Professor Sharyn Fisk and Attorney Barbara Lubin, Esq.
Every year, presidentially appointed U.S. Tax Court judges make their way across the country to conduct trials in tax cases in 70 major U.S. cities. In other words, they “ride the circuit,” which happens quarterly throughout the calendar year. Undergraduate accounting students Jose Luis and Elena Tuinova, and taxation graduate student Rienna Smith were the first three California State University, Northridge students to participate on behalf of the Bookstein Low Income Taxpayer Clinic in Tax Court at the Los Angeles Federal Courthouse on Sept. 12.
“It’s a big opportunity,” said Luis. “This opportunity is almost as big as going to the Supreme Court. There are 19 federal Tax Court judges in the country and it means a lot to meet one.”
In the past, there have only been three pro bono (meaning they represent taxpayers free of charge) groups that have had the opportunity to assist taxpayers during the Tax Court’s Los Angeles trial sessions: the Los Angeles County Bar Association (LACBA), Bet Tzedek Legal Services and Chapman Law School Tax Clinic. This year, the Internal Revenue Service (IRS) extended an invitation to the Bookstein Low Income Taxpayer Clinic, which is a "huge compliment to the Clinic and the graduate tax program for students to be given this responsibility,” said Sharyn Fisk, CSUN Professor and co-Supervising Attorney at the Bookstein Low Income Taxpayer Clinic.
The students and supervising attorney Barbara Lubin were among IRS lawyers, five taxpayers with pending trials, and Federal Judge Chiechi in attendance at the Los Angeles trial session. Not only were the Clinic students able to sit in the Tax Court and get a feel for the procedures, but they also had first-hand experience in helping to settle a case.
“In a matter of three hours, one can get 95 percent of what they owe taken out through a settlement at Tax Court,” said Tuinova. “That’s essentially what we did— we helped someone get relief after years of disputing a case with the IRS.”
The September Tax Court trial session in Los Angeles was for small cases, meaning the amount in dispute is less than $50,000. It is common that many of the taxpayers are minorities, English is not their first language, and they are not represented by an attorney. That day, there were 72 cases and the Court “called” all of them to see the status of each case. Most cases settled and did not go to trial. Only 3-4 cases were set for trial, and the students worked on one of these cases, the Angelo case is what they called it.
Angelo had his identity stolen in 2012. After having a return fraudulently filed under his name by the identity thief, Angelo’s real tax return was rejected by the IRS because there was already a return under his name.For over two years, Angelo suffered many unfortunate life events that stalled his ability to assess his situation with the IRS. He broke his back; his mother passed away; and he had to take care of the medical bills. During this time, letters from the IRS piled up, and the IRS conducted an audit resulting in a determination that Angelo owed $6,000 in taxes.
“Tax Court was his last chance,” said Tuinova. “He can plead his case and bring documents as his last resort to prove he is not liable for these debts.”
Tax Court is certainly the “last chance” scenario for many people who are audited by the IRS. In a case like Angelo’s, where the IRS was claiming an outstanding tax liability of $6,000 (roughly 20 percent of Angelo’s income), Tax Court was his chance to resolve the case without having to pay the taxes. Since his income was below $50,000, Angelo was qualified to be represented free of charge by the Clinic – that is where CSUN accounting students stepped in to help. Luis, Tuinova and Smith worked with Lubin to help Angelo come to a fair settlement with the IRS. By presenting the facts and the law to the IRS lawyer handling the Angelo case, the students were able to reduce the tax liability down by over 95 percent. Ultimately, Angelo settled with the IRS for $295.
“At first he was apprehensive about us working with him for free,” said Tuinova. “But when he agreed, he trusted us with his information.” Luis added: “We looked at the whole picture and advised him on what he can and cannot prove. In the end, it was worth it for him to take the settlement. It is a good feeling to know we impacted his life in a good way.”
According to ustaxcourt.gov, over 90 percent of tax court cases reach a settlement before going to trial, and one can expect a high probability of at least partial success. Settlement is a common route for taxpayers because they are determined to get their assessments reduced or eliminated and do not want to take a chance or incur the costs of trial. The burden of proof is upon the taxpayer to prove the IRS is wrong. In Angelo’s case, he was a victim, but he also had a lack of proof of his right to some of his claimed deductions.
“I don’t think he was in a position where he could advocate for himself,” said Lubin. “He was out of his element, overwhelmed, and feeling persecuted. There is frequently a lot of emotion tied to these cases, and it is helpful to have someone knowledgeable about taxation understand the taxpayer’s facts. The students did a good job advocating the client’s position to IRS counsel to get a positive result.”
In the past, CSUN has been limited in its representation of Taxpayers to the administrative procedures within the IRS. However, with the recognition and success of the Bookstein Low Income Taxpayer Clinic (one of only five low-income tax clinics in Los Angeles) and the Accounting and Taxation programs at CSUN, now there are undergraduate and graduate students like Luis, Tuinova and Smith who are granted these unique opportunities typically only open to law students and lawyers. Lubin says that for accounting and taxation students who are considering representing taxpayers in disputes with the IRS or are considering becoming tax attorneys, the Tax Court experience is particularly worthwhile. The students are enrolled in John Balian’s Accounting 542: Introduction to Federal Tax Procedure.
“Coming to the Tax Court calendar call is voluntary,” said Fisk. “Willingness is important, and you have to be extremely organized and present – it takes a lot of courage to step out of your comfort zone and be an advocate.”
*Names have been changed to conceal identity of taxpayers