US Tax Court Lifts Veil Of Secrecy

by Leroy Baker, for LawandTax-News.com, New York

14 July 2005

The United States Tax Court has announced that it will end its twenty-year practice of keeping reports written by special trial judges secret from taxpayers and attorneys involved in trials.

The court's change in policy, announced last week, has come after the Supreme Court ruled in March that the Tax Court does not have the justification to withhold vital documents from individuals and appellate judges, ruling that factual recommendations in proceedings must be disclosed.

Unusually, while the official opinions of the tax court are made public, the recommendations of specially appointed judges who hold trials in cases involving more than $50,000 are kept secret. This is because since the early 1980s, the court deemed such material as confidential internal documents.

It is thought that a controversial case involving the now-deceased tax lawyer Burton Kanter was the precipitating event which forced the Tax Court to throw off its veil of secrecy. Kanter, along with two other businessmen, was accused by the IRS in the 1990s of creating an elaborate scheme to commit tax fraud, and Kanter's tax returns dating back to the 1970s and 1980s were challenged.

However, it emerged that the final opinion of the judge in the Kanter case was markedly different to that of the special trial judge's report, and suggested that the three men had committed tax fraud, whereas the report of the special trial judge suggested that no tax fraud had taken place. The case remains unresolved.

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