Do United States Tax Court judge attributes influence the resolution of corporate tax disputes?

Abstract

Corporate taxpayers can have economically meaningful disputes with the United States Internal Revenue Service (IRS) that ultimately involve the federal judiciary. In an attempt to reduce the number of corporate tax disputes going to trial and reduce the amount of time between when corporate taxpayers file a petition with the United States Tax Court (USTC) and resolution of the case, politicians and judges have placed greater emphasis on negotiated settlements as opposed to Tax Court trials. In this paper, we investigate whether the personal attributes of the Tax Court judge assigned to the case (political ideology, tenure on the bench and professional experience) influence corporate taxpayers and the IRS to reach a negotiated settlement or proceed to trial. Overall, our results show that Tax Court judges who are conservative, have private practice experience, have governmental legislative experience, and have longer tenure on the Tax Court bench are more likely to preside over disputes resolved through a negotiated settlement as opposed to going to a trial.