The American Bar Association Tax Section has recently published the second edition of A Practitioner’s Guide to Tax Evidence. This Article provides updates discussed in the Guide and an excerpt from the Guide. The first part of the Article covers some 2015 legislative changes made by the Protecting Americans from Tax Hikes Act (PATH Act). The Federal Rules of Evidence establish the guidelines a judge will use to determine what testimony and documents will be admissible in evidence in the Tax Court. Before the PATH Act, under section 7453, the Tax Court conducted trials in accordance with the rules of evidence applicable in trials without a jury in the District Court for the District of Columbia. How the reference to the district court for the District of Columbia should be interpreted was never certain. It could have meant anything from applying the rules of evidence as adopted by the District of Columbia’s district court, as interpreted by the District of Columbia’s district court, as interpreted by the Circuit Court of Appeals for the District of Columbia, or something else.
The PATH Act changed the statutory language, removing the reference to the district court for the District of Columbia. As a corollary to the statutory amendment, there seems to be a new evidentiary trend. The Tax Court has begun citing district court opinions, often from the jurisdiction to which the case would be appealed, and to relevant appellate court opinions to support its evidentiary decisions. Citation to district court opinions makes sense as it is the trial court that is making the evidentiary decision. And, to the extent the district court has not been overruled by the appellate court, this law would be the controlling law in the jurisdiction.
Part II of the Article is an excerpt from the Guide. The excerpt covers opinions and hearsay testimony.