The Tax Court has dug out of its pandemic-induced mail backlog but expects to see some litigation related to collateral consequences of the delay in opening its mail, according to one judge.
Taxpayers may feel the effect of the Tax Court’s 10,000-piece mail backlog in their interactions with not only the court, but also the IRS, Judge Mark V. Holmes told the audience of a September 29 digital forum hosted by the National Association of Enrolled Agents. Because the IRS didn’t receive notice of the petitions filed while the court was closed, the agency’s assessment and collection processes, especially the automated ones, likely continued, he said.
Any tax assessment or collection notices that should have been prevented by the filing of a Tax Court petition — one the IRS wasn’t notified about — will probably lead to litigation in that court, according to Holmes. Some taxpayers “will end up with assessed taxes that they had thought, quite legitimately, that they had challenged,” he said.
Further, the IRS’s own mail backlog could deprive taxpayers of requested collection review hearings, Holmes said. “I don’t know how this is going to play out. I don’t know how big the volume of these cases is going to be. I don’t know what the response of the general public will be to this somewhat hidden complexity,” he added.
The IRS’s mail backlog appears to have caused another anomaly in which the Tax Court received only six total petitions during the whole month of August, according to Holmes.
During that same month, the Tax Court managed to finish reviewing the mail backlog it had accumulated while it wasn’t accepting deliveries for four months during the COVID-19 pandemic.
The Tax Court had employees pulling 12-hour shifts opening mail to sort through the petitions and other mail sent from March — when the court closed — until July 10, when it resumed accepting mail, according to Holmes. The court also confirmed that some mail had been returned to the senders as undeliverable, which could make the holding in Guralnik v. Commissioner, 146 T.C. 230 (2016), important for those taxpayers, he said.
In Guralnik, the Tax Court held that the final day of a petition filing deadline can’t fall on a day when the court clerk’s office is inaccessible. The court’s announcement of its closure stated that Guralnik would apply while it’s closed.
Trying Times
Regarding the Tax Court’s new remote trial sessions, Holmes emphasized the court’s new rule requiring subpoena responses before the calendar call opening a session. He noted that Chief Special Trial Judge Lewis R. Carluzzo conducts special sessions every Wednesday for subpoenaed parties to provide the required documents or to present the court with issues arising from those subpoenas.
Holmes said he thinks the Tax Court’s remote trial procedures, which he expects to be mandatory for all cases until at least mid-April of 2021, will be effective for the bulk of simple cases in which the petitioners want to tell their stories to the judges and have relatively few documents to present. Those procedures may be useful to petitioners in cities the Tax Court will visit infrequently after the pandemic ends, he added.
However, multi-week, document-heavy trials will probably have to be postponed until the court resumes in-person trials. Holmes said that some Tax Court judges worry about the difficulty of assessing witness credibility remotely. And witnesses could have things like notecards or computer messaging programs that the judge might not see through the computer screen, he added.