According to Law360, the U.S. Tax Court's return to in-person trial sessions this winter, will require tax practitioners to weigh their witnesses, clients, technology and expenses when deciding whether to conduct an in-person trial or request a virtual proceeding.
On Aug. 27, the Tax Court issued Administrative Order 2021-01, which said beginning in the winter 2022 term the court will default to holding in-person trial sessions with an option to request a virtual proceeding. The order overrides from 2020 that said the court would conduct only virtual proceedings because of the coronavirus pandemic.
The order presents representatives of Tax Court clients with a novel choice: whether it would be better to hold an in-person trial or to request a virtual session. When evaluating the options, tax attorneys have to think about their role not only as an advocate but also as a people manager, according to Igor S. Drabkin, a principal at Holtz Slavett & Drabkin APLC.
Things attorneys have to consider include "whether someone is unable or unwilling to show up [to the courtroom],'' Drabkin said, "and the cost factor is a consideration in certain cases with limited resources."
Each Case Should Be Evaluated Separately When Deciding Whether It's Worthwhile To Request A Virtual Proceeding Or To Keep It In Person, Drabkin Said.
The answer largely will depend on the complexities in the trial and the issues involved, he said. For example, an online trial is more cost-efficient because parties will not have to drive or fly to the Tax Court, which allows witnesses who live out of state or outside the country to appear before a judge without considerable expense, he said. The Tax Court holds sessions at its building in Washington, D.C., and in various courtrooms around the country.
Meanwhile, an in-person trial provides the opportunity for a taxpayer or a witness to make a personal impression upon the judge, especially in the case of a taxpayer's testimony and their personal story, Drabkin said. For example, an in-person trial may be more appropriate in a penalty case that hinges upon the taxpayer's intent or state of mind, he said.
"An in-person trial will maybe allow the taxpayer to make a better impression [and for a judge to understand] their vulnerabilities or lack of sophistication," he said.
On the other hand, if witnesses or attorneys have health concerns and holding an in-person trial would make them more vulnerable, that may weigh the scales in favor of a virtual session, Hill said. Virtual proceedings may also be better suited for arguing motions, he said.
Either party can request a virtual trial by filing a motion to proceed remotely, which can be filed after the petition is initially filed and up to 31 days before the first day of the trial session, the administrative order said.
However, it is unclear what will happen when one party wants an in-person session and the other party wants the proceeding to be remote, Garber said. The court will likely weigh the complexity of the case against any hardships such as travel costs, which could be especially important when evaluating smaller cases, he said.
A representative from the Tax Court confirmed to Law360 that each motion to proceed remotely will be determined case by case.
The motion to proceed remotely also potentially could be used to change a scheduled in-person trial to a remote trial at the last minute, since the request can be filed up to 31 days before the session. That means it could conceivably be used as a litigation tactic by either side to require the other party to cancel their travel plans and pivot to conducting the trial remotely, Hill said.
Timothy Jacobs, a tax partner at Hunton Andrews Kurth LLP, said that going forward, there's an opportunity for the Tax Court to continue using its virtual platform for the sake of efficiency and cost.
"It is an easier mechanism for pro se taxpayers and even the Tax Court itself for travel time, efficiency in terms of getting a large docket cleared and making sure there are no scheduling conflicts," he said. "Those are much easier in a Zoom world than in person."
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