Getting to Yes, Sooner

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We welcome back guest blogger Scott A. Schumacher who writes on new initiatives to resolve pro se Tax Court cases at an earlier stage. Scott directs the low income taxpayer clinic at the University of Washington and its graduate tax program. He is a former Tax Court clerk and Department of Justice attorney with a deep knowledge of the system. Keith 

Among the things that make litigating in the United States Tax Court unique are the stipulation process and the Court’s informal discovery rules. Rule 91 requires the parties to stipulate “all matters not privileged which are relevant to the pending case, regardless of whether such matters involve fact or opinion or the application of law to fact.” Rule 70 provides that “the Court expects the parties to attempt to attain the objectives of discovery through informal consultation or communication before utilizing the discovery procedures” allowed under the Court’s rules. Both of these rules are designed to encourage the parties to resolve as much of their case as possible prior to trial, and to make the trials as short and expeditious as possible, without unnecessary participation by the Tax Court.

The rules governing the pre-trial process are also designed to facilitate settlement of cases. Tax Court Judges based in Washington, D.C., attending trial session for a week or two in a given city, simply cannot try all of the cases set for the particular trial session. These rules do indeed work, and the vast majority of cases settle prior to trial. Of course, this is not unique to the Tax Court. Indeed, at least 95 percent of civil cases in the federal courts settle, which is similar to Tax Court statistics. What is different is the percentage of pro se litigants in the Tax Court, which can impact the timing of settlements. Approximately 70 percent of the cases in Tax Court are filed pro se, nearly three times the percentage of civil cases filed by pro se litigants in other federal courts.


For various reasons, stemming from a lack of understanding of tax law or tax procedure, fear, sloth, lack of resources, illness or all of the above, pro se litigants often do not settle cases that could – and should – be settled easily and early in the process. They have no ability to evaluate the strength of their case and whether or on what terms they should settle. They also do not know which facts and documents should be stipulated to and, indeed, which facts are relevant to their case. The cooperative winnowing process of Rules 70 and 91 often does not work as anticipated with unrepresented litigants. As a result, the courtroom at a Tax Court calendar call is pullulating with perplexed pro se petitioners who have no idea why they are there and what their case is about. Many of them meet with an IRS attorney for the first time at the calendar call. The reality of their impending appearance before a federal judge spurs them into action. Accordingly, many cases settle on the day of the calendar call.

Low-Income Taxpayer Clinics and pro bono attorneys have long been integral to this calendar call settlement process. The ABA Tax Section and the Tax Court have worked with clinics and volunteer attorneys to marshal resources at calendar to assist taxpayers at that point. These attorneys provide expert knowledge of the tax law, tax procedure, and the Court’s rules, and advise on the likelihood of success on a case. Equally important, this advice is coming from a neutral party that petitioners believe they can trust. Nonetheless, this process is far from perfect. At calendar call the attorneys working with the petitioner often have only a few minutes to evaluate, negotiate, and resolve cases, and the petitioner’s case may require further development that cannot be accomplished during the trial calendar. In addition, waiting until the calendar call to resolve these cases requires the IRS to prepare and submit pretrial memoranda, copy exhibits, call witnesses and do all of the things necessary to succeed at trial. It also requires the Court to do preparation work for each case still at issue at the time of calendar call. The current process can interject needless uncertainty and extra work into the week’s trial calendar.

In an effort deal with these shortcomings, IRS counsel, LITCs, and other pro bono attorneys have employed various methods to deal with this crush of time. In some cities, the lawyers arrive at the courthouse an hour before the calendar call and meet with potential petitioners before their case is called. While this adds some time to the process, it does not address all of the issues. In Baltimore, IRS counsel and the LITCs developed a program where the LITCs host settlement conferences attended by pro se petitioners and IRS counsel, with the LITCs and pro bono attorneys acting as intermediaries. These sessions are held approximately six weeks prior to the calendar call and are designed to replicate the process that occurs at the calendar call, but without the pressure of time. In addition, if the case cannot be resolved during that session, the parties have additional time to exchange documents and continue negotiations. The cast of characters has been expanded to include employees from IRS Appeals, Exam, Collections and the Taxpayer Advocate Service, providing a more thorough and holistic resolution of the taxpayer’s case.

These “pro bono days” or “tax clinic days” have been quite successful in resolving cases, and they have been replicated in several cities around the country. My clinic at the University of Washington in Seattle has participated in several of these, and we find the process much better than the one that occurs at calendar calls.

The biggest issue with these pro bono days is getting petitioners to actually participate in the process. While all pro se petitioners are invited, few respond. IRS Counsel and the LITC and pro bono programs in the Los Angeles area recently adopted a process where the settlement conferences or pro bono days are conducted as part of the Branerton conference. As readers of this blog know, Tax Court rules require the parties to meet and informally exchange information and documents prior to engaging in formal discovery, the so-called Branerton conference. Since pro se petitioners are required, at least in theory, to meet with IRS counsel at the Branerton conference, the idea is that more of these petitioners will participate in a settlement conference. So far, the participation rate has been appreciably higher, and the feedback has been very positive.

More can be done. In this regard, IRS Chief Counsel William Wilkins has suggested that the Tax Court require pro se litigants to participate in “Status Calendars.” These would require pro se petitioners to appear by telephone before a Tax Court Judge so that the Court can ascertain the status of the case. LITCs and IRS counsel would also participate in these calls. During the call, the judge would inquire about the status and make it clear that the parties must meet prior to the calendar call to discuss the case. Under Wilkins’ proposal, a case would not be calendared for trial until a pro se petitioner had participated in a Status Calendar call or a motion to calendar for trial had been filed.

Regardless of the method chosen, active participation by the Tax Court in the early settlement process can only increase participation in these programs. This, as Martha Stewart would say, is a good thing. As a result of the innovations to-date, not only have more cases been settled and settled earlier in the process, I am convinced the settlements reached are more just for petitioners. Settlements at the calendar call are, by definition, hastily reached, and the petitioner may well have left issues on the table. The additional time, case development, and more extensive participation by attorneys at the pro bono days allows for a better presentation of the taxpayer’s case. Whatever the Court can do to encourage pro se petitioners to participate in a settlement conference as early as possible will benefit all parties involved.


  1. The Tax Court’s website contains a video that should help nearly all pro se litigants through the Tax Court process. The problem is, like a recruit who learns hand-to-hand combat in Army basic training, the pro se litigant learns from the video only enough to get his butt kicked by a Chief Counsel attorney.

    The various solutions to leveling the playing field in pro se Tax Court cases are these:

    1. Increase the Tax Court filing fee to $450. The current $60 filing fee encourages taxpayers to represent themselves–and creates the impression that they could do so effectively. A higher fee will result in far fewer pro se cases.

    2. Require the Tax Court to appoint pro bono counsel in all pro se cases. Only the hardiest pro se litigant would not defer to an expert.

    3. Amend § 7491(a) to place the burden of proof in all pro se cases (or, if that would be unconstitutional, in all cases) on the IRS. If the taxpayer truly possesses all the facts in the case, then his return (or lack thereof) ought to be presumed correct. The IRS should have the burdens of overcoming that presumption and of proving the correct tax.

    4. Amend § 7452 to forbid any Chief Counsel attorney from representing the Commissioner in a pro se Tax Court case. In pro se cases, the Commissioner may be represented only by the IRS examiner, Appeals officer, or other IRS official who made the determination at issue. Now that would be a fairer fight.

    As for Prof Shumacher’s comments on increasing early case settlements, settlement is in the eye of the beholder. To the typical Chief Counsel attorney, “settlement” means the
    taxpayer signs a stipulated decision that the IRS’s determination is 100% correct.

    If the taxpayer fails to accept the Chief Counsel attorney’s “settlement” proposal, then he must endure the even worse Tax Court stipulation process. Our typical Chief Counsel attorney believes “stipulation” means:

    (a) I draft the entire Stipulation of Facts,

    (b) my Stipulation of Facts language may slant all facts in the IRS’s favor,

    (c) the taxpayer may not attempt to qualify or amend my drafted Stipulation of Facts because,

    (d) if he does, I will arrange for a telephone conference with the Tax Court judge and during it accuse you of “failing to cooperate in the stipulation process,” oh, and

    (e) if I can get you to sign my Stipulation of Facts, then I will not sign any Stipulation of Facts you might draft. I will then present my Stipulation of Facts to the Tax Court judge as the only Stipulation of Facts in the case (which, after all, is true, right?).

    In my experience, any problems that the Tax Court experiences with its caseload arise less from pro se taxpayer ignorance than from Chief Counsel attorney intransigence.

  2. I don’t want to respond to all the points Jason T. makes, but I do want to respond to his first two, as a person who ran a low-income clinic for over 10 years.

    First, raising the filing fee would likely not do that much to discourage pro se filings, since a huge portion of pro ses are people who get the fee waived because of being poor. Upping the fee will mean more fee waivers being submitted and granted, which will substantially reduce the effect Jason T. seeks.

    Second, upping the fee will also not force that many people to hire lawyers. Probably most pro ses either can’t afford lawyers or could not justify the expenses of lawyer for the typical small amount in controversy in most pro se suits. More likely, raising the filing fee will just discourage pro se taxpayers from continuing to fight the IRS in deficiency cases and so the taxpayers will just accept what might be erroneous IRS assertions.

    Third, pro se filers are sent multiple notices during the pendency of their cases giving them names and addresses of local pro bono clinics who they are invited to contact for assistance. Yet a surprisingly small proportion of pro se people seek the services of the clinics. This is a matter of human psychology, and I am guessing that the pro se people who don’t want a free lawyer are either suspicious of the lawyers who would be offered, concerned that they don’t want to tell their tax problems to a lawyer (too much personal information) , or think they can handle the matter well enough or better on their own. Jason T. says: “Only the hardiest pro se litigant would not defer to an expert.” But, in my experience, while I would hope what Jason T. says would be true, in fact, the opposite is true: Only a small percentage of people eligible to get a free lawyer want one.

    • Carl makes some good observations on my first two points. The human psychology of pro se taxpayers, however, is not as puzzling as he believes.

      At the outset, though, I’m not sure that “a huge portion of pro ses are people who get the fee waived because of being poor.” Or at least I’m not sure what Carl means by the term “huge portion.” If anyone can quote or cite supporting statistics, I’d like to read them. I know that quite a few pro se Tax Court cases involve filing status, dependency exemption, and refundable tax credit issues. But I don’t believe those cases are a “huge portion” of pro se cases. I am, however, open for persuasion.

      As to Carl’s fee waiver increase prediction, a $450 Tax Court filing fee would not increase filing fee waiver submissions. A taxpayer who is leery enough to refuse to provide a pro bono attorney with his personal information for free representation will not gladly give the United States Tax Court that same (if not more) personal information to obtain a fee waiver.

      If the taxpayer would give his personal information to either the Tax Court or to the attorney, then he would give it to the attorney. After all, the Tax Court could save the taxpayer only my suggested $450 filing. In contrast, the pro bono attorney could save the taxpayer the entire tax amount–plus provide him with services valued at well more than $450. Even the most uninformed taxpayer would call that decision a “no-brainer.”

      I disagree that “most pro se” litigants either cannot afford to hire attorneys or cannot justify hiring attorneys given the amount of taxes in dispute. Rather, the pro se litigant prefers not to hire an attorney. He typically will not have an attorney on retainer, so the vetting and hiring process is, to him, not worth the bother. His belief is confirmed when he learns the Tax Court’s fee is only $60. As the pro se litigant sees it, that small fee allows him to act before the Tax Court as an attorney would do on his behalf. At that low cost, he thinks, how hard could the Tax Court process be? Raise the filing fee to $450 and the pro se litigant will think he is in a serious dispute that warrants his retaining an attorney forthwith.

      Carl informs us that “a surprisingly small proportion of pro se people seek the services of the [low-income taxpayer] clinics.” Yet what Carl tells us is hardly a surprise.

      The name of Carl’s institution alone scares off the vast majority of pro se litigants: “Low-Income Taxpayer Clinics.”

      No matter his economic station, many a pro se litigant does not see himself as, and he does not want to see others style himself as, a “low-income taxpayer.” How embarrassing, he thinks.

      Even if the pro se litigant swallowed his pride and allowed others to qualify him as, and style himself as, a “low-income taxpayer,” where must he turn for assistance? To a “clinic.”

      To him, a “clinic” is where one goes when one gets sick. And a “clinic” with “free” services reminds him of a free medical clinic where medical students do the work. Thus, the pro se litigant sees the “Low-Income Taxpayer Clinic” as a place where tax law students would “practice” on his finances. No way, he says.

      After writing all that, I must make another suggestion:

      4. Change the name of the “Low-Income Taxpayer Clinic” to one that causes the taxpayer to think, “Yup, that’s me,” rather than “No, and heck no, that ain’t me.”

      Thus is true human psychology.

  3. The Wilkinson memo is three years old, and apparently suggests a procedure that would apply only to pro se petitioners who already have pro bono or contingency-fee help from clinics or other volunteers. They would then have to take another day off from work to proceed through the IRS meatgrinder. Like virtually all IRS memos, it should have been and was DOA. If I wanted to write my own memo to nowhere, though, here is what I would suggest.

    Monday I will conduct a hearing as arbitrator in a county Superior Court civil case involving a car accident. I have no expertise in tort litigation and I did not volunteer for this assignment; I am required to serve as arbitrator when my name comes up on the court list of nearly every lawyer in town. The cases that are assigned to arbitrators are those involving monetary damages only, of less than $50,000. If arbitrators bother to file a claim, they are compensated $75 a day. Or, they can claim some CLE credit for their service. If parties are unhappy with the arbitrator’s decision, they can then proceed to trial before a judge.

    Lawyers average one arbitration appointment a year, although I have been fortunate that in recent years my cases have settled before hearing. Arbitrators also rule on pre-trial motions. Typically the arbitration hearing takes place within five months of a case being filed, and enough cases are settled or decisions accepted that the court can try those remaining within another six months. Despite grousing about “involuntary servitude,” most of my colleagues welcome the intellectual challenge and opportunity to be a decider.

    What if members of the Tax Court bar (other than government employees) had to accept arbitration appointments, under a similar system, for cases under the $50,000 “small” limit?

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