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Monday, June 28, 2010

Cummings: Making Tax Litigation Complex

Tax AnalystsJasper L. Cummings, Jr. (Alston & Bird, Raleigh, NC), has published Making Litigation Complex, 127 Tax Notes 1483 (June 28, 2010). Here is the abstract: 
A primary cause of the length and complexity of recent tax litigation is the government’s assertion of the economic substance doctrine. Although the government’s intent seems to be to frighten people away, once the doctrine is unleashed, the government can’t control what it will do, including possibly upsetting previously settled law.

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Comments

This is a silly and seriously flawed article. It seems essentially to be an analysis of the docket sheets from the district court. More importantly, the author has little or no familiarity with public law practice. For example, Cummings' comments that "No doubt DOJ coordinated to some extent with Chief Counsel (but Chief Counsel cannot tell DOJ what to do)." According to Cummings, this may explain why a 30-day extension was needed for the U.S. to answer the complaint.
Really Mr. Cummings? Do you seriously think the DOJ trial lawyers consulted with the Chief Counsel lawyers in a $62.1mm case? Yes, I'd be willing to bet that the Tax Division trial team "coordinated to some extent with Chief Counsel." In fact, what passed between Chief Counsel and DOJ was an extensive "defense letter" that explained the known facts of the case and the Chief Counsel's suggested legal position. The Tax Division trial team could depart from that advice, but only with the considered concurrence of their supervisors and after direct consultation with the Chief Counsel lawyers who wrote the defense letter.
Why was a 30-day extension necessary in this case? Probably because it took the Chief Counsel's people 30-75 days to gather the administrative files from various components of the Service and Office of Chief Counsel, write the defense letter, send it to Justice, and conduct preliminary discussions on how to approach the case. It was hardly a plot to increase the complexity of the case.
I also find it somewhat ironic that a lawyer from a white-shoe firm like Alston & Bird is critical of DOJ's painstaking, comprensive, and successful litigation of a large tax shelter case. These DOJ attorneys are superb trial lawyers, public servants all, who labor in the shadow of their more well-known compatriots in the U.S. Attorney's offices (who, BTW, had no substantive role in this litigation). They were probably paid a fraction of what their overstaffed, overlawyered opposing counsel were paid. My guess is that the total annual salaries for the DOJ trial team was less than Mr. Cumming's annual draw.

Posted by: Publius Novus | Jun 29, 2010 10:49:18 AM

Mr. Cummings was Associate Chief Counsel (Corporate) of the Internal Revenue Service. I think that means he has more than "little or no familiarity with public law practice."

Posted by: dsmith | Jun 29, 2010 3:27:21 PM

The point is not whether Mr. Cummings has any familiarity with public law practice in the area of taxation. Many lawyers may claim that pedigree. Rather, anyone may consult the public record in the Fidelity case and recognize that Mr. Cummings distorts that record due to his failure to read it faithfully. In particular, Mr. Cummings has no business making observations about the DOJ Tax Division's conduct in relation to the Fidelity litigation that amount to thinly veiled ad hominem assaults on the integrity and motives of dedicated public servants.

Given his "familiarity with public law practice," Mr. Cummings surely knows that a Tax Division attorney is legally and ethically constrained from publishing a response to commentary by the private tax bar in the media or law journals. To so nakedly take advantage of that fact, for the mere sake of advancing a singularly uninformed, and therefore speculative, critique of a Tax Division lawyer's conduct of important tax litigation on behalf of all American citizens, is an unbelievably cheap and demeaning tactic on the part of Mr. Cummings.

I say all this, in part, based on the experience and privilege of having worked for a number of years with the Tax Division attorney who first-chaired the Fidelity trial. Mr. Cummings should exercise more caution in choosing his words and targets.

Posted by: Richard G. Jacobus | Jun 30, 2010 10:01:06 PM