November 30, 2020 At Court

Tax Court Making Significant Changes During Pandemic

By Keith Fogg, Clinical Professor and Director of Federal Tax Clinic, Harvard Law

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. Now, because of travel restrictions and related health concerns, the Tax Court expects to reach its petitioners virtually rather than with in-person visits. The transformation will make it easier for some petitioners but more difficult for others. The Court will have to cope with a variety of situations as it seeks to move forward to resolve the cases on its docket.

Like almost all government institutions, the Tax Court closed its building in March due to the pandemic. At the same time, it cancelled its remaining trial sessions in the Winter calendar and all of its trial sessions in the Spring calendar. In a typical year, the Tax Court holds trials sessions in Fall, Winter and Spring calendars spread across the country. It generally does not schedule trial calendars in July and August, reserving those months for special trial calendars, to catch up on writing opinions or even to take vacations.

Because of the pandemic, the Tax Court had almost a six-month gap between trial calendars in 2020. What does that mean? It means that about 80 trial calendars did not occur. Most trial calendars consist of 100 or more cases, with the result that approximately 8,000 cases had a postponement. Perhaps some of those cases settled during the period of postponement, but many still await resolution. As the Tax Court transitions to a new way of doing business, it must deal with that significant backlog of cases.

The closure of the Tax Court building during the pandemic also caused a closure of its clerk’s office for more than three months. This caused a backlog of mail, including many petitions that the Tax Court had to address upon reopening. Thus, at the same time the judges and the clerks were trying to build a new model for hearing cases, they also had to deal with a substantial amount of backlogged mail. Delayed mail can result in many consequences, some of which are difficult to predict and may take some time to resolve.

At the same time, the Tax Court was preparing to move to a new case management system that it has been building for some time. The case management system was scheduled for installation in July 2020. That time frame has now been pushed back to later this month (i.e., during November 2020). The installation of this system adds another obstacle for the Tax Court to overcome as it works to implement a new way of trying cases and digs out from backlogged cases and mail. The installation of the new system will cause the Tax Court to close its docket system for approximately a month as it transitions from the old to the new. This will create yet another backlog and will again make it difficult or impossible to obtain information from the clerk’s office about docketed cases.

This discussion of backlogs is mere background for examining the major change taking place at the Tax Court—remote trials. Tax Court judges new and old must adapt to a new way of trying cases and have had to build the system and learn it in a matter of months while working remotely or partially remotely. Like many in other occupations, some of the Tax Court judges are better equipped than others to move into the digital platform; similarly, some petitioners are better positioned than others to make that move.

We now have a few dozen calendars under the new platform and can start to assess how the new system is working. On August 6, 2020, the Tax Court issued a press release announcing the new procedures for its remote calendars. This seven-page document provides the primary roadmap to the new procedures. Complementing the notice, the Tax Court produced a series of videos demonstrating how remote trial sessions would work. 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.

The press release notes that the Tax Court updated many of the documents it provides which give written advice:

The Court will accept electronically filed stipulated decisions bearing digital image signatures. The Practitioners’ Guide to Electronic Case Access and Filing and the Petitioners’ Guide to Electronic Case Access and Filing have been revised to reflect this adjustment.

The Court has provided additional guidance on procedures related to the submission of documentary evidence. A copy of Documentary Evidence for Remote Proceedings is attached and has been posted on the Court’s website.

The Court has provided additional guidance on procedures related to subpoenas. A copy of Subpoenas for Remote Proceedings is attached and has been posted on the Court’s website.

The Court has updated Administrative Order 2020-03 to clarify that limited entries of appearance may be filed in cases that were on canceled trial sessions. The revised Administrative Order is attached and has been posted on the Court’s website.

The videos provide a step-by-step explanation of what to expect when arriving at the Tax Court’s digital platform, the calendar call and the trial. Although the videos have the quality of a home movie featuring many of the Tax Court’s employees in starring roles, they do an excellent job of walking a petitioner through the steps that will occur at a calendar call and a trial. Just as reading the press release is a necessity, watching the videos is something practitioners before the Tax Court should do prior to their first remote encounter with the Tax Court.

The biggest change to the practice may be what happens before the calendar call rather than at the calendar call. Remote practice forces the Tax Court and the parties to prepare earlier. It will cause many, if not most or all, of the judges to engage in pretrial practice to a degree that most judges on the Tax Court have hitherto avoided. This could greatly improve practice before the Tax Court and make calendar call move much more smoothly.

One of the biggest problems with the Tax Court for pro se petitioners is their feeling that they have fallen into a black hole when they file their petition. After the filing of the petition, they receive a notice from the Tax Court acknowledging receipt, providing them with some expectations and notifying them of the availability of clinics to potentially assist them. They then receive an answer from the IRS attorney which often denies almost everything they have said in the petition. At this point the IRS attorney ships their case off to Appeals which takes from four to six months to reach out to the petitioner. So, for the first six months of their case, they learn the government disagrees with everything they have said and then hear nothing. Many drop out of the process, resulting in a surprisingly high percentage of dismissals for failure to properly prosecute. The new procedures may result in better engagement with the taxpayers that will keep the case moving forward. They will also result in engagement with the Tax Court prior to calendar call, which may allow the Tax Court to resolve even more cases prior to calendar call or make the cases better prepared when the calendar occurs.

Parties must now submit the stipulation three weeks before calendar call. The stipulation process forces the parties to focus on the case. Documents need to go to the Tax Court prior to trial (at least that’s the rule published in the order scheduling the trial.) Many judges will meet with taxpayers prior to calendar call. The day of calendar call will no longer be the day that the taxpayer first encounters the Tax Court. Many taxpayers will have that encounter weeks or maybe a month or two before calendar call. This should allow the calendar calls to go more smoothly despite the difficulties that can result from remote operation.

Taxpayers and volunteers offering to assist unrepresented taxpayers are asked to log into the Tax Court’s system an hour early. The Tax Court changed its instructions several years ago to request that unrepresented individuals and volunteers connect an hour before calendar call in order to give them time to discuss the case before the actual call of the calendar. The new structure preserves that process both to provide an opportunity to discuss and to ensure that everyone is able to log into the system before the 10:00 call of calendar. Volunteers from clinics and bar associations now are asked to select one person to be their spokesperson, similar to the calendar coordinator for Chief Counsel. This allows the clerk’s office and chambers to focus on one person prior to the calendar rather than deal with several parties. This should improve pretrial communication.

The Tax Court has signaled that it will continue trying cases virtually through the Winter sessions, a decision that will take virtual sessions into March, at least, before a return to in-person court proceedings. Perhaps the Tax Court will adopt some of the virtual procedures even when it becomes possible to reenter the courtroom. The Court of Veteran’s Appeals, another Article 1 court with nationwide jurisdiction, has been doing some of its hearings virtually for a few years and was in the process of building an expanded virtual platform when the pandemic hit. The experience of that court suggests that the virtual platform may outlast the pandemic and become an important part of Tax Court practice.