The Un-Precedented Tax Court

• Author: Amandeep S. Grewal
• Position: Joseph F. Rosenfield Scholar & Professor of Law, University of Iowa
• Pages: 2065-2104

2065

The Un-Precedented Tax Court

Amandeep S. Grewal*

I. INTRODUCTION ........................................................................... 2065

II. THE NATURE OF THE NONPRECEDENTIAL PROBLEM .................. 2069

A. THE THEORETICAL DEBATE ................................................... 2069

B. THE PROBLEM IN PRACTICE: MEMO OPINIONS ....................... 2073

C. A POTENTIAL PROBLEM: BENCH OPINIONS ............................. 2079

III. THE PROBLEM COMPOUNDED .................................................... 2082

A. THE SEPARATION OF POWERS ISSUE ........................................ 2082

B. THE PROBLEM IN PRACTICE: S OPINIONS ................................ 2087

IV. THE PROBLEM FURTHER COMPOUNDED: THE TAX COURT’S

JUDICIAL(?) POWER .................................................................... 2091

V. A PROPOSED SOLUTION .............................................................. 2095

A. MEMO OPINIONS ................................................................... 2096

B. S OPINIONS ........................................................................... 2101

VI. CONCLUSION .............................................................................. 2103

I. INTRODUCTION

Around the turn of this century, a “highly-charged” debate erupted over

unpublished federal appellate court opinions.1 Some, including most notably

Judge Alex Kozinski of the Ninth Circuit, strongly argued that the common

prohibition against citation to those opinions posed no constitutional

problems, and that the prohibition allowed appellate judges to efficiently

discharge their duties.2 Yet others, including Judge Richard Arnold of the

*Professor of Law, the University of Iowa College of Law. The participants at th e 2015

Tax Court Judicial Conference provided helpful comments on this Essay, for which I am grateful.

1. Scott E. Gant, Missing the Forest for a Tree: Unpublished Opinions and New Federal Rule of

Appellate Procedure 32.1, 47 B.C. L. Rᴇᴠ. 705, 706 (2006).

2. Hart v. Massanari, 266 F.3d 1155, 1180 (9th Cir. 2001). For a survey of various courts’

citation rules regarding unpublished opinions, see Melissa M. Serfass & Jessie L. Cranford, Federal

and State Court Rules Governing Publication and Citation of Opinions, 3 J. APP. PRAC. & PROCESS 251,

2066 IOWA LAW REVIEW [Vol. 101:2065

Eighth Circuit, passionately disagreed, arguing that the no-citation rule

eliminated a significant check on the judicial power and consequently

violated the Constitution.3

In 2006, the Judicial Conference of the United States addressed one

aspect of this controversy. Under new Federal Rule of Appellate Procedure

32.1, any party may cite unpublished opinions.4 However, the new rule does

not address other fundamental questions related to unpublished opinions,

including their appropriate precedential status and their constitutionality.5

Consequently, an active scholarly debate over these issues continues.6

This debate might have been expected to reach, but has not yet touched

upon, issues related to the purportedly nonprecedential nature of most Tax

Court opinions. Although the Tax Court sometimes issues precedential

“Division” opinions,7 most of its opinions come in one nonprecedential form

or another.8 Under court practices, the Chief Judge classifies some opinions

as Memorandum or “Memo” opinions, and these opinions, in theory, involve

only heavily factual determinations or applications of settled law.9 Although

253–85 tbl. 1 (2001).

3. Anastasoff v. United States, 223 F.3d 898, 904 (8th Cir. 2000).

4. See FED. R. APP. P. 32.1 (“A court may not prohibit or restrict the citation of federal

judicial opinions, orders, judgments, or other written dispositions that have been . . . designated

as ‘unpublished,’ ‘not for publication,’ ‘non-precedential,’ ‘not precedent,’ . . . and . . . issued on

or after January 1, 2007.”). For a discussion of how the rule changes for unpublished appellate

opinions affects Tax Court practice, see Peter A. Lowy et al., Citing Unpublished Opinions in Tax

Court Proceedings, 114 TAX NOTES 171 (2007).

5. See FED. R. APP. P. 32.1 committee’s note (“Rule 32.1 is extremely limited. It does not

require any court to issue an unpublished opinion or forbid any court from doing so. It does not

dictate the circumstances under which a court may choose to designate an opinion as

‘unpublished’ or specify the procedure that a court must follow in making that determination. It

says nothing about what effect a court must give to one of its unpublished opinions or to the

unpublished opinions of another court. Rule 32.1 addresses only the citation of federal judicial

dispositions that have been designated as ‘unpublished’ or ‘non-precedential’—whether or not

those dispositions have been published in some way or are precedential in some sense.”).

6. See CHARLES ALAN WRIGH T ET AL., FEDERAL PRACTICE AND PROCEDURE § 3978.10 (4th

ed. 1998) (discussing controversy and collecting citations to scholarly works).

7. On occasion, after reviewing a draft opinion, the Chief Judge will call for full-court

review. See I.R.C. § 7460(b) (2012). The opinions ultimately issued via this procedure are usually

referred to as reviewed opinions.

8. According to a search of its website, the Tax Court issued over 500 total opinions in 2014,

only 45 of which received the T.C. designation. The remainder were Memorandum or Summary

opinions. See Opinions Search, U.S. TAX COURT, http://www.ustaxcourt.gov/USTCInOP/

OpinionSearch.aspx (last visited May 18, 2016) (providing an opinion search field).

9. As described by former Tax Court Chief Judge Mary Ann Cohen, Memo opinions are

issued in “cases involving application of familiar legal principles to routine factual situations,

nonrecurring or enormously complicated factual situations, obsolete statutes or regulations,

straightforward factual determinations, or arguments patently lacking in merit.” Mary Ann

Cohen, How to Read Tax Court Opinions, 1 HOUS. BUS. & TAX L.J. 1, 7 (2001).

2016] THE UN-PRECEDENTED TAX COURT 2067

parties may cite them,10 Memo opinions purportedly lack precedential

value.11

Congress has also denied precedential status to some Tax Court

opinions. Under Section 7463(b),12 so-called Summary or “S” opinions can

neither be appealed nor cited as precedent. These opinions relate to cases

decided under an essentially elective, streamlined set of procedures and

involve relatively small amounts of tax liabilities.13

The justifications for Memo and S opinions seem straightforward. Like

other federal courts, the Tax Court faces a heavy workload, and Memo

opinions might allow Tax Court judges to decide clear-cut cases without

worrying about the dangers of establishing precedent. S opinions also go

hand-in-hand with streamlined case procedures, without which taxpayers

could judicially contest their tax liabilities only by following generally

cumbersome procedural rules.14

The nonprecedential status of these Tax Court opinions gives rise to

practical problems, however.15 A judicial exposition of a case is difficult to

ignore, and taxpayers frequently invoke Memo or S opinions as authority in

connection with their tax disputes, whether in front of the IRS, the Tax Court,

or other federal courts.16 And the Tax Court seemingly cannot ignore its own

opinions.17 Although plenty of cases dismiss Memo opinions as

10. See Press Release, U.S. Tax Court (June 26, 2012), https://www.ustaxcourt.gov/press/

062612.pdf (providing citation forms for Memo opinions and noting that such opinions

“generally address cases which do not involve novel legal issues and in which the law is settled or

the result is factually driven”).

11. See, e.g., Dunaway v. Comm’r, 124 T.C. 80, 87 (2005) (dismissing IRS’s reliance on

several Memo opinions, given their limited analysis and because “memorandum opinions of this

Court are not regarded as binding precedent”) (citing Nico v. Comm’r, 67 T.C. 647, 654

(1977)), rev’ d in part on other grounds, 565 F.2d 1234 (2d Cir. 1977).

12. Unless noted otherwise, Section references are to the Internal Revenue Code of 1986

(I.R.C.), codified at 26 U.S.C.

13. See I.R.C. § 7463(a) (2012) (prescribing dollar limits for cases eligible for Section 7463

procedures).

14. See S. REP. NO. 91-552 (1969), reprinted in 1969-3 C.B. 423, 614 (explaining how stare

decisis and judicial review procedures mandate a degree of formality in Tax Court proceedings,

and these procedures may be burdensome to taxpayers litigating relatively small amount s).

15. See Erik M. Jensen, American Indian Law Meets the Internal Revenue Code: Warbus v.

Commissioner, 74 N.D. L. REV. 691, 692 n.9 (1998) (“There is a neverending dispute within the

Tax Court about the precedential effect of the court’s not-officially-published ‘memorandum

opinions . . . .’”).

16. See infra Part II. Generally speaking, the value of a judicial precedent falls along a

spectrum, with some authorities being accorded only persuasive value and others being viewed

as binding, unless a justification for abandoning the principles of stare decisis applies. Practices

regarding Memo opinions cover the spectrum.

17. Andrew R. Roberson & Randolph K. Herndon, Jr., The Precedent ial and Persuasive Value of

Unpublished Dispositions, 66 TAX EXEC. 83, 87 (2014) (“[I]t is rare to find a non-T.C. opinion that

has rejected the reasoning of a prior memorandum opinion.”). Memo opinions also routinely cite

prior Memo opinions for their precedential val ue. See, e.g., Tilden v. Comm’r, 110 T.C.M. (CCH)

314, 316–17 (2015) (relying on Boultbee v. Comm’r, 101 T.C.M. (CCH) 1031 (2011), which