TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, February 24, 2014

TRAC-IRS: The Decline of the District Court as a Tax Litigation Forum

The Transactional Records Access Clearinghouse at Syracuse University has released a report, Tax Lawsuits Edge Downward:

TRAC 2The latest available data from the federal courts show that during January 2014 the government reported 68 new civil filings under the category of "Taxes." According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this number represents a decline of nearly 10 percent from one year ago. Tax lawsuits have declined a total of 32.4 percent from the levels reported five years ago in January 2009. The January 2014 figure is however up 9.7 percent over the previous month, when the number of civil filings of this type totaled 62.

The comparisons of the number of civil filings for tax lawsuits are based on case-by-case court records which were compiled and analyzed by TRAC (see Table 1). Note that the cases covered by this report exclude suits dealing with summonses on third-party witnesses under 26 USC 7609.


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Simple explanation and no big surprise. Interest rates. Why pay to litigate in a refund forum when you can hold your money and litigate a deficiency assessment in the Tax Court? When interest rates increase above an unknown (but easily calculated) tipping point, it will be more economical to litigate in the refund forums (district courts and Fed. Ct. Clms.)

Posted by: Publius Novus | Feb 25, 2014 7:08:36 AM

I thought that, traditionally, taxpayers went to District Court when they hoped for a more "equitable," as opposed to a technically correct decision, and went to the Tax Court for a technically correct decision. Has this calculation changed? Have Tax Court judges become more interested in being "equitable" to taxpayers and less concerned about the letter of the law?

Posted by: Elmer Stoup | Feb 25, 2014 10:35:12 AM