Amy Hang (’18) Wins Audit Case at U.S. Tax Court

November 29, 2017

Amy Hang (’18), a student attorney in the Law School’s Ronald M. Mankoff Tax Clinic, recently won a favorable ruling for clients before the U.S. Tax Court in St. Paul on an issue that usually favors the IRS.

The case dealt with the “qualifying child” provisions of the Internal Revenue Code, which can be one of the most frustrating sections of the code for low-income taxpayers. A qualifying child can provide such taxpayers with exemptions and credits worth several thousand dollars—no small matter for the household’s finances. Many of the IRS’s “tests” to qualify a child are straightforward: for example, that the taxpayer is properly related to the child and that the child is under a certain age can be demonstrated by birth certificates. Where families frequently run into trouble, however, is demonstrating to the IRS’s liking that the child lived with the taxpayer for more than half the year. Often, official records placing the child at the taxpayer’s home simply don’t exist. This is especially true in so-called nontraditional families—as in this case, where the clients were attempting to show that they were the primary caretakers for their niece and nephew.

In such cases, low-income taxpayers hit a roadblock: the IRS rarely accepts testimony or affidavits from witnesses as sufficient proof to show that the child lived with someone. The only option the taxpayer has in such a case is to take it to court, where a judge determines the weight and credibility of the testimony. Taxpayers that rely only on their own testimony (especially when appearing without counsel), do not have a good track record of winning in court. In this case, however, Hang’s extensive preparation and thorough questioning helped her clients buck that trend.

“Our entire case relied on testimony in the courtroom,” said Professor Caleb Smith, who teaches the Mankoff Tax Clinic. “Amy really impressed me with her preparation and poise. It carried through into the courtroom, and carried the day for our clients. Her rapport with the client—and how much she wanted to help—really showed during the case, and helped in reaching a positive outcome.”

The case was adjudicated on Oct. 2, and the decision was immediately announced from the bench following closing arguments. As is typical with the U.S. Tax Court, the decision will be formally entered at a later date, following transcript review.

A footnote: It is quite rare for the U.S. Tax Court to even hold a trial. The fact that a Mankoff Tax Clinic case—let alone any case—was heard in court is exceptional. Indeed, on the day of the trial, all but two of the outstanding cases on the court docket had been settled in advance.

Amy Hang (’18)
Amy Hang (’18)

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