Raul was researching an issue and found two tax court decisions issued within six months of each other, one for a taxpayer residing in California and the other for a taxpayer residing in New York, whose rulings were inconsistent. Raul knows that the federal tax law does not differ by state and the issue was exactly the same in both cases. Raul is confused because he thought that a basic judicial doctrine was that a court is supposed to rule consistently. Name and describe this judicial doctrine that requires judicial consistency and discuss why the tax court may have intentionally ruled inconsistently in this example.

Question

What will be an ideal response?

Answer 1

In rendering court decisions, all courts apply the judicial doctrine of stare decisis. This doctrine means that a court will rule consistently with (a) its previous rulings (i.e., unless, due to evolving interpretations of the tax law over time, they decide to overturn an earlier decision) and (b) the rulings of higher courts with appellate jurisdiction (i.e., the courts their cases are appealed to). The implication of stare decisis is that a circuit court will abide by Supreme Court rulings and its own rulings, whereas a trial-level court will abide by Supreme Court rulings, its respective circuit court's rulings, and its own rulings. For example, a district court in California would follow 9th Circuit and Supreme Court rulings as well as the court's own rulings.

The doctrine of stare decisis presents a special problem for the U.S. Tax Court because it appeals to different circuits based on the taxpayer's residence. To implement the doctrine of stare decisis, the tax court applies the Golsen rule. The Golsen rule simply states that the tax court will abide by rulings of the circuit court that has appellate jurisdiction for a case. The implication of the Golsen rule is that tax courts may issue conflicting opinions in different circuits, and thus most likely explains the differing tax court decisions that Raul located.