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through the Freedom of Information Act and are published by some commercial publishers.
General Counsel's Memoranda
General Counsel's memoranda (GCM's) are legal memoranda prepared by the Chief Counsel's Office. They are written in response to requests from IRS employees for advice in the preparation of revenue rulings, private letter rulings, and technical advice memoranda. General Counsel's memoranda are not officially published, although they may be obtained (with taxpayer specific information expurgated) through the Freedom of Information Act and those of general interest are published by some commercial publishers.
B. THE DEPARTMENT OF JUSTICE
The Department of Justice, Tax Division, represents the United States in all civil and criminal litigation arising under the tax laws, other than cases before the United States Tax Court. The Justice Department represents the United States as defendant and as plaintiff in a wide variety of cases. Examples include cases in which taxpayers claim refunds in Federal district court; suits brought by individuals to foreclose mortgages or obtain quiet title to property on which there is a tax lien; challenges to the constitutionality or legality of IRS regulations or rulings; cases in which the Government seeks to collect unpaid taxes; actions to enforce IRS collection procedures such as jeopardy assessments for tax liens; cases brought under the Freedom of Information Act; suits against employees of the IRS for damages resulting from alleged breach of their official duties; and suits to collect judgments in tax
The Justice Department is also responsible for the prosecution of all criminal offenses committed in violation of the tax laws. Criminal offenses under the Internal Revenue Code include: any attempt to evade or defeat a tax; willful failure to pay over a tax; willful failure to file a return or supply information; and various kinds of fraud. For a more complete list of crimes under the Internal Revenue Code see Code sections 7201 through 7216.
Section 4. Role of the Judiciary
Following examination of a taxpayer's return, the Internal Revenue Service (IRS) may determine that a taxpayer's tax liability for a year is higher than that actually paid. If the taxpayer disagrees with the Government's assessment of his or her taxes, after exhausting the administrative appeals process within the IRS, the taxpayer may appeal to Federal court.
Which court the taxpayer chooses depends in part on whether or not the taxpayer first pays the disputed tax. If the taxpayer has already paid the disputed tax in full and filed a claim for refund which was disallowed (or on which the IRS did not take action within six months), the taxpayer may take the case to the U.S. district court or the U.S. Claims Court. If the taxpayer chooses not to pay the tax, the claim may be taken to the Tax Court.
There are various other jurisdictional differences that might dictate which court would properly decide a particular tax controversy. For instance, the Tax Court, unlike the Claims Court and U.S. district courts, generally does not have jurisdiction over certain types of controversies, such as criminal cases, summons enforcement, and Freedom of Information Act cases.
Of these three forums, only the U.S. district court offers trial by jury. Because the district court is a court of general jurisdiction, however, the judge may have little preexisting tax expertise. For this reason, most complex civil tax cases are ordinarily brought in either the Claims Court or the Tax Court.
Various additional factors might influence a taxpayer's choice between the Claims Court and the Tax Court. Procedural and evidentiary rules vary between these courts. A trial in the Claims Court generally is conducted in a more formal manner (generally with more discovery permitted) than in the Tax Court. Each court follows its own precedents; for this reason, the taxpayer may view one court as a more favorable forum than another. Appeals from the Claims Court lie with the Court of Appeals for the Federal Circuit, whereas appeals from the Tax Court lie with the respective Court of Appeals. The Justice Department represents the Internal Revenue Service in the Claims Court, whereas the Internal Revenue Service uses its own district counsel in the Tax Court.
The Tax Court was created in 1924 as the Board of Tax Appeals, and in 1942 was renamed the Tax Court of the United States. Until 1969, the court was an independent executive agency.
In 1969, the court was renamed the United States Tax Court and reconstituted as an Article I court; that is, an independent agency in the legislative branch of the government. The Tax Court shares
its Article I status with the Court of Military Appeals. As an agency in the legislative branch, certain of the court's attributes differ from those of courts established under Article III of the Constitution. Its judges are each appointed for a term of 15 years (rather than the lifetime tenure constitutionally required for a judge in an Article III court). The Tax Court is the only court with the power to review determination of tax liability before actual payment of the tax.
The Tax Court is comprised of 19 judges appointed by the President, with the advice and consent of the Senate. Judges may be removed by the President for inefficiency, neglect of duty, or malfeasance. The jurisdiction of the Tax Court is confined to tax cases, and consists of the ability to hear taxpayers' petitions for deficiencies determined by the Internal Revenue Service; and to review the qualified status of charitable organizations, the qualification of retirement plans, and the tax-exempt status of municipal bonds.
There are a number of strict procedural requirements governing a taxpayer's ability to take a dispute to Tax Court. A taxpayer who wishes to dispute the IRS's determination of his or her tax liability may pursue the case through the administrative channels established by the IRS. If these channels do not resolve the dispute to the satisfaction of the taxpayer and the Government, the IRS sends the taxpayer a notice of deficiency (Internal Revenue Code section 6212). This notice is often called a "90-day" letter because the taxpayer has 90 days following mailing of this letter to file a claim in Tax Court (or 150 days, in the case of notices addressed to persons outside the United States). The Tax Court has no jurisdiction to review deficiencies of taxpayers who do not meet the 90-day (or 150day) requirement (Internal Revenue Code section 6213).
The Internal Revenue Service is not empowered to enforce collection of the deficiency until after the expiration of the 90-day (or 150-day) period. If the taxpayer files a timely petition with the Tax Court, the IRS may not enforce collection until the court renders a final decision (Internal Revenue Code section 6213).
Either the Government or the taxpayer may appeal the Tax Court's decision to the Federal court of appeals for the circuit in which the taxpayer resides or has his or her principal place of business. Different courts of appeal may reach different decisions on similar cases. In the event of conflict among the courts of appeal, taxpayers are bound by the decision of the circuit court in which they live or maintain their principal place of business. Conflicts among courts of appeal can be settled only by the Supreme Cou
A taxpayer's appeal from a decision by a district court is heard by the court of appeals for the circuit in which the taxpayer resides or has his or her principal place of business. That is, whether the taxpayer begins a case in Tax Court or district court, the taxpayer's appeal will be heard by the same court of appeals. A taxpayer who has paid the tax and sues for a refund in the United States Court of Claims, however, may appeal only to the Court of Appeals for the Federal Circuit.
PART III. SOURCES OF INFORMATION ABOUT FEDERAL TAXES
Section 1. Legislative Support Staffs
A. Congressional Research Service
The Congressional Research Service (CRS), as the name implies, is the research arm of the legislative branch. The purpose of CRS is to provide Congress with analytical research and reference assistance, without political bias, in support of its legislative, oversight, and representative functions. Research projects are initiated both in response to inquiries from Members and committees of Congress and in anticipation of issues likely to receive congressional attention in the near future.
CRS is organized into seven research divisions (American Law, Economics, Education and Public Welfare, Environment and Natural Resources Policy, Foreign Affairs and National Defense, Government, and Science Policy Research) and two library information divisions (Congressional Reference and Library Services). Generally, tax inquiries of an analytical nature are referred either to the American Law Division (for inquiries of a legal nature such as requests for legal analysis, legislative history, or statutory interpretation) or to the Economics Division (for inquiries analyzing economic effects or implications, or for statistical analyses). Inquiries in some specific subject areas which may have a tax component, such as pensions or Social Security, may be referred to analysts in one of the other divisions.
CRS attempts to tailor its responses to fit the nature of the inquiry, the congressional_need to be met, and any time constraints placed on the request. The scope of responses to inquiries in the field of taxation ranges from providing specific factual information, such as the number of taxpayers who claim a certain type of deduction, to broad analyses of the potential economic effects of major policy options, such as integration of the corporate and individual income taxes or a tax cut to stimulate the economy. A response may be in the form of a prepared report or issue brief on topics of general interest, or a memorandum or personal briefing on questions of specific interest to a congressional office. CRS also supplies copies of documents (laws, regulations, court opinions) and articles or other secondary materials. While CRS cannot give individual tax advice to, or for, constituents, it does provide general information to assist in answering this type of inquiry.
Information on CRS products may be found in the on-line CRS Products File (CRSP) or in several printed guides which are distributed to all Member and committee offices. The Guide to CRS Products, which is issued quarterly, lists products under the headings Taxation and Local Finance. The Guide is supplemented by