practice before the u.s. tax court - saceasacea.org/education/practice_before_us_tax_court_3...5...

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Practice before theU.S. Tax Court

Presented to Southern AZ Chapterof Enrolled Agents

in Tucson, AZJune 18, 2013 monthly meeting

Overview of Presentation

• Admission to practice• Why take the exam?• Costs to take the exam• What the US Tax Court is• What the exam consists of• How to study? What to study?• Test taking skills• Waiting for the exam results• Then what?Presented by Tom Rex, CPA, USTCP 2

Admission to practice

• In order to practice before the U.S. Tax Court, you need toapply for admission, either as an:

• Attorney• Non-attorney.

• As a non-attorney, you need to take and pass all 4 parts of theTax Court exam!

• Once you are admitted, then you are considered counsel, justlike an attorney.

Presented by Tom Rex, CPA, USTCP 3

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Why should you take the exam?What are the benefits?


Reasons to take the Tax Court exam

• PERSONAL:• Challenge!• Ego

• Increased confidence level

• Etc.

• PROFESSIONAL:• It’s a win-win situation, whether you pass or not• You will get a broad review of taxes

• You may fair better in IRS Appeals as a USTCP

• You will think differently about taxes, how you advise, prepare returns, deal with IRS


Representation

before IRS

• Tax prep is not representation

• EA’s – tens of thousands

• CPA’s – hundreds ofthousands

• Attorneys

before Tax Court

• Attorneys• USTCP’s – hundreds!


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Application to take exam

• U.S. Tax Court press release around May• Next exam will be in November 2014


Costs to take the examTime and money


Time and money

• Time• At least a one year commitment, to study almost every day!

• Costs to take the exam (depends)• Course materials• Other materials

• Join ABA for discounts

• Travel• Hotels

• In DC, stay close to US Tax Court

• Meals


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My Travel

• Las Vegas in May 2012

• Phoenix Calendar Call in June 2012• You should go to as many as possible

• Las Vegas in July 2012

• Wash. DC in Nov. 2012


What the US Tax Court isKnow what you’re getting into!


Why go to Tax Court

• Don’t have to pay while case is pending in Tax Court

• Essentially, buying time, but interest still accrues

• Other reasons

• Can be represented by an attorney or a USTCP.Both are considered counsel.


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Other Courts for tax cases

• Have to be an attorney to practice before:• US District Courts

• Can be a jury trial

• US Court of Federal Claims

• Bankruptcy courts

• Why choose these courts?• Variety of reasons, but have to pay up front for District

Courts and Court of Federal Claims


Tax Court Jurisdiction

• Notice of Deficiency

• Notice of Determination Concerning CollectionAction

• Notice of Determination Concerning Your Requestfor Relief From Joint and Several Liability

• Notice of Determination of Worker Classification

• Other


Tax Court players:Judge (no jury)

• Petitioner• Counsel (if not pro se)• Witnesses

• Lay

• Expert

• Audience (not a participant)

• Respondent• Counsel• Witnesses

• Lay

• Expert


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Self-representation by taxpayer

• Before IRS

• Before Tax Court• Pro Se - Latin for "for himself".


TP’s Journey to Tax Court – SNOD(condensed)

• File a tax return• Substitute for return (SFR)

• Accepted as filed, or

• IRS Notices,• Math and clerical errors, or CP2000

• Audit• Audit reconsideration

• Appeals within IRS

• SNOD – ticket to Tax Court• Sent to last known address

• Tax Court


TP’s Journey through Tax Court(condensed)

• Per the Tax Court process for Pro Se

• File a Petition to begin their case.

• Things that occur:• Before the trial

• During the trial

• After the trial


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Starting a case

• Files a Petition to begin their case (must be timely filed)• Decides to be represented or Pro Se

• Might qualify for tax clinic help

• Chooses:• Regular or small tax case• Place for trial

• Commissioner files their Answer• Reply to the Answer

• Motions


Before the Trial begins

• Pre trial• Branerton Conference

• Formal discovery

• Settle before trial

• Prepare for trial


During the Trial

• Present evidence to make your case, and tax law to back itup, following Tax Court procedures, in accordance withlegal ethics.

• Evidence:• Witnesses, examined and cross examined under oath• Documents must be authenticated to be entered into evidence

• KRAP rule

• Petitioner usually has the Burden of Proof


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After the Trial

• File Briefs• Opinion is issued by Tax Court, if bench opinion was not issued

during trial session• Post trial motions for regular cases:

• Reconsideration of an opinion or findings of fact• Vacate or revise a decision

• Request for fees and costs if taxpayer wins• Appeals for regular cases:

• US Courts of Appeals

• Settle up with IRS


Journey to Tax Court - Other

• These all have their own Tax Court Rules:• CDP hearings

• Innocent spouse

• Employee vs. independent contractor

• Whistle blower awards

• Other


What the exam consists ofFour parts


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4 Parts of Exam

• Need to pass all 4 parts!• Tax Court Practice and Procedures (60 minutes)

• U.S. Taxes - substantive law (96 minutes)

• Federal Rules of Evidence (60 minutes)

• Legal Ethics (24 minutes)


Tax Court Procedures

• Tax Court Rules of Practice and Procedure

• Based on Civil Rules (not tested)


U.S. Taxes

• Income, Gift and Estate taxes• Similar to what you studied for the EA Exam:

• Individuals

• Businesses

• Representation, Practices and Procedures

• Some Excise taxes


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Evidence

• FRE – Federal Rules of Evidence• Hearsay is the Biggie!

• In general, it’s 3 years of Law School Evidencecompressed into 1 year of study for a 1 hour TaxCourt exam!


Legal Ethics

• ABA - Model Rules of Professional Conduct• 4 C’s –

• Competency• Confidentiality and client privilege

• Conflict of interest• Communication

• Similar to but not the same as:• Circular 230

• There are proposed regulations with some big changes

• AICPA’s Statements on Standards for Tax Services (SSTSs)• NAEA Code of Ethics and Rules of Professional Conduct


US Tax Court Cases

• Tax Court tests on its own cases!• TC Opinions

• Memorandums

• Summary opinions for small tax cases

• No precedent and can’t cite

• Can’t be appealed by either party


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Criminal Law

• Ignore this for the most part for Tax Court exam:• Parts of legal ethics

• Parts of Federal Rules of Evidence (FRE)

• Criminal Procedures

• Substantive non-tax Law


How to study? What to study?


How to Study

• On your own

• Classroom

• Study groups• E.g., law school students argue cases with their roommates

• Don’t let what other say discourage you!

• You need supporters, not detractors!Presented by Tom Rex, CPA, USTCP 33

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Tax Court Exam Prep Websites

• Gregory and Associates• Sherrill Trovato

• Article in EA Journal

• Google for others, e.g.• The Tax Law Institute (TLI)


Gregory and Associates

• Monthly study hints and guides• Yahoo Group

• Past exams and suggested answers• By year and by topics

• Classes meet in May and July in Las Vegas, and in November in DC• Evidence is taught by an attorney, and also by Sherrill

• Texts for all 4 parts• Classroom handouts• Pop quizzes in classes


What to study

• Important to stay focused and study what you’retested on!

• Study where you’re weak, but not only where you’reweak.


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Study materials (use different media)

• Books:• Mostly soft bound• Electronic versions, e.g., Kindle

• Study Cards:• Evidence

• CD’s:• Evidence

• Videos:• U.S. Tax Court• ABA Section of Taxation

• My Cousin Vinny (recommended by attorney who taught us Evidence)


Websites

• USTC

• IRS

• Cornell Law

• FRE – Federal Rules of Evidence

• ABA - Model Rules of Professional Conduct


PPC's Five-Minute Tax Briefings

• Comes out daily in emails

• Scan for Tax Court cases and appeals of Tax Courtcases


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Most Litigated Issues(NTA) Annual Report to Congress

• Summons Enforcement Under IRC §§ 7602, 7604, and 7609

• Accuracy-Related Penalty Under IRC §§ 6662(B)(1) and (2)

• Appeals From Collection Due Process Hearings Under IRC §§6320 and 6330

• Trade or Business Expenses Under IRC § 162 and RelatedSections

• Gross Income Under IRC § 61 and Related Sections


Most Litigated Issues (continued)(NTA) Annual Report to Congress

• Failure to File Penalty Under IRC § 6651(a)(1),Failure to Pay an Amount Shown As Tax on Return Under IRC § 6651(a)(2), and

Failure to Pay Estimated Tax Penalty Under IRC § 6654

• Civil Actions to Enforce Federal Tax Liens or to Subject Property to Payment of TaxUnder IRC § 7403

• Frivolous Issues Penalty Under IRC § 76673 and Related Appellate-Level Sanctions

• Relief From Joint and Several Liability Under IRC § 6015

• Limitations On Assessment Under IRC § 65


Test taking skills


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Thinking like a lawyer

• IRAC• Issues (F&C)• Rules and factors (Law)

• Application of rules to issues

• Conclusion

• Settled law or not• Appeals in taxpayer’s circuit• US Supreme Court for split circuits

• Example:• 6 year statute of limitations for overstatement of basis


Reading tax law like a judge!

• IRC• Tax Treaties• Regulations

• Mayo Foundation Supreme Court case (Deference)

• Congressional intent• Court cases

• Appeals in taxpayer’s Circuit


Writing the US Tax Court Exam

• You are a number (not a name) on the exam

• You get exam blue books and scratch paper

• Time yourself

• Pace yourself

• Answer every question as best you can

• Usually don’t go back and change answers


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Waiting for the exam resultsBe patient!


Tax Court Exam results letters -sometime in April

• Passed• Send in Practitioner's Oath

• Need 2 Tax Court Bar Sponsors

• Not• Request graded exam


Letter and Certificate - sometime inMay

• Can now use USTCP designation on business cards, etc.

• Assigned a Tax Court Bar No. to use on all Tax Courtfilings as Counsel

• Register for eAccess:• eService

• eFiling


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Then what?Should align with why you took the exam in the first

place, but things change!
