The Best Kept Secret

Recently, Michael Stuart, Litigation and Trial Practice Director at the Tax Law Institute at Washington DC wrote the following: 

Several years ago, I wrote an article that was published in a continuing professional education journal, which has since become obscure. The content addressed attorney versus non-attorney practice in United States Tax Court. It is time to resurrect that message, with updates. 

United States Tax Court Practitioner v. Attorney: Who can earn more money? 

• There are just about 270 United States Tax Court Practitioners and over 70,000 attorneys who are engaged in federal tax litigation practice. A tax attorney in the U.S. who knows his/her business (i.e. top-earning litigator in a seasoned practice), usually earns between $1-1.5 million or more each year. It is indeed one of the more lucrative practice areas of law. A United States Tax Court Practitioner (also known as Tax Litigation Counsel), is an individual trained and experienced as an IRS enrolled agent or a CPA, who has passed the Tax Court Bar Examination, been vetted by the FBI, sworn, and approved to practice exclusively in and before the Tax Court. He/she can earn up to $1-1.5 million or more each year as well. 

Law school education versus USTCP Apprenticeship

• The tax attorney has 3-6 years of law school training, whereas the EA or CPA has attended no law school (although that's becoming less true), may have or have not attended college (if they're an EA); and if a CPA, most likely, does hold a four-year baccalaureate degree and/or a MST/MBA. Their USTCP approval was obtained, most likely, after they self-prepared or program-prepared (usually for less than one year), before they passed the rigorous, four-hour tax bar exam that tested their understanding of the Internal Revenue Code (IRC), Federal tax procedure and legal applications of Federal evidentiary principles as well as case law, embedded in published opinions of the Tax Court judiciary. 

• Insofar as the tax attorney is concerned, his/her cost for their legal education probably amounted to $100,000 to $200,000, depending on when and where they received their legal education. 

• For the EA, their cost to prepare for the IRS Special Enrollment Exam (SEE) included any prep course to which they subscribed, and the fees associated with those courses (usually amounting to several hundred-to-several thousand dollars). And of course, if they've gone to college, which many of them have done and beyond, then include expenses related to costs and possibly graduate education as well. On the other hand, consider too that many CPAs also have an MBA and/or Ph.D. 

• And then, there are other professionals like retired medical doctors, who have gotten into the tax industry and become very active after retirement. They mostly acquire EA credentials and usually serve clients from the healthcare industry with whom they are usually intimately acquainted. 

• For all of these practitioners, trial practice and litigation training can come from only two sources - either tutelage under a seasoned tax attorney (or USTCP, which is rare) or enrollment in a litigation and trial practice program, offered by select LL.M. programs that usually require a J.D. and at a total cost in excess of $75,000. 

• Whereas the Tax Law Institute is the only Tax Court litigation and trial preparation program in the country, established specifically for CPAs and EAs, and developed by a former judge to offer such training for about $50,000 and 18 months of your time - a real educational bargain when one compares the cost to the six-figure expenses incurred for law school training, which could take 3-4 years.

Who provides more bang for the buck?

• Now, why have I taken the time to write about the background of these tax practitioners and the expenses related to their training? 

• Because I want to make clear that the best kept secret in the world of tax law, tax litigation and U.S. Tax Court trial practice is the benefits and privileges awarded to those who obtain the United States Tax Court Practitioner designation. 

• It is attainable by anyone who has an interest in Federal taxation and is willing to take the time to learn about the U.S. tax system and the role of the U.S. Treasury's Internal Revenue Service. From there, it's just a matter of recognizing that if one lives in the United States and one earns a certain level of income, then one is required, under penalty of law, to submit an annual tax return. 

• By doing so, one may find himself/herself challenged by the IRS over alleged underpayment of taxes, due to mistakenly-claimed deductions or the application of credits to which the government may deem one is not entitled. Or, worst still, the perpetration of a tax fraud upon the government, under a false filing status, for example. Consequently, a determination is made by the IRS that taxes are owed and notice of deficiency is issued . The recourse for the taxpayer is to pay the deficiency or challenge the IRS. With the latter choice, the taxpayer may self-represent (under the risk of making detrimental admissions and other crucial errors), or if need be and affordable (if unaffordable, then apply to a free tax clinic for help), he or she may retain the services of a tax attorney or a United States Tax Court Practitioner.

The Tax Court does not distinguish between attorneys  and USTCPs ... in the courtroom, the judge refers to both parties as 'Counsel' ... possessing the litigation and trial practice skills are what matter ...

• These days, it is fair to say that if a taxpayer is in need of representation (always advised), it would behoove him or her to seek out the best talent he or she can afford. 

• The most bang for the buck comes from the USTCP because they not only prepare tax returns and deal with audits (both CPAs and EAs), but with their U.S. Tax Court-approval to practice in and before the Tax Court, they can represent the taxpayer before the IRS, and they can also prosecute a civil case against the IRS, i.e. go to trial.  However, keep in mind, USTCPs can only engage in a limited practice, exclusive to the U.S. Tax Court, and they are not trained or approved to represent taxpayers in matters of criminal tax fraud for which a licensed and seasoned criminal practitioner must be retained.

• And, they can do so usually for a lot less money than what a tax attorney will charge. That's not to say they're going to work for peanuts. They get anywhere from $275-$650 an hour (highly-specialized practitioners-consultants can demand up to $1200 an hour), so they're well-compensated. But they are so worth it, especially to a taxpayer who comes across a USTCP who is well-trained and well-educated in tax law, tax accounting, litigation and U.S. Tax Court trial practice (most likely a TLI graduate).

Practice throughout the national jurisdiction and all U.S. territories ... no reciprocity required

• On motion, cases docketed on the U.S. Tax Court Calendar may be heard remotely. This accommodation offers tremendous opportunities for the United States Tax Court Practitioner, who upon approval to  practice may do so throughout the national jurisdiction without preapproval of respective state bar authorities. (Read the Guidance for Petitioners and Remote Proceedings in U.S. Tax Court below to learn about the process of litigating a case from the perspective of a self-represented taxpayer.) 

• Imagine, for just a $50,000 investment a federally-authorized tax practitioner can become a very well-compensated professional and well-performing litigator and public servant. It's a transition anyone can make, but it takes dedication, focus and the right training. 

So, perhaps now you will understand why I believe it is timely to reiterate and update my obscure article about the 'best kept secret'. 

• Book an interview here

Michael Jerome Stuart J.D. MPA | Professor Emeritus . The John F. Dean Professor of Tax Litigation and U.S. Tax Court Trial Practice at The Tax Law Institute at Washington DC  | Approved CE Provider at IRS Office of Professional Responsibility | President of the Hawaii Federal Tax Clinic | Educational Coordinator of the Pro Bono Program at the HFTC's Approved U.S. Tax Court Clinical, Student Trial Practice and Calendar Call Program | Former Chair, Joint Program in Taxation and Litigation at the University of Alabama School of Law Graduate Tax Program and the Tax Law Institute | Former White House interim tax policy advisor | Former visiting scholar appointee (taxation) at Yale Law School | Former special consultant in Islamic banking and finance to Harvard University Center for Middle Eastern Studies.

Posted above is a video of a simulated calendar call at the United States Tax Court courtesy of the ABA. See Remote Proceedings in U.S. Tax Court below for the most recent mock Calendar Call video created by the U.S. Tax Court.