To successfully litigate a case before the U.S. Tax Court, mastery of the applicable substantive tax rules is crucial. However, the importance of the Tax Court’s unique Rules of Practice and Procedure (Rules) should not be overlooked. As one commentator wisely stated, “[t]he procedural aspects of the tax law are of overriding importance in many controversies, eclipsing or making moot substantive issues….”
In general, the Tax Court Rules are modeled after the Federal Rules of Civil Procedure. However, Tax Court Rules are unique in several critical respects, including with respect to pretrial discovery practice. In the Tax Court, the parties are required to exchange relevant evidence through the court’s informal discovery and stipulation process before engaging in formal discovery. Moreover, formal discovery in the Tax Court is more limited than the broad discovery available in the Court of Federal Claims and the federal district courts (refund forums). Other unique features of the Tax Court Rules include the requirement of post-trial briefs, the court’s distinct Court Conference Procedure, and the Golsen rule.
As a prepayment forum, many of these Rules were implemented by the Tax Court to accelerate the inexpensive resolution of cases, promote efficiency, and reduce judicial workload. The purpose of this article is to identify and explain some of the unique characteristics of the Tax Court’s Rules. Thus, a comprehensive discussion of the Rules is beyond the scope of this article.
1. INFORMAL PRETRIAL DISCOVERY IS REQUIRED
“The rules on discovery perhaps most clearly illustrate the uniqueness of the Tax Court Rules.”
A unique aspect of Tax Court practice, and the aspect that is perhaps most distinguished from the refund forums, is the requirement that parties engage in informal discovery prior to resorting to the court’s compulsory discovery procedure. Rule 70(a)(1) makes clear that the parties must “attempt to attain the objectives of discovery through informal consultation or communication before utilizing the discovery procedures provided in these Rules.” In contrast, in the federal district courts, informal discovery is not mandated. Rather, there is a for mal process, with discovery phases clearly defined under the rules and overseen and enforced by the presiding judge.
The Practical Tax Lawyer
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Tax Lawyer.