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8 December 2004

Stephen Shapiro Argues Important Tax Case Before U.S. Supreme Court
Mayer, Brown, Rowe & Maw LLP

8 December 2004 - Mayer, Brown, Rowe & Maw LLP partner Stephen Shapiro argued a significant federal tax case before the Supreme Court yesterday. The case raises statutory and constitutional objections to the U.S. Tax Court's practice of preparing trial judge reports that are held in secrecy without disclosure to the parties or even the reviewing courts.

The Tax Court's "special trial judges" conduct hearings and make findings of fact and credibility judgments, which are memorialized in detailed reports that, pursuant to the Tax Court's own rules, are "presumed to be correct" upon review by a Tax Court judge. Yet the Tax Court keeps those reports secret from the parties and from the reviewing courts of appeals, and generally does not disclose the fact that a special trial judge's findings of fact have been rejected or modified. Shapiro argued on behalf of two taxpayers, Claude Ballard and the estate of Burton Kanter, who contend that this practice violates a federal statute requiring that "all reports of the Tax Court" be "public records" and infringes the taxpayer's statutory and due process right to a full and fair appeal. The petitioners also argue that Tax Court rules require the court to defer to the trial judge's findings unless those findings are clearly erroneous.

The Associated Press reports that the Supreme Court "seemed disturbed" by the Tax Court's practice of secrecy; Justice Ginsburg characterized the practice as "misleading" and potentially "deceitful," and Justice O'Connor described it as "such a strange procedure." Shapiro's advocacy has been widely praised: Tax Notes observed that he "impressed Justice Antonin Scalia with his institutional knowledge" and "had an answer, complete with Supreme Court precedent, for every question put to him." The other Mayer, Brown lawyers on the case were Philip Allen Lacovara and Lauren Goldman.

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