Tax Court Improvement Act

The bill would amend the Internal Revenue Code to make five procedural changes to the U.S. Tax Court. First, it would expand the court's subpoena authority to allow judges and special trial judges to compel the production of documents, electronically stored information, and other items for discovery purposes at any stage — not only in connection with a scheduled hearing or deposition. Second, it would allow special trial judges to hear any type of Tax Court proceeding, provided both parties consent, expanding beyond the currently enumerated case categories. Third, it would authorize special trial judges to impose limited contempt penalties not exceeding those for a Class C misdemeanor (a fine up to $5,000 and up to 30 days in jail).

Fourth, it would create a new Tax Court section applying the federal judicial disqualification standard (28 U.S.C. § 455) to Tax Court judges and special trial judges, requiring recusal in specified circumstances. Fifth, it would authorize the Tax Court to toll — extend — the deadline to file a petition contesting an IRS deficiency notice when equity warrants it, and would clarify that a petition dismissed solely because equitable tolling was denied does not count as a Tax Court decision, preserving the taxpayer's ability to refile in a U.S. district court.

Taxpayers who dispute IRS deficiency notices in Tax Court — especially those who missed petition deadlines and would seek equitable tolling — and their legal representatives. Tax Court judges and special trial judges face new recusal obligations and, for special trial judges, expanded jurisdiction and contempt authority. Opposing parties in Tax Court proceedings are also affected by the broader subpoena and discovery rules.

Taxpayers who missed the deadline to contest an IRS deficiency notice could gain a second chance through equitable tolling, avoiding a permanent bar to challenging the IRS's determination. The expanded subpoena authority changes litigation strategy by allowing parties to seek documents earlier in a case. The new recusal rules impose federal-court ethical standards on a specialized court that previously lacked them explicitly.

The Tax Court would apply equitable tolling on a case-by-case basis, weighing facts and circumstances to determine whether equity warrants extending a petition deadline. The consent-to-assignment provisions for special trial judges would not take effect until the Tax Court adopts implementing rules. The disqualification provision directly imports the existing federal recusal standard (28 U.S.C. § 455) without requiring additional rulemaking. Taxpayers whose petitions are dismissed solely because equitable tolling is denied retain the right to file in U.S. district court if other applicable conditions are met.