Attorneys-at-Law

“THE ABSENT-MINDED BEGGAR”

In Uncategorized on 07/23/2014 at 17:06

No, not Rudy Kipling’s celebrated Boer War poem that made the Blighty hit parade when Sir Artie Sullivan put a tune to it. This is the story of Paul O. Reynolds, Docket No. 7405-14S, filed 7/23/14, a designated hitter that makes blogging Tax Court fun.

Paul petitions, apparently from a NOD, but he and IRS both agree there never was a NOD, it was a SNOD.

So when The Judge With a Heart, STJ Armen, tells Paul to produce said SNOD, Paul “… argues that he never received the original notice of deficiency and that the incomplete copy attached to the Supplement Objection was all he has.” Order, at p. 1.

IRS says oh yes, there was a SNOD, and Paul petitioned that SNOD a year ago.

STJ Armen pores through the files, and finds “…a timely petition was filed with the Court on July 9, 2013, in response to a notice of deficiency for tax years…. A copy of relevant pages of the deficiency notice… was attached as an exhibit to the petition. After the Court issued two separate Orders…directing petitioner to ratify the petition…, the case… was closed by Order Of Dismissal For Lack Of Jurisdiction… on the ground that the petition was not properly executed by petitioner as required by Tax Court Rules of Practice and Procedure. Petitioner did not move to vacate that Order of Dismissal, and it became final….” Order, at pp. 1-2. (footnotes omitted).

I omitted the footnotes, but read them both. Footnote 1 says the addresses on the SNOD, the petition in Case No. 1 and the petition in this case were all the same address. Footnote 2 says both orders told Paul to properly execute the petition or face dismissal; he didn’t and he did.

Sorry, Paul. No jurisdiction. No excuse for being absent-minded.

 

 

YA GOTTA DO IT TO ACCRUE IT – PART DEUX

In Uncategorized on 07/23/2014 at 16:40

Old-time followers of this my blog might just possibly recall the story of VECO Corporation and Subsidiaries, as more fully set forth in my blog post entitled “Ya Gotta Do it To Accrue It”, 11/20/13.

Well, it’s the same story for Giant Eagle, Inc., 2014 T. C. Memo. 146, filed 7/23/14, with Judge Haines taking up where Judge Marvel left off.

No, this isn’t about prohibited bird parts in Rauschenberg collages, as in my blogpost “The Eagle Sleeps Tonight – Part Deux”, 5/21/13. This is about a grocery and gas chain that gave frequent eater points to its customers, that allowed them, if they ate enough, to gas up (their vehicles) at reduced rates.

The Eagle gang wanted to accrue the expense of the earned eater points as earned, because their customers could redeem them. They argued the Section 461 accrual test, and the Reg. Sec. 1.451-4 future redemption cost offset to current revenue.

IRS concedes one prong of the three-prong accrual test; that the amounts earned can be computed with reasonable accuracy, but “all events” necessary to fix liability hadn’t happened in the year that the expense is accrued.

Before the frequent eater points could be redeemed, the frequent eater had to gas up at the Eagle gang’s pumps. Even with enough points, a frequent eater might not be a frequent gasser, and the points could expire 90 days after being earned.

And for that reason the Reg. Sec. 1.451-4 gambit fails. The frequent eater has to do more than just turn in the points to get the “merchandise, cash, or other property” which are the hooks to get the taxpayer anchored within Reg. Sec. 1.451-4(a)(1) safe harbor. The frequent eater has to buy the gas, or the frequent eater gets nothing.

“Allowing a present deduction with respect to redemptions conditioned on an additional purchase can result in a mismatching of expenses and revenues, contrary to the regulation’s primary purpose.” 2014 T. C. Memo. 146, at p. 12.

And even though a sufficiently gluttonous frequent eater could accumulate enough points to get a tank of gas for nothing, that still depends upon the price of gas at the time the frequent eater becomes a frequent gasser. So the benefit is not fixed until the additional purchase (even for zero) is made.

IT’S ONLY A NOTICE

In Uncategorized on 07/23/2014 at 16:10

That’s the message from Ch J Michael B. (“Iron Mike”) Thornton to poor old Renald Eichler. Ren is the lead-off hitter for 143 T. C. 2, filed 7/23/14, and he claims to be both poor and old, after his non-profit educational corporation cratered, leaving Ren in the hole for about $200K in TFRPs.

Ren submitted a proposed short-pay installment agreement, but what with coding mishaps at IRS and a lengthy mail delay, IRS sent Ren an NIL while his proposed installment agreement was under review.

Ren claims that’s a no-no under Section 6331(k)(2).

But Ch J Iron Mike isn’t having it. All Section 6331(k)(2) does is bar the levy, not the Notice of Intent to Levy (NIL). And though IRS tries arguing the installment agreement wasn’t “pending” when the NIL was sent, Ch J Iron Mike doesn’t have to go there. Pending or not pending, the bar is on the levy, not the notice.

Ch J Iron Mike brushes aside a contrary case in a footnote. “We are mindful that in Tucker v. Commissioner, T.C. Memo. 2011-67 (upholding Appeals’ rejection of an OIC), aff’d, 676 F.3d 1129 (D.C. Cir. 2012), in the ‘Background’ section of the opinion, a footnote indicated that the IRS had withdrawn a notice of intent to levy that it had issued after the taxpayer had submitted an OIC. By way of explanation, the footnote stated: ‘Section 6331(k)(1) provides for a restraint on levy while an OIC is pending, and the issuance of the notice of levy violated that restriction.’ Id., slip op. at 8 n.6. This dictum, however, did not represent a holding or a predicate to any holding in Tucker, as made explicit in the same footnote: ‘The issuance of that first levy notice (and its subsequent withdrawal) was not part of the CDP hearing or determination and is not part of the CDP appeal at issue here.’ Id. Accordingly, the dictum in Tucker concerning sec. 6331(k)(1) does not control this case.” 143 T. C. 2, at pp. 154-15 footnote 6.

Ren claims the IRM is inconsistent and that he should get the benefit of the more favorable of the two Manual provisions. Poor old Ren can’t get a break.

Ch J Iron Mike: “IRM pt. 5.11.1.2.2.8 appears in the part of the IRM that provides information and guidance to revenue officers in the collection process. It directs the IRS Collection Division to rescind notices of intent to levy in certain circumstances, one of which is when a notice of intent to levy is issued while levy action is prohibited and the taxpayer timely requests an Appeals hearing. By contrast, IRM pt. 8.22.2.2.2.2(5) (Dec. 14, 2010) states that Appeals should not rescind a notice of intent to levy that was issued during the pendency of an installment agreement, even where levy is prohibited. Petitioner argues that these two provisions are inconsistent and that we should treat IRM pt. 5.11.1.2.2.8 as controlling. We disagree. The IRM is not necessarily inconsistent in directing the Collection Division and Appeals to take different actions.”.143 T. C. 2, at p. 15. The SO who sustained the NIL was in Appeals, not Collections, so she followed the book as far as Appeals was concerned.

Besides, “…provisions of the IRM do not carry the force and effect of law or confer rights on taxpayers.” 143 T. C. 2, at pp. 14-15.(Citation omitted).

But the SO didn’t consider that Ren and Mrs Ren were old and ill, and that whatever they had in the bank was borrowed from Mrs Ren’s sister, Mrs Ren not being a party to this proceeding. So no summary judgment, and Ch J Iron Mike sends Ren back to Appeals to discuss the whole installment bit.

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