipate this number will continue to grow as practitioners become more comfortable with this tool.

Rich Goldman, Deputy Associate Chief Counsel, Procedure and Administration, spoke on the panel for Chief Counsel’s office as he has done for many years.  He foreshadowed the upcoming 100th anniversary of the Tax Court by giving some statistics from the beginning of the Board of Tax Appeals. The BTA began on July 16, 1924.  It received 30 petitions in July of 1924.  During the month of July 2022, taxpayers filed 2042 petitions. If I heard Rich correctly, he said that the BTA decided 11,000 cases in its first three years.  He said that 98% of tax litigation now occurs in the Tax Court.

The IRS issued 1,892,478 notices of deficiency in 2022. Most of these notices came from the Automated Underreporter Unit (AUR) – 1.5 million; 300,000 were issued by Automated Substitute for Return (ASFR) while field exam issued 15,000. (My notes may be inaccurate here because a few hundred thousand statutory notices issue each year from correspondence exam where all of the refundable credits exams take place.) 

Rich also spoke about some of the challenges facing Chief Counsel attorneys in answering cases.  They have difficulty verifying signatures in joint petitions.  He noted that Rule 25 treats ratification of an imperfect petition as restarting the time to file the answer.  He displayed some statistics which are available here.

Where Have All the Judges Gone (and Other Information from the ABA May Meeting) Part 1

At the Court Procedure and Practice Committee of the ABA Tax Section Tax Court Chief Judge Kerrigan presented as part of the panel and provided information about the Tax Court.  One of the first things she mentioned concerned judicial staffing at the Court.  At present, the Court is operating with 16 Presidentially appointed judges out of a possible 19 due to judges in need of reappointment, such as Judge Holmes, and judges who have reached the age of 70 when they age out of being “regular” Tax Court judges and have the opportunity to move into senior status.


Judges Lauber and Marvel moved to senior status recently.  This doesn’t mean judges who turn 70 immediately stop trying cases if they are willing to continue working which they seem to be, but it does exclude them from Court conference on cases of importance and it does open up slots for further Presidentially appointed judges who can help with the overall workload of the Court.

Chief Judge Kerrigan stated that three more vacancies will occur by the end of the summer – two because judges, Judge Morrison and Judge Paris, will come to the end of their terms and one because a judge, Judge Gale, will reach age 70.  The two judges who will reach the end of their terms can be reappointed.  Most Presidents seem to do that although not all.  Even if reappointed, the process seems to move quite slowly rather than seamlessly creating a gap in the time the judges can act as regular judges forcing them to go onto senior status for the period of the gap.  Once their term ends, judges under 70 who have not been reconfirmed by the Senate move to senior status until the reconfirmation occurs.  Judge Holmes has now been in this status since 2018 though readers of Tax Court opinions know that he is still very active.

The backed up judicial appointments because of the health of Senator Feinstein on the Judiciary Committee has been much in the news; however, that should not be a barrier to appointing new Tax Court judges and having them confirmed.  Unlike Article III judges, the appointment of Tax Court judges goes through the Finance Committee where Chairman Wyden seems to be active and well.  But the Finance Committee can’t act if the President doesn’t send up any names.  I don’t know why the President wouldn’t send up names for appointment or reappointment so the Tax Court can operate at full strength.  There are a number of time-consuming cases on the Court’s docket.  From what I can tell, it could use the extra members.

The Tax Court could expand the current number of special trial judges in an effort to process more cases.  Once upon a time special trial judges (STJs) got assigned to large trials.  When an STJ was assigned to a large case, the STJ would handle everything and issue a preliminary opinion.  Because STJs cannot issue opinions in regular cases, to become final the opinion would be adopted by a Presidentially appointed judge.  That process generally seemed to work well.  Over the years many STJs had as much or more trial experience as Presidentially appointed judges and did a nice job of conducting large trials as well as trials in small tax cases.  In the 1980s when the Tax Court’s inventory was high, there were 10 STJs for much of the decade.  The practice of assigning STJs to handle large trials of regular cases went into disfavor after the Supreme Court’s decision in Ballard v. Commissioner, 544 US 40 (2005).  The unwanted exposure created by the decision seems to have stopped the practice of assigning STJs to help with the large case workload of the Court.

STJs should or could operate in the Tax Court much like magistrate judges in the District Courts and there have been legislative proposals to rename the STJs in the past to align the name with the title in District Court.  In District Court cases the parties can elect to have their case heard by a magistrate judge with the ability for the magistrate judge to issue the final decision without review by a District Court judge.  Perhaps Congress could consider amending the Code to give greater power to STJs or more flexibility to the Chief Judge to use them to the Court’s highest advantage.  IRC 7443A(b)(4) and (6) gives STJs the ability to hear any CDP or whistleblower case.  These cases could all be moved to small tax calendars though the volume, and type, of these cases may not provide much relief.

The Court does seem to be making a move to use the STJs to greater advantage as it sets up the calendars for the fall.  Chief Judge Kerrigan said that regular judges will be holding more special sessions in the coming year and that STJs will handle calendars with cases involving more than $50,000 at issue for one period.  I expect this reflects the large number of big cases sitting on the Court’s docket. 

At the May meeting of the ABA Tax Section, I participated for the first time on the committee which the Tax Section has to vet judicial appointments to the Tax Court.  For those readers older enough to remember commercials by Maytag from 50 years ago, members of this committee are like the Maytag repairman in those commercials – they have nothing to do.  Perhaps I should be happy to be on a committee that has nothing to do.  What I noticed about the committee was that it contained a number of individuals who would make excellent Tax Court judges.  Since I am over 70, I don’t have to worry about being appointed, but I note for whoever is on President Biden’s judicial appointment staff that looking at the members of this committee could provide a ready source of well qualified appointees in addition to the judges available for reappointment.

In Part Two I will talk about some of the case and other statistics provided during the committee meeting.

Unscrupulous Return Preparers Draw Attention At The ABA Tax Section Midyear Meeting

The Midyear Meeting of the ABA Tax Section concluded last week. There were many terrific panels that I suspect will generate posts in the next few weeks. The Pro Bono and Tax Clinics Committee had an especially insightful panel entitled “Holding Unscrupulous Tax Preparers Accountable.” Moderated by Mandi Matlock, a federal tax litigator at Texas RioGrande Legal Aid, the panel included David Sieminski from Consumer Financial Protection Bureau, Karyna Lopez from Lone Star Legal Aid, and Laura Baek from Taxpayer Advocate Service.

David offered a consumer law perspective on preparers who often use the return filing process as an opening to sell high priced loan products that can carry outrageously high fees. Karyna discussed how taxpayers can use state law causes of action to go after preparers who violate taxpayers’ trust. Laura discussed TAS’s perspective, including summarizing a special research report that was included in the 2022 NTA’s Annual Report to Congress. That research report included a study that explores dividing the earned income tax credit (EITC) into a separate worker and child component.

Any panel considering unscrupulous preparers and the tax system invariably includes a discussion of the EITC.  


Splitting up its work and child component would likely make the IRS’s task of administering the credit more manageable, a primary consideration TAS has explored previously. For example, when I was Professor in Residence at IRS, we prepared a research report in the 2020 Objectives Report to Congress that recommended a similar bifurcation, though the 2022 study drills down deeper and explores seven possible options for a new structure of determining the EITC amount.

Also in this year’s NTA report to Congress was a recommendation in its Purple Book that Congress authorize the IRS to establish minimum competency standards for federal tax return preparers. At the panel, Laura mentioned that longstanding recommendation, and this year’s Purple Book recommendation includes many others who have similarly proposed that Congress explicitly give the IRS that authority.

This recommendation comes at around the ten-year anniversary of the IRS’s defeat in Loving v IRS, a date noted by Dan Alban at the Institute for Justice (IFJ), a group self-described as “fighting outrageous government abuse” (Dan was the lead attorney who represented Sabina Loving and two other preparers who successfully sued the IRS to shut down the IRS’s testing and continuing education for unlicensed preparers). Tackling what the IFJ believes is anti-competitive and anti-consumer occupational licensing is a core part of its work.

Among the tax community the almost universal support for mandatory continuing education and licensing for unenrolled preparers is met by IFJ’s claim that the IRS’s licensing, testing and education regime would have put some mom and pop preparers out of business or resulted in higher taxpayer preparation costs. IFJ also was skeptical that the regime would have an impact on improving the quality and accuracy of the returns. This policy issue is somewhat unrelated from the legal issue in the Loving case itself, which focused on whether the IRS had the authority to impose the regime rather than its merits.

There is a fair bit of data pointing to problems with non-credentialed preparers. At the panel, Laura referred to data discussed in the report’s Most Serious Problems #8 Return Preparer Oversight, which noted that “paid non-credentialed return preparers prepared almost 79 percent of the prepared 2020 individual income tax returns with Schedule EIC….compared to only 52 percent of the prepared individual income tax returns without a Schedule EIC.” Moreover, while paid “return preparers prepared about 79 percent of 2020 EITC returns…over 92 percent of the total amount of audit adjustments (in dollars) occurred on returns prepared by non-credentialed paid return preparers.”

In addition, the MSP discussed how over 75% of all return preparer penalties that the IRS assessed in calendar year 2021 were assessed against non-credentialed preparers. For good measure, DIF scores (suggestive of noncompliance) are higher for non-credentialed preparers: “non-credentialed paid return preparers prepared about 44 percent of 2020 individual income tax returns in the three highest deciles of DIF scores. This is compared to 36 percent of the returns in those same DIF score deciles prepared by credentialed preparers.”

MSP #8 also referred to a 2014 IRS study that showed that “unaffiliated unenrolled preparers (i.e., non-credentialed preparers who are not affiliated with a national tax return preparation firm) were responsible for “the highest frequency and percentage of EITC overclaims.”  That 2014 study “found that half of the EITC returns prepared by unaffiliated unenrolled preparers contained overclaims, and the overclaims averaged between 33 percent and 40 percent.”

Going forward, one key data point that TAS or IRS may wish to explore in a future study is to examine taxpayer preparation costs, RAC/RAL usage and improper payment rates in the handful of states which themselves have regulated preparers. IRS could compare both improper payment rates and (if available) costs and RAL/RAC take-up in those states with other states that do not impose competency and disclosure requirements on unlicensed preparers. This helpful post from Kay Bell’s Don’t Mess With Taxes blog from 2018 summarizes state licensing/testing regimes as of that date. As Kay notes, California, Maryland, New York and Oregon have been at the lead in imposing requirements on preparers, and twenty other states imposed additional disclosure requirements when preparers offered or facilitated access to refund related products like RALs and RACs.


Even among those skeptical of occupational licensing generally, perhaps additional data can inform the debate. Kudos to TAS for focusing on the challenges IRS faces in administering the EITC; it is time to start meaningfully exploring ways to make things better for taxpayers and the IRS, especially as Congress shows no signs of reducing its reliance on IRS to administer credit-based social policy benefits.

An upcoming Inflation Reduction Act mandated study requires the IRS to work with independent third-party experts to explore the feasibility of an IRS-run “direct file” tax return system. I hope that study, to be released this spring, will generate momentum for a truly free and accessible option for taxpayers. That would likely reduce demand for preparers, including the unscrupulous ones that the ABA panel discussed.

Updates from the ABA Tax Section 2022 Fall Meeting: Court Procedure & Practice

Les, Samantha, Caleb, and I recently returned from the ABA Tax Section’s Fall Meeting in Dallas. Among the excellent sessions I attended was a Recent Developments program of the Court Procedure & Practice committee on October 14. The panelists were Judge Lewis T. Carluzzo, Chief Special Trial Judge, United States Tax Court; Cynthia Messersmith, Chief, Southwestern Civil Trial Section, U.S. Department of Justice, Tax Division, Dallas, TX; and Melissa Avrutine, Special Counsel, IRS Office of Chief Counsel, Procedure & Administration. The moderator was Kandyce Jayasinghe, Covington & Burling LLP. This post will focus on the Tax Court updates provided by the panel, grouped by topic.

General Tax Court Updates

Chief Special Trial Judge Carluzzo began the session with updates from the Tax Court. He first offered a tribute to former Tax Court Judge Herbert Chabot, whose passing was announced by the Court that same day.

Judge Carluzzo announced that the court will hold a webinar on November 16, moderated by Chief Judge Kerrigan. The flyer is here, and you can register here.


From the flyer:

Please join the United States Tax Court for an informative webinar panel discussion moderated by Chief Judge Kathleen Kerrigan. The program will highlight changes to Tax Court practice made in response to the COVID-19 pandemic, including lessons learned, best practices, and practical implications for ongoing controversy matters and trial calendars.

The webinar participants are Chief Judge Kathleen Kerrigan, Judge Cary Douglas Pugh, Judge Emin Toro, Sheri Dillon of Morgan Lewis & Bockius LLP, Michael Garrett and Andrew Titktin of the IRS Office of Chief Counsel, and myself. Experience with both large and small cases is represented on the panel.

Judge Carluzzo also addressed mail irradiation, which was recently a topic of discussion on the ABA’s Low-Income Taxpayer Clinic listserv and in the news. The judge explained that irradiation of mail to the Court is not within the Tax Court’s control – it is conducted by the U.S. Postal Service. Some types of ink do disappear in the process. Kelly Philiips Erb wrote about the issue, and her search for a pen whose ink would not be affected, here ($). There does not seem to be an easy way to tell if your ink will disappear. This provides another reason to use DAWSON and pay.gov whenever possible.

Case Statistics and Filing

Judge Carluzzo reported that the Tax Court continues to receive a high volume of petitions, approximately two thousand per month. The Court has received over 20 thousand petitions so far this calendar year. However, the Court is closing more cases than it is opening, and the majority of cases are disposed by stipulated decision. The Court is pleased that many cases are settling earlier in the process. This past August 1,300 cases were closed that had never been calendared.

Electronic filing of petitions has been at a consistent level of around 35%. This indicates that some self-represented petitioners are using the e-filing system, but the Court would like to see that number rise. The Court encourages practitioners to make clients aware of DAWSON when consulting with people who may petition pro se.

As of October 14, 2022, the Tax Court had 31,831 cases pending, of which 8,295 were assigned to a judicial officer. Of those, 250 cases are fully submitted and awaiting an opinion. The Court does not track the time it takes cases to move from submission to opinion, or the time from petition to decision. There is no average figure available for either timeframe.

Later in the session, Melissa Avrutine offered additional case figures from the IRS Office of Chief Counsel. As of 6/30/22, the Office of Chief Counsel records showed 40,400 dockets open in Tax Court, representing $30.1 billion in dispute. Ms. Avrutine noted that this is $10 billion more in dispute than any of the years from 2012 to 2020; however the 2022 numbers are down from 2021. In the first three quarters of FFY 2022, 28,100 dockets were opened (of which about 25,000 had self-represented petitioners), and 20,400 dockets were closed.

Post-Boechler Issues

Judge Carluzzo noted that the Supreme Court’s Boechler opinion has impacted the court’s case processing, in that the court will no longer scrutinize CDP petitions for late filing. He acknowledged that the Court will need to develop law on equitable tolling, but cautioned that the Court may not have occasion to reach the issue in very many cases. For equitable tolling to come before the Court, (1) the answer must raise late filing as a defense; and (2) petitioner’s reply to the answer must raise equitable tolling.

Judge Carluzzo noted that post-Boechler challenges to the jurisdictional nature of filing deadlines are pending in the Hallmark (deficiency) and Frutiger (innocent spouse) cases. Ms. Avrutine also commented on the Hallmark case, referring attendees to Respondent’s filing of June 22 (linked in Carl’s post here; the taxpayer’s reply is linked in another of Carl’s posts here). She noted that the government believes the Ninth Circuit opinion in Organic Cannabis is controlling under the Golson rule. Notably, in the Frutiger case Judge Buch has invited motions for leave to file an amicus brief.

Keith and Carl recently blogged on the impact of Boechler and pending litigation here, here, and here.

Tax Court Rules

As PT readers know, last March the Tax Court released proposed amendments to its Rules of Practice and Procedure. Judge Carluzzo said that the Court is still in the process of finalizing its rule changes. All of the public comments can be found on the Court’s website here.

Ms. Avrutine highlighted some of the comments from the IRS Office of Chief Counsel on the proposed rules. In particular, Ms. Avrutine noted the government has concerns about the proposed requirement for it to locate and file the statutory notice with the Court if a petitioner fails to attach the notice to their petition. At least 8 different offices issue jurisdiction-granting notices, and it is difficult for the Office of Chief Counsel to find the notice by the Answer deadline. If the rule is finalized as proposed, Respondent will often have to move to extend the deadline. Ms. Avrutine stated the government’s position is that the Court should treat such filings as imperfect petitions and order petitioners to supplement with the statutory notice within 60 days. Presumably, the case could be dismissed if the petitioner is unable to find the notice, or a complete copy of the notice. Such a position would cause many more cases to be dismissed.

Regarding proposed rule 92, Respondent supports the proposal for the parties to stipulate to the administrative record but believes 60 days after the notice setting the case for trial would be more administrable than the proposed 30 days, and 90 days would be appropriate for whistleblower cases. Ms. Avrutine further stated that the administrative record should have a uniform definition across all cases where the validity of a rule could be challenged under the APA.

Subpoena Procedures

Perhaps the most positive development to emerge from the pandemic has been the availability of remote hearing sessions for the purpose of receiving subpoena responses before the calendar call. Pre-pandemic, the inability to serve a subpoena returnable in advance of trial was a longstanding source of practitioner frustration. Samantha Galvin wrote about the anomaly of Tax Court subpoenas here, and William Schmidt wrote about the new procedures here.

Judge Carluzzo stated that the Court intends to continue regular remote motion and subpoena sessions indefinitely as long as standalone remote calendars continue to be scheduled. He commented that the Court’s remote subpoena procedures have been well received on all sides, and generally occur weekly on Wednesdays. Although the document is titled “Subpoenas for Remote Proceedings,” I understand that attorneys are currently requesting and receiving remote subpoena hearings for cases that will be tried in person.

A subpoena returnable only at the calendar call is much less useful to the parties and the court and needlessly prolongs litigation. However, Judge Carluzzo noted that there is a pending case before Judge Lauber in which petitioner challenges the remote subpoena hearing process as a violation of the Tax Court rules and the statute (presumably rule 147 and IRC 7456). As the Court finalizes its next round of rule changes, perhaps remote subpoenas will be formally incorporated.

Trial Sessions

Judge Carluzzo reported that all trial sessions are now being scheduled in person, except for some smaller cities. However, the calendar may be changed to a remote format at the discretion of the trial judge, or by order of the Chief Judge.

I recently experienced this in Philadelphia, where on September 20 we were notified that the September 26 trial calendar would be heard on Zoomgov. I can understand the Court’s decision. The docket was down to 5 unresolved cases, all with unresponsive petitioners. I understand that two of the petitioners appeared at the remote calendar call, notwithstanding the late format change.

National Virtual Settlement Week October 24-27

Ms. Avrutine announced the upcoming national Virtual Settlement Week, happening October 24 -27 as part of National Celebration of Pro Bono Week. This event is a partnership between the IRS Office of Chief Counsel and the ABA Section of Taxation. Practitioners can learn more and sign up for a shift here.

Whistleblower Litigation

Ms. Avrutine alerted attendees to an important new appeal to watch, Whistleblower case Docket 972-17W, concerning disclosure of nonparty return information under IRC 6103(h)(4)(A). The Tax Court opinion held that respondent is authorized under the statute to submit the unredacted administrative record to the Court, and that the Court had jurisdiction over the case, consistent with the D.C. Circuit’s opinion in Li v. Comm’r. Keith most recently blogged about the jurisdictional issue here. The disclosure issue is significant in these cases, and we will follow the issue in the D.C. Circuit.

“The Dark Net? We OWN the Dark Net.” -Charles Rettig, IRS Commissioner, ABA Tax Section Meeting

Charles Rettig, a tall white man with short white hair, wearing a dark suit, lapel pin, and red tie, speaking from a podium before a blue backdrop.

Today’s post by guest blogger Karen Lapekas is a thoughtful reflection on Commissioner Rettig’s remarks given at the ABA Tax Section meeting last week.  I was not at the meeting – I had just returned from international travel and was hunkering down to make sure I did not have COVID – so I am relying on this description, which notes that the Commissioner “called out” tax attorneys for not defending the IRS when politicians and commentators fear-monger about the $80 billion funding in the Inflation Reduction Act.  Now, I find this a very strange reaction.  The Tax Section has written and testified before the House and Senate Appropriations Committees in support of increased IRS funding for as long as I can remember.  Historically and definitely during the recent funding debate, members of the Section have written letters individually, spoken to the media, and spoken to members of Congress and their staff, explaining what happens to taxpayers when the IRS doesn’t get sufficient funding. And here at PT Les, in The Fear Over IRS Funding, called out politicians using inflamed rhetoric to describe the Inflation Reduction Act.

Since 2006, I have been calling for additional funding for the IRS and consistently testified before the Appropriations and tax-writing committees of Congress about this issue.  (See page 442-457 of my 2006 Annual Report to Congress here; it’s also worth reading my 2013 Most Serious Problem on IRS lack of funding.)  Unlike the enforcement-driven debate today, the case I made to Congress was that funding the IRS is a constituent service.  The IRS will do whatever job it is given; even with inadequate funding it will still plow forward – but in that plowing forward, with inadequate funding core services such as answering the phones and core taxpayer rights such as providing prompt appeals hearings and correct, clear, informative notices go by the wayside.  Looked at from that perspective, adequate funding of the IRS – whether for service or compliance activities or information technology – is something every elected official should desire.

So why is this not the case?  First, the IRS collects taxes and has awesome powers to do so.  As a matter of strategy (overrated and even misguided, I think) it believes that the more people fear being audited or face enforced collection, the more they will comply with the law.  So it’s not surprising that people react with fear when they hear the IRS will get more funding.  Second, people tend to remember negative things rather than positive things.  Thus, although the IRS pulled off a near-miracle during COVID distributing Economic Impact Payments, the Advance Child Tax Credit, and other pandemic relief provisions, when asked to think about the IRS, taxpayers are more likely to remember the Tea Party 501(c)(4) debacle of a few years ago or their own negative interaction with the IRS.   Third, in the last three decades the geographic presence of IRS employees in most of the United States has all but vanished.  Taxpayers no longer know IRS employees who are members of their religious organizations or PTAs or gyms.  This makes it easier to see IRS employees as nameless and faceless automatons.

These three tendencies make the IRS an easy target.  How to combat this?  Well, “combat” is not the right approach – that just brings on more yelling.  Being defensive doesn’t help; complaining that people aren’t appreciative enough of all the IRS’s good work isn’t going to win converts either.  I personally agree with Ms. Lapekas that we tax lawyers need to speak up, but we should speak as taxpayers, not tax lawyers.  We should take every opportunity we can to talk to our neighbors, our friends, our colleagues about why taxes matter, why tax compliance matters, and then, and only then, why we need a tax agency that functions well.  Let’s not make the conversation about the IRS – that just triggers negative reactions.  Instead, let’s make the funding conversation about achieving a fair and just tax system, something no one will say they don’t want.  — Nina

Chills ran down my spine when IRS Commissioner, Charles Rettig, said these words about the IRS to a room crowded with hundreds of tax attorneys.

They weren’t chills because I feared an overgrown IRS, but because I hadn’t before truly appreciated how important its work was, how thankful I am for it. Its work is important not only for the collection of 96% of the funds that support this country, but for the work it does in protecting and serving the individuals that call it home.

Yes, the IRS protects and serves. It fights fraud, terrorism, money-laundering, child exploitation, and human trafficking (to name just a few things). It’s in everyone’s best interest to support it, fund it, and work to improve it. And before you dismiss me as a brainwashed civil servant, know that I make a living fighting against the IRS. My career is finding the IRS’s faults and mistakes and exposing them. I pay my bills by fighting the IRS’s wrongs. Am I proud of my work? Hell yes. But what makes me even more proud? Living in a country where it’s possible.

read more…

Chuck (the name he goes by, he reminded us) reminded us that the IRS has tracked and helped seize Russian oligarch’s yachts around the world, took control of Al Qaeda and Hamas websites and diverted donations from those sites to victims of terrorism, and took down the largest child pornography website in the world. The child porn website takedown resulted in the arrest of 337 users within the United States alone.

When Chuck concluded his speech (which went over-time, as usual), I tried to talk to other attorneys about it. Two of them said they didn’t attend the speech because they’d heard him speak many times before and thus (said with a roll of their eyes), had heard his same stories at least twice that many. Another attorney who did attend mentioned that the Commissioner was a great orator, but dismissed the speech as a rah-rah campaign for the IRS. (No, Mr. Rettig is not eligible for re-appointment and by his account is looking forward to returning to his humble public-school, immigrant-raised, military supporting, beginnings in Los Angeles).

Something was different about this speech though. The Commissioner called us out. He criticized us tax practitioners. Repeatedly. Why? Because as the media has excoriated the IRS’s recent $80 billion funding boost and spread fake news about 87,000 new gun-toting agents, we said nothing. Worse, some practitioners rode the media frenzy for personal gain from the hype to spew false information and feed the fire.  Doing so has literally caused increased death threats against IRS employees and put them in harm’s way.  It has certainly eroded the country’s confidence in the second-most important government agency in the United States (the first being the military, Chuck reminded us).

When public confidence in the IRS wanes (even further), voluntary tax compliance wanes. And that hurts all of us.

Why would the Commissioner of the IRS express disappointment in a room full of tax attorneys? Why would he call on private practitioners to speak out IN SUPPORT OF the IRS? We make a living fighting it, after all.

He didn’t say. But I think I know why.

Because we know the truth.

When everyone was seemingly inflamed by the $80 billion infusion into the IRS, there was a group that largely wasn’t. It was tax attorneys. From the most Trump-supporting, die-hard Republicans to the snow-flakiest Democrats; we supported it. All the tax attorneys I know said the same thing about the increased IRS budget. They agreed, “It’s about damn time.”

We didn’t say this publicly, of course. Because if we speak out in support of the IRS our clients would think we wouldn’t put up a bull-dog fight against it. Our clients would be wrong if they thought this. But we fear losing them, nonetheless.

We support increased funding to the IRS because fighting the IRS works. It works because, when the IRS operates properly, taxpayers can win. Yes, tax administration can (and should) be improved. But there are checks and balances in place, opportunities for appeals, IRS employees who care about the right answer (even to the detriment of the government), and laws in place to protect us. If you’re not familiar with tax procedure and if you have not actually fought (and won) countless disputes with the IRS, you wouldn’t know this. You wouldn’t know how much easier it is to achieve “justice” in a fight with the IRS than it is against a state tax, or other government, agency.

When the IRS can answer its phones, it helps taxpayers solve problems. When the IRS has resources to improve its technology and public outreach, it can inform and protect the public against scams. If the IRS is well-funded, it can reach the poor, the elderly, non-English speakers, and members of the military, before financial predators can.

Yes, the Commissioner’s speech was full of his same old stories. We heard ad nauseum about his love for his wife (a refugee from Vietnam, lest anyone forget), his support for the military (even—no, especially—when his son was deployed), and his admiration for his immigrant in-laws (who have notably thrived in this country, despite not speaking English). But these stories are only “old” if you’re sick of hearing about the “American Dream.” I’m not sick of it. I hope I never tire of hearing it. I love hearing that the American Dream is alive and well.

But it’s only alive and well because we have people like “Chuck” at the helm of the IRS. Because we can speak out against the IRS and it listens, and cares. (It really does). The American Dream is alive and well because the IRS Commissioner is (justifiably) so confident in the IRS that he can call out a room full of private tax attorneys and criticize them for their silence when the IRS was under attack.

His rebuke was well-placed.

Information from Administrative Practice Programming at the May ABA Tax Section Meeting

At each ABA Tax Section meeting certain committees have programing that directly impacts tax procedure, and we try to cover those committees.  At the May meeting none of the regular bloggers attended the Administrative Practice Committee meeting – usually one of the critical committee meetings for tax procedure information – but Abbey Garber and Bibiana Cruz of Holland & Knight agreed to cover this meeting.  We welcome them as first time guest bloggers.  Abbey worked for Chief Counsel in the Dallas office for many years (where I first met him) before retiring and moving to the firm.  Bibiana is an associate in the firm’s Miami office. You can view the slides from the meeting here.

The discussion of the information coming from committee meetings serves as a good reminder that the next ABA Tax Section meeting is coming up next month in Dallas.  The preliminary program is here. You can register and get other information about the meeting here.  Keith

On May 13, 2022, as part of the ABA’s Tax Section Meeting in Washington D.C., the Administrative Practice Committee invited Holly Paz, IRS Deputy Commissioner of the Large, Business and International Division (LB&I), Scott Irick, IRS Director of Small Business / Self-Employed (SB/SE) Examination Division, Abbey Garber, Partner at Holland & Knight’s Tax Controversy and Litigation Group, and Henry Cheng, Associate at DLA Piper’s Tax Controversy and Litigation Group to discuss Exam’s return to office, innovations and challenges encountered during COVID, and what Exam is currently focusing on. Paige Braddy, from Skadden Arps, moderated the panel, titled IRS Exam –Reflections on Two Years of COVID.


The IRS has completed its return to office transition after more than two years of COVID. As of June 25th, normal in-person operations have resumed. However, the IRS continues to be flexible in certain aspects such as digital/photograph signatures for some purposes, which will be accepted until October 31, 2023. In addition, other innovative tools such as virtual reading rooms and video conferencing through Microsoft Teams are now being utilized. Also, the fax machine option is receiving an upgrade as some web-based upload tools are being introduced.

During the chat, the panelists discussed the new IRS Office of Chief Counsel Memorandum 20214101F which sets forth the requirements for a taxpayer to claim an I.R.C. Section 41 research credit refund on an amended return. In summary, these requirements include: (i) the identification of all the business components that relate to the claim, (ii) identification for each business component of the activities performed, the individuals who performed such activities and the information each individual sought to discover, and (iii) providing the total qualified employee wage expenses, supply expenses and contract research expenses. The memo also provides a 45-day period (increase from the prior 30-day period) to perfect a claim for refund prior to a final determination. According to the officials, at the moment, a low volume of submissions have been received, but they expect to evaluate the process further once sufficient number of claims come in.

The group also discussed the continuing validity of Rev. Rul. 94-69. Rev. Rul. 94-69 allows large corporate taxpayers who are under continuous audit to make affirmative disclosures at the start of the audit with the practical effect of informally “amending” a return without having to file all of the required paperwork. The IRS has published a new draft form (Form 15307, Post-Filing Disclosures for Specified Large Business Taxpayers) in an effort to standardize submissions. Although this process is still being examined, the idea is for certain large taxpayers to have a clear view of what information needs to be provided and that there is consistency among taxpayers as to the information being submitted. The IRS is evaluating whether the population of eligible taxpayers will be changed.

LB&I has made some changes related to the assertion of the Economic Substance Doctrine and related penalties. As of April 22, 2022, the level of approval required to assert the application of this doctrine and its related penalty has changed: executive approval is no longer required to raise this argument and to assert the economic substance penalties. This, however, does not remove the requirement that the penalties must be approved in writing by the immediate supervisor of the person who initially determines the penalty.

The application procedure to the Compliance Assurance Process (CAP) also has undergone some changes. These include: (i) for 2022 CAP years “two filed” open returns are permitted, (ii) audited financial statements in accordance with GAAP must be provided, and (iii) new applicants will be required to complete the Tax Control Framework Questionnaire. On September 15, 2022, the IRS announced the opening of the application period for the 2023 Compliance Assurance Process (CAP) program. The application period runs from September 15 to November 15, 2022.

Partnerships are being closely monitored by the IRS and audits under the new BBA centralized partnership audit regime are ongoing. According to the officials, the IRS is looking to increase its coverage by bringing in new resources and increasing agent training in partnership exams. The IRS officials cautioned that, regardless of taxpayers having elected out of the BBA, an audit could be underway.

The Fast Track Appeals Process is also under review. Fast Track, a voluntary mediation program and an option for most disputes at Exam, is an alternative process where a mediator seeks to facilitate settlement discussions making it a shorter, and more flexible and cost-effective process. According to the IRS, they are looking to improve Fast Track by increasing agent training and by using metrics to measure progress and identify areas for improvement.  

The IRS is aware of its challenges and taxpayers’ struggles in their communications with the agency. It is focused on tackling the long processing delays and improving taxpayers’ overall experience with the IRS. To make this happen, the IRS is looking to hire 400 new agents and increase training for existing ones. It is also updating its technology and communication platforms. Leadership changes also have occurred, with the recent announcement of Lia Colbert as Commissioner of SB/SE and Maha Williams as Acting Deputy Commissioner for SB/SE Exam.  Darren Guillot will continue to serve as Deputy Commissioner for Collection. They are hopeful that these changes, along with increased resources, have a positive outcome for taxpayers and practitioners.