Ballard v. IRS -- NFIB Fights Against Secretive Tax Court Procedure

Author: R Stell Date: September 27, 2006

The NFIB Legal Foundation took its fight for taxpayer fairness to the U.S. Supreme Court when it filed an amicus brief urging the court to decide whether the U.S. Tax Court's refusal to disclose special trial judge reports to litigants violates taxpayers' rights to due process under the Fifth Amendment of the U.S. Constitution. The issues under review are of considerable importance to all taxpayers, including small-business owners. Similar to many other tax cases, the underlying case started in the U.S. Tax Court, where a chief judge appoints a special trial judge to conduct the trial. At the conclusion of the trial, the STJ submits a report to the chief judge, who can then accept, reject or modify the report. However, due to a change of direction by the Tax Court in 1983, the STJ reports are no longer disclosed to the parties, nor are the reports included in the court record. Currently, the Tax Court is the only forum in which a small-business owner or an individual (nearly 85 percent of small businesses file taxes as an individual) can contest an income tax without first paying the deficiency in full. The inability to review the STJ report severely hampers a taxpayer’s ability to effectively advocate an appeal from the trial court’s decision, because they have no way of knowing why the trial court made the decision it did without seeing the STJ report.

Status: DECIDED. Amicus brief filed in support of Ballard Aug. 2, 2004. Oral argument held Dec. 7, 2004. On March 7, 2005, the Supreme Court held the Tax Court's practice violated the court’s rules.

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