08/02/2004
CONTACT: Michelle Dimarob, (202) 554-9000
The NFIB Legal Foundation took its fight for taxpayer fairness to the U.S. Supreme Court today and 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 a taxpayers' rights to due process under the Fifth Amendment of the U.S. Constitution.
"In the face of an increasingly complex tax code, America's small-business owners are spending more and more of their time and money to address tax-related issues," said NFIB Legal Foundation Executive Director Karen Harned. "As the highest court in the land prepares to hear this case, we're optimistic they'll take meaningful action to address how the Tax Court puts up unfair roadblocks for a small business fighting a potentially erroneous tax bill."
The issues under review are of considerable importance to all taxpayers, including small-business owners. Specifically, the Supreme Court is preparing to hear the case of Ballard v. Commissioner of Internal Revenue. 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. Accordingly, most small businesses elect to litigate their tax disputes in Tax Court. 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.
"This case comes down to two simple principles – fairness and transparency – the true hallmarks of the judicial process," Harned said. "Requiring full-disclosure and transparency for all records is essential to ensuring that small-business owners have the ability to properly challenge decisions by the Tax Court. NFIB's 600,000 members – indeed, all small businesses -- are hopeful the Supreme Court will end this secretive practice so Main Street can enjoy the same rights in court as others who have cases in the judicial system."
The NFIB Legal Foundation is a 501(c)(3) public interest law firm created to protect the rights of America's small-business owners by providing advisory material on legal issues and by ensuring that the voice of small business is heard in the nation's courts. The National Federation of Independent Business (NFIB) represents the consensus views of its 600,000 members in Washington and all 50 state capitals.
