What the Tax Court Might Learn from the Chinese

The start of computer-assisted pleading, I propose, would be “check the box” petitions that might eliminate some hopeless cases and refine the procedures for others. At IRS, tax compliance is forms-driven. It seems to work for most people. Tax Court should also consider it, at least as an option.

Here is what I mean. A CDP petition would look something like this:

– – –

1) My CDP hearing was based on
O  Doubt as to liability;
O  Request for collection alternative;
O  Both.

2) If based on doubt as to liability,
O  The tax was shown on my original return, but I later amended it.
O  The tax was assessed after an IRS examination, but I did not receive a Statutory Notice of Deficiency (“90-Day Letter).
O  Other (explain).

3) If based on a request for a collection alternative, I proposed:
O   An offer in compromise.
O   An installment agreement.
O   A “currently not collectible” determination.
O   Something else (explain).

4) The Appeals Settlement Officer did / did not request a current financial statement showing my income, expenses, assets and liabilities. If requested,
O   I provided this information.
O   I did not provide complete information.

5) The Appeals Settlement Officer did / did not request that I file all tax returns currently due. If requested,
O   I have filed all required returns.
O   I have not filed all required returns.

6) The Appeals Settlement Officer did / did not determine a “Reasonable Collection Potential” based on my financial information. If a determination was made:
O   I agreed with it.
O   I did not agree with it because of these circumstances which I asked to be considered:

7) I do / do not request help with Alternative Dispute Resolution under Rule 124(c) of the Tax Court, (“Nothing contained in this Rule shall be construed to exclude use by the parties of other forms of voluntary disposition of cases.”) For example, if IRS agrees I would allow this case to be decided by a mediator from a recognized tax clinic affiliated with a university or professional organization.

– – –

Does this look like a way to discourage taxpayers with no reasonable prospect for success, from wasting everyone’s time?  If so, that would be useful, provided it does not close the courthouse door to those who might prevail. It would not discourage those who are filing a petition simply to delay the inevitable. That problem can be alleviated by identifying losers early and putting them on a fast track to closure. For example, Congress could help (but won’t) by increasing the Tax Court filing fee to $250, with a refundable credit for the prevailing party.

“Check the box” pleading can help taxpayers and the Court. Another improvement would be to require, as many federal and local courts have, a “cover sheet” that must accompany a petition. The cover sheet could, for example, require a statement that either the filing fee, or a waiver request is attached.

I recently noticed that the Tax Court is issuing dozens of notices each month, setting the Place of Trial for petitioners who have not done so. They may not think it’s urgent, since the Tax Court website states that the Form 5 can be electronically filed later. A cover sheet could also identify the type of case (tax, CDP, innocent spouse, whisteblower, passport, etc.), not just for real-time statistical purposes but for work-flow scheduling.

I hope some of these suggestions are criticized, by people who can come up with better ones. Meanwhile, maybe we don’t have to look to China for inspiration. Maybe Utah is close enough, for finding judges willing to let a hundred flowers bloom. Utah’s Supreme Court has created a “sandbox”, for testing new ideas about the administration of justice.

The idea is to encourage legal providers and even nonlawyers to suggest and test products that they think can help improve access to legal services. “With oversight from the courts, applicants can test their product without worrying about the strict rules that attorneys have been forced to follow for years.”