When you’re in law school, you often dream about having a case that makes it to the Supreme Court. Rachael E. Rubenstein of Clark Hill knows that feeling—and in her case, it actually happened.
Statistically, that dream is a long shot. The Term of the Supreme Court begins on the first Monday in October and lasts until the first Monday in October of the next year. Approximately 5,000-7,000 new cases are filed with the Supreme Court each Term. Of those, plenary—or complete—review with oral arguments by attorneys is granted in about 80 each Term. The Court typically disposes of about 100 or more cases without a plenary review.
(You can find a recent breakdown of the Court’s caseload by number here.)
When it comes to federal tax matters, you typically begin resolving disputes directly with the IRS. That’s something that Rubenstein fell into early in her career working at a low-income taxpayer clinic at St. Mary’s University School of Law in San Antonio, Texas—that’s also her alma mater. There, she also tackled impact litigation cases—those are lawsuits that are intended to change laws or policies and have the potential to impact a lot of taxpayers.
Meeting Bittner
A few years after law school, Rubenstein joined Strasburger & Price—now Clark & Hill—where she met Farley Katz. Rubenstein describes Katz, who had previously served five years with the Justice Department, Tax Division, as a mentor. Katz was also a litigator, briefing and arguing cases in the federal appellate courts. Notably, he briefed the Supreme Court victory in Dickman v. Commissioner, which held that a series of interest-free demand loans resulted in taxable gifts.
Katz introduced Rubenstein to a client of the firm, Alexandru Bittner, a dual Romanian-US citizen, who was attempting to move into tax compliance. She soon joined the team of lawyers assigned to help.
The case was eye-opening for Rubenstein, who noted that early on, it wasn’t the government that identified the errors on previously submitted FBARs—the taxpayer did. What followed, she said, were years of attempts to resolve the case. It was clear, she believed, that the taxpayer had not known about the FBAR requirement. The government didn’t argue differently. They merely took the position that non-willful penalties would apply to each account not accurately or timely reported, resulting in a $2.72 million penalty.
The government eventually sued to collect. There was, Rubenstein says, “Literally no way to not fight it.” And so Bittner went to court where he argued that the correct penalty should be per return, not per account.
The district court denied Bittner’s reasonable cause defense, but reduced the penalty to $50,000. That was quite a blow to the IRS and his legal team knew that the government would appeal. “So,” Rubenstein says, “We appealed first.”
Appeal
There are 13 Circuits in the U.S. Court of Appeals that hear cases from the Tax Court and the District Courts. Appeals are typically reviews of decisions based on arguments that there were errors in procedure or interpretation of the law—you are generally barred from raising new arguments or issues at appeal.
In Bittner’s case, with the facts and arguments on the record, the Fifth Circuit sided with the IRS. Bittner’s legal team, including Rubenstein, recognized that the Fifth Circuit decision was at odds with a 2021 Ninth Circuit decision (United States v. Boyd). That’s when Rubenstein says she realized, “This case is going to Supreme Court.”
Supreme Court
The Supreme Court has original jurisdiction over certain kinds of cases defined by statute (28 U.S.C. §1251)—they go straight to the Supreme Court. An example of a case with original jurisdiction would be a dispute between the states.
Most cases don’t have original jurisdiction. There’s a process for hearing those cases that have been argued in another court and now want a shot in front of the highest court. To be heard at the Supreme Court, you file a petition seeking a review of the case—you’re petitioning for a writ of certiorari—Latin meaning a written order “to be more fully informed.”
If the Supreme Court decides to hear the matter, it’s called a grant of certiorari. Usually, certiorari is granted in a case of considerable importance, or one involving a circuit split to resolve the issue for consistency. The latter is what happened in Bittner —on June 21, 2022, the Supreme Court agreed to hear the matter, granting certiorari.
Procedure
Once briefs are filed with the Supreme Court, the justices hear oral arguments, which are typically short with no witnesses. The justices may ask questions during the hearings to help them clarify any outstanding issues. Once they’ve heard the arguments, they meet as a group to decide the outcome of the case.
Daniel L. Geyser argued Bittner’s case at the Supreme Court on November 2, 2022. A seasoned tax litigator, he is the chair of the U.S. Supreme Court Practice and a member of the Appellate Group at Haynes Boone.
It was a chance for Rubenstein to watch one of the top tax lawyers in the country go to work. The experience working with Geyser, Rubenstein says, “was so fabulous… such a pleasure.” The caliber of his work, she says, with just a little awe in her voice, was “unmatched.”
Decision
After Geyser and the government argued their points, the waiting game began. Unlike court dramas you see on television where the judge renders a verdict in open court hours or days after arguments, Supreme Court decisions are made public by a written opinion published weeks or months later.
The Supreme Court issued the Bittner opinion on Feb. 28, 2023. It was a big win for Bittner even though the margin was slim—the vote was 5-4.
Bittner, Rubenstein says, is happy to have the win.
She is, too. She plans to continue to work on tax controversy matters and front-end tax compliance planning as part of her practice at Clark Hill. But looking back at the last few years, she clearly wouldn’t change a thing. “I learned a ton,” she says.
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