Should There Be Juries in Tax Court?

A recent film on Ruth Bader Ginsburg, called On the Basis of Sex, brought to light a tax court case that was appealed to the Tenth Circuit. Tax Court is often lesser known by the public, and a significant difference from most other courts is that there are no juries.

The appeals case Mortiz v. Commissioner was argued by Ruth Bader Ginsburg and her tax lawyer husband, Marty Ginsburg, and the tax court judge had found for the I.R.S. Commissioner. RBG and Marty were successful on appeal, convincing the court the denial of a dependent care deduction only to a man who had not married was an invidious discrimination and a violation of due process. However, this movie illustrates how the typical tax case is handled – with no jury and most often in favor of the Commissioner.

Why Are There No Juries in Tax Court?

The Tax Court is a specialized court created by Congress under Article I of the U.S. Constitution, rather than a court under Article III. It is a court of limited jurisdiction that has been found to be constitutional, not encroaching on the powers of the Article III courts. Therefore, no right to trial by jury is required.

What If You Want a Jury in Your Tax Case?
There are three court options when deciding on where to bring your tax case: Tax Court, Court of Federal Claims, and district courts. As a general rule, Tax Court has jurisdiction over deficiency cases (when the taxpayer has not paid the disputed balance) and the Court of Federal Claims and district courts have refund jurisdiction (when the taxpayer has paid the disputed balance). Both Tax Court and the Court of Federal Claims have no juries. Therefore, if you want a jury on your case, you will almost always need to pay your full balance due and sue for a refund in district court. This is often cost prohibitive for many clients who cannot afford to pay the balance the IRS believes is due.

Should Tax Court Have Juries?

From speaking personally with tax practitioners, they often strongly believe that juries are almost always harmful for their clients. The thought is that juries have little sympathy for people who do not pay their taxes. This logic seems in line with the popular notion that juries may be swayed more by their emotions than reason consistent with the law. It is also a common thought that jury members are not sophisticated enough to understand complex law.

However, there is substantial evidence that juries understand complex information given to them, and they often come out with decisions consistent with a judge. In the book American Juries: The Verdict, the authors cite several studies showing consistency in decisions between judges and juries. For example, a study by Kalven and Zeisel showed a 78% consistency in decisions between juries and judges. When the judge and jury did disagree, the jury was six times more likely to be lenient. While these studies focus on criminal cases because the verdicts are binary classifications, they demonstrate how juries generally process information in a case. Studies further supported that the disagreement between juries and judges did not get worse when the case was more complex. In situations where they did disagree in the verdict, judges almost never speculated that it was from the jury failing to understand the evidence.

These findings are consistent with a recent article written in the newsletter for the Civil Jury Project at NYU School of Law by the Honorable Kathleen O’Malley, a U.S. Circuit Judge of the U.S. Court of Appeals for the Federal Circuit. Judge O’Malley adamantly argues there should not be a “complexity exception” for complex civil cases, including patent cases. She explains how her experience presiding over jury trials is “consistent with studies showing that juries…tend to reach reasoned conclusions,” and she describes herself as “an unabashed believer that juries can sort out even complex issues when given the proper tools.”

If it were up to Judge O’Malley, it is likely she would argue Tax Court cases should also not have a “complexity exception.” While taxpayers have the option to pay their deficiency and go to district court to be heard by a jury, it seems to be an unpopular route both because taxpayers often do not have the money to pay their tax and because practitioners are under the impression juries are less reasonable. While studies and perspectives from judges support that juries understand and apply reason even in complex cases, the structure of Tax Court is unlikely to change considering it was setup this way by Congress in 1924.