We welcome first time guest blogger Kandyce Korotky. Kandyce is an associate at the Washington, D.C. law firm of Covington and Burling, where she works with occasional guest blogger Sean Akins. Prior to joining Covington and Burling, Kandyce obtained her LLM in Taxation at Georgetown and then clerked at the Tax Court first for Judge Paris and then for Chief Judge Marvel. She now teaches at Georgetown as an adjunct professor. She writes today about the case of Coffey v. Commissioner and wrestles with the issue of significantly split Tax Court fully-reviewed opinions. In an earlier post, guest blogger Joe Diruzzo also looked at Coffey but from a different angle. For those interested in how to interpret a decision such as Coffey, the insights provided by Kandyce nicely complement the earlier post by Joe, though the definitive answer may be yet to come. -Keith
As a general rule, the Tax Court speaks with one voice. That is, unlike most federal courts which speak en banc only occasionally, the Tax Court’s default is that, unless a case has gone through Court Conference and is published with side opinions, each opinion is issued as the opinion of the Court. In other words: All for one and one for all.
This unique characteristic has, like the existence of the Tax Court itself, a statutory foundation. To begin at the beginning, each judge is required to author opinions in the cases before him or her—or, in statutory-speak, each division “shall make a report” of its determination of the proceedings before it. [*1] The judges submit their opinions to the Chief Judge for review. Unless the Chief Judge, within 30 days, sends an opinion back to the authoring judge without action or earmarks it for Court Conference, it “become[s] the report of the Tax Court.” [*2] Therefore, in the majority of cases, the opinion of the trial judge becomes the opinion of the Court.
read more...This statutory scheme is not just a curious bit of Tax Court history. It has real logistical and legal implications. On the logistical side, it means the Chief Judge reads every report and has the option of offering comments to the authoring judge before publication. After that review process, every Tax Court judge also has the opportunity to read every report before issuance. Moreover, the Court has a powerhouse staff whose job is to review everything from inconsistencies with previous opinions to grammar and citation format. Each opinion truly is a team effort. On the legal side, speaking with one voice imbues each opinion with a certain gravitas. A Court Conference case that is published with one unanimous opinion, for example, sends a strong message to the tax community and can influence a decision to appeal, settlement negotiations in future cases, and the like. Such uniformity is also a possible explanation why Tax Court memoranda, which are non-precedential, are often viewed as persuasive by the tax community.
Of course, sixteen judges (the current number of Presidentially-appointed Tax Court judges on the bench) don’t always agree with each other. When this happens, Court Conference offers a vehicle for differing points of view. It provides a formal venue for the judges to discuss a case amongst themselves through the Court Conference process. Most of the time, even with respect to a report published with side opinions, there is no question which is the majority (read: binding) opinion. This means that, absent distinguishable facts or successfully going through the lengthy process to overturn an opinion (which requires Court Conference approval), a dissenting judge is bound to follow the majority opinion in subsequent cases.
But what happens when the opinion of the Court isn’t the majority opinion—when more judges have signed a side opinion than have signed what is published as the opinion of the Court? This curious phenomenon is exactly what happened in the recent Coffey v. Commissioner, 150 T.C. No. 4 (Jan. 29, 2018). Substantively, the consolidated cases (collectively, the “case”) raised the issue whether an income tax return is considered filed with the IRS where the taxpayer files the return with the Virgin Islands’ taxing authority (known as the “VIBIR”) and the VIBIR sends the return to the IRS.
The case was before Judge Holmes and, after Court Conference, his report was ultimately published as the opinion of the Court. It held that the return filed with the VIBIR constituted a return filed with the IRS (such that the period of limitations had begun to run). But here’s the curious part: Only four other judges signed the opinion of the Court. Judge Thornton authored a side opinion that concurred in result only, which was joined by seven other judges. (Judge Gustafson, who also joined Judge Holmes’ opinion, joined the concurring opinion except for certain phrases.) Judge Marvel dissented and was joined by three judges. Put simply, the opinion of five judges became the opinion of the Court, even though eleven judges disagreed with the reasoning.
Remember that the judge who has a case is required by statute to write a report (opinion). When an opinion is designated for Court Conference, the judge who authored the opinion presents it to the Court Conference. If the report is approved, it is released as the opinion of the Court (with or without side opinions). Alternatively, if the report is not approved, the authoring judge may keep the case and rewrite the report or request that the case be reassigned to another judge. See, e.g., Dixon v. Commissioner, 141 T.C. 173 (2013) (trial judge authored dissenting opinion).
When a judge agrees with the trial judge’s result but not his or her reasoning, the judge may concur and write a concurring opinion. Other judges who agree with the concurring opinion may join it (whether or not they also join the trial judge’s opinion). This can result in a situation where a concurring opinion has more judges joining it than the opinion of the judge who authored the lead opinion. [*3] There is no rule which, in this situation, would designate the concurring opinion as the opinion of the Court. Rather, joining a concurring opinion is deemed a vote in favor of the authoring judge’s opinion, and the opinion that is released as the opinion of the Court flows from the results of this vote.
Coffey is not the first time more judges have signed a concurring opinion than have joined the opinion of the Court. [*4] What’s more, because a concurring vote counts toward the adoption of the report, it’s possible to have more judges signing the dissent than the opinion of the Court—so long as the concurrences tip the balance in favor of adoption. [*5] There are also cases where the same number of judges signed the opinion of the Court as dissented. [*6] Accordingly, it is more appropriate to think of Tax Court opinions not in terms of majority and minority opinions, but rather as the opinion of the Court and side opinions.
These types of situations are not governed by statute but rather are left to the administration of the Court itself. Certainly, in cases where the number of judges supporting the lead opinion and the dissenting opinion is equal, it makes sense to view the opinion with concurrences as the opinion of the Court. However, the footing is not as firm where a majority of the judges has signed a concurrence in result only, as in Coffey.
What does this mean in terms of precedence? Once again, we are left without a statutory answer. On the one hand, there is still an opinion of the Court in Coffey, and the opinions of the Court in reviewed cases are precedential. Judge Holmes’ opinion would be the opinion subject to appellate review. On the other hand, a reviewed opinion where the reasoning is supported by only five judges does not seem to be the product of a Court speaking with a uniform or at least a clear majority voice, which is the hallmark of many Court-reviewed opinions. Such cases seem especially ripe for circuit splits, which could also send the issue back to Court Conference. If I were trying a similar case and relying on Coffey, I certainly wouldn’t feel like I had a slam dunk.
So, as is quickly becoming the catch phrase of the post-reform tax community: Stay tuned.
FOOTNOTES:
[*1] Section 7460(a); see also Section 7444(c) (permitting the Chief Judge to assign the Tax Court judges to “divisions”); Section 7459(a) & (b) (“A report upon any proceeding instituted before the Tax Court and a decision thereon shall be made as quickly as practicable.”). [*2] Section 7460(b); see also Section 7459 (“The decision shall be made by a judge in accordance with the report of the Tax Court, and such decision so made shall, when entered, be the decision of the Tax Court.”). [*3] This approach does not parallel the Supreme Court’s approach when it issues a splintered opinion: “When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those members who concurred in the judgment on the narrowest grounds.” Marks v. United States, 430 U.S. 188 (1977). In fact, the concurring opinion in Coffey is the narrower of the two opinions holding that the taxpayers’ Forms 1040 constituted “returns.” For further discussion, see Joseph A. DiRuzzo, III, “Fractured Tax Court Opinions – Which Opinion Controls and Does the Supreme Court’s Marks Decision Apply?” (March 7, 2018), http://procedurallytaxing.com/fractured-tax-court-opinions-which-opinion-controls-and-does-the-supreme-courts-marks-decision-apply/. [*4] See Carpenter Family Investments v. Commissioner, 136 T.C. 373 (2011) (4 judges signing opinion of the Court, 5 judge concurring, 1 judge concurring in result only). [*5] See, e.g., Driscoll v. Commissioner, 135 T.C. 557 (2010) (5 judge signing opinion of the Court, 1 judge concurring, 1 judge concurring in result only, 6 judges dissenting), rev’d and remanded, 669 F.3d 1309 (11th Cir. 2012); Rowe v. Commissioner, 128 T.C. 13 (2007) (5 judges signing opinion of the Court, 5 judges concurring, 6 judges dissenting); Billings v. Commissioner, 127 T.C. 7 (2006) (4 judges signing opinion of the Court, 5 judges concurring, 8 judges dissenting with 2 dissenting opinions (7-1)). [*6] See Dees v. Commissioner, 148 T.C. No. 1 (2017) (7 judges signing opinion of the Court, 2 judges concurring, 1 judge concurring in result only, 7 judges dissenting); Tigers Eye Trading, LLC v. Commissioner, 138 T.C. 67 (2012) (5 judges signing opinion of the Court, 2 judges concurring, 2 judges concurring in result only, 5 judges dissenting with 2 dissenting opinions), aff’d in part, rev’d in part, and remanded in part sub. nom. Logan Trust v. Commissioner, 616 Fed. App’x 426 (D.C. Cir. 2015); Wadlow v. Commissioner, 112 T.C. 247 (1999) (9 judges signing the opinion of the Court, 1 judge concurring, 9 judges dissenting).
