U.S. Tax Court: A Brief Introduction

U.S. Tax Court: A Brief Introduction

December 2, 2015
U.S. Tax Court: A Brief Introduction
The U.S. Tax Court is an Article I court created by
service but continue, on a part-time basis, to hear cases or
Congress to hear tax disputes arising under the Internal
perform other duties related to judicial administration. A
Revenue Code (IRC). This In Focus provides background
senior status judge may be recalled to hear cases for any
information about the court.
period specified by the chief judge.
Creation
Special Trial Judges
The entity that eventually became the U.S. Tax Court was
The chief judge may appoint special trial judges to decide
created by the Revenue Act of 1924 (P.L. 68-176) as the
certain cases, including those involving disputes of no more
Board of Tax Appeals. The act established the board as an
than $50,000 and lien and levy proceedings.
independent agency within the executive branch. While
later renamed the “Tax Court of the United States” by the
The chief judge can also authorize a special trial judge to
Revenue Act of 1942 (P.L. 77-753), this action did not
hear, but not decide, other cases. In the 1991 case Freytag
change the court’s status as an independent agency. It was
v. Comm’r, 501 U.S. 868, the Supreme Court rejected the
not until the Tax Reform Act of 1969 (P.L. 91-172) that
taxpayer’s argument that this authority was limited to minor
Congress established the Tax Court as an Article I court.
and relatively simple cases, holding instead that it applied
(For information on Article I courts, see CRS Report
to any case the chief judge determined was appropriate for a
R43746, Congressional Power to Create Federal Courts: A
special trial judge to hear. The Court also held that the
Legal Overview, by Andrew Nolan and Richard M.
assignment of a case to a special trial judge did not violate
Thompson II.)
the Constitution’s Appointments Clause (Art. II, §2, cl. 2).
The statutes providing for the court’s organization and
When a special trial judge is assigned to hear but not decide
related matters are IRC Sections 7441-7479.
a case, he or she provides a report to a regular judge. The
regular judge may adopt, modify, or reject the special trial
Purpose
judge’s recommended findings of fact and conclusions of
The court’s primary purpose is to provide a forum where
law, or may order further proceedings.
taxpayers may challenge determinations by the Internal
Revenue Service (IRS) of federal tax deficiencies prior to
Jurisdiction
paying the disputed amount. Taxpayers also have the option
The Tax Court is a court of original jurisdiction. Its
of challenging tax deficiencies in U.S. district court, but
jurisdiction is limited to federal tax matters as expressly
only after paying the alleged deficiency.
provided in various statutes.
Judges
As mentioned, the court provides a forum where taxpayers
The Tax Court consists of 19 judges, including the chief
may challenge the IRS’s determinations of federal tax
judge. Judges are nominated by the President and
deficiencies prior to paying the disputed amount. Other
confirmed by the Senate for a fixed term of 15 years
issues that fall within the court’s jurisdiction include the
(although judges may be reappointed).
authority to hear cases relating to partnership adjustments;
to make certain declaratory judgments; to determine worker
Individuals appointed to the court typically have experience
classification as an employee or independent contractor; to
working as government attorneys specializing in tax law.
review IRS denial or failure to rule on relief from joint and
For example, of the 17 active judges on the bench as of
several liability; and to review IRS determinations in
November 2015, 16 have experience as attorneys working
collection due process hearings.
on tax matters for Congress, the IRS, the Department of
Justice, or the Department of the Treasury. Many of the
Court Proceedings
judges, 14 of 17, also worked in private practice as
Only taxpayers may file suit in the Tax Court—the
attorneys specializing in tax law.
government may not. The proceedings are adversarial, with
the taxpayer suing the IRS commissioner. Taxpayers may
Prior to the expiration of his or her term in office, a judge
represent themselves or be represented by practitioners
can be removed by the President for inefficiency, neglect of
admitted to practice before the court. The government is
duty, or malfeasance in office, but only after notice and
represented by the IRS chief counsel or his/her delegate.
opportunity for a public hearing.
The vast majority of cases filed with the Tax Court are
settled by mutual agreement between a taxpayer and the
Senior Status Judges
government, without requiring a trial.
The Tax Court, in addition to using full-time active judges
to hear cases, also uses senior status judges. Senior status
If a trial is conducted, a single judge presides and there is
judges are those judges who have retired from full-time
no jury. While the court itself is physically located in
https://crsreports.congress.gov

U.S. Tax Court: A Brief Introduction
Washington, D.C., trials are also held in over 50 designated
petitioners or respondents who are admitted to practice
cities throughout the United States.
before the court, and certain other participants to
electronically view documents in their case or cases.
In general, the taxpayer and the IRS may call witnesses,
conduct cross examination, and enter evidence into the
Appealing Decisions
record. There are some situations, such as with declaratory
Summary opinions—the decisions in cases in which the
judgments regarding the status of retirement plans or
taxpayer chose to use the simplified procedure—cannot be
exempt organizations, where the general rule is that only
appealed.
evidence in the administrative record will be considered.
The U.S. Courts of Appeals (except for the Federal Circuit)
Simplified Procedure
generally have exclusive jurisdiction to review decisions in
In cases involving disputes of $50,000 or less, taxpayers
non-simplified procedure cases. A case is generally
may choose to have their case heard under a simplified
appealed to the circuit containing the taxpayer’s legal
procedure. These cases are decided by special trial judges
residence or principal place of business.
and do not involve briefs or oral arguments. Cases decided
under the simplified procedure are commonly referred to as
Under IRC Section 7482, appellate courts are instructed to
“S cases.”
review cases “in the same manner and to the same extent as
decisions of the district court in civil actions tried without a
Types of Opinions
jury.” Courts of appeals have generally interpreted this to
Tax Court opinions may be oral or written. Oral opinions,
mean that they should review the Tax Court’s legal
called bench opinions, may be issued in both simplified
conclusions de novo (i.e., without deference to the court’s
procedure cases and regular cases.
determinations) and its findings of fact for clear error.
Written opinions, meanwhile, fall into three categories. The
Recent Caseload Statistics
special trial judge’s written decision in a simplified
For the fiscal year ending September 30, 2013 (the most
procedure case is called a summary opinion. In other cases,
recent year for which data are available), there were 27,039
the written decision is issued as either a Tax Court opinion
new cases docketed, or filed, with the Tax Court.
or a memorandum opinion. The chief judge makes the
Additionally, for FY2013, 31,983 cases were terminated
determination of which type is appropriate (the chief judge
and 26,517 cases remained pending.
must also decide, within 30 days of receiving a trial judge’s
opinion, whether the entire court should review it). As a
Of the cases handled by the Tax Court for FY2013, 94%
general rule, Tax Court opinions are issued in cases that
were cases involving a tax deficiency, while 5% involved
involve novel or significant legal issues, while
collection due process hearings. The remaining cases
memorandum opinions are issued in cases dealing with
involved innocent spouse “stand-alone” actions (cases
issues of settled law or those whose holdings depend
where the issue is raised without a deficiency
heavily on the specific facts of a case.
determination), partnership actions, and other
miscellaneous cases. (Information and statistics cited
Use of Technology
regarding the Tax Court’s caseload provided by The United
Electronic filing (eFiling) is mandatory for most parties
States Tax Court: An Historical Analysis (second edition)
represented by counsel in cases filed with the Tax Court on
by Harold Dubroff and Brant J. Hellwig).
or after July 1, 2010. Mandatory eFiling does not, however,
apply to (1) pro se petitioners—including those assisted by
Recent Appropriations
low-income taxpayer clinics and Bar-sponsored pro bono
The Tax Court received $53 million in FY2014 (P.L. 113-
programs; (2) practitioners who apply to the court for and
76).
are granted relief from the requirement to eFile based on
good cause; (3) documents filed at trial session; or (4)
For FY2015, the President requested $52 million, a
documents not eligible for eFiling in the Tax Court, such as
decrease of $1 million from FY2014 enacted
petitions, notices of appeal, and sealed documents.
appropriations. P.L. 113-235 provided $51 million for
FY2015, $1 million less than the President requested and $2
Given the sensitive nature of many of the documents that
million less than the Tax Court received for FY2014.
are filed with the Tax Court, the court requires filers to
redact (or refrain from including) taxpayer identification
Erika K. Lunder, Legislative Attorney
numbers; dates of birth; names of minor children; and
Barry J. McMillion, Analyst on the Federal Judiciary
financial account numbers.
IF10331
The Tax Court also provides electronic access (eAccess) to
registered petitioners, persons representing either

https://crsreports.congress.gov

U.S. Tax Court: A Brief Introduction

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10331 · VERSION 2 · NEW