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At the U.S. Tax Court, a final written opinion may appear innocently straightforward—just a statement of facts, an explanation of the law, and a conclusion. But behind the completed document is a complex process that includes legal research, evidence, procedural rules, briefs, judicial analysis, and careful writing.

The U.S. Tax Court is a federal court with jurisdiction over tax disputes from taxpayers against the Internal Revenue Service (IRS) in every state of the United States. Its opinions can be used to settle individual disputes and, depending on the kind of opinion issued, serve as law that practitioners can use in future disputes.

Taxpayers, attorneys, CPAs, and others may be better informed about the research and development of these opinions, and thus better understand what will follow after a tax case is brought before the Court.

A Tax Court opinion is a written decision by a judge on the issues that were heard and presented for a decision. The Court makes a distinction between the different types of decisions, and that distinction is important because the precedential value is not equal for each type of decision.

In general, regular cases might lead to:

• Tax Court Opinions: When an important legal issue or principle is involved in a case.
• Memorandum Opinions: Usually prepared when the law is fairly well established or the case is a fact-finding type.
• Summary Opinions: Are issued in a few small area cases; are not normally binding precedent.
• Bench Opinions: Oral statements by the judge in trial and are not binding precedent.

The Chief Judge decides which type of Opinion or Memorandum Opinion will be issued for a regular case. While Summary Opinions and Bench Opinions have more limited legal effect, Summary Opinions and Tax Court and Memorandum Opinions can be cited as legal authority and appealed.

The issues in the dispute should first be determined before any meaningful legal research is undertaken.

Questions in a tax case might include:

• To determine if income was reported correctly.
• The question of whether the Internal Revenue Code covers a deduction.
• The accuracy of the IRS’s classification of a transaction.
• The eligibility of a taxpayer for an interest or deduction.
• If penalties were appropriately applied.
• The extent to which the IRS had the burden of proof on any specific issue.

The Court doesn’t decide if the taxpayer’s total tax burden is fair. Applies relevant laws, regulations, case law, and procedure to issues before it as they relate to the case.

This is a critical part of the issue identification process. The seemingly general issue may have several narrower legal and factual issues, each of which must be dealt with separately.

Legal research cannot be separated from the facts.

The Court takes evidence in documents, testimony, stipulations, admissions, and other evidence presented before it. Include the following elements in the factual record:

• Tax returns and amended returns
• Bank and financial documents
• Contracts and invoices
• Business records
• Emails and correspondence
• Expert testimony
• Witness testimony
• IRS examination documents
• Notice and administrative records

The parties can also make stipulations to fix facts which do not need to be established by proof.

This is particularly significant because tax litigation is sometimes about details. The same provision of law can be applied to two taxpayers, but may result in different outcomes due to the differences in the underlying facts.

After you’ve identified the issues and the facts, you need to research the relevant law thoroughly.

A comprehensive research process can involve:

• Provisions in the Internal Revenue Code.
• Treasury regulations
• Tax Court opinions
• The U.S. Supreme Court’s rulings.
• Federal appellate decisions
• Other federal court decisions
• Revenue rulings and other administrative guidance
• Procedural rules and authorities in the Tax Court

Many other aspects of litigation, such as pleadings, discovery, motions, evidence, trials, briefs, decisions, and posttrial proceedings and appeals, are regulated by the Tax Court’s Rules of Practice and Procedure.

The researchers have to find out who, in fact, has control over the conflict. Similar information from another jurisdiction may be helpful, but does not have to be followed.

Previous Tax Court cases can be of particular value because they will demonstrate the way judges have interpreted tax laws and applied them to facts in real cases.

Opinions may be searched by keywords or phrases in the Court’s DAWSON system, and can be filtered by docket number, case title, petitioner, judge, date, and opinion type.

A researcher may want to look up:

• The Internal Revenue Code section in question.
• Unique language of the statute.
• The nature of the transaction.
• A particular deduction or tax credit.
• A frequent jurisprudential exercise.
• An earlier case with similar circumstances.

The search for good research doesn’t end when a single good case is discovered. To conduct research, the researcher has to determine both pro and anti-authorities and why the cases were decided as they were.

An integral component of legal research is establishing if earlier cases are truly similar.

If a taxpayer discovers a Tax Court ruling which grants a business deduction, for instance. This does not necessarily imply that the same deduction should be given in the other case.

Researchers should ask:

• Were the taxpayers in a similar position?
• Did the costs for the same purpose occur?
• Was adequate documentation available?
• Was the taxpayer complying with the same requirements?
• If the law is relevant, was it the same at the time of the transactions?
• Did the prior court make a finding of fact distinction?

This is also referred to as cases of distinguishing precedent. When a case looks bad in the beginning, it may not be nearly as critical if the facts are substantially different.

In addition, the Court listens to the arguments made by both parties.

The issue in a typical dispute is that the taxpayer and the IRS might disagree on:

• An explanation of the meaning of a law.
• A clause of a law or rule.
• The use of prior cases.
• The believability or importance of evidence.
• A taxpayer’s burden of proof.
• Correctly ascertaining the tax.
• The applicability of penalties.

These competing positions are organized with the help of the parties’ briefs.

Litigation procedures are addressed in detail in Tax Court rules, including briefs and the rules for briefing. Tax Court rules specifically discuss briefs and other litigation procedures and provide guidelines for briefing.

Not all factual statements are equal.

In litigation proceedings, judges must review the evidence. If evidence contradicts that of the witnesses, the Court may be required to assess credibility or find which evidence is more convincing.

Why documentation is crucial to tax disputes.

There may be a legitimate business expense, though, and if the recordkeeping is insufficient, it may be difficult to prove the deduction.

Practical evidence tips

Taxpayers and professionals should:

• Preserve original records.
• Keep financial records in order.
• Maintain communication relating to disputed transactions.
• Record business purposes as they occur.
• Keep contracts, receipts, invoices and statements.
• Don’t do the main thing by rote-learning.

A well-documented factual record will help the Court to better understand the facts.

Once the law and evidence have been reviewed, the Court must use the law to apply the facts that are established.

This is where having an opinion is very important and where the reasoning of an opinion is also very important.

A well-developed opinion will explain:

• The facts the Court determined.
• The relevant laws in force.
• The influence of previous authorities on the analysis.
• Why one interpretation is more convincing.
• How the law applies to the particular facts.
• What are the implications of that analysis?

The outcome is not just a victory for the taxpayer or IRS. The opinion includes a legal analysis that justifies the ruling.

The final opinion should be written in a way that conveys complex tax and legal issues understandably.

Although each judicial chamber may have its own style, the opinion usually covers: the procedural history, facts, legal issues, law, analysis, and conclusion.

The writing process must be precise since differences in wordings can impact future practitioners’ understanding of the decision.

The opinion may also only discuss those issues necessary to the case. Generally, it is not necessary to pose hypothetical questions to the court.

The reasoning and supporting authorities for an opinion need to be thoroughly reviewed before becoming final.

This helps ensure:

• Citations correctly back up legal propositions.
• The use of statutory references is accurate.
• Rights are applied to the previous cases correctly.
• Mathematical calculations are correct.
• The results are consistent with the record.
• The conclusion is drawn from the analysis.

The tax case is a special area of review, as the statutes and regulations governing such cases can be quite complex.

The Rules of Practice and Procedure of the Tax Court are still maintained and updated, and it is crucial for practitioners to use the current rules and not outdated versions.

The opinion of a Tax Court can have a much greater impact than on the one taxpayer who brought the case to court.

If an opinion deals with an issue of significance, tax practitioners may review the opinion to gain insight into the interpretation of a specific provision by the Court.

As an example, an opinion might be used to assess:

• The defensibility of a given deduction.
• The manner in which a transaction can be described.
• Evidence taxpayers are required to keep.
• How a particular statutory test is applied.
• Whether a penalty position is “supported”.

But no one should presume that the outcome of any future case will be the same as it is here. All of this is relevant: its precedential value, its jurisdiction, its facts, its language, and subsequent decisions.

The following are some practices that can help improve the process of researching a client issue or better understanding a Tax Court decision:

1. Use the Statute as a starting point

Start with an arbitrary case search. Start by finding the appropriate Internal Revenue Code provision.

2. Learn how to use multiple terms to search

Use and apply the statute, legal terminology, type of transaction, and unique factual phrases. DAWSON does support keyword and phrase queries and further filters.

3. Read the Full Opinion

Avoid using only a case summary or a quotation in the middle of an opinion.

The facts might help the Court in reaching its decision.

4. Both the Opinion Type and the Opinion Value should be checked

Identify a Tax Court Opinion, Memorandum Opinion, Summary Opinion, or Bench Opinion, since they have varying precedential values.

5. Look for Later Treatment

When subsequent courts interpret, limit, distinguish, or reject the logic in a case, that case becomes more or less important.

6. Distinguish between Facts and Legal Rules

What is the legal principle in this decision, and what is dependent on the taxpayer’s facts?

7. Ensure that the Current Rules are in place.

Procedural requirements may be subject to change. The Tax Court has current rules and issues amendments; practitioners should check the current rules and consider whether a rule applies to a specific case before relying on it.

Research in Tax Court is now much easier with the help of technology.

Opinions and other case information are available on the Court’s electronic filing and case management system, DAWSON. Opinions may be searched by the public, and practitioners who have proper access may search opinions with added features.

The Court also makes opinions and orders available electronically. Opinions and some other documents may be accessed by the public users within the system, with restrictions such as sealed materials.

It is easier to do historical and current decisions through a researcher study rather than by the traditional way of paper study.

There are a number of pitfalls in tax research:

• To use a case without studying its facts.
• A nonprecedential decision is a decision by a court that will not be binding for future cases.
• Adopting and applying obsolete laws or regulations.
• Ignoring unfavorable cases.
• Partial quotations from text.
• Mixing up the taxpayer’s position with the Court’s ruling.
• Failure to investigate decisions subsequently.
• Similar tax terms result in identical legal issues.

Defining good legal research is not just locating a case that agrees with a desired outcome. It’s about knowledge of the full legal picture.

A Tax Court opinion is the result of a methodical process which involves fact development, legal research, procedure, evidence evaluation, advocacy, and judicial reasoning.

Each step in the process serves a specific purpose in the Court’s final determination, from identifying the tax issue that is in dispute to researching statutes and precedent, examining the evidence, reviewing opposing arguments, and composing the written analysis.

1. What about a tax court opinion?

A Tax Court opinion is a judicial opinion that interprets the Court’s application of statutes, regulations, precedent, and facts to the dispute between a taxpayer and the IRS.

2. What about tax court research?

Opinions are formed by analyzing statutes, Treasury regulations, court decisions, evidence, briefs, procedural rules, and the facts found in a particular case.

3. What makes tax court opinions important?

Tax Court opinions often provide insight into the application of tax laws. In addition, depending on the type of opinion, it may also offer authorities for taxpayers and tax practitioners in similar cases.