Tax Lawsuits Edge Downward

The latest available data from the federal courts show that during January 2014 the government reported 68 new civil filings under the category of "Taxes." According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this number represents a decline of nearly 10 percent from one year ago. Tax lawsuits have declined a total of 32.4 percent from the levels reported five years ago in January 2009. The January 2014 figure is however up 9.7 percent over the previous month, when the number of civil filings of this type totaled 62.

The comparisons of the number of civil filings for tax lawsuits are based on case-by-case court records which were compiled and analyzed by TRAC (see Table 1). Note that the cases covered by this report exclude suits dealing with summonses on third-party witnesses under 26 USC 7609.

Figure 1. Tax Lawsuit Filings over the Past Five Years

The long term trend in taxes lawsuit filings going back five years is shown more clearly in Figure 1. The vertical bars in Figure 1 represent the number of tax lawsuits recorded each month. The superimposed line on the bars plots the six-month moving average so that natural fluctuations are smoothed out. One-year and five-year change comparisons are based upon the moving averages.

Figure 2. Jurisdiction
for Tax Lawsuits

Jurisdiction

Within limits set by Congress and the Constitution, the federal district courts have jurisdiction to hear cases falling under any one of several categories. In the case of tax lawsuits, jurisdiction either involves the U.S. Government as defendant or plaintiff. Nearly three quarters (72%) of civil filings of these matters in January 2014 fell under the classification "U.S. Government Plaintiff". In just over one quarter (28%) of lawsuits filed, the U.S. Government was named as defendant.

Cause of Action

Various federal statutes are invoked as the cause of action in tax lawsuits. The most commonly used for the month of January 2014 were 26 USC 7401 — "IRS: Tax Liability" (37%), 26 USC 7402 — "IRS: Petition to Enforce IRS Summons" (25%), 26 USC 7403 — "Suit to Enforce Federal Tax Lien" (9%), 26 USC 7422 — "IRS: Refund Taxes" (6%) and 28 USC 1346 — "Recovery of IRS Tax" (4%).

Top Ranked Judicial Districts

Understandably, there is great variation in the number of tax lawsuits filed in each of the nation's ninety-four federal judicial districts. Table 2 lists the ten districts that saw the greatest activity in such filings in January 2014.

• The Central District of California — with 8 civil filings — was the most active through January 2014. This district was also top-ranked one year ago as well as five years ago.

• The Western District of Texas, Northern District of California and Middle District of Florida were all tied for second place. The Middle District of Florida was ranked second one year ago.

The federal judicial district which showed the greatest growth in tax lawsuits compared to one year ago — 200 percent — was the Southern District of California. Compared to five years ago, the district with the largest growth — 300 percent — was the Middle District of Florida.

Tax Lawsuits Filed

Table 3 lists all individual cases of this type either filed or re-opened in January 2014. You may sort the table by clicking on any of the column headings; click again to reverse the sort.

Each month, TRAC offers a free report focused on one area of civil litigation in the U.S. district courts. In addition, subscribers to the TRACFed data service can generate custom reports by district, office, nature of suit or federal jurisdiction via the TRAC Data Interpreter.