Editor’s Note: T. Keith Fogg retired at the end of June 2022 as the director of the Federal Tax Clinic at the Harvard Legal Services Center, where he had been a clinical professor of law since 2017. He will retain an affiliation with Harvard as an Emeritus Professor. Previously, he taught at Villanova Law School for 10 years and had spent 30 years working in the IRS Office of Chief Counsel. He was interviewed by ATT editor Jeremiah Coder.
ATT: Hi Keith. Let’s start at the beginning. What got you interested in tax in the first place?
KF: Well, I guess I’m mostly interested in tax because I got offered a job in tax. My father began working for the IRS – he was a veteran of World War II, went to college, and then got a job as a revenue agent and eventually became an appeals officer. So I was familiar with tax.
I graduated from the University of Richmond in the late 1970s when the economy wasn’t doing particularly well. I was near the top of the class, but I wasn’t recruited, wasn’t having success with the big private law firms. Nobody in my family had been a lawyer or had any ties to lawyers or law firms, so I looked at government jobs. I got an offer from Chief Counsel and I had one sort of pending from the Securities Exchange Commission, but the one from Chief Counsel came first. So that’s how I got interested in tax, when they offered me a job.
ATT: You’ve been teaching a long time, first as an adjunct and then full-time after leaving Chief Counsel. How have you seen legal education change? Is there anything particularly noticeable that has changed in the teaching of tax?
KF: I would say the biggest change has been the rise of clinics. When I went to law school, my law school didn’t have any clinics. I spent three years sitting in classrooms, and then they push me out the door. And I’m thinking, well, what do I do now? So I think clinical education is a positive addition to law school curriculums over the span of my career. Students are crazy if they’re planning to practice law but don’t take a clinic. Taking a clinic gives you an opportunity to have direct client representation, which is really helpful. It depends in part on what you expect after you graduate. But if you’re expecting to represent clients, I think you’re missing a real opportunity if you don’t participate in a clinic allowing you to learn the skills of client representation in a supervised setting.
In terms of teaching basic tax, taxes continue to get more and more complicated. If you get an LLM, it’s hard to take all the tax courses available. I took an LLM almost 40 years ago and I found it to be useful to expose me to areas of the Internal Revenue Code that I’ve never really seen in a case, because I’ve been a litigator rather than a planner. There are parts of the code that I’ve never litigated or otherwise dealt with but understanding where things are in the code and how the code is pieced together has been extremely helpful. It’s hard to pick up tax from a basic income tax class that just touches on fundamental concepts. If you really want to get into tax, you need to take an LLM. Tax is one of those areas where you have to keep learning throughout your career, because it changes so frequently. It’s not like real estate, or torts, or family law, which are relatively static compared to tax. Taxation is a very dynamic area of the law. That makes it interesting for me, but maybe some people wouldn’t want to go there, because there’s too much continuing education – otherwise you’ll be committing malpractice.
ATT: Has there been a change in the use and stature of law clinics over the years?
KF: There hasn’t been a huge amount of change in the number of law school clinics in the last 15 years or so. There were about 15 law school tax clinics in existence in 1998, when Congress passed the legislation that created the grant under section 7526. During the first four or five years after 1998, the number of academic clinics jumped from 15 to about 35 or 40, but it has remained relatively static since then. Part of the problem now is that the amount of the grant has stayed fixed at $100,000, without any increase since 1998. The value of that $100,000 is a lot less today than it was almost 25 years ago. Consequently, law schools have to be willing to devote more money to the clinic than they will get from the grant. So many law schools haven’t, even a number of schools with big LLM programs. The University of Florida is just starting a tax clinic; great LLM programs like those at Georgetown and NYU don’t have clinics; and the Ivy League law schools, other than Harvard, don’t have a tax clinic. I’ve been disappointed that tax clinics haven’t become more commonplace.
It’s true from the standpoint of being a student that the cases you deal with in a clinic aren’t generally going to be helpful to you from a technical tax standpoint – when you graduate, you’re probably not going to encounter the earned income tax credit or collection law issues if you’re working at the biggest law firms. But I think it’s helpful if you’re going to be a tax lawyer to practice in the clinic, so you can see what happens when the train wrecks. Understanding what happens when the train wrecks can help you as a planner, because now you see all the problems that people have when they’re trying to deal with the IRS and trying to fix a problem. Some of my students who have gone into planning have found that as a brand-new associate, they would be the one lawyer in the practice who had some knowledge of dealing with the IRS. So they would be the newest lawyer saying “Yeah, I know how to do that,” because they’ve had experience in a clinic. Those cases may not have been a big matter, but it gave them something that they could feel proud about. I don’t understand why an LLM program wouldn’t encourage that and sponsor clinics just so people can have that opportunity for exposure to the practical side of tax administration.
ATT: How important are clinics to development of public interest law and involvement of systemic tax administration issues?
KF: About a quarter of existing tax clinics are academic clinics, and I think every academic clinic should be looking at broader public policy issues. If there’s a reg or something that impacts low-income taxpayers on which the IRS or the Tax Court or anybody seeks comments, academic clinics should respond. At the Harvard Clinic, we tried to comment on everything that impacted low-income taxpayers. To me, low-income taxpayers do not have a voice other than clinics. It’s not like a reg that might impact a major industry, where impacted taxpayers can use a big law firm to push their thoughts on how the regs should be fashioned. Low-income taxpayers don’t otherwise have the practical means to comment. You see that dynamic in some of the regs that came out of thethat particularly affected innocent spouse and Collection Due Process (CDP). When those regs went out for comment in 1999 and 2000, nobody in the clinic world submitted a comment. Later, when clinics began litigating those issues, they encountered problems that those regs created by being skewed in a way that disadvantaged low-income taxpayers. Clinics should be there at the beginning, looking at every reg that affects low-income taxpayers and every rule that they can comment on.
Fortunately, the ABA—particularly through the Low-Income Taxpayer Committee—has gotten stronger over the last 20 years and is now one of the biggest commenters on regulations. But I think clinics still have an important voice to add. Some of my students got to participate in the oral reg comments. In fact, we’ve been the only commenter in certain circumstances, so the IRS has reached out, giving the students the experience of hours-long meetings with IRS officials going over their ideas. I think that’s a big part of what clinics, particularly academic clinics, should be doing.
ATT: I can’t resist asking about the intersection of tax and administrative law. The blog “Procedurally Taxing,” which you help run, has had some great commentary recently on this issue and the Administrative Procedure Act (APA). With 30 years of government experience and then academic litigation, what’s your view on tax rulemaking?
KF: You know, in all my years at the IRS, I never even heard the word APA. I didn’t. Partly because I had little exposure to regs, other than when I participated in writing the regulations for CDP, and maybe third-party notice.
After RRA 98 passed, I was immediately called into the national office to head up what was then called the general litigation division, on a temporary basis, because they needed a new division director. That was basically my only contact with the creation of regs. In a field office, where I spent most of my time, I don’t remember ever having a case when I was at the IRS where anybody raised the APA. So my knowledge of the APA and my thoughts about it have all been formed after 2007 when I left Chief Counsel.
I think at that point, Chief Counsel’s Office was still buying into tax exceptionalism. As IRS officials, we just didn’t worry about some of these things that other agencies have to worry about. Treasury and IRS have their own templates when they write regs. I think Kristin Hickman and others have certainly led the charge to teach the IRS that it should and must pay attention to the APA. Thecame out after I left the IRS, so we were dealing with Supreme Court cases that were different. I think every tax lawyer has to make themselves familiar with the APA and look for ways to use the APA to the advantage of their clients. The IRS is learning and changing, but there are many regs that were written a long time ago when the IRS wasn’t thinking about the APA. So I don’t think we’re anywhere close to the end of litigation regarding the APA.
ATT: Is there a particular Supreme Court decision that you think has been most impactful on tax administration?
KF: Although it was decided some 60 years ago, I think theis interesting in terms of what was decided and how it is now interpreted. Mr. Flora got a notice deficiency of about $25,000, which in the 1950s would have been an amazingly high notice of deficiency. He let the 90 days pass and then paid about $5,000 and tried to go to District Court. Ten or 15 years after the Flora decision, the IRS and Solicitor General argued that Flora only applied to deficiency cases. Yet what’s happened since then is a proliferation of assessable penalties, and Flora has been applied to all of them. I don’t think there’s been any court ever who thought about assessable penalties at the time. In the late 1950s and early 1960s, there were only two or three assessable penalties, one of which was section 6672, which was divisible.
But now we have a bunch of assessable penalties, some of which are not divisible and often keep people from getting into court because they can’t come up with the money to pay in full before filing suit. That was exactly why Congress created the Tax Court, to prevent people from being forced into bankruptcy because of taxes. So Flora has had tremendous influence, I think, even though it was decided sixty years ago, because Congress has in the meantime created so many assessable penalties and low-income taxpayers don’t pay attention to the notice of deficiency, so there are many more low-income taxpayers in the system. These taxpayers don’t get interested in a case until the IRS starts collecting from them.
I tell my students that most of our clients view the IRS as a pen pal. The IRS audits them and sends them letters, but they get letters from creditors all the time that they tend to ignore. They get three or four letters from the IRS during the audit stage, and they ignore them. Then they get three or four letters from the IRS at the collection stage, and they ignore them. They’ve gotten six or seven or eight letters over the course of a year to 18 months from the IRS and their attitude is “what’s the big deal, I get letters from everybody.” Then when their bank account is cleaned out or their paycheck is wiped out by a levy, they run screaming to the legal clinic wanting to know what the IRS doing. This is a lifestyle of a many people who’ve been brought into the tax system because the tax system is now a benefits system.
So Flora creates difficulty not just for people who have assessable penalties, but for many people who are in the tax system and struggling to meet basic life demands. For example, they owe $5,000, because the IRS says they shouldn’t have gotten the earned income tax credit. But they don’t have $5,000, and they’re not likely to ever have $5,000. So Flora keeps them from being able to litigate. The IRS has some safety valves, but then there is something like the pandemic when it’s hard to use those safety valves.
So I think Flora has issues that should be rethought by Congress: it’s had a major impact on tax administration in a way that likely wasn’t even considered at the time. If you look at it properly, the Supreme Court has two Flora cases: the first one was decided eight-to-one, and the second decision was five-to-four. The second decision said, “yeah, the statute doesn’t really require this result, but let’s stick with it anyway.” It’s a case that barely had a majority sixty years ago, when the majority acknowledged that they weren’t interpreting the statute but making a policy decision. I think we should rethink that policy rather than let Flora be a club that’s used to keep people out of court. I like for taxpayers to be able to get into court, even if they’re going to lose, because I think they feel better. I don’t like excluding them. That was why we pushed on theissue regarding 30-day time limits for CDP reviews. I think you let them in the door even if they’re going to lose, because they’re going to feel better than if you just bar the door.
ATT: Thinking about important trends in tax administration, where do you think we will be in 10 years’ time? Is there going to be some of the same battles we see now or will there be new front lines on the horizon?
KF: I think that depends on whether Congress is going to fund the IRS. If they keep squeezing the IRS, the IRS is going to keep using computers as their way of auditing. When I started at the IRS in 1977, my docket as a litigator was filled with small businesses. And that’s where the tax gap is. Today, the IRS might go after a really small business, but they don’t go after relatively successful small businesses very often. But that’s where the IRS ought to be spending time – on Schedule Cs and small businesses that could be Sub S or LLCs. The IRS just doesn’t have the people power to do that.
I would also like to see tax administration put more people into helping in more places where taxpayers can walk in and call on the phone. I mean, it’s just darn hard for taxpayers to get through to the IRS and get the help they need from that agency. And so I would like to see tax administration not just going after people but also giving a helping hand much more than they’re doing today.
ATT: Is there a particular factor exacerbating the disconnect between taxpayer needs and IRS assistance?
KF: We have so many people that have to interact with the tax system because we use it as a benefit delivery system. Those people need answers to some basic questions, and the IRS answer is to rely on a computer. That just doesn’t work for a large segment of society – there are many elderly people and low-income people who just need more hand-holding than they’re getting.
The way I look at it, if you go back to the 1960s and you look at the tax rates, we had tax rates that were confiscatory – they were as high as the tax rates of Sweden and the Nordic states – but at the same time we had government services that reflected that. President Ronald Reagan changed that in the 1980s. We went from what I would call Nordstrom-service to taxpayers to Walmart-service. Now, Walmart-service works great if you know what you want to buy and where to find it: the prices are a lot cheaper than you’ll find at Nordstrom. But if you need any kind of assistance, you’re not going to get much at Walmart. This has been a bipartisan problem from all presidential administrations since 1980: we haven’t reconsidered so we are stuck with Walmart government, which is particularly hard on people without the educational or financial wherewithal to deal with the government when they must. People without financial means or without education are just wandering around, looking at the shelves, wondering if somebody can ever help them find what they’re looking for.
ATT: How did you first get involved in the ABA and what has kept you involved?
KF: When I worked for Chief Counsel, I occasionally spoke at the ABA Tax Section meetings. I would be an expert on some issue and get asked to speak, but the government generally doesn’t pay for you to go to the ABA meetings if you are not a speaker nor do they pay for you to belong to the ABA. So I was too cheap to belong or to attend other than if the government was sending me. When I became a faculty member at Villanova Law School, I automatically became a member of the ABA because they bought a membership for every faculty member.
But the reason that I wanted to use that membership and become involved in the ABA was because I had watched Nina Olson leverage the ABA to achieve good things for low-income taxpayers. Nina Olson came into Richmond to start her community tax law project, and I was the district counsel in Richmond, so I worked closely with Nina for a number of years. I saw that she was able to use the ABA to help her clients. So I thought “well, I want the ABA to help me help my clients as well.” I got involved in leadership of the Low-Income Taxpayer Committee. What disturbed me at the time is that the only people who were engaged in that committee were academics, because it was difficult and expensive to participate. Most of the clinics are in legal services organizations or in independent clinics, but those people didn’t come to Tax Section meetings and didn’t belong to the ABA. I worked with the ABA and Christine Brunswick to lower the cost: if you’re an active clinician, you only have to pay $25 to come to the meeting, which is an amazing cost. Then I worked with the ABA to set up scholarships so that four non-academic clinicians could come to every meeting. We really worked hard, back when I was working on that committee, to get all the clinic world to understand how the ABA could be helpful to them. Then we write the reg comments and do other things through the ABA that would give us a voice for low-income taxpayers. The ABA was very helpful, very understanding to create the special ways for clinicians to get involved. I think the ABA provides a tremendous platform for the clinicians to advocate for their clients. While I was the chair of the committee, we merged with what was previously the pro bono committee, so we became the Pro Bono and Tax Clinic Committee. Now the committee went from having a meeting with maybe five or 10 people attending to 40 or 50 attendees engaged in thinking about low-income tax issues.
I decided to go into leadership to be on the council and then to be a Vice Chair, because I wanted to continue to be a voice for the clinicians. The ABA has never had a clinician who was the leader of the Tax Section, and I wanted to be a voice in the leadership so that clinics would have that voice and would continue to be thought of as an important part of the Tax Section.
ATT: If you had the power to snap your fingers and make any change to either the code or IRS practice, what would it be?
KF: My biggest hang-up is that I think the IRS should autofill tax returns for wage earners. There’s so many people paying a couple hundred bucks to get a W-2 return filled out. There are other countries that do it; I think there are even states like California that do it. But the IRS faces opposition from the companies that prepare returns. Even if the IRS doesn’t prepare the returns, I’d like to see the tax season moved out a little bit. I’d rather see all the third-party returns go into the IRS, so the taxpayer doesn’t even get those. Send all the W-2s and 1099s to the IRS and then the agency delivers everybody a wage and income statement that has everything in one spot. Then you don’t have to keep all these scraps of paper from 10 different places. So many clients forget some little 1099 and then the IRS computer dings you. Why not just wait until the end of January when all the 1099s go into the IRS, then have the IRS start the filing season mid to late February after the IRS delivers a statement to everybody all in one place, all of the income items, all the information returns that have been delivered to the IRS. I’d like to see them autofill for the people with really simple returns. But even for the people without simple returns, I think it would be a benefit to get it all in one fell swoop rather than to get it from five or 10 different sources.
ATT: Is our self-assessment system a detriment to tax administration?
KF: Yeah, I think that the government should help with the assessment process. The most critical thing is getting the tax return filed correctly and timely. The IRS should do everything they can to get taxpayers to file accurate and timely returns, because if people do that then it makes it so much easier for the IRS. That’s where all the effort should be: on getting it right at the very first step.
ATT: Do you think it is important for the IRS Commissioner to have a tax practice background?
KF: I thought it was a good thing to pick a commissioner who was a tax practitioner after having several successive commissioners who were not. I’m not saying that we couldn’t go back to a non-tax commissioner; maybe it’s not a bad thing to switch back and forth. But I don’t think the tax system should go two decades without a commissioner who has a deep knowledge of the tax system. Sure, a tax practitioner may have only managed 50 people in his or her firm, as opposed to 50,000 or 75,000 at the IRS. It’s a steep learning curve on management, but you can have a deputy commissioner who’s a real management guru. The commissioner is the voice of the IRS, and in that role, I think it’s really helpful to have been a practitioner. I can see the benefit of having someone who has managed large organizations before, but I still like the idea of having a tax practitioner at least every so often.
ATT: Do you think the common complaint from some quarters about the revolving door between private practice and IRS service is legitimate? Is the revolving door good, bad, or agnostic for the tax system?
KF: I think it’s helpful that people who understand how the IRS works go into private practice. I don’t think you want to have a group that’s totally divorced from knowing how it works on the inside. Having the knowledge of the system usually makes it easier to work with somebody because they understand the constraints in trying to resolve a case, so I think it’s good. I think the system benefits from having people who used to work there who are now on the outside and who used to be on the outside who are now coming in to work at the IRS.
ATT: Last question, any favorite depiction of a tax lawyer in film or literature?
KF: In terms of an aspirational goal, it would be Atticus Finch in To Kill a Mockingbird. It would be hard to not want to be Atticus.