Wednesday, February 19, 2014
Leandra Lederman (Indiana-Bloomington) presents (Un)Appealing Deference to the Tax Court, 63 Duke L.J. ___ (2014), at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:
The U.S. Tax Court hears the vast majority of litigated federal tax cases. It occupies an unusual place in the federal government in that it is a federal court located outside the judicial branch but whose decisions are appealable to the U.S. Courts of Appeals. This unusual situation coupled with its history as an independent agency in the executive branch can give rise to important questions, such as the standard of review that should apply to its decisions. In particular, should the Courts of Appeals treat Tax Court decisions the same as those of district courts in tax cases, or should they apply a more deferential standard analogous to review of an agency decision, as the Supreme Court held in 1943 in Dobson v. Commissioner?
Answering the standard of review question implicates issues of both law and policy. The article argues, contrary to some scholarship, that, as a doctrinal matter, no vestige of the Dobson rule remains and that Courts of Appeals must apply the same standard of judicial review they apply to district courts in non-jury cases. The article further argues that appellate review theory supports that result, as well. As the article explains, the Dobson rule was a largely instrumental one designed by Justice Jackson to reduce the volume of tax litigation. Although tax litigation has the unique characteristics of decentralization and the expertise of the Tax Court, the article demonstrates that those differences do not support departing from the policies supporting appellate review. Appellate courts therefore should not defer to the interpretations of the Tax Court any more than they do to those of the district courts.