We have written quite a bit about answers in Tax Court cases recently. I wrote a post about answers describing how little help they provided. In that post I provided some history about answers and some suggestions present and past on how to improve the system. Caleb Smith followed my post with a three part series, found here, here and here, in which he focused on the failure of Chief Counsel attorneys to engage in the type of due diligence and duty for reasonable inquiry regarding alleged facts that one may expect with respect to answers. Christine wrote a post in 2018 about the EZ Answer procedures adopted by Chief Counsel for answering small tax cases. (In that post Christine reports on the surprise Judge Leyden had about the number of petitioners who disappear, who I refer to as melting away in a recent post.)
Because I think there is a correlation between the melting away of petitioners and the answer, recent activity regarding answers in a different federal court has brought me back to the topic of answers and my continued desire for a better procedure. Since the Tax Court purports to look to Social Security cases as the basis for its rules for denying electronic access to documents (see my article available through a link in this post), I thought that perhaps it would find interesting the discourse happening in federal district courts regarding answers in cases brought to challenge Social Security determinations under 42 USC 405(g).
I thank Carl Smith for pointing me to the rule change and my research assistant Grace Heinerikson for running down all of the comments.
The Supreme Court forwarded a rule change to Congress which will take place on December 1, 2022, absent action to stop it. Here’s the pertinent rule change for purposes of the discussion in this post:
SUPPLEMENTAL RULES FOR SOCIAL SECURITY
ACTIONS UNDER 42 U.S.C. § 405(g)
Rule 1. Review of Social Security Decisions Under 42
U.S.C. § 405(g)
(a) Applicability of These Rules. These rules govern an
action under 42 U.S.C. § 405(g) for review on the
record of a final decision of the Commissioner of
Social Security that presents only an individual
(b) Federal Rules of Civil Procedure. The Federal
Rules of Civil Procedure also apply to a proceeding
under these rules, except to the extent that they are
inconsistent with these rules.
Rule 2. Complaint
(a) Commencing Action. An action for review under
these rules is commenced by filing a complaint with
(1) The complaint must:
(A) state that the action is brought under
(B) identify the final decision to be
reviewed, including any identifying
designation provided by the
Commissioner with the final
(C) state the name and the county of
residence of the person for whom
benefits are claimed;
(D) name the person on whose wage
record benefits are claimed; and
(E) state the type of benefits claimed.
(2) The complaint may include a short and plain
statement of the grounds for relief.
Rule 3. Service
The court must notify the Commissioner of the
commencement of the action by transmitting a Notice of
Electronic Filing to the appropriate office within the Social
Security Administration’s Office of General Counsel and to
the United States Attorney for the district where the action is
filed. If the complaint was not filed electronically, the court
must notify the plaintiff of the transmission. The plaintiff
need not serve a summons and complaint under Civil Rule 4.
Rule 4. Answer; Motions; Time
(a) Serving the Answer. An answer must be served on
the plaintiff within 60 days after notice of the action
is given under Rule 3.
(b) The Answer. An answer may be limited to a certified
copy of the administrative record, and to any
affirmative defenses under Civil Rule 8(c). Civil
Rule 8(b) does not apply.
(c) Motions Under Civil Rule 12. A motion under Civil
Rule 12 must be made within 60 days after notice of
the action is given under Rule 3.
(d) Time to Answer After a Motion Under Rule 4(c).
Unless the court sets a different time, serving a
motion under Rule 4(c) alters the time to answer as
provided by Civil Rule 12(a)(4).
Rule 5. Presenting the Action for Decision
The action is presented for decision by the parties’
briefs. A brief must support assertions of fact by citations to
particular parts of the record.
Rule 6. Plaintiff’s Brief
The plaintiff must file and serve on the Commissioner
a brief for the requested relief within 30 days after the answer
is filed or 30 days after entry of an order disposing of the last
remaining motion filed under Rule 4(c), whichever is later.
I bolded the provision regarding the Answer, which requires merely that the government attach a copy of the record and set forth any affirmative defenses. Contrast this proposal with Tax Court Rules 34 and 36 on which the Tax Court proposed amendments recently here. For the reasons discussed in the first post linked above, the Tax Court will want more than the FRCP amendment copied above requires for a petition in a social security case in order to determine if it has jurisdiction, but what about the idea of a simple answer such as the Supreme Court has now proposed in these Social Security cases proceeding in district court?
The new rule seems designed to simplify (a good thing and something Chief Counsel’s Office would probably get behind) and to speed up (another good thing and a reason for some of the Melt) the filings and rulings in these cases.
Might the Tax Court look to the newly adopted rules for Social Security cases as a basis for thinking again about the answer procedures in small tax cases and perhaps petitions as well? With IRS continuing to provide heavy audit coverage of the least among us and 75-80% of petitions filed by pro se petitioners, it’s not only the answers that might benefit from a make-over. Pro se petitioners don’t exactly write the kind of petitions lawyers might want which makes it harder to write good answers. Why not examine the whole process of how to get a case underway?
Maybe the petition should simply state what the petitioner thinks is the problem, and the answer should simply attach pertinent documents and make affirmative allegations. New Rule 2(b)(2) for Social Security cases states: “(2) The complaint may include a short and plain statement of the grounds for relief.” Maybe the Tax Court should no longer treat the failure to raise an item from the notice of deficiency in the petition as a concession of the item. Could we just make getting the small tax case underway as simple as possible and then sort it out? That seems to be the process the Supreme Court has adopted for Social Security cases filed under 42 USC 405(g).
The proposed rules drew a number of comments, linked here:
American Association for Justice
Judge Patricia Barksdale
Empire Justice Center
Federal Magistrate Judges Association
Judge Frank P. Geraci, Jr.
NAACP Legal Defense & Educational Fund
Judge Ricardo S. Martinez
Alan B. Morrison
National Organization of Social Security Claimants’ Representatives
New York City Bar
Joanna L. Suyes
Social Security Administration
Not every comment specifically addresses the petition and answer aspect of 42 USC 405(g) and not every comment was supportive. Of particular importance was the comment submitted by the Social Security Administration – the last of the comments linked above. In the SSA’s comment was the following paragraph:
With respect to the Commissioner’s initial response to the complaint, the Supplemental Rules strike an appropriate balance. In the vast majority of cases, an answer from the Commissioner is unnecessary, and the parties are able to proceed to briefing as soon as the administrative record is filed because the legal issue is defined by statute. At least 25 Federal districts currently allow for the administrative record to serve as the Commissioner’s answer without any issue. In the rare case that warrants an affirmative defense, Supplemental Rule 4(b) preserves the Commissioner’s ability to assert one.
SSA reports that there are about 18,000 district court review cases filed each year. This number is not appreciably different from the number of small tax cases filed each year. While there are certainly differences in the procedural posture of SSA appeal cases and small tax cases, many similarities also exist. The FRCP rule changes present an opportunity for study of the Tax Court rules regarding small tax cases. Maybe the Tax Court should use this as an opportunity to study ways to improve the process for all parties, including the Court. What’s the harm in taking a close look by studying the issue?