TaxProf Blog

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

Tuesday, January 16, 2007

Tax Court Amends its Rules to Require IRS to File Answer in Small Tax Cases

Tax_court_36 The Tax Court has amended Rule 173 to require the IRS to file an answer in all small tax cases. The amendment is effective for small tax cases in which the petitions are filed after March 13, 2007. [Section 7463 defines a small tax case as a case in which the amount of deficiency does not exceed $50,000.]  Here is part of the Tax Court's explanation of the rule change:

Small tax cases now make up about half of the Court’s docket. Taxpayers in small tax cases are increasingly represented by low-income-taxpayer clinics, which in recent years have profilerated, partly because of funding provided by legislation. The parties as well as the Court would benefit from improved pretrial communication between the parties in small tax cases.

Because current Rules generally do not require the Commissioner to file answers in small tax cases, taxpayers and low-income-taxpayer clinics have sometimes had difficulty in identifying and contacting, until shortly before trial, the IRS attorney responsible for a case. Requiring the Commissioner to file answers in all small tax cases will provide taxpayers or their counsel the name, address, and telephone number of the IRS attorney responsible for the case well before trial. This information should facilitate essential pretrial communication between the parties, encourage earlier consideration of small tax cases by the appropriate IRS attorney, and reduce instances in which the parties and the Court are surprised by 11th-hour procedural and jurisdictional motions.

In addition, small tax cases move through the administrative system relatively quickly and may present novel issues resulting from changes in the tax law. The filing of answers may promote earlier identification of such issues and assist the Court in making informed and timely decisions as to whether it might be appropriate to discontinue small tax case proceedings in particular instances, pursuant to Code section 7463(d). It is not anticipated that the amendment will result in any significant delay in the calendaring of small tax cases for trial.

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