U.S. TAX COURT ENDS PRACTICE OF WITHHOLDING SPECIAL TRIAL JUDGE’S REPORTS

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Melissa Sharp
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U.S. Tax Court Ends Practice of Withholding Special Trial Judge’s Reports

WASHINGTON, D.C., July 13, 2005 — The United States Tax Court announced last week that they would end their 20-year-old practice of not disclosing Special Trial Judge’s (STJ) reports to litigants, a decision that the National Federation of Independent Business Legal Foundation has been fighting for during the past year.

"This case came down to two simple principles – fairness and transparency – the true hallmarks of the judicial process," NFIB Legal Foundation Executive Director Karen Harned said. "Requiring full-disclosure and transparency for all records is essential to ensuring that small-business owners have the ability to properly challenge decisions by the Tax Court. NFIB’s 600,000 members – indeed, all small businesses, – applaud the Tax Court for ending this secretive practice so Main Street can now enjoy the same rights in court as others who have cases in the judicial system."

In March, the U.S. Supreme Court ruled that "the tax court’s practice is extraordinary, for it is routine in federal judicial and administrative decision making both to disclose a hearing officer’s initial report." NFIB’s Legal Foundation filed an amicus brief in this case and was thrilled with the Supreme Court’s decision.

"In the face of an increasingly complex tax code, America’s small-business owners are spending more and more of their time and money to address tax-related issues," said Harned. "The Tax Court’s decision to end the practice of withholding Special Trial Judge’s reports, was a victory for all taxpayers, especially small-business owners."

Currently, the Tax Court is the only forum in which a small-business owner or an individual (nearly 85 percent of small businesses file taxes as an individual) can contest an income tax without first paying the deficiency in full. Accordingly, most small businesses elect to litigate their tax disputes in Tax Court. The inability to review the STJ report severely hampered a taxpayer’s ability to effectively advocate an appeal from the trial court’s decision, because they had no way of knowing why the trial court made the decision it did without seeing the STJ report.

The proposed new rules for disclosing Special Trial Judge’s Reports will take effect later this year and will apply to all future cases filed in the U.S. Tax Court.

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The National Federation of Independent Business (NFIB) is the nation’s largest small-business advocacy group. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington and all 50 state capitals. More information is available online at www.NFIB.com/newsroom.