HistoryThe first incarnation of the Tax Court was the "U.S. Board of Tax Appeals", established by Congress in the Revenue Act of 1924 (also known as the Mellon tax bill) in order to address the increasing complexity of tax-related litigation. Those serving on the Board were simply designated as "members." The members of the Board were empowered to select, on a biennial basis, one of their members as "chairman." In July 1924, Coolidge announced the appointment of the first twelve appointees, of which seven members were appointed from private life and the other five from the Bureau of Internal Revenue."Newly Appointed Tax Board To Be Organized At Once", ''The Baltimore Sun'' (July 4, 1924), p. 6. Additional members were appointed in the fall, and the Board when fully constituted originally had 16 members, with Charles D. Hamel serving as the first Chairman. The Board was initially established as an "independent agency in the executive branch of the government." It was housed in the Internal Revenue Service Building in the Federal Triangle.U.S. Tax Court Building
Jurisdiction of the Tax CourtThe Tax Court provides a judicial forum in which affected persons can dispute tax deficiencies determined by the Commissioner of Internal Revenue prior to payment of the disputed amounts. The jurisdiction of the Tax Court includes, but is not limited to the authority to hear: # tax disputes concerning notices of deficiency # notices of transferee liability # certain types of declaratory judgment # readjustment and adjustment of partnership items # review of the failure to abate interest # administrative costs # worker classification # relief from joint and several liability on a joint return # review of certain collection actions Congress amended the Internal Revenue Code, now codified in Internal Revenue Code section 7482, providing that decisions of the Tax Court may be reviewed by the applicable geographical United States Court of Appeals other than the Court of Appeals for the Federal Circuit. (See Article I and Article III tribunals). "Small Tax Cases" are conducted under Internal Revenue Code section 7463, and generally involve only amounts in controversy of $50,000 or less for any one tax year.See . The "Small Tax Case" procedure is available "at the option of the taxpayer." These cases are neither appealable nor precedential. At times there have been efforts in the Congress and the Tax Bar to create a single national Court of Appeals for tax cases (or make Tax Court decisions appealable to a single existing Court of Appeals), to maintain uniformity in the application of the nation's tax laws (the very reason underlying the creation of the Tax Court and the grant of national jurisdiction to the Tax Court), but efforts to avoid "hometown results" or inconsistent results due to a lack of expertise have failed. An important reason for the movements to create a single national Court of Appeals for tax cases is that the United States Tax Court does not have exclusive jurisdiction over tax cases. In addition to the Tax Court, federal tax matters can be heard and decided in three other courts: U.S. District Courts, the Court of Federal Claims, and the Bankruptcy Court. In the first two instances, the taxpayer bringing the claim generally must have first paid the deficiency determined by the IRS. For the Bankruptcy Court, the tax matter must, of course, arise as an issue in a bankruptcy proceeding.See Steve R. Johnson, "The Phoenix and the Perils of the Second Best: Why Heightened Appellate Deference to Tax Court Decisions is Undesirable," 77 Oregon Law Review, 235, 239–242 (Spring 1998) for a review of federal court jurisdiction including, especially, as to the Bankruptcy Court. Bankruptcy Court appeals are initially to the U.S. District Court. Appeals beyond the U.S. District Courts and the Court of Federal Claims follow the same path as those from the U.S. Tax Court as described above. With this number of courts involved in making legal determinations on federal tax matters including all 13 United States Courts of Appeals exercising appellate jurisdiction (the 11 numbered Circuits, the Federal Circuit (for appeals from the U.S. Court of Federal Claims), and the D.C. Circuit), some observers express concern that the tax laws can be interpreted differently for like cases. Thus arises the movement on the part of some for a U.S. Court of Federal Tax Appeals, though the merits of this are a matter of much discussion.
Representation of partiesThe Chief Counsel of the Internal Revenue Service (IRS) or his delegate represents the executive branch in the Tax Court. The Tax Court permits persons who are not Attorney at law (United States), Attorneys at Law to be admitted to practice (to represent taxpayers) by applying for admission and passing an examination administered by the Court. Attorneys who provide evidence of membership and good standing in state bar or the D.C. bar can be admitted to the bar of the Court without sitting for the Tax Court examination. Tax Court practice is highly specialized and most practitioners are licensed attorneys who specialize in tax controversies.
Genesis of a Tax Court disputeMany Tax Court cases involve disputes over Federal income tax and penalties, often after an examination by the Internal Revenue Service of a taxpayer's return. After issuance of a series of preliminary written notices and a lack of agreement between the taxpayer and the IRS, the IRS formally "determines" the amount of the "deficiency" and issues a formal notice called a "statutory notice of deficiency," or "ninety day letter". In this context, the term "deficiency" is a legal term of art, and is ''not necessarily'' equal to the amount of unpaid tax (although it usually is). The deficiency is generally the excess of the amount the IRS contends is the correct tax over the amount the taxpayer showed on the return—in both cases, without regard to how much has actually been paid. Upon issuance of the statutory notice of deficiency (after IRS determination of the tax amount, but before the formal IRS assessment of the tax), the taxpayer generally has 90 days to file a Tax Court petition for "redetermination of the deficiency". If no petition is timely filed, the IRS may then statutorily "assess" the tax. To "assess" the tax in this sense means to administratively and formally record the tax on the books of the United States Department of the Treasury. This formal statutory assessment is a critical act, as the statutory tax lien that later arises is effective retroactively to the date of the assessment, and encumbers all property and rights to property of the taxpayer.
Life cycle of a Tax Court caseBecause of the negative legal consequences ensuing with respect to a statutory assessment (especially the tax lien and the ''Flora'' requirement that the taxpayer otherwise pay the full disputed amount and sue for refund), a taxpayer is often well advised to file a Tax Court petition in a timely manner. The rule in the Tax Court is that the taxpayer sues the "Commissioner of Internal Revenue," with the taxpayer as "petitioner" and the Commissioner as "respondent." This rule is an example of an exception to the general rule that the proper party defendant in a U.S. tax case filed by a taxpayer against the government is "United States of America." In the Tax Court, the Commissioner is not named personally. The "United States Secretary of the Treasury, Secretary of the Treasury", the "United States Department of the Treasury, Department of the Treasury" and the "Internal Revenue Service" are not proper parties. The petition must be timely filed within the allowable time. The Court cannot extend the time for filing which is set by statute. A $60 filing fee must be paid when the petition is filed. Once the petition is filed, payment of the underlying tax ordinarily is postponed until the case has been decided. In certain tax disputes involving $50,000 or less, taxpayers may elect to have the case conducted under the Court's simplified small tax case procedure. Trials in small tax cases generally are less formal and result in a speedier disposition. However, decisions entered pursuant to small tax case procedures are not appealable and are not precedential. Cases are calendared for trial as soon as practicable (on a first in/first out basis) after the case becomes at issue. When a case is calendared, the parties are notified by the Court of the date, time, and place of trial. Trials are conducted before one judge, without a jury, and taxpayers are permitted to represent themselves if they desire. However, the vast majority of cases are settled by mutual agreement without the necessity of a trial. However, if a trial is conducted, in due course a report is ordinarily issued by the presiding judge setting forth findings of fact and an opinion. The case is then closed in accordance with the judge's opinion by entry of a decision.
Appellate reviewEither the petitioner (the taxpayer) or the respondent (the Commissioner of Internal Revenue) may take an appeal from an adverse decision of the Tax Court to the appropriate United States Court of Appeals. In the case of an appeal by the taxpayer, a bond is normally required in order to avoid enforcement action during the pendency of the appeal. Instead of taking an appeal, the Internal Revenue Service may issue an "Action on Decision" indicating the Commissioner's "non-acquiescence" in the decision, meaning that the Commissioner will not follow the decision in subsequent cases. In such cases, the Commissioner hopes for the opportunity to litigate the matter in another circuit where he will have a better chance of obtaining reversal on appeal.
JudgesThe Tax Court is composed of 19 judges appointed by the President of the United States, President and confirmed by the United States Senate, Senate. Former judges whose terms have ended may become "Senior judges", able to return and assist the court by hearing cases while serving on recall. In addition, the court is assisted by a number of "special trial judges", who are employees of the court, appointed by the chief judge of the Tax Court, rather than by the President. Special trial judges serve a function similar to that served by United States magistrate judges of the United States district court, district courts, and may hear cases regarding alleged deficiencies or overpayments of up to $50,000. Reappointment, when requested by a Tax Court judge (I.R.C. 7447(b)(3)) is generally ''pro forma'' regardless of the political party of the appointing President and the political party of the re-appointing (sitting) President. Each active judge appointed by the President has two law clerks (attorney-advisers) and each senior judge and special trial judge has one law clerk. President George W. Bush was heavily criticized by the U.S. Congress, the Tax Bar, and others when he indicated that he likely would not, or might not, re-appoint Tax Court judges whose terms were expiring (even though the first Judge whose re-appointment President Bush called into question, Judge John O. Colvin, was appointed by President Ronald Reagan). President Bill Clinton also was criticized for not acting timely to re-appoint Tax Court judges, having allowed one sitting Chief Judge's term to expire, thus requiring the Tax Court to elect a new Chief Judge. Additionally, several Tax Court Judges had to wait more than a year (sometimes more than two years) to be reappointed during the Clinton presidency. Trial sessions are conducted and other work of the Court is performed by its judges, by senior judges serving on recall, and by special trial judges. All of the judges have expertise in the tax laws, and are tasked to "apply that expertise in a manner to ensure that taxpayers are assessed only what they owe, and no more". Although the "principal office" of the Court is located in the District of Columbia, Tax Court judges may sit "at any place within the United States". The judges travel nationwide to conduct trials in various designated cities. The work of the Tax Court has occasionally been interrupted by events. In 2001, a trial session in New York City was canceled due to the September 11 attacks, September 11 terrorist attacks. In 2005, stops in Miami and New Orleans were canceled due to the effects of hurricanes which had struck shortly before their scheduled visit to each city. The Tax Court's judges serve 15-year terms, subject to presidential removal during the term for "[I]nefficiency, neglect of duty, or malfeasance in office." The mandatory retirement age for judges is 70. The judges' salaries are set at the same rate as "[J]udges of the district courts of the United States", currently $210,900.00 per annum.
Current composition of the court
Current special trial judges, the special trial judges on the court are as follows:
Vacancies and pending nominations
Former members of the Board of Tax Appeals and Tax CourtFormer members were part of the Board of Tax Appeals until 1942, and part of the Tax Court since 1942.
Succession of seats
Past special trial judges*D. Irvin Couvillion (1985–) *Carleton D. Powell (1985–2007) *John J. Pajak (1979–) *Norman H. Wolfe (1985–) *Daniel J. Dinan (1991–) *John F. Dean (1994–2014) *Lehman C. Aarons (1975–1986) *Robert N. Armen (1993–2019) *Helen A. Buckley (1983–1994) *Randolph F. Caldwell Jr. (1971–1985) *Francis J. Cantrel (1977–1994) *Murray H. Falk (1975–1981) *Lee M. Galloway (1981–1993) *Fred S. Gilbert Jr. (1977–1984) *Stanley J. Goldberg (1985–) *James M. Gussis (1970–1994) *Darrell D. Hallett (1980–1983) *Joseph N. Ingolia (1970–1977) *Charles R. Johnston (1970–1980) *Larry L. Nameroff (1986–) *Edna G. Parker (1977–1980; elevated to a regular seat on the Tax Court) *Joan Seitz Pate (1983–1994) *Marvin F. Peterson (1979–1994; Chief Special Trial Judge, 1987–1994) *John H. Sacks (1970–1977) *Fred R. Tansill (1980–1986) *Hu S. Vandervort (1984–1989)
Sources* Some information on this page is from the web site of the U.S. Tax Court, which, as a publication of the United States government, is in the public domain.