Bloomberg Tax Insights & Commentary is featuring a recurring questionnaire of prominent tax professionals who are willing to share their thoughts about their work and the practice of tax these days. Today we feature Sheri A. Dillon, a federal tax controversy attorney and special counsel at Miller & Chevalier.

What is the biggest challenge that tax practitioners are facing in 2026?

How to effectively and appropriately use artificial intelligence without violating ethical responsibilities or attorney-client privilege or confidentiality.

We all know that AI can be an amazing tool — it’s efficient and can perform tasks in seconds that used to take tax practitioners hours, if not days. But AI platforms are still developing, and they don’t always provide the right or complete answer. Tax practitioners must independently confirm any AI results by researching, reviewing, and analyzing the authorities.

In addition, recent court rulings such as United States v. Heppner have addressed whether materials generated by AI tools are protected by the attorney-client privilege or if they’re work product doctrine. Tax practitioners need to educate themselves on the effective and appropriate use of AI and then educate their clients.

What tax case is no one watching that they should be?

One thing I have learned is that someone is always watching. With that in mind, a case we all should be watching is in US Tax Court: Siemens USA Holdings Inc. v. Commissioner.

The case involves an international restructuring that led to a $3.5 billion deduction for foreign dividends under Section 245A of the Internal Revenue Code. The IRS disallowed the deduction on multiple “soft” grounds — that is, lack of economic substance, substance-over-form, and step transaction theories. But the government primarily is relying on lack of economic substance under Section 7701(o).

Siemens is arguing that the IRS is invoking Section 7701(o) to avoid the result of the straightforward application of Section 245A. The IRS is arguing that Siemens’ multibillion-dollar deduction is due to a restructuring intended to exploit Section 245A’s timing mismatch by generating artificial dividends and is a result unintended by Congress.

Practitioners should be watching to see how the Tax Court applies Section 7701(o) following its 2025 decision in Patel v. Commissioner and the US Court of Appeals for the Tenth Circuit’s decision (and the strong dissent) this year in Liberty Global Inc. v. United States.

What’s the biggest lesson you learned in your early years of practice?

Spend more time listening and less time speaking when you’re with your clients. Not only will you learn a lot, but you will be sure to understand what your client is asking and be able to understand what your client should be asking.

And when you do speak, be sure to speak in layman’s terms. To make decisions, your clients need to understand what you are saying.

What is one section of the tax code that you’d like to change?

Section 6213(a), which generally provides a 90-day period for filing Tax Court petitions.

Historically, the Tax Court and appellate courts treated the 90-day filing period as a strict jurisdictional prerequisite. But following the US Supreme Court’s guidance in Boechler, P.C. v. Commissioner in 2022, several appellate courts reversed course and are treating the 90-day filing period as a claims processing rule subject to equitable tolling — that is, whether the running of the 90-day filing period may be “paused” when taxpayers can show they diligently pursued their rights, but an extraordinary circumstance prevented them from filing a petition within that period.

To date, the US Court of Appeals for the Second Circuit (in Buller v. Commissioner), Third Circuit (in Culp v. Commissioner), Sixth Circuit (in Oquendo v. Commissioner), and Eighth Circuit (in Maniktala v. Commissioner) have all held that the deficiency petition deadline is non-jurisdictional — so petitions filed after the 90-day period aren’t barred from a court’s consideration for lack of jurisdiction — and are subject to equitable tolling.

The First Circuit (in Kyick Holdings v. Commissioner) has taken another approach. While it held that the deficiency deadline is non-jurisdictional, it also held that the 90-day deadline is mandatory and not subject to equitable tolling, thereby creating a circuit split. Appeals are pending in several other circuits.

A fair and equitable tax system requires that similarly situated taxpayers be treated the same. Rather than waiting for these cases to work their way through the system and potentially to the Supreme Court, Congress should resolve the issue so that all taxpayers have the same access to the courts to resolve their tax disputes. Section 6213(a) should be clarified to ensure that it is treated as a claims processing rule, subject to equitable tolling, for all taxpayers.

What’s the most memorable case you’ve worked on?

My most memorable cases are the pro bono cases that I take on, all for different reasons. Sometimes it’s because the case reminds me of how fortunate I am. Other times, it’s because the case reminds me of how complex and arguably unfair the tax system can be. And when I’m lucky, it’s because I have the privilege of helping a taxpayer (and the tax system) get to the right answer.

One of my first pro bono cases is memorable for all of these reasons. I represented a taxpayer who had reported a foster child as a dependent and claimed head of household status, a child dependency exemption, and the earned income credit, which entitled the taxpayer to a refund. At issue was the determination of whether his foster child qualified as a “child” for these tax provisions.

Like many low-income taxpayers, my client didn’t have many documentary records to specifically show financial support of the child — this was back in the day when low-income taxpayers largely used cash. But my client did have shoeboxes filled with school registration records, report cards, medical records, and photos of his child. After working through the shoeboxes with my client and coming to understand the materials, I used them to share his story.

Although the financial documents weren’t sufficient in and of themselves to prove the requisite specific financial support, coupling those documents with the everyday details of taking care of his child did persuade IRS counsel that my client’s foster child was his child for federal income tax purposes. The IRS conceded the case, and my client received his sorely needed refund.

This article does not necessarily reflect the opinion of Bloomberg Industry Group Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

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