Virus Poses Extra Obstacles for Attorneys With Tax Court Cases

via Bloomberg Tax

By Jeffery Leon and Aysha Bagchi

The limits of the technology at the U.S. Tax Court are making things more difficult for attorneys amid the coronavirus pandemic. Many expect to see a document backlog once the court building reopens. Jonathan Hurtarte/Bloomberg Law

The new coronavirus pandemic is increasing the challenges for attorneys representing clients at the U.S. Tax Court, a place already slow to technological advancement.

Attorneys have long grappled with technological barriers at the court—not being able to electronically file petitions or access many case documents online, for example. But now that the building is shuttered until further notice, tax professionals are facing additional hurdles, and they fear it could get worse the longer the virus outbreak continues.

The court has historically struggled with a backlog of cases, a situation that got worse during the 35-day government shutdown at the end of 2018. Such delays are likely to happen again, tax attorneys said.

Backlog concerns have spurred questions about whether the IRS will have to take special measures to get through cases more quickly, according to Frank Agostino, president of Agostino & Associates, P.C.

“The most frequently asked question is, ‘Will there be a coronavirus-based settlement program or offer-in-compromise?’” he said. An offer-in-compromise would allow taxpayers to settle their debts for less than the original amount owed.

Antiquated Practices

Tax professionals are urging the court to enable e-filing petitions, which could ease some of the strain from processing mailed petitions, and spare individuals from needing to go to crowded post office locations.

“They really need to find a way to ensure public access,” said Anson Asbury, founder of Asbury Law Firm who represents clients before the court.

Hand-mailed petitions and in-person documents are antiquated practices that are hindering the court’s services during the pandemic, said Kelley Miller, a partner in the tax group at Reed Smith LLP who practices in the court.

“The judges and staff at the Tax Court have been working for years to enhance access to online services and improve the interface of the Tax Court’s website, but unfortunately the pandemic hits at a time when the Court was, I believe, focused on introducing some of those changes,” Miller said.

Tax Court Judge L. Paige Marvel previously said the Tax Court could be ready with a new case management system that would allow for petition e-filing this spring. She said rules to permit petition e-filing weren’t in place because there wasn’t a system to enable expanding e-filing to include petitions.

The Tax Court didn’t return a request for comment.

Document Access Troubles

One result of the building closure is that visitors can’t access court documents at the Tax Court’s records room. Those who are unable to get the documents from the actual petitioner or that person’s attorney are left with one potentially prohibitive option: Pay a $0.50 per page charge from the Tax Court and have the documents mailed. The Tax Court has cited concerns about privacy as a reason to preserve those restrictions.

That can be an issue particularly for people interested in reaching out to self-represented petitioners because their contact information can be viewed on their petition, said T. Keith Fogg, who directs Harvard Law School’s Federal Tax Clinic.

“It’s no longer possible to go to the court and sit in the docket room to do research or to call the court and get copies of documents,” Fogg said. “The closing of the court accentuates the problems caused by the Tax Court’s decision not to make its documents public except through a portal that becomes unavailable when it closes.”

Charles M. Ruchelman, member at Caplin & Drysdale Chartered in Washington, pushed back on any move to make all filings public, saying the Tax Court’s system is in place to protect taxpayer privacy, and it would be a big ask for the court to redact all documents for sharing online.

IRS Weighing Relief Options

A lingering concern for tax professionals is the window to file petitions. Under tax code Section 6213, a taxpayer has 90 days to file a petition with the Tax Court after getting a notice of deficiency, after which the IRS can assess the tax if a petition wasn’t filed.

The agency has offered some relief to individuals already during the pandemic, pushing back some deadlines to pay and file taxes, and easing off many enforcement actions. Officials are aware the changes don’t resolve the 90-day issue, and it’s something they are thinking about, IRS Chief Counsel Michael Desmond said late last month on a press call hosted by the American Bar Association tax section.

Petition deadlines “are at the top of our list of things to consider,” he said.

Even with existing relief, facing a tax assessment after missing the 90-day deadline to file a petition may still be very important to a taxpayer who is disputing a large tax bill, said Guinevere Moore, a partner at Johnson Moore who litigates tax issues.

“That’s going to have all sorts of ramifications from a practical business perspective, from a credit perspective, from a lending perspective,” Moore said.

—With assistance from Allyson Versprille.