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The Supreme Court on Monday lifted the veil of secrecy that has shrouded important parts of Tax Court proceedings for the past 22 years. The high court ruled 7-2 that early-stage determinations made by special trial judges � assigned by Tax Court judges to make recommendations on how to decide particular cases � must be made public. Until the Supreme Court’s decision, those determinations had been kept secret from the parties in the cases as well as the circuit courts that ultimately heard appeals from the cases. “The Tax Court’s practice, we think it plain, impedes fully informed appellate review of the Tax Court’s decision,” said Justice Ruth Bader Ginsburg in announcing the ruling from the bench. She called the practice a “bold” and unjustified departure from traditional administrative decision making. The ruling in Ballard v. Commissioner of Internal Revenue and Estate of Kanter v. Commissioner of Internal Revenue affects only the Tax Court and its own rules, and thus does not stand as a broad statement about the value of open courts. But it was welcomed by tax experts, who saw the procedure as an impediment for Tax Court litigants. “The Court was concerned about the importance of the appellate process,” said Leandra Lederman, a visiting professor at Indiana University School of Law, Bloomington, who filed a brief in the case. “It will be interesting to see how the Tax Court reacts and whether the court will make less use of this procedure in the future.” The Washington, D.C.-based Tax Court comprises 19 judges, appointed by the president to 15-year terms, who hear the pleas of taxpayers contesting Internal Revenue Service findings of deficiency. Under Tax Court rules, these judges can appoint special trial judges to hear cases. The special judges submit findings and opinions to Tax Court judges, who use the reports as the basis for their rulings. Before 1984, findings were made public and included in the record that went to federal circuit courts on appeal. But the Tax Court changed its rules that year to close findings to the parties and public. Tax Court judges do not indicate whether they have modified or rejected the findings. In one of the cases before the high court, the trial before the special judge took five weeks and generated thousands of pages of transcripts. The judge’s report went to the Tax Court four years later and was reversed, but the parties were not allowed to see the special judge’s findings. The government defended the Tax Court procedure, arguing that the findings are just part of a “confidential decisional process” that need not be made public. But Ginsburg said that the Tax Court’s own rules do not authorize the closed procedure. “The rule,” she said, “does not contemplate a collaborative revision process.” In dissent, Chief Justice William Rehnquist chided the majority for basing its decision on that point, which he said was not before the Court. “Only by failing to abide by our own rules can the Court hold that the Tax Court failed to follow its rules,” said Rehnquist, who was joined by Justice Clarence Thomas. Ginsburg’s husband, Martin, a leading tax practitioner, is of counsel at Fried Frank Harris Shriver & Jacobson and teaches tax law at Georgetown University Law Center. He was in attendance when Ballard and Kanter were argued in December. Tony Mauro can be contacted at [email protected].

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