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The Evolution of the Tax Court as an Independent Tribunal

995 U. Ill. L. Rev. 17, *

Copyright (c) 1995 The University of Illinois
University of Illinois Law Review

1995

1995 U. Ill. L. Rev. 17

BIO: David Laro *

* Judge, United States Tax Court. B.A. 1964, University of Michigan; J.D. 1967, University of Illinois; LL.M. 1970, New York University School of Law.

SUMMARY:
... In the lecture reprinted below, Judge Laro provides a brief historical perspective of the federal income tax system and the United States Tax Court.... The principal forum in which a taxpayer may adjudicate a tax controversy with the federal government is the United States Tax Court in Washington, D.C.

Over ninety-five percent of all tax-related litigation is adjudicated in this court. ... We must look to the history of our tax law system and the Tax Court to understand the basis of the perception of a pro-government bias on the part of the Tax Court. ... The federal income tax law of 1913 imposed an annual one-percent tax on all persons with a net income over and above $ 3,000, and on all corporations, joint stock companies, and insurance companies. The federal income tax law consisted of sixteen pages; compare that to today's income tax laws and regulations which Commerce Clearing House prints on over 25,000 pages in eight volumes. ... To the contrary, often the taxpayer who has a weak case is unable to reach an acceptable settlement in the Appeals Division and so must either pay the assessed deficiency or proceed to trial. ...

TEXT:

[*17]

Judge David Laro, a graduate of the University of Illinois College of Law, currently sits on the United States Tax Court. He graciously accepted the invitation by Professor John McCord to share his experience as a tax court judge. In the lecture reprinted below, Judge Laro provides a brief historical perspective of the federal income tax system and the United States Tax Court. In addition, he discusses the constitutional source of the Tax Court and its current status. Judge Laro ends by dispelling the myth that the Tax Court is a pro-government tribunal.

I. INTRODUCTION

I am honored to be invited to the rededication of the University of Illinois law school building, joining a group of distinguished jurists, academicians, public officials, and, of course, the students at the University of Illinois College of Law. As always, I am pleased to be at the school where I received my law degree almost thirty years ago. At the outset, I must note that my comments are my personal views which may or may not be harmonious with the views of any of my colleagues on the United States Tax Court for whom I do not speak. Bearing this in mind, I am privileged to present a brief perspective of the history of the federal income tax system and the United States Tax Court, with attention to the controversial issue of whether the Tax Court is a progovernment tribunal.

II. JUDICIAL FORUMS

The mention of the Internal Revenue Service (IRS) generally brings chills to the spines of taxpayers. To many taxpayers, experiencing an audit by the IRS is equated with undergoing a root canal. Indeed, many taxpayers probably would prefer the latter to the former. [*18] All the same, taxpayers who undergo an audit, but who are unable to resolve with the IRS any tax disputes that may arise from it, are not without a remedy. These taxpayers may choose to resolve their tax dispute by suing the federal government in a neutral judicial forum.

The principal forum in which a taxpayer may adjudicate a tax controversy with the federal government is the United States Tax Court in Washington, D.C. Over ninety-five percent of all tax-related litigation is adjudicated in this court. The Tax Court judged approximately 360,000 cases in the last decade alone and currently has cases before the court involving liabilities which aggregate about $ 34 billion. As an alternative to the Tax Court, taxpayers have a choice of two other forums in which to contest their tax matters. Taxpayers may choose to adjudicate a tax dispute in either a federal district court or in the United States Court of Federal Claims. Of these three forums, the Tax Court is the only forum in which a taxpayer may pursue his or her federal tax controversy without first paying the amount of tax that the government alleges is due.

The Tax Court's jurisdiction to redetermine a deficiency determined by the IRS is invoked when: (1) the IRS determines a deficiency; (2) the IRS mails a notice of deficiency (i.e., a "90-day letter") to the taxpayer or a notice of liability to a transferee or fiduciary; and (3) the taxpayer timely files a petition with the Tax Court to redetermine the deficiency or liability. Once its jurisdiction is invoked, the Tax Court has exclusive authority to resolve the years that are the subject of the petition. The ability of a taxpayer to litigate in the Tax Court without a prior payment of tax is the primary reason many taxpayers choose to pursue a tax dispute with the IRS in the Tax Court.

Notwithstanding the ease of invoking the Tax Court's jurisdiction, and the popularity of the Tax Court as the choice of forum, a myth has arisen over the years that the court is sometimes predisposed in favor of the government. One can understand that some litigants, dissatisfied with the result of their cases, may try to attribute their loss to an inexperienced attorney or a biased judge. However, in a more neutral environment, some academicians, in pursuit of intellectual and empirical truth, have joined recently in the claim of bias in favor of the government at the Tax Court. 1 Thus, claims of judicial bias deserve attention.

We must look to the history of our tax law system and the Tax Court to understand the basis of the perception of a pro-government bias on the part of the Tax Court. Therefore, we will examine the [*19] origin and relationship of our federal tax system vis-a-vis the United States Tax Court before proceeding to examine the perception of bias by the court.

III. HISTORY OF THE FEDERAL INCOME TAX

The history of the federal tax law in some sense reflects the social and economic development of our nation. All of the New England colonies had adopted a faculty tax 2 by the 1770s as a levy on the profits of a person's skill or ability. Rather than being a tax that was levied on actual gains or profits, however, the faculty tax was a class tax that was arbitrarily levied on assumed earnings. Our Founding Fathers believed that the power to tax was quintessential for the proper governance of our country. Taxation was viewed as a means of designing the national economy, influencing and shaping morals, and implementing social reform.

From 1789 until the Civil War, most government revenues were derived from customs taxes on distilled spirits, carriages, sugar, snuff, property sold at auction, and other articles. The need to finance the Civil War then brought about a variety of new taxes, including the first federal income tax that was enacted as an emergency measure on August 5, 1861. This income tax was abandoned ten years later, but the desire for an income tax was not forgotten.

In the years following the Civil War, an income tax was advocated by the farmers and the working people in the western and southern parts of the United States. In particular, these groups were dissatisfied with the tariff policies of the country. These advocates stressed that tariffs unfairly increased the cost of living for those who were least able to afford it. In addition, these advocates stated, the tariffs allowed large corporations to prosper and create monopolies, while small businesses struggled to survive. Thus, as a result of the tariffs, a serious disparity of wealth among social classes developed. The differences in attitude toward the income tax reflected the disparity of wealth in the country at the time. According to a survey that was taken circa 1890, one percent of the families in the United States held fifty-one percent of the national wealth and eighty-eight percent of the families owned only fourteen percent. 3 Yearly income figures for the same groups revealed much the same imbalance.

[*20] Eventually, in 1894, Congress levied a two percent tax on income. Subsequently, however, in one of the most celebrated legal battles in the United States's history, the United States Supreme Court struck down the federal income tax in Pollock v. Farmers' Loan & Trust Co. 4 By a five-to-four vote, the Court held the income tax unconstitutional because the tax was not apportioned according to the population of the United States as required by the United States Constitution. 5 Thus, based on the holding in the Pollock case, a constitutional amendment was necessary to subject the people of the United States to an income tax.

Fifteen years later, in 1909, President Taft began the process of amending the United States Constitution; he recommended that Congress amend the Constitution a sixteenth time to remove the constitutional barrier to an income tax. Less than one month later, his proposal was approved by both the Senate and the House. The Senate adopted President Taft's proposal without a dissenting vote. In the House, the bill was reported and adopted on the same day. The bill's adoption followed a four-hour debate, which included a warning by the Chairman of the House Ways and Means Committee that the imposition of a federal income tax would turn the United States into a nation of liars. On February 25, 1913, the Sixteenth Amendment authorizing Congress to "lay and collect taxes on income from whatever source derived" was proclaimed part of the Constitution. 6 According to the House Committee Report, the tax was levied upon incomes according to each taxpayer's ability to pay; "it would be difficult to devise a tax fairer or cheaper of collection." 7

The federal income tax law of 1913 imposed an annual one-percent tax on all persons with a net income over and above $ 3,000, and on all corporations, joint stock companies, and insurance companies. The federal income tax law consisted of sixteen pages; compare that to today's income tax laws and regulations which Commerce Clearing House prints on over 25,000 pages in eight volumes. The federal income tax law of 1913 allowed six types of deductions: business expenses, interest on personal debt, other taxes, uninsured casualty losses, bad debts, and depreciation of business property. Interestingly enough, mortgage interest and medical expenses were not deductible.

In 1914, the Department of Treasury introduced Form 1040. The House Ways and Means Committee stated that completing a Form 1040 would not be onerous because "those citizens required to do so can well afford to devote a brief time during some one day in each [*21] year to the making out of a personal return, willingly and cheerfully." By 1915, some congressmen found that they could not complete their own tax returns because the instructions were too confusing. Incidentally, the original instructions for Form 1040 consisted of twenty separate instructions that took up one page; compare that to the current instructions to Form 1040 which, in and of themselves, are more than thirty-seven pages long and include tax tables, rate schedules, and introductory material. Indeed, the current instructions are so intricate that they begin with information on how to use the instructions. The complexity of Form 1040, both in 1915 and today, results from the complexity of the law itself. As one congressman stated in 1915 in trying to explain why the tax laws were getting so complicated: "I write a law. You drill a hole in it. I plug the hole. You drill a hole in my plug." The remark was widely reported, and a new tax word "loophole" entered the language.

Throughout the years, the federal income tax system also has affected our society in numerous ways. As observed by Justice Jackson of the United States Supreme Court in Dobson v. Commissioner, 8 "no other branch of the law touches human activities at so many points" as does the tax law. 9 Many of our famous and notorious citizens can attest to the far-reaching implications of the tax law. For example, in 1925, United States Senator James Cousins of Michigan charged that millions of tax dollars were lost through the favorable treatment of large corporations by the Bureau of Internal Revenue. Several days later, Senator Cousins was notified by the Bureau of Internal Revenue that he owed $11 million in back taxes. In 1931, after years of murdering, stealing, extorting, smuggling, and bribing with impunity, Chicago mobster Al Capone was toppled from power for tax evasion. Capone was sentenced to eleven years in federal prison. In 1933, testimony before the Senate Banking and Currency Committee revealed that J. Pierpont Morgan, Jr., the most powerful banker in the world, with liquid assets totaling $ 52 million, paid no income tax during 1931 and 1932. In 1955, because their mother wanted them to work together, the Block brothers, Henry and Richard, set up a company in Kansas City, Missouri, to help people prepare their tax returns. The name of the company was H & R Block.

The Internal Revenue Code has continually evolved through the country's major wars and fifteen presidential administrations from President Wilson to President Clinton. The history of the Internal Revenue Code has been complex. By 1990, the IRS employed 120,000 employees to collect $ 1 trillion in taxes. The Internal Revenue Code has changed because of the pressure of external events, the demands [*22] of war, the challenges of depression, and the desire to reshape social policy.

IV. THE TAX COURT

As the federal tax law expanded and became more complicated, the need to adjudicate tax controversies between the government and its citizens emerged. In 1924, Congress created the Tax Court's predecessor, the Board of Tax Appeals. Before the Board was formed, taxpayers were required to pay a tax deficiency alleged by the IRS in order to contest the deficiency. A taxpayer's sole judicial recourse in federal tax disputes with the government was to file a refund suit in the Court of Claims or in a federal district court. Congress did not create the Board of Tax Appeals, however, as a court of record. Rather, the Board was created as an independent agency in the executive branch of the government. Although the Board was empowered to hold pre-assessment, judicial-type proceedings of tax determinations with respect to income, estate, gift, and excess profit taxes, the Board's jurisdiction was limited.

Congress changed the Board in 1942 and redesignated it as the Tax Court of the United States. Congress also changed the statutory designation of the Board "members" to "judges." The Tax Court of the United States, however, remained an agency of the executive branch.

The Tax Reform Act of 1969 dramatically and significantly changed the nature of the Tax Court. 10 The Tax Reform Act of 1969 changed the classification of the Tax Court from an agency of the executive branch (as is the IRS) to a specialized legislative court under Article I of the United States Constitution. 11 This, in turn, made the Tax Court an independent tribunal that was (and is) separate and distinct from the IRS. Congress also renamed the Tax Court from the Tax Court of the United States to the United States Tax Court. In 1974, the Tax Court solidified its independence from the executive branch (and the IRS) by moving its physical location from the National Office of the Internal Revenue Service to its own separate building in Washington, D.C. The Tax Court's primary function is the redetermination of deficiencies determined by the IRS with regard to income, estate, gift, and certain excise taxes. The jurisdiction of the Tax Court has been expanded over the years to include jurisdiction over: (1) certain declaratory judgment issues, such as the initial or continuing tax status [*23] and classification of certain exempt organizations and foundations, the qualification of certain retirement plans, and the exempt status of certain governmental obligations; (2) special unified partnership proceedings; and (3) a variety of other matters involving interest on deficiencies, levies, and awards of litigation costs. The Tax Court also has the authority to restrain the IRS from premature assessment and collection of a tax that was the subject of a timely petition for redetermination of a deficiency before the court. The Tax Court, however, generally does not have jurisdiction over refund suits. Most lawsuits requesting tax refunds must still be filed in either the United States Court of Federal Claims or in a federal district court.

The Tax Court hears only cases involving federal tax matters. The Tax Court has nationwide jurisdiction over taxpayers regardless of where the individual taxpayer resides or where the corporate taxpayer has its principal office or place of business. The Tax Court also has nationwide service of process and subpoena powers. The court hears cases either in Washington, D.C., where it is headquartered, or in certain other cities that are more convenient to the petitioners in the tax controversy. The Tax Court currently hears cases in eighty cities and regularly visits thirty-four cities annually for trials.

An attorney from the Office of District Counsel of the IRS generally represents the government in a case before the Tax Court. A taxpayer, on the other hand, may represent himself or herself (that is, the taxpayer appears pro se) or may be represented by an attorney who is admitted to practice before the Tax Court. In rare situations, a taxpayer may choose to be represented by a certified public accountant or another qualified individual. In such rare cases, however, the accountant or other individual must have passed the rigorous examination administered by the court. Notwithstanding whom the taxpayer chooses to represent him or her, all litigants must conduct the case in accordance with the Tax Court Rules of Practice and Procedure. Many of these rules are similar to, and in fact were derived from, the Federal Rules of Civil Procedure. In certain cases, however, the Tax Court Rules of Practice and Procedure differ from the Federal Rules of Civil Procedure. For example, the rules of discovery under the Tax Court Rules of Practice and Procedure are more limited than the rules contained in the Federal Rules of Civil Procedure.

V. BURDEN OF PROOF

In proceedings before the Tax Court, the taxpayer generally has the burden of proving that the Commissioner of Internal Revenue erred in the determination of a deficiency in the taxpayer's federal tax. The Supreme Court held in the 1933 landmark case of Welch v. [*24] Helvering, 12 that the taxpayer must prove that the Commissioner's determination is erroneous. 13 Therefore, the taxpayer generally bears the burden of proof before the Tax Court. Tax Court Rule 14 2(a) contains this general rule. Although the taxpayer generally bears the burden of proof, however, the IRS bears the burden of proof with respect to alleged fraud, new issues, items that raise or increase a previously determined deficiency amount, or items with respect to affirmative defenses pleaded in the answer.

VI. TAX COURT JUDGES

Cases commenced in the Tax Court are normally placed on a trial calendar for various cities, and a Tax Court judge is assigned to each city with a calendar of cases. Some groups of cases, such as tax shelters or pension issues, may be specifically assigned to a certain judge who has had much exposure to, or who has expertise in, the particular issues in those cases.

The regular judges of the Tax Court are appointed by the President of the United States, with the advice and consent of the Senate. Other judges of the Tax Court, known as Special Trial Judges, are selected by the Chief Judge. The Special Trial Judges usually hear cases involving deficiencies of less than $10,000. Both the ninetten regular judges who currently sit on the Tax Court, as well as the various Special Trial Judges, ascended to the bench from a variety of backgrounds. All of the judges have tax expertise acquired from prior private practice, government service, or a combination of both. For example, some of my colleagues and I ascended to the bench after many years of private practice representing both individuals and businesses in tax planning, as well as tax controversy. Other judges, enriched in tax policy and often litigation, rose to the bench from esteemed positions in government. Whatever the backgrounds are of the respective judges, however, each judge takes an objective and independent view of the issues to be decided.

VII. BIAS TOWARD THE GOVERNMENT

From time to time, potential litigants and their counsel have viewed the Tax Court as having a slight bias toward the government. One can only speculate as to the reasons why some members of the public perceive the Tax Court in this manner. Although it has been written that bias on the part of Tax Court judges "may be so insidious as to be indiscernible to both the judges themselves as well as to the [*25] public," 14 my experience has taught me that the Tax Court is not biased toward either the private taxpayer or the government in the disposition and adjudication of tax controversies.

Various explanations are advanced as to why the Tax Court is perceived to be pro-government. Two of the more popular reasons are that the composition of the Tax Court makes it more sympathetic to the IRS's position, and statistics show that the government generally prevails in the Tax Court.

VIII. COMPOSITION OF THE TAX COURT

Many commentators and litigants believe that the Tax Court judges are biased because of their backgrounds and positions. In this regard, some persons who come before the Tax Court believe that the court is merely an arm of the IRS. As previously discussed, this is untrue. The United States Tax Court is an Article I court that is an independent body with no outside influences exerting pressure on it to be either pro-government or pro-taxpayer. Of the nineteen regular judges currently on the court, nine came to the court from the private sector and two worked in the private sector before accepting government positions. Thus, the Tax Court is comprised of former government and private-sector attorneys whose individual backgrounds add to the diversity of thought at the court.

IX. STATISTICAL ANALYSIS

Articles have been written purporting to show that some Tax Court judges are biased toward the government. 15 To support this claim, statistics are given which show that the government succeeds more often in the Tax Court than it does in district court and the Court of Federal Claims. 16 A number of problems arise from looking strictly at this type of limited statistical analysis. In fact, it is myopic [*26] to derive any meaningful conclusion of bias based solely on statistics of the prevailing party in the Tax Court.

As the most convenient forum, the Tax Court attracts a larger number of litigants, some of whom choose to litigate against the IRS merely to delay the ultimate collection of their taxes. Some tax protesters litigate for their own political reasons and seem to have an agenda quite aside from the narrow issue of correctly determining their tax liability. The court should and does address these parties evenhandedly and with due consideration for the merits of their cases. However, because the government prevails in the vast majority of these protester-type cases, the statistics of who wins and loses display an imbalance in favor of the government, and deservedly so.

Moreover, statistics are inappropriate because quantifying decisions is practically impossible. Most Tax Court cases involve multiple issues, where as refund suits brought before the district court or the Court of Federal Claims involve, for the most part, a single issue. The multiplicity of issues makes it very difficult to determine who is the winner in a Tax Court case in which split dispositions of issues regularly occur.

Also, the statistics do not reflect the relative ease of commencing a lawsuit in the Tax Court as opposed to a district court or the Court of Federal Claims. As stated earlier, a taxpayer may file a petition in the Tax Court without paying the tax that the government alleges is due. In the district court or the Court of Federal Claims, by contrast, a potential litigant must first pay the alleged deficiency. Given that a potential litigant must first part with cash before commencing a lawsuit in a district court or the Court of Federal Claims, the Tax Court is the least expensive forum in which to commence a tax lawsuit.

The statistics do not reflect the fact that the government chooses to settle its weakest cases and litigate only its strongest cases. Many taxpayers who file suit in this court ultimately settle in the Appeals Division of the IRS. Thus, the cases which proceed to trial are usually those in which the government feels it has a strong litigating position. To the contrary, often the taxpayer who has a weak case is unable to reach an acceptable settlement in the Appeals Division and so must either pay the assessed deficiency or proceed to trial. The statistics do not explain that the agents and attorneys who represent the government are highly educated, experienced, and skilled tax practitioners who know the provisions of the Internal Revenue Code and the Tax Court Rules. Taxpayers, by contrast, often represent themselves. Approximately forty-three percent of the filings in the Tax Court are pro se litigants. Thus, many cases are brought to the Tax Court without an experienced tax professional who can adequately evaluate the taxpayer's realistic chances for success. Moreover, most pro se taxpayers do not adequately know the Tax Court [*27] Rules or the Federal Rules of Evidence and are thus handicapped in the courtroom. Although judges feel inclined to be lenient when a pro se taxpayer is litigating, nevertheless in the interest of fairness and impartiality, there is a limit to such leniency.

A final argument against pro-government bias is the plain fact that several of the court's decisions, when appropriate, have allowed taxpayers to escape taxation even when it may have been more equitable to tax them. For instance, in the recent case of Shelfer v. Commissioner, 17 the estate of the decedent/wife failed to include the value of a trust for which her deceased husband's estate was previously allowed a deduction as qualified terminal interest property. Property that meets the statutory definition of "qualified terminal interest property" is generally excludable from the estate of the first spouse to die, but is includable in the estate of the surviving spouse at the time of his or her death. 18 The IRS determined a $ 1.3 million deficiency in the estate tax of the decedent/wife primarily because her estate did not include the value of the trust. In the Tax Court, the estate of the decedent/wife argued that the husband had improperly treated the trust as qualified terminal interest property, and, therefore, the value of the trust was includable in her husband's rather than her estate. The period of limitations had expired with respect to an assessment of a deficiency in her husband's federal estate tax liability. Notwithstanding that the value of the trust would escape taxation, the Tax Court agreed with the wife's estate that it did not have to include the value of the trust. A similar result for the taxpayer was reached in the case of Arnes v. Commissioner, 19 in which the Tax Court held that an amount that otherwise should have been taxed to one spouse escaped taxation because the wrong spouse was before the court. These cases demonstrate that where the taxpayer is able to assert a correct legal position, the court will not hesitate to find in favor of the taxpayer even though purely equitable considerations may have produced another result.

Because tax law permeates so many other fields and activities, Tax Court cases tend to be interesting and diverse. Taxpayers who underreport their income, overstate their deductions, or who merely find that they are being pursued wrongly by an aggressive IRS all end up in front of the Tax Court. Over the years, entertainers, such as Jack Benny, Sammy Davis, Jr., and Willie Nelson, and athletes, such as Sugar Ray Robinson, Paul Hornung, and Steve Garvey, all have argued their respective positions before a judge and have had their [ *28] proverbial day in court. 20 One of the most interesting cases this judge has decided involved the recent case of two professional violinists who wanted to depreciate their more than 100-year-old Francois Tourte violin bows. 21 The taxpayers appeared in court in New York and testified that they used the particular violin bows in the course of their performances. At issue was whether the violin bows could be depreciated under section 168 of the Internal Revenue Code or whether the instruments were nondepreciable as "works of art" as argued by the IRS. With the court's permission, the musicians demonstrated to the court the superior sounds which emanate from the aged instruments. In a fully reviewed Tax Court opinion, the court held for the taxpayers. That day musicians around the country celebrated their common victory over the IRS.22

It is a tribute to our system of justice when two musicians can successfully battle the United States government and prevail on the basis of sound reasoning and legal argument.

Tax Court cases simply are not decided on the basis of bias or sympathy, although judges, like others, can empathize with those taxpayers who appear before the court. Rather, cases are decided after much deliberation on the basis of strict interpretation of complex tax statutes. Admittedly, it is refreshing, however, to decide a case on the law which coincidentally also provides a warm feeling with respect to the result.

X. CONCLUSION

Our income tax laws have grown complex and are difficult to understand. Yet, at the same time, the nation's fiscal soundness depends upon voluntary compliance for the payment of its citizens' tax liabilities. It is essential that the country have confidence in a court which not only understands the tax law but can fairly adjudicate tax controversies which arise between the public and the government. It is the role of judges to decide cases, without bias, objectively on the record before them. Taxpayers who choose to contest the federal government in the United States Tax Court undertake their litigation with natural concern for cost and result. However, they need not have any anxiety with respect to claims of alleged pro-government bias. It is true that the power to tax is the power to destroy, as Chief Justice Marshall so [*29] eloquently stated in McCulloch v. Maryland. 23 However, it is also unquestionably true that this judge of the United States Tax Court respects and adheres to the words of Justice Holmes who wrote that "the power to tax is not the power to destroy while this Court sits." 24

FOOTNOTES:

n1 See, e.g., Babette B. Barton, Legal and Tax Incidents of Compulsive Behavior: Lessons from Zarin, 45 TAX LAW. 749, 750-51 n.10 (1992); B. Anthony Billings et al., Are U.S. Tax Court Decisions Subject to the Bias of the Judge?, 55 TAX NOTES 1259 (1992).

n2 A somewhat archaic term for a familiar concept: a tax based on the theory that "every individual should contribute to the support of the public burdens according to his ability" to pay. See WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY (3d ed. 1981) (emphasis added) (defining the term "faculty theory").

n3 See ROBERT HUNTER, POVERTY 345 app. (Peter d'A. Jones ed., Harper & Row 1965) (1905).

n4 157 U.S. 429, reh'g granted, 158 U.S. 601 (1895).

n5 Id.

n6 U.S. CONST. amend. XVI.

n7 H.R. REP. NO. 5, 63d Cong., 1st Sess., at xxxvii (1913).

n8 320 U.S. 489 (1943).

n9 Id. at 494-95.

n10 Tax Reform Act of 1969, Pub. L. No. 91-172, 83 Stat. 487 (codified as amended in scattered sections of 26 U.S.C.).

n11 26 U.S.C. A7 7441 (1988).

n12 290 U.S. 111 (1933).

n13 Id.

n14 See Deborah A. Geier, The Tax Court, Article III, and the Proposal Advanced by the Federal Courts Study Committee: A Study in Applied Constitutional Theory, 76 CORNELL L. REV. 985, 999 (1991).

n15 See sources cited supra note 1.

n16 The Annual Report of the Commissioner of Internal Revenue (Annual Report) is often cited for the proposition that the Tax Court is pro-government. These annual reports show that the government won or partially won an average of 70.5% of district court cases between the years 1965 and 1986. Over the same period, the government won or partially won an average of 90.4% of Tax Court cases. See Geier, supra note 14, at 998. Ms. Geier used these statistics to conclude that there was "a decided pro-government trend in recent years" by the Tax Court. This conclusion does not take into consideration data in the Annual Report which shows that taxpayers' overall savings as a percentage of the amounts at issue in the Tax Court were approximately one-half higher than in the district court and the Court of Federal Claims. See Paul L. Caron, Tax Myopia, or Mamas Don't Let Your Babies Grow Up to Be Tax Lawyers, 13 VA. TAX REV. 517, 579 (1994).

n17 103 T.C. 10 (1994).

n18 Id. at 14.

n19 102 T.C. 522 (1994).

n20 Garvey v. Commissioner, 66 T.C.M. (CCH) 355 (1993); Davis v. Commissioner, 58 T.C.M. (CCH) 650 (1989); Willie Nelson Music Co. v. Commissioner, 85 T.C. 914 (1985); Hornung v. Commissioner, 47 T.C. 428 (1967); Robinson v. Commissioner, 44 T.C. 20 (1965); Benny v. Commissioner, 25 T.C. 197 (1955).

n21 Simon v. Commissioner, 103 T.C. 247 (1994).

n22 See William Grimes, Violinists Win I.R.S. Challenge, N.Y. TIMES, Aug. 24, 1994, at C1, C12.

n23 17 U.S. 316, 430 (1819).

n24 Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 223 (1928) (Holmes, J., dissenting).