Today we welcome guest blogger Sheldon “Shelly” Kay. Shelly practices with Sutherland in Atlanta. He was the District Counsel in Atlanta when I was the District Counsel in Richmond, and we went to many meetings together. After leaving Chief Counsel’s office, he returned to the IRS as an executive where he served, during part of that return visit, as the National Director of Appeals. He is a great manager and leader. He writes today to present a different view of the state of Appeals than my rather gloomy view published a few months ago. Because his practice takes him to a different part of the hallway in Appeals or perhaps a different office since I doubt his cases get handled by too many Service Center Appeals employees, we may be describing different experiences based on our different client bases. I hope his assessment is more correct than mine. Keith
Like Professor Fogg, I am a former attorney and supervisor for the Office of Chief Counsel of the Internal Revenue Service. Additionally, I was also the Deputy Chief and the Chief of Appeals. Throughout my career, I have had the opportunity to work closely with and across the table from many Appeals Technical Employees (both Appeals Officers and Settlement Officers). Throughout all, I have gained a great respect for their knowledge and have valued their input.
Professor Fogg lists several areas where he has perceived a decline in Appeals, leaving it, in his words, “a very different Appeals Division from the one developed decades ago.” He also suggests that Appeals officers “with little or no knowledge of litigation” cannot properly analyze evidentiary questions or properly evaluate hazards of litigation. I respectfully disagree with his assessment.
read more...Training
In the tax arena, training is vital to being able to keep up with the ever-changing legal landscape. With the significant budget decreases over the last several years, Appeals has had less to spend on training. I have often stated that more funds for training would be advantageous for Appeals, its Technical Employees, as well as the taxpayers, and I continue to believe that. However, given the current budgetary restrictions, Appeals has done an excellent job of addressing several important areas in the training of its employees using in-house experts to fill the gaps in some cases.
For example, with the assistance from attorneys of the Office of Chief Counsel, led by Associate Area Counsel, Mark Miller, Appeals Technical Employees have been offered targeted training classes. Just this year, Miller’s team of attorneys from all Chief Counsel Divisions, taught a web-based, two-day, seven-hour course on topics such as:
- Rules of evidence
- The weight to be given taxpayers’ testimony
- Burden of proof
- Hazards of Litigation and penalties
- IRC section 6201(d).
Attending Calendar Calls, Tax Court Trials and Receiving Counsel Settlement Memorandum
Just a couple of years ago, while I was at the Appeals Division, Mark Miller and a group of dedicated and knowledgeable Chief Counsel attorneys, visited Appeals Division’s campuses (Service Centers) to provide a two-day seminar for both Appeals Officers and Settlement Officers that covered technical tax and procedural topics.
I would agree that watching the trial of a case that an Appeals Technical Employee personally considered would be helpful. However, suggesting that such attendance would help in weighing the credibility of witnesses is a little overdone. Analyzing credibility and the weight that a court might give to testimony is something we all can do. I would argue that the amount and nature of an Appeals Officer’s experience, as well as just having the ability to judge credibility, is what’s important.
As for the suggestion that Appeals Technical Employees should learn how Chief Counsel attorneys resolve cases, all Counsel Settlement Memoranda are shared with Appeals. Reviewing the CSMs can provide a useful tool for additional growth by Appeals Technical Employees. I would recommend to all Appeals managers that they use the opportunity for continued training, presented whenever they receive a CSM. This kind of feedback can help in the development of their professionals.
Due to recent policy changes designed to bolster its independence, the Appeals Division is currently working on a docketed examination assistance project. In public statements, Appeals has explained that the project was initiated to develop formal procedures for obtaining examination assistance from Compliance technical employees when taxpayers submit new information or raise new issues in docketed Tax Court cases. Appeals is working closely with Compliance and Counsel to devise procedures that protect Appeals’ independence while getting examiners to review new information submitted on docketed cases.
Understanding Burden of Proof
Not only has the topic of burden of proof been covered in Chief Counsel training for Appeals Technical Employees discussed above, but, as we all know, the determination of who has the burden of proof rarely makes a difference in a court’s opinion. While a discussion of burden of proof will often appear in a Tax Court opinion, the Court usually concludes that determining who has the burden of proof does not impact its opinion.
“Reach the Correct Result”
Professor Fogg suggests that Appeals Technical Employees are trying “to reach the correct result.” I am not sure what is meant by “the correct result,” but Appeals Division’s mission is to “resolve tax controversies, without litigation, on a basis which is fair and impartial to both the government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Internal Revenue Service.” Appeals’ mission directs it to reach principled resolutions of tax disputes based on the law and the relevant facts as developed by Compliance.
Quality Service
If anyone finds that Appeals Technical Employees are not properly performing their duties or understanding the nuances of a particular case, taxpayers and their representatives should elevate their concerns to Appeals management. Discussing issues with Appeals management, just like in the other operating divisions of the IRS, can help both parties (taxpayers and Appeals) better understand the issues and procedures involved and is an accepted way to respond to situations, like those identified by Professor Fogg. The Taxpayer Bill of Rights listed in IRS Publication 1 includes the Right to Quality Service. Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service. I encourage taxpayers and their representatives to elevate concerns to Appeals’ management whenever appropriate.
I am proud to have been the Chief of Appeals. The Appeals Division that I regularly experience is as good today as it was “decades ago.”
“Shelly” Kay is no Keith Fogg; but he is in a fog. His tale that IRS Appeals Technical Employees are, as a rule, competent and professional is refuted by all available evidence and by many of our personal experiences.
When was the last time “Shelly” read an Appeals employee’s determination or decision letter? As a rule, those letters read as if a 15 year old sixth-grader wrote them–even though nearly half of the text in those letters contain computer-generated paragraphs.
Also, how many times over the years have we read of a GAO, TIGTA, or NTA report that has pointed out the Office of Appeals employees’ many stumblings and bumblings? Only this year, the National Taxpayer Advocate identified as a Most Serious Problem the fact that IRS Appeals employees who hear CDP cases incorrectly balance the parties’ respective interests in tax collection methods under I.R.C. § 6330(c)(3)(C). How hard can it be to conduct that statutory balancing test? For Appeals employees, it is very hard; read any balancing test “analysis” that they claim to have conducted.
Further, how many of us have belatedly learned that an Appeals employee had engaged in a prohibited ex parte communication? When we call that Appeals employee on his violation, does he somehow take action to ensure that not even an appearance of compromised independence is present in our case? He does not. He does not because he knows that he can violate the prohibited ex parte rules with impunity because generally the taxpayer lacks any legal remedy. So he keeps the lines of “communication” with the IRS open at all times.
Mr. Kay says that continuous training of Appeals employees is necessary because of an “ever changing legal landscape.” But the training he tells us that the Appeals employees have received lately are on subjects where the “legal landscape” has not been substantially altered in years. That Appeals employees must constantly be “trained” to correctly perform the same duties that they have purportedly performed for years proves that they are generally unfit for their jobs.
Fear not, however, says Mr. Kay. He tells us that on the off-chance we should encounter a subpar Appeals employee we can always “elevate our concerns” to Appeals management. Would this be the same Appeals management that rubber-stamps the poorly written and ill-reasoned letters that their underlings routinely issue (except in the rare cases where the underling’s position favors the taxpayer)?
Except for “Shelly,” I know of no one who would say that the general performance of IRS Appeals employees is A-O”Kay.”
Jason and I just have the bad luck to get the few Appeals and Settlement Officers who don’t walk on water. I’m happy that we can reserve the perfect ones to help others.
An outsider reading this might ask, “Where are these people hired, that they need so much training and retraining? Mostly off the street, because there’s a rule against promoting the best revenue agents and revenue officers?”
I remember the brusque Appeals Officer at the Fresno factory who threatened me that if I refused to work with her, in an EIC disallowance case where taxpayer credibility was the only issue, she would just have to tell counsel already assigned to the Tax Court case. (I’m not sure how this matter ended up in Fresno because another IRS compound had started the correspondence disallowance.) Counsel had already assured me that he would see that the case was assigned to my local Appeals office.
Fine with me, if someone 800 miles away refused to figure out if my clients were telling the truth, never having met them. Shouldn’t taxpayers have the right to meet in person with the people who start out believing they are liars?
I think I eventually got a letter from a manager, acknowledging that a misunderstanding may have taken place. I knew what they were thinking, though. “We’ll just be twice as nasty on the next case where the taxpayers are pro per.”
Or maybe not.