On May 6, 2016, the Tax Court issued a press release announcing the next test for admission to the Tax Court for non-attorneys. Here is a prior announcement. Tax Court Rule 200 governs practice before the Court. The general requirement for practice before the Tax Court concerns good moral character and the ability to provide competent representation before the Court. For those meeting the general requirements, there are two paths to admission. First, you can be admitted to practice before the Tax Court pursuant to Rule 200(a)(2) if you are a member in good standing of the Bar of the Supreme Court of the United Sates or of the highest (or other appropriate court) of a State, of D.C., of a commonwealth, territory or possession of the United States. Members of one of these bars represent, by far, the typical member of the Tax Court bar. You must submit an application, a fee and proof of good standing in the appropriate bar. It has been a long time since I became a member of the Tax Court but I remember it as a fairly easy and low cost process.
Even if you are not a member of any bar, it is still possible to practice before the Tax Court using the second path which is available to non-attorneys. This path requires submission of an application and a fee as well but also requires the applicant to take a test. Tax Court Rule 200(a)(3) provides that this test “will be held no less often than every 2 years.” This subsection of the Rules also provides that at least six months prior to the administration of this test the Court will make a public announcement of the upcoming test. Tax Court Rule 200(c) requires that individuals taking the test must be sponsored by at least two persons already admitted to the Court. The sponsor sends the letter shortly after the person passes the exam and provides the Court with “the sponsor’s opinion of the moral character and repute of the applicant and the sponsor’s opinion of the qualifications of the applicant to practice before” the Court.
Why does the Tax Court admit non-lawyers and how hard is it to get admitted?
read more...The reason the Tax Court, among all federal courts, admits non-lawyers to its bar is rooted in history. We have discussed the book before but for any reader interested in the history of the Tax Court the “The United States Tax Court – An Historical Perspective” originally by Harold Dubroff and updated in 2015 by Dean Brent Hellwig of Washington & Lee Law School is the authoritative source. The book is available directly from the Court’s web site and you can read all 953 pages from the privacy of your home computer. It is excellent. It devotes some time to the subject of practice by non-lawyers before the Tax Court.
The Tax Court allows non attorneys to practice before it because it did so when it was first created in 1924. When Congress eventually pulled the rug out from under CPAs in allowing them to automatically practice before the Tax Court, the test was created as a safety valve to allay the concerns over the removal of the right CPAs previously had and which they lost. In 1926 Congress first amended the legislation creating the Tax Court. In doing so, it created a deliberative body more like a court than a “Board.” Persons coming before the Board of Tax Appeals (BTA) after the 1926 amendments participated in a process that essentially paralleled the process of a court. There was some discussion about the appropriateness of having clients represented by CPAs but the rules were not changed and CPAs as well as attorneys could join the Tax Court’s bar in a process similar to the attorney process today.
The next time Congress looked hard at the BTA was 1942. The BTA wanted to become known as a court for several reasons one of which being called a court would make It much easier for it to borrow courtrooms around the country. Congress changed the name from BTA to Tax Court. It also made other changes at that time including limiting practice before the Court to those who were attorneys in good standing or who passed the test Congress order the Tax Court to establish and who otherwise showed themselves to be of good moral character.
The Tax Court has published statistics showing the past success rates for taking thee exam. No law school would want these rates as its bar passage rates. The descriptions I have heard of the exam from those who have taken it have convinced me that it very hard and I might not pass. There are organizations, (more here and here) that assist with exam preparation. One of the members of the pro bono panel at the Harvard Tax Clinic, Charles Markham, is a person who has passed the Tax Court test. At the most recent Tax Court calendar in Boston, Charles tried his first case. He came to calendar call to assist with the cases. One couple needed assistance. I met with them but was unwilling to represent them due to the income guidelines that govern the grant our clinic receives from the IRS pursuant to IRC 7526. The grant requires the clinic to represent individuals whose income falls under 250% of poverty. Although it also allows the clinic to accept as clients 10% of its cases for individuals above that threshold, I try to reserve those cases for ones I think will make a difference in broad legal questions. Despite my reluctance to take the case, Charles jumped in at the last moment and represented them in a trial that day. I feel confident that the petitioners he represented appreciated his efforts and that they benefited from them.
Enrolled agents and CPAs seeking the ability to represent their clients in Tax Court should take note of the upcoming test. My impression is that interest in this test is growing.
I believe it to be inequitable that a barrier such as this test is placed before other professionals such as CPAs and especially Enrolled Agents. For example, I hang out at a tax professional forum called http://www.taxprotalk.com. There are very few attorneys I see besides myself who participate. The depth of, knowledge and thoughtfulness of the CPAs and Enrolled Agents there have humbled me as I am constantly learning by association with these professionals. Some might argue some non-attorney practitioners would be out of their depth in a litigation setting but I do not agree.
Correct me if I am wrong, but Tax Court cases are replete with petitioners’ attorneys trying cases who know nothing about taxation. And they are up against real pros from Chief Counsel. When after I read a case involving a represented taxpayer where I shake my head ask, “What were you thinking?” I do a little research and often find out the lawyer in question specializes in personal injury or black mold cases.
I believe the Tax Court should be open to all Federally Authorized Tax Practitioners (FATP) on an equal basis, since we are all already subject to Circular 230 oversight. This would lower the cost of Tax Court representation, and also allow more flexibility for non-attorney tax professionals to pursue remedies beyond appeals. As of now, a non-member of the court can only go so far before “hitting the wall” of actual litigation and pre-litigation procedures. From a policy standpoint, I see no reason to allow a FAT practitioner the ability to interact with Appeals yet be forced to have their clients obtain counsel, or even worse, go pro-se in order to go beyond an adverse appeals.
Finally, in mentioning pro-se, I believe many bad (for the taxpayer) decisions have come down because of taxpayers’ pro-se status. If the availability of a competent representative in litigation were to be more affordable and accessible, perhaps some of these unfriendly decisions could be avoided.
In New York State, the equivalent of the Tax Court is an administrative agency independent of the Dept. of Tax. & Fin. named the Division of Tax Appeals and Tax Appeals Tribunal (the tribunal being the appellate level of the agency). CPAs and all others who can be named on POAs used by the Dept. can practice before the DTA and TAT without taking any exam. This has gone on since 1986, without any problem. CPAs generally try cases that lawyers wouldn’t take on.
One difference between attorneys and CPAs is that CPAs are not familiar with the rules of hearsay. But trials before the DTA are not limited to strict rules of evidence — just like Tax Court trials in S cases. As an experiment, I would like to see Congress authorize anyone who could be named on an IRS POA to be able to represent taxpayers in Tax Court cases where the taxpayers elect small case status under section 7463.
Tim – I agree with you that you do see cases in which a non-tax lawyer does not handle a Tax Court case very well. I might not say replete because I do not think it happens all too often but it certainly happens. Non-tax lawyers also handle tax cases in which they do an excellent job and tax lawyers sometimes handle cases poorly. Practitioners need to know their limits. I have no doubt that non-lawyers can do a good job representing clients in Tax Court if they properly prepare. Your point that non-lawyers may provide competent representation at a lower cost than lawyers seems correct to me. One problem for many Tax Court petitioners is that the cost of having a tax professional work on their case will be too high for the amount at issue no matter what branch of tax practitioner is involved. Litigating a case properly takes a fair amount of time and effort and any professional needs to compensated at a level that frequently does not match the amount at issue. Keith
Interest in the exam is growing. In the NY/NJ area, we have a free preparation course for applicants the volunteer to assist at our local LITCs and at calendar calls. Attendance at each class exceeds 100. Of those, we expect at least 50 will take the November 2016 examination.
Can you give me some details of this free preparation course? i am interested in taking it next time. thanks
Just want to add few points – 1) http://taxcourtexam.com/ assists with exam preparation and most of the successful candidates are form this course 2) I myself attended the course and found beneficial. I missed 2012 and 2014 by just few points ( painful) 3) I am sitting this year again. 4) I am an enrolled agent and I agree with the comment that CPA’s and EA have good understanding about tax laws but while preparing for the exam I learned a lot that winning a tax court cases is not about knowing tax about presenting facts of the case in a manner that improves the odds of favorable ruling for the client. The journey to pass the exam provides that skill.
Keith, I read PT regularly if not religiously. Thanks to you and Leslie and your other writers for providing analysis of ongoing tax law and tax administration issues.
Interestingly, an enrolled agent who is a non-attorney admitted to practice before the U.S. Tax Court provides an astonishingly successful course. Perhaps some readers will find this source of interest: http://taxcourtexam.com/. (Oh, and to provide a caveat, the post is not an endorsement by my association, NAEA).
Wondering why a cpa or ea hasn’t sued tax court barring entrance because of an exam. This right was first given to them in 1924 then taken away
I fully support the Tax Court limiting admission to only those who pass the test.
I’m an EA who took & passed the test in 2018 and felt that way before, during and after I took the exam. I have since handled half a dozen cases. Yes, I’ve worked with clients’ tax attorneys in the past who had a no working knowledge of tax and, yes, many practicing EAs & CPAs know a lot about taxation, but that doesn’t mean they know anything about Tax Court rules & procedures, Federal Rules of Evidence and legal ethics let alone the actual mechanics of practicing before the Tax Court. Does some public tax/accounting work overlap with Tax Court work? Absolutely, but Tax Court is a different ball game and the knowledge base needed to pass the test is no more than the bare minimum needed to play the game. The Bare Minimum. In my experience all of the work comes after you pass the exam.
I first learned being admitted to the Tax Court bar as a non-attorney was possible in 2012. As soon as I’d read it I knew I wanted to do that, but wanted it to actually use it in my career. I made my first attempt at the test in 2016 and afterwards felt that if I passed it would be by the skin of my teeth but I felt confident that I could ultimately do it. I didn’t pass in ’16 but it motivated me to try again in 2018. I studied for a full year and passed in 2018. I got my Tax Court bar number in late April 2019 and filed my first petition with the Court three weeks later.
To be sure representation at the Tax Court is underserved professionally (as evidenced by all of the pro se cases), but I believe the answer is for us professionals to improve our own knowledge & skill sets to be able to competently practice in that arena, rather than proposing that the bar be lowered.
As a side note a fair number of CPAs in my study group expressed no interest in actually practicing at the court but only wanted to add more letters behind their names. I do not know how many of them passed/failed; my opinion is that by its self is not sufficient motivation to successfully study for & pass the exam. (And while I’m “sharing dirty secrets” I do not believe that passing the exam is sufficient motivation to do the work needed afterwards to competently practice at the Tax Court.)
Chris makes good points. I sat for the exam in 2010 just thinking that it would be a good learning experience, and surprise, surprise, I was one of EIGHT that passed the exam. It did help that I was working for a Tax Law firm. I now work for a national wide tax preparation firm and have done about a dozen cases, only one actually went to trial with the others having stipulated settlements. I must say the exam is the hardest I have ever taken, and I have a BS and three masters, to include a MS(Tax).