COMPARING THE DECISION MAKING OF SPECIALIZED COURTS AND GENERAL COURTS: AN EXPLORATION OF TAX DECISIONS

Justice System Journal, 2005 by Howard, Robert M

Yet a focus on the type of litigant does not address the question of the actual issues examined by the court. For example, all litigants might have to defend the meaning of what constitutes income, what are proper deductions, what is the proper value of stock or another item, or whether a business or an individual properly withheld income taxes from an employee's return and, if not, who is responsible for the failure. While a business or an estate might present more complexity on these questions, a wealthy individual might have a far more complex tax return than a small business or a relatively simple estate. Both courts deal with highly salient, ideologically charged matters like tax protestors, individuals who assert that the income tax is unconstitutional and that the IRS has no authority to collect income taxes; frauds, when individuals or businesses are accused of illegally hiding income or asserting patently false deductions; or tax shelters, financial arrangements to reduce the investor's tax, with some designed to lose money for potentially greater tax savings.

Highly relevant to comparisons of the two courts is that, although some issues appear in both courts, such as what constitutes income and what deductions were proper, the two courts at times deal with different issue areas. For example, district courts often deal with the question of jurisdiction, when court litigants have not paid their assessment and are, thus, in the wrong court. The district court, unlike the tax court, also confronts issues as to whether income was properly withheld from employees, as the government holds a taxpayer responsible for a company's failure to withhold taxes properly, or a business tries to avoid withholding taxes by claiming that the workers were independent contractors and not employees. The tax court, by contrast, often deals with innocent-spouse issues. This occurs when a spouse signed a joint return but claims lack of knowledge of the contents in order not to be held responsible for penalties and interest. In addition, the court deals with valuation issues, particularly for gifts, estates, and trusts.

HYPOTHESES

The prevalence of ideological decision making, the differences in structure, and local versus national outlook lead to two subgroups of hypotheses about decisions of these two courts.

Ideology. As tax policy, and support or opposition to the Internal Revenue Service, is highly ideological, one would expect judges to exhibit ideological bias in their rulings. Tax court judges are subject to the same nomination and confirmation process as are the judges of the district court, so one should see similar ideologies in rulings for both courts. However, because tax policy is complex, judges of general jurisdiction courts need to rely more on litigants, lawyers, the IRS, and other courts for the meaning and proper construction of the Internal Revenue Code; this reliance on outside interpretation will restrict the use of ideology in the rulings by the district court judges. Tax court judges' expertise, and the concomitant lack of reliance on others, means that the tax court judges have greater freedom to use their ideology in their rulings.