After the Opinion: Rule 155 Computations and the Tax Court Decision

Taxpayers often think a Tax Court case ends when the judge issues an opinion. It does not. The opinion resolves the issues, but the Court enters a separate decision stating the dollar amounts. When the opinion does not specify the final numbers, the parties compute them under Tax Court Rule 155.

That step can be routine. It can also be where a favorable opinion turns into a disappointing decision if no one checks the math.

Why Rule 155 exists

Tax computations are interconnected. Disallowing a deduction can change adjusted gross income, which changes phaseouts, credits, self-employment tax, and penalties. The judge decides the issues; the parties are better positioned to translate those findings into exact tax figures. Rule 155(a) lets the Court withhold entry of its decision so the parties can submit computations under the Court's determination of the issues.

When an opinion ends with the phrase "Decision will be entered under Rule 155," this is the process that follows.

Agreed computations

Under Rule 155(a), if the parties agree on the amounts that follow from the Court's findings and conclusions, they (or either of them) file a computation within 90 days of service of the opinion, unless the Court directs otherwise. The computation shows the amounts and states that there is no disagreement that the figures are in accordance with the Court's findings. If there is an overpayment, the computation must include the amount and date of each payment. The Court then enters its decision.

In practice, IRS counsel often prepares the first draft. Do not sign off without reviewing it line by line.

Disputed computations

If the parties do not agree, Rule 155(b) says each party files its own computation within 90 days of service of the opinion. The Clerk serves notice of the filing, and if the opposing party does not file an objection or alternative computation by the date in the Clerk's notice, the Court may enter decision on the computation already submitted. If the computations differ, the Court may hear argument and will determine the correct amount.

What you cannot do in Rule 155

Rule 155(c) is strict. Any argument is confined to the correct computation of the amount resulting from the Court's findings and conclusions. No argument will be heard on issues the Court already decided, and no new issues will be considered. The rule expressly says it is not an opportunity for retrial or reconsideration.

So if you think the judge got an issue wrong, Rule 155 is not the place to say so. That is what motions for reconsideration and appeals are for.

What to check in a Rule 155 computation

• Each issue resolved in your favor is actually reflected. Concessions and holdings sometimes get lost in the spreadsheet.
• Correlative adjustments. A disallowed deduction in one year may create an allowable deduction or carryover in another.
• Self-employment tax and its deduction. A change in business income changes both.
• Credits and phaseouts that depend on adjusted gross income.
• Penalties computed on the redetermined underpayment, not the original deficiency.
• Payments and credits. Especially in overpayment cases, confirm every payment and its date.

Here's the part most people miss: the decision entered is what the IRS will assess. Once it becomes final, fixing a computational error is very difficult. The 90 days in Rule 155 are the time to catch it.

Decisions without an opinion

Not every case reaches Rule 155 through an opinion. When a docketed case settles, the parties submit a stipulated decision, and the Court enters it. When the Court decides a case on a dispositive order, such as a grant of summary judgment under Rule 121, Rule 155 can apply in the same way if computations are needed. In each situation, the entered decision is the document that controls assessment, and the same care in checking the numbers applies.

Motions after the opinion

Reconsideration under Rule 161

A motion for reconsideration of an opinion or findings of fact must be filed within 30 days after the written opinion is served, or after the transcript pages containing an oral opinion under Rule 152 are served, unless the Court orders otherwise. Reconsideration is for real errors, such as a misread fact in the record or overlooked controlling law, not for re-arguing the case.

Vacating or revising the decision under Rule 162

A motion to vacate or revise a decision must be filed within 30 days after the decision is entered, unless the Court permits otherwise. That is the vehicle for errors discovered after entry, including computational mistakes. Under the Federal Rules of Appellate Procedure, a timely motion to vacate or revise also affects when the time to appeal begins to run, so coordinate it with any appeal plan.

When the decision becomes final

IRC 7481(a)(1) says a Tax Court decision becomes final when the time for filing a notice of appeal expires, if no notice of appeal has been filed. Under IRC 7483, that is 90 days after the decision is entered, or 120 days for a cross-appeal if another party filed a timely notice. If there is an appeal, finality depends on what happens in the court of appeals and, if review is sought, the Supreme Court, as IRC 7481(a)(2) and (3) describe.

Small tax case decisions cannot be appealed under IRC 7463(b), so they become final when the appeal period would otherwise expire.

Assessment and collection

IRC 6213(a) bars assessment of the deficiency until the Tax Court's decision becomes final. After that, the IRS assesses the amount in the decision, plus interest computed separately, and sends a bill. Collection follows if the balance is not paid.

If you plan to appeal, assessment and collection are not automatically stayed. IRC 7485 requires a bond, up to double the amount of the deficiency appealed, to stay assessment and collection during the appeal. See appealing a Tax Court decision.

If you won an overpayment, the decision determines it, and the IRS refunds or credits it with interest after the decision is final. If you substantially prevailed, consider whether you can recover costs; see qualified offers and litigation costs. The motion deadline in Rule 231 is 30 days after service of the written opinion, which may come before the Rule 155 process ends.

Paying after the decision

If the decision leaves a balance you cannot pay in full, the normal collection alternatives become available after assessment. The firm's overview of IRS installment agreements is a sensible next read. Plan for it before the bill arrives.

Let's talk

The Rule 155 computation is where the opinion becomes a number. If you have an opinion in hand, call (813) 229-7100 before you sign off on the figures. Let's talk.