The Internal Revenue Service (IRS) has largely been in shut down mode since March 24, 2020, when employees confirmed that some IRS call centers and return processing centers were closing in response to COVID-19. However, on April 25, 2020, the IRS announced that it was calling some employees back to work.
Now, the IRS Office of Chief Counsel has announced that their Settlement Days program will continue to allow unrepresented taxpayers to work towards resolving their pending United States Tax Court case despite “stay-at-home” orders in many jurisdictions. The twist? It’s virtual.
Settlement Days allows taxpayers who are not represented by counsel to receive free tax advice and possible representation from Low Income Taxpayer Clinics (LITCs) or other pro bono organizations. At the events, taxpayers can discuss their case and federal tax issues with members of the IRS Office of Chief Counsel, Appeals and Collections.
The help is needed. According to a 2018 National Taxpayer Advocate report (downloads as a PDF), more than 80% of cases in Tax Court are brought by unrepresented taxpayers. That percentage increases to almost 94% among cases where the deficiency for a tax year is $50,000 or less, and the taxpayer elects small tax case (S Case) procedures.
How do they do? Unrepresented taxpayers are more than 2.5 times more likely to have their petition dismissed. Reasons for dismissal can include procedural defects, and may not even be connected to the merits of the case. Statistically, even those who make it to trial don’t fare well: the chances of achieving a favorable outcome for unrepresented taxpayers aren’t as good as taxpayers that are represented.
Settlement Days is geared to help unrepresented taxpayers get assistance without the need for more litigation or a trial in Tax Court. According to the IRS, the vast majority of taxpayers participating in previous Settlement Days programs have resolved their cases; most of those who ended up with a liability entered into an installment agreement.
Of course, with stay-at-home orders in place, it’s a challenge to hold Settlement Days. But some Tax Court trial sessions are proceeding (with appropriate social distancing measures, of course). And by Order, the Tax Court has made clear that it expects that parties will continue to work together to exchange information and address pending issues.
With Virtual Settlement Days, parties can still work towards settling their cases on a remote basis. They’ll just do it screen-to-screen instead of face-to-face.
The first two events are for docketed cases with a place of trial in Detroit or Atlanta. The Detroit Office of Chief Counsel will host its event on Saturday, May 9, 2020, while the Atlanta Office of Chief Counsel will host the second event on Thursday, May 21, 2020.
Here’s how they will work: IRS Chief Counsel has invited more than 100 unrepresented taxpayers to meet with Chief Counsel attorneys or paralegals via WebEx for the two events. The taxpayers will be able to speak with LITC representatives before the online meetings, and the LITC representatives can later join the settlement discussions if the taxpayers would like for them to do so.
While the first few events may take a little getting used to, some guidance will be available. The IRS Chief Counsel has prepared a Virtual Settlement Days Best Practice Guide for external use that will be released before the events.
Future events may be scheduled in other cities throughout the United States.
