The Un-Precedented Tax Court

I. IntroductionAround the turn of this century, a "highly-charged" debate erupted over unpublished federal appellate court opinions.1 Some, including most notably Judge Alex Kozinski of the Ninth Circuit, strongly argued that the common prohibition against citation to those opinions posed no constitutional problems, and that the prohibition allowed appellate judges to efficiently discharge their duties.2 Yet others, including Judge Richard Arnold of the Eighth Circuit, passionately disagreed, arguing that the no-citation rule eliminated a significant check on the judicial power and consequently violated the Constitution.3In 2006, the Judicial Conference of the United States addressed one aspect of this controversy. Under new Federal Rule of Appellate Procedure 32.1, any party may cite unpublished opinions.4 However, the new rule does not address other fundamental questions related to unpublished opinions, including their appropriate precedential status and their constitutionality.5 Consequently, an active scholarly debate over these issues continues.6This debate might have been expected to reach, but has not yet touched upon, issues related to the purportedly nonprecedential nature of most Tax Court opinions. Although the Tax Court sometimes issues precedential "Division" opinions,7 most of its opinions come in one nonprecedential form or another.8 Under court practices, the Chief Judge classifies some opinions as Memorandum or "Memo" opinions, and these opinions, in theory, involve only heavily factual determinations or applications of settled law.9 Although parties may cite them,10 Memo opinions purportedly lack precedential value.11Congress has also denied precedential status to some Tax Court opinions. Under Section 7463(b),12 so-called Summary or "S" opinions can neither be appealed nor cited as precedent. These opinions relate to cases decided under an essentially elective, streamlined set of procedures and involve relatively small amounts of tax liabilities.13The justifications for Memo and S opinions seem straightforward. Like other federal courts, the Tax Court faces a heavy workload, and Memo opinions might allow Tax Court judges to decide clear-cut cases without worrying about the dangers of establishing precedent. S opinions also go hand-in-hand with streamlined case procedures, without which taxpayers could judicially contest their tax liabilities only by following generally cumbersome procedural rules.14The nonprecedential status of these Tax Court opinions gives rise to practical problems, however.15 A _ judicial exposition of a case is difficult to ignore, and taxpayers frequently invoke Memo or S opinions as authority in connection with their tax disputes, whether in front of the IRS, the Tax Court, or other federal courts.16 And the Tax Court seemingly cannot ignore its own opinions.17 Although plenty of cases dismiss Memo opinions as nonprecedential, other cases treat them like persuasive or binding authorities.18 More troubling still, Memo opinions sometimes address controversial issues of tax law, and not only heavily factual or clear-cut legal issues.19 The ambiguous weight of Memo opinions thus sows confusion in the tax law.20S opinions also raise problems. Section 7463(b) denies the precedential effect of S opinions, and uncertainty lingers over whether this statute displaces issue preclusion doctrines.21 Also, a case that seems suitable for streamlined procedures sometimes turns out not to be, and the Tax Court may address important issues through a nonprecedential, nonreviewable opinion.22Issues relating to the scope of the judicial power further complicate matters. If Judge Arnold's view holds, federal courts, including the Tax Court, do not enjoy the constitutional authority to deprive their opinions of precedential value. Under this view, the categorical denial of precedential status to Memo opinions reflects an unconstitutional practice.The statutory prohibition against citation to S opinions adds a further wrinkle to this analysis. …