Tax Court dodges CDP record rule ruling

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Today we welcome back guest blogger Carlton Smith with another discussion of the Golsen rule.  Because of the uncertainty surrounding the Tax Court’s appellate venue at this point with respect to certain issues, we continue to visit cases where the Golsen rule can have a hand in the outcome or at least be lurking in the background.  Here the importance of the Golsen rule interplays with the administrative law record rule.  We thank Carl for his observations on the way appellate venue can influence the outcome of a case before the Tax Court.  Keith

There have been several blog posts on the interplay of the Tax Court’s Golsen rule and the issue of whether the Tax Court, in reviewing an Appeals Settlement Officer’s actions at a Collection Due Process hearing, may take in additional evidence that was not part of the administrative record at Appeals.  Those posts were in connection with a litigation in the D.C. Circuit over the proper Circuit to which a Tax Court CDP decision is appealable.  In Byers v. Commissioner, 740 F.3d 668 (Jan. 17, 2014), the D.C. Circuit recently held that it — and not the regional Circuit in which the taxpayer lived — was the proper venue on appeal for those CDP Tax Court cases in which the taxpayer was not raising any issues about the underlying liability.  In an opinion issued by Tax Court Judge Cohen this week, Dalla v. Commissioner, T.C. Memo. 2014-37, she cleverly avoided wading into the issue of whether the Tax Court agrees with the Byers opinion.  Dalla was the first case in the Tax Court presenting the conundrum created by the Byers ruling.


First, though, back to the record rule:  In Robinette v. Commissioner, 123 T.C. 85 (2004), the Tax Court held that a CDP proceeding in the Tax Court is a trial de novo as to evidence (though limited to the issues raised at the Appeals Office CDP hearing).  However, the Eight Circuit reversed the Tax Court in Robinette, holding that a Tax Court CDP proceeding is generally limited to the administrative record. 439 F.3d 459 (8th Cir. 2006).  Two other Circuits have agreed with the Eighth Circuit.  See Murphy v. Commissioner, 469 F.3d 27, 31 (1st Cir. 2006), and Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009).  None of the other regional Circuits or the D.C. Circuit has ruled one way or the other on this Tax Court CDP “record rule” issue.

Under its Golsen doctrine (Golsen v. Commissioner, 54 T.C. 742, 757 (1970), affd. on other issue, 445 F.2d 985 (10th Cir. 1971)), the Tax Court follows its own precedent — except in the case where a court of appeals to which the Tax Court case is appealable has ruled to the contrary.  Ever since it decided Robinette, the Tax Court has applied its Golsen rule such that it follows its own precedent (i.e., trial de novo) in CDP proceedings where the taxpayer lives in the D.C. Circuit or the eight other regional Circuits that have not decided the issue and follows the rule limiting its CDP proceedings to the administrative record for taxpayers who reside in the First, Eighth, and Ninth Circuits.  The Tax Court has done so under the undiscussed assumption that venue on appeal from one of its CDP decisions is to the regional Circuit in which the taxpayer lives.  The regional Circuits are where, since 1999, nearly every one of the 600-plus CDP appeals has been taken.  Since Byers was decided, the Tax Court has not revisited how it would apply the Golsen rule in a CDP case before it that, like Byers, only involved a complaint about a collection alternative (not the underlying tax).  Dalla was such a case.

In Dalla, two taxpayers residing in Nevada (the Ninth Circuit) complained of the Settlement Officer’s calculation of their monthly income available to pay back taxes.  Although they also initially challenged that underlying liability at Appeals, they gave up that challenge during the Appeals CDP hearing and did not raise the challenge again in their Tax Court petition.  To the Settlement Officer and the Tax Court, the taxpayers had also argued that they should have been put into currently not collectible (CNC) status.  The Settlement Officer had determined that the taxapyers could make monthly payments that would fully pay off the taxes owed.  The Tax Court litigation was merely over the issue of whether the taxpayers were entitled to CNC status.

During the Tax Court trial, one of the taxpayers testified and tried to introduce documents.  The IRS promptly objected to expanding on the administrative record — no doubt citing the Ninth Circuit’s Keller opinion holding that a Tax Court CDP proceeding is limited to the administrative record.  Judge Cohen took in the evidence (testimony and documents) without ruling yet on the IRS’ objection.  I speculate that she did not immediately rule that the evidence was excluded under Keller (following it under Golsen) because she had read a law review article in 2008 that had argued that CDP cases were appealable only to the D.C. Circuit (the same article relied on by Mr. Byers and the D.C. Circuit).  If she were to hold under Golsen that the D.C. Circuit was the correct venue on appeal for the Dalla case, then, since the D.C. Circuit had never addressed the record rule issue, Judge Cohen would be bound by the Tax Court’s Robinette opinion allowing the expansion of the administrative record.

When she wrote her opinion, though, she managed to dodge the record rule issue.  Without even citing Keller, Robinette, Golsen, or Byers, she merely observed:  “[W]e conclude that consideration of the testimony and additional arguments and exhibits offered by petitioners would not affect our conclusion and that respondent’s objection, which we took under advisement, has been rendered moot.”  Slip op. at *10.  She held that, with or without this non-record evidence, the taxpayers had not shown the Settlement Officer abused his discretion in finding that the taxpayers were not entitled to CNC status.

I would not be surprised if other Tax Court judges, in appropriate cases, for some time take the way out that Judge Cohen found to avoid deciding the CDP record rule issue after Byers.  But, eventually, someday, that way out won’t be available; the additional non-record evidence presented by a taxpayer will require the Tax Court to rule differently than if it only considered the administrative record.  When that day comes, the Tax Court will have to decide either (1) whether it agrees with Byers that CDP cases not challenging underlying liability are all appealable to the D.C. Circuit, so under Golsen, the Tax Court should apply its own Robinette precedent allowing supplementing the record, (2) whether the Tax Court disagrees with Byers, so the Tax Court must follow the precedent (if any) of the Circuit in which the taxpayer lives, or (3) without deciding whether the Tax Court agrees with Byers, since the Tax Court can’t control the Circuit to which a party will appeal (i.e., regional or D.C. Circuit), the Tax Court should just ignore Golsen‘s command to follow the precedent of a Circuit contrary to the Tax Court’s precedent.  After all, Golsen is simply a rule of convenience to avoid automatic reversals.  If the Tax Court can’t tell which Circuit will review it — so that automatic reversal is not inevitable — it would seem that the Tax Court should follow its own precedent (the one it thinks is right as a legal matter).


Carlton Smith About Carlton Smith

Carlton M. Smith worked (as an associate and partner) at Roberts & Holland LLP in Manhattan from 1983-1999. From 2003 to 2013, he was the Director of the Cardozo School of Law tax clinic. In his retirement, he volunteers with the tax clinic at Harvard, where he was Acting Director from January to June 2019.


  1. The Tax Court’s avoidance of Byers is indeed troublesome. It smacks of how, for 14 years, it has nearly always avoided ruling on a burden of proof argument under I.R.C. section 7491(a).

    Byers is great for another reason aside from avoiding the Golsen Rule: the D.C. Circuit is the premier appellate court in administrative law cases. No longer can the Office of Appeals, and the Tax Court, get away with their typical slipshod reviews of CDP cases.

    I hope more of us will avail ourselves of Byers and appeal all adverse Tax Court CDP decisions (including those in liability included or exclusive cases) to the D.C. Circuit.

  2. Carl Smith says

    I, too, disagree with the way the courts deal with 7491(a)’s burden of proof. The courts should decide who has the burden. I am also very unhappy when I see the courts write: “Because the taxpayer has not cited 7491(a), we need not discuss it.” Most Tax Court petitioners are pro se. Why would the Court expect them to know about 7491(a)? Does the burden shift only apply for rich, represented taxpayers?

    Further, have you ever seen the Court say: “Because the petitioner did not mention section 7454(a) putting the burden of proof on the IRS on the issue of fraud, we leave the burden of proof on the petitioner to show lack of fraud?” Of course not. So, why the different treatment of section 7491(a)’s statutory mandate?

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