Section of Taxation Publications
  VOL. 59
NO. 1
FALL 2005
Contents | TTL Home


Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.


Grover Hartt, III & Jonathan L. Blacker

 Grover Hartt, III; Assistant Chief, Civil Trial Section, Southwestern Region, Department of Justice Tax Division; Southern Methodist University, B.A. 1970, LL.M. 1986; Texas Tech University, J.D. 1973. Jonathan L. Blacker; Trial Attorney, Civil Trial Section, Southwestern Region, Department of Justice - Tax Division; University of Texas, B.B.A., M.P.A. 1993; Southern Methodist University, J.D. 1996. The views expressed in this article are the personal views of the authors and are not necessarily the views of the Department of Justice or the Internal Revenue Service.


In a world of increasing litigation and decreasing judicial resources, both courts and litigants value legal devices that lighten their burdens. Issue preclusion, formally and still frequently known as “collateral estoppel,” is a judicial doctrine intended to protect courts and litigants from the vexation of repeated trials of the same issue. Developed originally as a shield for successful defendants against the relitigation of issues finally determined in an earlier trial between the same parties or those in privity with them, collateral estoppel was later accepted by the courts as a sword to be employed offensively by plaintiffs in certain circumstances. The use of collateral estoppel to prevent the relitigation of a fact essential to a judgment that was actually litigated and determined in a prior case between the parties is described as unique to common law systems.

Despite the historical acceptance of collateral estoppel as a useful tool to restrict multiple trials of the same issue, a surprising degree of uncertainty exists as to when and how it should be applied. At least part of this uncertainty appears to result from the discretionary character of the rule. The commendable desire to allow each court the latitude to balance the interests of reliance and repose against the right to be heard has engendered a body of case law that may sometimes seem to be unduly ad hoc in nature. A clearer understanding of the rules imposed upon the application of collateral estoppel that have emerged from that body of case law should promote more predictability, and, therefore, permit this potentially valuable tool to achieve fully the purposes for which it was intended. To the extent that judges and attorneys share a common view of collateral estoppel, fewer cases may be filed. Of those that are filed, more may be disposed of at an earlier stage.

Within the arena of tax controversies, and complex litigation in general, the use of collateral estoppel may become more common. This article considers the historical development of collateral estoppel and its unique application to tax cases. Its use in litigation is examined in the context of several specific types of tax controversies: (1) related or parallel civil and criminal tax cases, (2) determining or discharging tax liabilities in bankruptcy courts, and (3) the burgeoning tax shelter litigation. Procedural issues related to the application of collateral estoppel are addressed. The article concludes by offering several suggestions for the more effective use of collateral estoppel.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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