Faculty Bibliography

In Brockamp, the Supreme Court faced the issue of whether the three-year time limit for filing an administrative tax refund claim in Code Sec. 6511 was subject to equitable tolling.8 Without discussing whether the time period was jurisdictional (and apparently assuming that it was not), the Court held that, even if the Irwin presumption applied to this time period, a combination of factors would rebut any presumption that equitable tolling could apply: (1) the time limits were set forth in an "unusually emphatic form"; (2) the statute set forth the limitations in a "highly detailed technical manner," by reiterating the limitations period in multiple subsections; (3) the statute specified numerous exceptions to the filing deadline, which did not include equitable tolling9; (4) the granting of equitable tolling would require tolling substantive limitations on the amount of recovery, for which there was no direct precedent (see Code Sec. 6511 (b) lookback amount limitations); and (5) granting equitable tolling could create serious administrative problems by forcing the Internal Revenue Service (IRS) to respond to large numbers of late claims.10 In Holland, the Supreme Court revisited Brockamp when addressing whether the one-year statute of limitations for asking a federal district court to engage in habeas review of a state death penalty conviction was subject to equitable tolling.11 In distinguishing the habeas statute from the one in Brockamp, the Court found that the presumption in favor of equitable tolling was not rebutted because (1) the language of the limitations provision was not unusually emphatic, (2) the statute did not "reiterate" its time limitation, (3) the one exception the statute enunciated (tolling during state collateral review proceedings) was a necessary procedural measure to account for exhaustion of state remedies, (4) the application of equitable tolling would not affect the substance of a habeas petitioner's claim, and (5) the subject matter at issue, habeas corpus, pertains to an area in which equitable considerations often factor (which "reinforced" the presumption in favor of tolling), unlike the area of refund claim administration.12 Refunds claims present a special problem for the IRS because most tax returns qualify as refund claims making the number of claims huge, over 90 million according to Brockamp, and the consequent administrative problems if equitable tolling applied significant. [...]in Rubel, the IRS gave a taxpayer an incorrect deadline for filing a Tax Court petition in written correspondence.19 Likewise, in Matuszak, an IRS employee orally gave an unrepresented taxpayer the wrong last date to file a petition.20 In Nauflett, an employee of the IRS's Taxpayer Advocate Service orally gave another unrepresented taxpayer an incorrect final filing date.21 Although these cases arose in the innocent spouse context, rather than under Code Sec. 6330, they illustrate the contexts in which a failure to allow for equitable tolling can be outcome-determinative for litigants. In each of these cases, the tax clinic at Harvard Law School filed an appeal from the dismissal for lack of jurisdiction of the case by the Tax Court and in each case the circuit court upheld the dismissal and did not get to the issue of equitable tolling because of the ruling on jurisdiction. In one of the Code Sec. 6330(d)(1) cases described above in which the tax clinic at Harvard represented the petitioner on appeal, the Fourth Circuit found that the IRS language was not confusing enough to justify equitable tolling.25 The Ninth Circuit declined to even consider the taxpayer's equitable-tolling arguments, reasoning that Code Sec. 6330(d)(l)'s deadline was jurisdictional.26 B. Extraordinary Circumstances Sometimes Prevent Taxpayers from Meeting Tax Court Filing Deadlines In other cases, taxpayers experience extraordinary circumstances that prevent them from timely filing petitions with the Tax Court.

The United States Tax Court hears well over 90% of the federal tax cases litigated each year with only a small percentage of opinions coming out of district courts and the Court of Federal Claims. The Tax Court classifies its opinions as precedential or non-precedential based on the issues presented. Over 75% of Tax Court litigants file their petition pro se. Each year it classifies a handful of opinions as precedential in which the petitioner(s) is pro se. In almost all of these cases the Court creates binding precedent on the basis of a case in which only one side, the IRS, presents meaningful legal arguments thus turning the process leading to the decision from one based on the adversarial process to the inquisitorial process. While the Tax Court works hard to reach the right conclusion, it loses the benefit of legal argument on the side of the petitioner/taxpayer and potentially reaches a different conclusion than it might have reached had the taxpayer’s side of the argument been well developed. Tax Court opinions typically take several months or years after trial before the Court renders an opinion. This paper suggests that when the Tax Court decides to render a precedential opinion in a pro se case it pause its deliberations for a short period and appoint or solicit members of its bar, either in the low income taxpayer clinical community or other pro bono counsel, to allow the submission of an amicus on behalf of the position of the taxpayer. The paper points to practices in other courts that have developed a more formal approach to amicus briefs as models for the proposed practice. Adopting such a practice would not only benefit the individual litigant but all who follow with the same issue.

The tax system designed by Congress imposes significant administrative burdens on taxpayers. IRS decisions regarding how it administers tax laws can add to congressionally imposed burdens. The administrative burdens are consequential and hurt some people, especially lower- or moderate-income individual taxpayers, more than others. While the IRS strives to measure and reduce the time and money taxpayers spend to comply with their tax obligations, it does not consider the effect administrative burdens have on taxpayer rights, including the right to be informed, the right to pay no more than the correct amount of tax, and the right to a fair and just tax system. In this Article we discuss the concept of administrative burdens and reveal specific examples of how IRS actions, and inaction, have burdened taxpayers and jeopardized taxpayer rights. In addition to identifying and contextualizing these problems, we propose that the IRS conduct Taxpayer Rights Impact Statements on new and existing systems to evaluate when it would be appropriate to reduce, eliminate, or shift burdens away from citizens and onto the government or third parties.

The legal principle of offset has played a key role in debt collection by private parties for centuries. In 2021, offset plays an equally essential role in the United States government’s collection of debts owed to it, accounting for billions of dollars in funds taken from outgoing payments. The right of offset arises when two parties owe each other debts. The party asserting offset can subtract what is owed to them from what they owe, allowing the parties to avoid an unnecessary transaction. Offset thus makes intuitive sense, simplifying two payment flows into one. But offset becomes far more complex when one of the parties is the federal government, which is unlike a traditional private creditor in important ways. Offset has perhaps its largest impact in the tax system, where Congress has legislated that the Internal Revenue Service (the “Service”) has the authority (and sometimes, the mandate) to offset tax refunds. Refunds are commonly offset when a taxpayer owes prior year tax liabilities, other agency debts (e.g., student loans), state taxes, or past due child support. Despite its frequent use by the Service, offset is subject to minimal procedural protections, likely due to its origin in longstanding common law doctrine. Unlike other forms of tax collection, offset does not carry a right to prepayment judicial review in Tax Court. Nor does offset require the Service to issue a notice to the taxpayer prior to taking collection action. Courts also treat offset inconsistently when the applicable taxpayer/debtor is protected by a collection stay under Title 26 or Title 11, allowing offset in some scenarios and denying it in others. Finally, Congress and the Service have often failed to use their authority to make offset more equitable, particularly as applied to low-income taxpayers. The Service has a limited administrative remedy available for taxpayers to affirmatively request bypass from the offset of their refund to a tax debt. But the remedy is little-publicized, little-used, and difficult to administer. During the COVID-19 pandemic and recession, Congress legislatively protected advance stimulus payments from some forms of offset. But Congress failed to make that protection expansive or to extend it to conventional tax refunds, both of which would have put needed funds in the hands of millions of taxpayers during an economic crisis. Similarly, the Service declined to exercise its statutory discretion to systemically suspend offset of conventional tax refunds to past tax liabilities. These issues extend to payments of the Earned Income Tax Credit (EITC), which are subject to offset. Both Congress and the Service have failed to acknowledge the EITC’s unique nature as a type of public benefit, treating it instead as a conventional tax refund subject to offset. This disproportionately hurts the low-income taxpayers, and their children, that the EITC was enacted to benefit. We argue that policymakers should pay closer attention to offset and make the necessary changes to apply it in a more equitable and logical manner.

As it approaches its 100th birthday in just a few more years, the Tax Court is undergoing one of its most significant changes since its creation, in large part due to the pandemic’s impact. Born as a national court, the Tax Court long met its mission of nationwide coverage by having judges travel to all corners of the United States. The press release and the videos provide the roadmap for practitioners (and for the 70% of Tax Court petitioners who are pro se) seeking to prepare for an encounter with the new Tax Court.

In 1958 and 1960, the Supreme Court took two tries to decide Flora v. United States and then only by the thinnest of margins with the thinnest of reasons. In the second opinion, the Court concluded that under section 1346(a) a taxpayer must fully pay any asserted tax deficiency prior to bringing a refund suit in federal court. The majority of justices acknowledged, however, that neither the statute nor the legislative history of the statute controlled the outcome. Instead, the majority relied upon the harmony of the carefully structured system of tax litigation involving the district courts and the Tax Court. A decade and a half later, the Solicitor General of the United States argued before the Supreme Court that Flora stood only for the narrow proposition that a taxpayer who had received a statutory notice of deficiency and failed to petition the Tax Court could not sue for a refund in district court by paying only a portion of the liability. Yet today, and for the last few decades, the United States has argued vigorously, and successfully, for a broader interpretation of the decision in Flora, an interpretation that prevents taxpayers in situations quite different from that of Mr. Flora from successfully pursuing a tax refund suit without full payment of the tax or penalty at issue. Importantly, since the Court’s decision on its rehearing of Flora in 1960, Congress has enacted over 50 assessable penalties that do not offer the taxpayer an opportunity to appear before the Tax Court prior to assessment and collection. Consequently, the legal landscape has changed dramatically. The current situation effectively denies many taxpayers the right to judicial review of the taxes or penalties assessed against them. This stark reality played out in Larson v. United States, in which the district court and the Second Circuit denied Mr. Larson the right to bring a refund suit after partial payment of a $163 million assessable penalty. This Article examines the history of how we arrived at the current situation and suggests a solution that would provide taxpayers with the right to litigate in district court any taxes or penalties assessed against them without making full payment under the Flora rule if they did not have the prior opportunity to challenge the assessment in a judicial proceeding.

This article seeks to identify and discuss the impact of Nina Olson, in her role as National Taxpayer Advocate (NTA), on low-income taxpayer clinics (LITCs). The article discusses the background of Ms. Olson including her advocacy that led to grant funding for LITCs and the background of LITCs before she began administering the grant funds as NTA. The accomplishments of Ms. Olson with respect to LITCs are discussed in six separate topic areas: Changes to Clinic Structure; Pushing for Actions and Resources That Aided Clinics; Expanding Taxpayer Advocate Service Oversight of Low-Income Taxpayer Clinics; Changing the Culture of Low-Income Taxpayer Advocacy; Connecting LITCs to the Tax Court; and Creating Research Office That Provided Empirical Data to Support LITC Positions.

The purpose of this brief is to correct and respond to two arguments in Petitioner-Appellee Altera’s petition for rehearing en banc and briefs of amici supporting the petition for rehearing. First, Treasury’s regulation requiring cost sharing of stock-based compensation and the Ninth Circuit panel’s decision are entirely consistent with longstanding precedents, practices and understandings regarding the meaning of the arm’s length standard. Second, reversal of the U.S. Tax Court by a Court of Appeals is an ordinary occurrence that reflects the federal courts’ hierarchy and is not a basis for granting en banc review.

Fogg discusses the improvement The Tax Lawyer journal is doing. The Tax Lawyer is improving its publication process to ensure timely publication of all the important material on federal, state, and local taxation. Starting this year, the journal will include state and local tax (SALT) articles along with non-SALT articles in every issue.

Congress has added a Taxpayer Bill of Rights (TBOR) to the Internal Revenue Code following the administrative adoption by the IRS of the identical slate of rights. The question for taxpayers and practitioners with respect to TBOR concerns its impact, if any, in seeking a remedy for certain IRS behavior. Practitioners have begun to argue for remedies based on the rights enumerated in TBOR. Facebook became one of the first taxpayers to seek to use TBOR to obtain a right that the IRS had otherwise denied. The Tax Court found that the remedy Facebook sought based on perceived rights in TBOR was not a remedy the court could provide. In the Facebook case the IRS followed the guidance set forth in a Revenue Procedure. Other taxpayers have also begun to test the waters with TBOR arguments. This paper analyzes several cases and several situations in which TBOR has arisen or might soon arise as the basis for seeking a remedy not otherwise available. The paper concludes that taxpayers will struggle to find a basis for remedy in TBOR when facing a specific statute, regulatory or even sub-regulatory guidance directing the IRS to take a specific path. TBOR could make a difference in situations in which the IRS has leeway in deciding what to do. The specific area in which the IRS has great leeway in deciding the course of action it will pursue falls in the collection of taxes. So much of collection is driven by judgment and policy that it presents one of the primary areas in which TBOR could apply to assist taxpayers in reaching the remedy that best suits their situation in balance with the needs of the IRS. The paper discusses some collection situations in which TBOR could make a difference. The other area where TBOR could make a difference is the formulation of regulatory and sub-regulatory guidance. The IRS should build a culture that embraces the goals of TBOR and uses them as it constructs its interactions with taxpayers. The paper discusses how this might happen. TBOR has moved past its infancy but not far. There is much to learn about how TBOR will impact tax administration. Litigation will help to move TBOR to where Congress intended it to be or help to move Congress to reshape TBOR into the impact statement it intended.

In this article, Fogg addresses procedural rules through which the IRS effectively dictates whether the Tax Court has jurisdiction over many collection due process cases. He discusses recent litigation of similar jurisdictional issues and recommends changes at the agency level.

Fifty years ago the Tax Court adopted a small tax case procedure in 1968. A year later Congress formalized the procedure passing Code Sec. 7463.1 For most types of cases the Tax Court offers a choice between having your case heard via the "regular" procedure or the small tax case procedure. The regular procedure generally follows normal court formalities and allows the parties to appeal an adverse outcome to the appropriate US Court of Appeal. The small tax case procedure offers less formality and finality of outcome. In comparing the procedures, the discussion will presume that the default is to the regular procedure. This article will first discuss 15 things to think about in deciding whether to choose the small tax case instead of the regular procedure. By evaluating the factors differentiating the two types of Tax Court cases, a qualifying taxpayer with a ticket to Tax Court can choose the appropriate "forum" for their case within the Tax Court.

This article seeks to explain the role of the Tax Court both within the system of taxation and the system of tribunals of the United States.

The Internal Revenue Code has four discreet sections that allow late filing of claims and other documents under the circumstances described in those sections. The IRS has promulgated a procedural regulation that allows it to permit late elections under prescribed circumstances. Neither the Code sections nor the Regulation cover all of the circumstances in which taxpayers have a good excuse for missing a time frame. The current provisions have developed in an ad hoc manner. More ad hoc development of this area is possible as equitable tolling litigation seeks to open up time frames under the Code despite the efforts of the IRS to argue the tax code is exceptional. Rather than continue down the path of ad hoc allowance of late claims and certain other late actions, this Article recommends the creation of a statute that would apply to all situations. The recommendation draws from the current provisions allowing late action and from principles developed in equitable tolling litigation. It proposes a transparent system under which the IRS would make a determination whether the late action qualified and that determination would be subject to judicial review under an abuse of discretion standard.

This article provides a chronological history of low-income tax clinics in the United States from their inception in 1974 to the present. It discusses leaders in the tax clinic movement such as Stuart Filler, Janet Spragens and Nina Olson and their impact on the growth of tax clinics. In addition to individual leaders, several institutions played significant roles in shaping the development of tax clinics. Tax clinics developed parallel to and then in conjunction with legal service corporation offices and academic clinics. The article discusses the growth of tax clinics within the broader growth of poverty law and the academic clinical movement. Finally, it looks at the challenges that lie ahead for tax clinics.

The IRS faced a serious problem in the 1990s with taxpayers hiding their money offshore to avoid federal taxes. An International Revenue Agent, in New Jersey, Joe West, audited an individual engaged in hiding assets offshore and gained access to the offshore information through the use of a summons. The work of Joe West on that case caused him to “invent” a method for obtaining the names of individuals investing offshore who would not otherwise be known to the IRS. The article discusses the case that led Joe West to his discovery, the technique he developed for locating the names of U.S. citizens placing their money offshore, and the implications to the IRS of the type of creative thinking exhibited by Joe West.

The federal government collects the majority of taxes through business entities that are required to withhold taxes from wages or collect excise taxes at the time of providing services. These business entities hold the taxes they collect in trust for the United States. The vast majority of business entities pay over the taxes held in trust in a timely and appropriate manner; however, a sizeable amount, in dollar terms, does not get paid. Aside from passing criminal laws at or near the passage of the 1954 code, Congress has done little to create a structure that provides incentives for business entities acting as trustees to pay over these collected taxes. This article explores the literature that has primarily developed with respect to the tax gap seeking to find structural answers to the problem. Most of the literature addresses issues concerned with underreporting taxes rather than the underpayment of taxes but certain ideas on how to influence taxpayer behavior are transferable to underpayment. Applying appropriate structural principles to the problem, the article explores some of the solutions adopted by states to see if importing those solutions could assist the federal government in collecting these taxes. Five specific recommendations follow from the study and these recommendations range from information gathering to monetary incentives for timely compliance to requiring bonds. The range of proposed solutions is intended to address the range of reasons for the non-compliance. Through the implementation of these solutions or similar ideas that create the proper structure for taxpayers serving as trustees, this corner of the tax gap should be reduced.

Most federal taxes are collected from taxpayers by business entities, held in a public trust for the United States, and then paid over to the Internal Revenue Service (the IRS). While the vast majority of business entities pay over the taxes held in trust in a timely and appropriate manner, a sizeable amount, in dollar terms, does not get paid. The amount of unpaid "collected" taxes in 2008 created a $58 billion tax gap item. Disclosure law governing federal taxes defaults to non-disclosure for most tax returns. This general rule of non-disclosure governs the returns reporting the taxes collected by business entities even though the information on these returns is information concerning a public trust. This article analyzes the federal tax disclosure laws and concludes that the amount of taxes collected on behalf of the United States and the amount of these collected taxes paid over to the IRS should be disclosed. Rather than coming under the general rule of non-disclosure which applies to income tax returns and other returns reporting the liability of an individual or entity for the payment of taxes, these returns should be treated like the returns of pension plans, which are open for the public to see. In addition to approaching the issue from the perspective of disclosure policy, the article also looks at the collection policy issues presented by the disclosure of this information. For the same policy reasons that Congress has decided compliance is enhanced by the disclosure of pension plans and the returns of exempt organizations, the article concludes that compliance would be enhanced by this proposal and the tax gap reduced.