Taxing Definitions

Definitions — Defining the court

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Source: General Services Administration [Public domain], via Wikimedia Commons
Source: General Services Administration [Public domain], via Wikimedia Commons

The court released no opinions this week. Fortunately for tax geeks, the second edition of the historical analysis of the court—all 953 pages—is available. And yes, it is interesting reading. Here are a few questions so you can test your knowledge.

1. Why did the Bureau of Internal Revenue remain in existence after the federal income tax was repealed in 1872?


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2. Before the Tax Reform Act of 1976, tax returns were public records.

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3. What is the proper name of the tax court?

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4. The tax court is independent of the executive and legislative branches of the federal government.

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5. As of 2012, in 68% of cases filed in the tax court, taxpayers represented themselves without using a lawyer.

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6. The tax court website went live on January 1, 2009.

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The income tax of the Civil War period was repealed effective 1872, and most of the other internal taxes imposed to finance the war were repealed by 1877. Nevertheless, the bureau continued in existence to administer the remaining internal taxes and those thereafter enacted, such as the taxes on alcoholic beverages and tobacco. Additionally, it was given charge of various non-revenue regulatory measures such as the bounty for United States sugar producers, the certification of Chinese laborers, and the taxes on opium and oleomargarine.

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For much of the 100 years preceding the Tax Reform Act of 1976, tax returns were designated “public records” and were subject to disclosure pursuant to executive order and regulations. The law, in its various forms, required that lists of tax information be made available to the general public. Proponents of publication of this information argued that it kept taxpayers honest, while opponents argued that publication of this information did nothing more than satisfy idle curiosity.

Immediately prior to the 1976 Act, the IRS was authorized by statute to tell anyone who asked whether a taxpayer had or had not filed a return.

The Watergate hearings brought out allegations regarding impropriety on the part of the White House regarding return information. This publicity regarding possible misuse of return information on the part of the administration helped provide impetus for the 1976 Act changes to the disclosure rules.

The 1976 Act eliminated executive branch control over access to returns and return information and replaced it with an extensive statutory regime governing disclosure. In general, the 1976 Act provided that returns and return information are confidential. The 1976 Act also included a variety of exceptions to this general rule.

Since the enactment of the 1976 Act, the general rule that returns and return information are confidential has remained. However, additional exceptions to this rule have been added by subsequent changes in the law where the need for returns and return information has been determined to outweigh the taxpayers’ interest in privacy and other purposes served by nondisclosure.

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The court was originally established in 1924 as the Board of Tax Appeals, “an independent agency in the executive branch of the Government.” In 1942, the name of the Board was changed to the Tax Court of the United States, but despite its new title the court’s status as an agency of the executive branch was not disturbed. Finally, in 1969, the court was established as a legislative court under article I of the Constitution, and its name was changed to the United States Tax Court.

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In Freytag v. Commissioner (501 U.S. 868, 1991), the Supreme Court declared that the tax court is independent of the executive and legislative branches and that it exercises a portion of the judicial power of the United States. The Freytag decision therefore provided a powerful affirmation of the tax court’s judicial character.

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Statistics provided by the Clerk of Court, United States Tax Court.

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Statistics provided by the Clerk of Court, United States Tax Court.

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