States are increasingly turning to independent tax tribunals. Most states now have either a judicial-branch tax court or an administrative-level tax tribunal that is independent of the state’s tax authority. Taxpayers and practitioners have pressed states for independent decision-making bodies for several reasons, including that the judges or administrative law judges who write decisions are impartial and knowledgeable in tax issues and that the opinions should more consistently and transparently apply the tax law because they will be published. All in all, independent tax tribunals have a positive impact on state tax systems.
In its first decision, issued October 1, the tribunal addressed whether taxpayers could obtain a three-year lookback period rather than a five-year lookback period. A lookback period is the number of years that a taxpayer could be required to amend her state income tax return and pay any tax and interest due.
In the case, the taxpayers discovered some questionable deductions and filing statuses on previous returns prepared by a now-deceased tax return preparer. The taxpayers notified the Department of Revenue of the errors on their previous years’ returns under the state’s voluntary disclosure program.
The legal issues at stake in the tribunal’s opinion admittedly aren’t that important. What is important is that the tribunal has begun to issue opinions, and its first opinion was rich with legal reasoning. It bodes well for the future.
The tribunal will also eliminate some of the bias that existed with all tax disputes in the state. It will reduce the bias against taxpayers and improve transparency by providing clarity and consistency in the administration of the state’s tax laws. With any luck, other states will take notice.
In its first decision, issued October 1, the tribunal addressed whether taxpayers could obtain a three-year lookback period rather than a five-year lookback period. A lookback period is the number of years that a taxpayer could be required to amend her state income tax return and pay any tax and interest due.
In the case, the taxpayers discovered some questionable deductions and filing statuses on previous returns prepared by a now-deceased tax return preparer. The taxpayers notified the Department of Revenue of the errors on their previous years’ returns under the state’s voluntary disclosure program.
The legal issues at stake in the tribunal’s opinion admittedly aren’t that important. What is important is that the tribunal has begun to issue opinions, and its first opinion was rich with legal reasoning. It bodes well for the future.
The tribunal will also eliminate some of the bias that existed with all tax disputes in the state. It will reduce the bias against taxpayers and improve transparency by providing clarity and consistency in the administration of the state’s tax laws. With any luck, other states will take notice.
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