In Uncategorized on 02/12/2016 at 16:50

The 1908 British music hall song echoes through Tax Court today, as Thomas F. Kelly, Esq., strives mightily to undo the tax lien filed against his client, Gregory P. McGuckin, Docket No. 8185-15L, filed 2/12/16. STJ Armen, The Judge With a Heart, may not have seen Mr Kelly, but he has heard from him. The result is not gratifying.

Greg McG filed an OIC, but got bounced. He didn’t petition for a CAP, but he did get an NFTL. Mr Kelly, denominated by STJ Armen as a “POA” (which is a piece of paper, Judge; the party who grants the POA is the “taxpayer,” and the party receiving powers thereunder is the “representative”; see Form 2848), claims he should have gotten the denial letter from OIC Unit, as his principal’s timely-filed POA said he should get correspondence. So he offers no alternatives, even though OIC Unit decided Greg McG could do an IA and pay in full thereby.

“Mr. Kelly claimed that in accordance with Form 2848, the IRS was required to send him a copy of the…OIC rejection letter but failed to do so. Mr. Kelly further claimed that if he had received it, he would have timely appealed the denial of the OIC, during which appeal, Mr. Kelly claimed, the IRS would have been prohibited under its Internal Revenue Manual (IRM) from filing the NFTL. Mr. Kelly did not dispute petitioner’s underlying liability or that petitioner received the OIC denial letter in time to file an appeal.” Order, at p. 2.

Well, the SO noted the record showed that a copy of the letter had been mailed to Mr Kelly at his office address. And the IRM did not prohibit filing a NFTL while an OIC was being reviewed. And while IRS can withdraw a NFTL, it doesn’t have to, and the four (count ‘em, four) magic criteria (premature, or otherwise not in accordance with established procedures, or will facilitate collection, or in best interests of taxpayer and the fisc) don’t apply here. And even if all four did, IRS doesn’t have to, and Tax Court can’t make them.

“A Federal tax lien arises automatically after notice and demand for an assessed tax liability is not paid. The record in this case shows that the tax liabilities for the years at issue were all assessed prior to August 26, 2013. Although the lien exists as a matter of law, to ensure its priority with relation to other creditors, respondent is authorized to file a NFTL. There is no legal authority that restrains respondent from filing an NFTL until after an OIC and appeal is concluded. Accordingly, respondent was within its authority to file a NFTL in this case well before it actually did so….” Order, at p. 3. (Citations omitted; but I can’t tell the significance of the August 26, 2013 date; the NFTL wasn’t sent until September 30, 2014. And Greg McG submitted his OIC on August 12, 2013. So what gives?).

Howbeit, the IRM isn’t law and gives taxpayers no rights. And the Regs give IRS the option of sending bounces of OIC either to taxpayer or representative; see Reg. 301.7122-1(f)(1). Greg McG got the bounce timely and could have filed a CAP. Neither he nor Mr Kelly had the right to stall a NFTL while he did so.

Summary J for IRS.


In Uncategorized on 02/12/2016 at 16:11

Even If It Didn’t Work

I can understand counsel getting really tired of a crafty adversary, and trying to torpedo the elusive foe. And, without naming IRS counsel, I want to reward her ingenuity witrh a Taishoff “nice move” (which is the only reward she will get, I fear, as Judge Wherry isn’t buying her inventive maneuver).

The case is Derringer Trading, LLC, Jetstream Business Limited, Tax Matters Partner, et al., Docket No. 20872-07, filed 2/12/16. And if the cast of characters seems familiar, yes, we’re back in Mr Roger’s neighborhood. And this is yet another iteration (or reiteration) of the DADs deals Mr Rogers flogged far and wide, the blowing-up of which provided much copy for this blogger and much work for IRS.

So inventive IRS counsel filed a Motion for Order to Show Cause Why Judgment Should Not Be Entered Against Petitioner on the Basis of a Previously Decided Case, citing to one of the many blow-ups of the phony partnerships that married big gains to distressed Brazilian debt, to step up basis and create a loss. IRS counsel wants a finding that the partnership had no basis in the Brazilian junk, but they do have a 40% overvaluation chop.

Derringer and its adherents claim their case is different, but Judge Wherry is dubious about the alleged factual dissimilarities.

He isn’t dubious about IRS counsel’s ingenious but flawed attempt to sidestep Rule 121.

“…in Tax Court litigation, as so often under the tax law, form matters. Where no material fact is genuinely in dispute, this Court’s rules provide a mechanism by which a party that believes the governing law, when applied to those undisputed material facts, compels a decision in its favor, may seek judgment as a matter of law: a motion for summary judgment. See Rule 121. On a motion for summary judgment, the moving party has the burden of showing the absence of a genuine issue as to any material fact, and ‘all doubts as to the existence of an issue of material fact must be resolved against the movant[].’ Electronic Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002) (citing Adickes v. Kress & Co., 398 U.S. 144, 157 (1970), Dreher v. Sielaff, 636 F.2d 1141, 1143 n.4 (7th Cir. 1980), and Kroh v. Commissioner, 98 T.C. 383, 390 (1992)). By seeking a show-cause order, respondent effectively seeks to turn the tables. Rather than assume the burden of showing why judgment should be entered, respondent would impose on petitioner the burden of showing why it should not be entered.” Order, at pp. 2-3.

So make the motion, counselor. And may the Force be with you.



In Uncategorized on 02/12/2016 at 15:39

The Model Rules of Professional Conduct of the American Bar Association, that is, which Model Rules govern Tax Court practitioners. I wish to name the scrupulous IRS attorney who adheres to the Rules, Brian J. Bilheimer, Esq.

Mr Bilheimer is thwarted in his attempts to move along the case of Teodulo C. & Dolores Villarreal, et al., Docket No. 26030-10L, filed 2/12/16, because of the nonresponsiveness of Teo’s and Dolores’ counsel (whom I will not name). Mr Bilheimer correctly cites ABAMRPC 4.2, which provides that counsel for one side cannot communicate directly with parties represented by counsel absent that counsel’s permission.

Practice tip- Always get it in writing.

Teo’s and Dolores’ counsel so far failed to respond to a motion to amend caption, and to an order to file a status report.

Judge Ruwe tosses the unresponsive counsel, schedules a hearing on the motion to change the caption and a motion by IRS for a continuance, and sends Teo and Dolores all the papers that their counsel got.

Exactly what they’re to do with them at this point is a good question, but at least Judge Ruwe didn’t direct Mr Bilheimer to discuss it with them. See my blogpost “Assigned Counsel? – Part Deux.”


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