Uniformity and Jurisdiction in U.S. Federal Court Tax Decisions - Diversity in Appellate Tax Jurisdiction

Diversity in Appellate Tax Jurisdiction

For three of these sets of courts, appeals can be taken either by the taxpayer or the IRS to one of the eleven regionally-based U.S. courts of appeals or the United States Court of Appeals for the D.C. Circuit. For the Court of Federal Claims, appeals are to the Court of Appeals for the Federal Circuit, a specialized appeals court, but one with national jurisdiction. With this number of original jurisdiction courts involved in making legal determinations on federal tax matters and thirteen United States courts of appeals exercising appellate jurisdiction, observers recognize and are concerned that the tax laws can be interpreted differently for like cases. As examples, Supreme Court decisions in the well-known cases of Kowalski (whether state policemen could exclude meal reimbursements from gross income) and Dalm (whether a taxpayer could get a refund for overpaid gift taxes otherwise time-barred, when the delay was caused in resolving income tax deficiencies) show the Supreme Court resolving diametrically opposed decisions from two or more of the circuit courts. The Supreme Court, however, accepts few tax cases on appeal, and many cases are not appealed from the circuit courts, allowing diametrically opposed decisions to stand. The diversity also allows forum shopping because a taxpayer can choose to bring a case before any of three, and in a voluntary bankruptcy proceeding, four of the courts of original jurisdiction and can select the court most likely to provide a favorable opinion based on the taxpayer’s knowledge of the precedents of the various courts as well as the precedents of appellate courts with jurisdiction over them.