Federal Tax Cases Research Articles

The Challenge of Challenging Tax Laws as Unconstitutionally Vague

ABSTRACT Many laypersons (and CPAs and attorneys, for that matter) argue that federal tax statutes and regulations are complex, ambiguous, and vague. However, successfully challenging tax law as unconstitutionally vague has generally not been a successful strategy for taxpayers. In this article, we discuss the void for vagueness doctrine as it has been developed and applied in other areas of the law and review over 40 federal tax cases litigated over the last 20-plus years, in which taxpayers claim that a provision is unconstitutionally vague. Although taxpayer wins are rare, some tax cases find that a statute can be declared overly vague before clarifying regulations or other administrative guidance are issued. Regardless, vague tax laws run afoul of principles of good tax policy. We also provide suggestions for taxpayers and their advisors, who may argue in the future that a federal tax provision is unconstitutionally vague.

Tax Litigation in the Federal Courts of the United States: The Role of Precedent in a Changing Legal Environment

In this article, the author considers the role of precedent in deciding federal tax cases in the United States.

Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases

Since 2006, the Tax Court, District Courts, and Circuit Courts have collectively issued more than forty decisions relating to the federal charitable income tax deduction for the donation of perpetual conservation easements (fifteen decisions were issued in 2012 alone). This outline discusses the practical implications of recent court decisions for conservation easement donors and donees. The outline was prepared for a workshop of the same name at the Land Trust Alliance's national conference in New Orleans in September 2013. Presenters at the workshop were Nancy A. McLaughlin, Professor of Law, University of Utah S.J. Quinney College of Law; Steve Small, Attorney at Law, Law Office of Stephen J. Small, Esq., P.C.; Karin Gross, Supervisory Attorney, Internal Revenue Service; and Marc Caine, Senior Counsel, Internal Revenue Service, Office of Chief Counsel.

2016 Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases

Since 2005, the courts have collectively issued more than 80 opinions involving challenges to deductions claimed under IRC § 170(h) with regard to conservation and facade easement donations. This outline provides a brief history of developments in the deduction context, discusses the practical implications of the recent court decisions, and offers advice on how to file a tax return package to minimize the risk of audit. It also briefly notes various other important issues, such as the IRS's focus on valuation and syndicated deals, quid pro quo, and reserved development rights.

2015 Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases

2015 Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases

Trying Times 2014: Important Lessons to Be Learned from Recent Federal Tax Cases

Trying Times 2014: Important Lessons to Be Learned from Recent Federal Tax Cases

Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases

Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases

Use of Judicial Doctrines in Federal Tax Cases Decided by Trial Courts, 1993-2006: A Quantitative Assessment

This paper examines the use of judicial doctrines in federal tax trial controversies. Despite a taxpayer's strict compliance with the terms of a statute, a judge may still justify deciding for the government by applying a judicial doctrine. The common wisdom, derived from traditional tax scholarship about these doctrines, is that the doctrines are raised only by the government or the court and can only favor decisions in behalf of the government. A taxpayer may argue that the form of a transaction be set aside in limited circumstances such as fraud, so negating form is a one way street, available only to the government. The literature does not contain any empirical research. The five most common judicial doctrines, which were analyzed, are: business purpose, economic substance, sham transaction, step transaction, and substance over form. The hypothesis of this article is that the common wisdom is incorrect. A database was created for this article and consists of those federal trial decisions rendered by the district court, the Tax Court, and the Court of Federal Claims between 1993 and 2006 in which one or more of the doctrines were raised. Data was culled from on-line sources for these cases and for the accompanying briefs, if they were available. The evidence sustains the hypothesis. Judicial doctrines were raised in a much richer manner than the common wisdom would suggest. Among the results gleaned from the data are: -All three parties raised doctrines, the court more than the government or the taxpayer. The taxpayer raised doctrines half as much as the government, suggesting the taxpayer's active interest in judicial doctrines. The court's predominant role in raising doctrines appears to have occurred because litigants made more focused arguments, depending upon more specific authorities in their briefs, such as cases or legislative history. -All three parties raised doctrines, expecting that they would be applied, but the taxpayer argued much more frequently than the court or government that a doctrine it had raised should not be applied. -Three doctrines could be raised by the taxpayer to its advantage - economic substance, step transaction and substance over form - but the other two could be raised only to benefit the government - business purpose and sham transaction. The litigants, however, did not raise doctrine in a manner resonant with this model. -The areas of tax law in which doctrines were raised were inconsistent with traditional observations about the areas in which they should have been raised. -Despite the absolute nature of the one way rule, it was largely ignored when the taxpayer raised a doctrine. -Doctrines' use in the database could be associated with specific causes. More generally, a party's argument that the doctrine that it had raised be applied in behalf of a specific litigant was predictive of the doctrine being applied in that litigant's behalf. More specifically, and quite robustly, the taxpayer's prevailing in a doctrine's application was associated with use of substance over form and the government's prevailing was associated with the use of the business purpose doctrine. In addition to the paper's presentation of its result, it underscores the gap between traditional legal scholarship and empirical research. As this paper illustrates, more quantitative analysis can and needs to be done, in law and especially in tax.

Some Empirically Based Conclusions About the Use of Judicial Doctrines in Federal Tax Cases

Some Empirically Based Conclusions About the Use of Judicial Doctrines in Federal Tax Cases

Statutory Construction in Federal Appellate Tax Cases: The Effect of Judges' Social Backgrounds and of Other Aspects of Litigation

Statutory Construction examines the effect of judges' social backgrounds on the method of statutory construction used to justify decisions in a database of federal appellate tax cases. It concludes that social backgrounds have a modest effect. Relatively few descriptive statistics were statistically significant, as was also true of predictive statistics. Results regarding aspects of the case, such as the type of taxpayer (e.g., individual, business) or representation by a lawyer, were more robust. These results are consistent with earlier research by the author on the same topic, in a database of federal trial tax cases.

Equity and the Article I Court: Is the Tax Court's Exercise of Equitable Powers Constitutional?

Article I courts are the other federal courts, infrequently studied despite their important role in the judiciary. This article focuses on the United States Tax Court, an Article I court that hears approximately 95 percent of litigated federal tax cases. The article argues that the Tax Court's current tendency to apply equitable doctrines when necessary to avoid harsh outcomes dictated by statute lacks constitutional authority. First, the article examines the role of Article I courts in the federal judicial system and under the Constitution. Next, it considers the historical and modern meanings of equity and equitable powers in the context of the distinction between law and equity. The article then discusses the Tax Court's use of equity, focusing on the doctrines of equitable recoupment, equitable estoppel, and equitable relief from joint and several tax liability for an innocent spouse. Finally, it examines possible sources of equitable power for the Tax Court, including applicable statutes, and the possible equity-like ancestry of Tax Court overpayment claims. The article concludes that Article I courts have limited sources of equitable power, and that for the Tax Court to apply equitable principles as it has been doing, Congress will need to take appropriate action - within constitutional limits - to broaden or redefine the jurisdiction of the court.

Empirical Research on Judicial Reasoning: Statutory Interpretation in Federal Tax Cases

In Empirical Research on Judicial Reasoning: Statutory Interpretation in Federal Tax Cases, Professor Daniel Schneider uses empirical research to examine the interplay between methods of statutory construction used by judges in federal tax decisions and the judges' social backgrounds. While tax scholarship has analyzed how the Internal Revenue Code is interpreted, it has not done so empirically. This article uses statistics, especially logistic regressions, to engage in such an analysis, taking judges' backgrounds into account. Professor Schneider's database consists of decisions from both the Tax Court and the district courts sitting in the Southern District of New York, the Northern District of Illinois, and the Central District of California that were rendered between 1979 and 1998. He has assembled data about both the decisions - the court where the decision was made, the year of the decision, the primary Code section at issue, and the rationale used to justify the decision (e.g., strict construction, reliance on legislative history) - and the social backgrounds of the judges who rendered the decisions - each judge's gender, race (for the district court judges) educational background, political affiliation, prior professional experience, and length of the judge's tenure when he rendered the decision. Some of Professor Schneider's descriptive statistics include his observations about judges that: - those who decided the Tax Court cases had gone to more elite colleges and less elite law schools than judges who decided the district court cases, and - relative to the Tax Court judges, the district court judges had served on the bench less when deciding the case before them and also were more likely to have come from private practice. His observations about the methods of interpretation used are that: - judges strongly favored nonliteral approaches, especially practical reasoning, to strict construction of the Code, - they used practical reasoning in a wide variety of substantive areas of tax law, and - they frequently mixed different approaches to interpretation, pairing strict construction, for example, with nonliteral approaches. Finally, Professor Schneider uses logistic regressions to predict what approaches judges in the sampled cases could be expected to use when justifying their decisions. Statistically significant correlations between factors in judges' social backgrounds and approaches existed for factors such as the judge's education, his professional background before being appointed to the bench, and the length of his tenure when rendering his decision.

The Politics in the Canadian Judicial Decision Making Process: Economic Analysis of Tax Litigation

The application of economic theories, rightly or wrongly, has a major impact on our lives. Economic reform inevitably leads to political reform. However, it remains unanswered whether economic reform leads to reform in the judicial decision making process. Although there are a number of studies on the economic analysis of taxation, that is, the study of economics and tax policies, there is virtually no literature on the economic analysis of tax cases. The time is ripe for a study of the connection between economic analysis and case law in taxation as Canada approaches the twenty-first century. This article investigates whether the federal courts in Canada have taken economic reality into consideration in making their decisions on tax matters. This is the first attempt to address the issue; although somewhat exploratory and speculative, it provides a starting point. This article first discusses tax scholarship in Canada. Then, the relevance of law and economics is discussed with special emphasis on the use of economic tools to analyse common law cases. From these discussions, the theories of economics are linked to tax cases. Finally, the author analyses trend of applying economic analysis in federal tax cases. This article should serve as a starting point for a future analysis of the cases determined by the Supreme Court of Canada.

Dissent Without Opinion: The Behavior of Justice William O. Douglas in Federal Tax Cases

Dissent Without Opinion: The Behavior of Justice William O. Douglas in Federal Tax Cases

Go East, Young Man

Go East, Young Man, The Judicial Record of Justice William O. Douglas and Dissent Without Opinion: The Behavior of Justice William O. Douglas in Federal Tax Cases Get access Douglas William O., Go East, Young Man. New York, Random House, Inc., [ 1974]. xv, 493 pp. $10.00.Countryman Vern, The Judicial Record of Justice William O. Douglas. Cambridge, Massachusetts. Harvard University Press, 1974. viii, 418 pp. $15.00.Wolfman Bernard Silver Jonathan L. F. Silver Marjorie A., Dissent Without Opinion: The Behavior of Justice William O. Douglas in Federal Tax Cases, Philadelphia, University of Pennsylvania Press, 1975. xvii, 204 pp. $9.50. Richard Danzig Richard Danzig Associate Professor of Law Stanford Law School Search for other works by this author on: Oxford Academic Google Scholar American Journal of Legal History, Volume 21, Issue 1, January 1977, Pages 84–86, https://doi.org/10.2307/844927 Published: 01 January 1977

The Behavior of Justice Douglas in Federal Tax Cases

During his first years on the Supreme Court, Justice Douglas wrote many tax opinions usually sustaining the Government's position. Then a change occurred. He began to dissent more frequently, usually in favor of the taxpayer. And he often dissented alone, without opinion, or with only a few words. In the last decade and a half particularly, Justice Douglas' positions in tax cases have been marked by a strong disposition in favor of taxpayers' positions, a lack of sympathy with the administration of the Internal Revenue Service, and an increasing failure to explain his votes in well-reasoned opinions. Assisted by the statistical tables we have compiled, we will attempt to pinpoint where and how Justice Douglas changed course in tax cases.

Federal Procedure: Judgments: Res Judicata Effect of Consent Judgments in Federal Tax Cases

Federal Procedure: Judgments: Res Judicata Effect of Consent Judgments in Federal Tax Cases

Mitigation of the Statute of Limitations in Federal Tax Cases

Mitigation of the Statute of Limitations in Federal Tax Cases

Mitigation of the Statute of Limitations in Federal Tax Cases

Mitigation of the Statute of Limitations in Federal Tax Cases

Res Judicata in Federal Tax Cases

Res Judicata in Federal Tax Cases