In Uncategorized on 10/23/2014 at 16:43


 Those hardy persons still reading this blog may wonder why I devote so many blogposts to mailing misadventures. Exemplia gratia, as my classically-educated colleagues would say, “Bless ‘Em All”, 10/14/14.

Well, this is where a great number of Tax Court petitions run aground, relegating taxpayers with colorable claims from the free kick of USTC to the pay-to-play route at either USDC or USCFC. And it’s a danger point for the in-the-trenches preparer who must rely upon others to lug the magic envelope to the posties or the people in purple-and-black (or brown and brown, or yellow-and-red). Here be dragons, indeed.

Yet another case in point, this one from yesterday, 10/22/14. I must have fallen asleep as I prepared the blogpost yesterday night, because my literary effusion vanished into cyberspace. So here it is again.

The case is Joseph Sanchez, 2014 T. C. Memo. 223, filed 10/22/14, opinion by the Judge With A Heart, STJ Armen. But STJ Armen, bighearted as ever, cannot help Joe, who misplaced his trust upon an unnamed third party, and lost by one day his sixty-buck ticket to justice.

“Affixed to the envelope was a ‘stamp’ printed by a third party from her computer using software from and a certified mail sticker. The ‘stamp’ reflected the ‘’ logo, ‘$4.70’ of ‘US Postage First-Class’, a five-digit number that presumably corresponds to the ZIP Code from which the ‘stamp’ was generated, and ‘MAR 03 2014’. The ‘stamp’ also includes a string of alphanumeric characters whose meaning is not disclosed in the record.” 2014 T. C. Memo. 223, at pp. 3-4. (Footnote omitted).

Of course, “MAR 3 2014” is the magic last day of the 90, mailing on which would get Joe out of the starting gate at Tax Court and into the race to fight off the $13K of tax and penalty in the SNOD. See again Section 7502.

Except it doesn’t. Joe’s trust in, and worse, in his unnamed third-party helper, avails him not.

Joe’s correspondence doesn’t show up at 400 Second Street, NW for a week. It bears a USPS postmark, clearly legible, as follows: “Salt Lake City UT – TUE 04 MAR 2014 – 841 PM”. Joe is therefore a day late and much more than a dollar short.

Joe used certified mail, and that helps, but the date of mailing must be evidenced by a USPS postmark, and only if same be lacking or illegible may extrinsic evidence be introduced. See Section 301.7502-1(c)(1)(iii)(B)(3), Proced. & Admin. Regs. Where there are dueling postmarks, USPS wins.

Worse, Joe’s factotum sinks Joe’s boat.

“In support of his argument petitioner provided a statement by the third party who prepared the petition for mailing and then delivered it to the post office. In her statement the third party describes how on Monday, March 3, 2014, after being ‘given documents to mail’, she printed postage using software, added extra postage for certified mail, and then took the petition to the U.S. Post Office…for deposit into the mail. The third party candidly states that in order to ‘avoid[] the long lines’ at the post office, she dropped the petition off without having a certified mail receipt stamped by a Postal Service employee and that as a consequence ‘the sender has no documentation showing * * * [the post office] received the certified package’ on March 3, 2014.” 2014 T. C. Memo. 223, at p. 6.

I would point out that, in post offices where there are automated postal machines that dispense postage and receipts maintained by USPS, it might be tempting to rely on the machines. I myself have suggested that; see my blogpost “Going Postal”, 2/4/13. After Joe’s debacle, though, I’m not so sure. After all, the technophobes and Luddites still reign, and the posties may have the magic touch, after all.

And I also point out that maildrops inside post offices aren’t cleared as often as one might wish.

Finally, in my local post office there’s a sign on the maildrop as follows: “Items delivered after 5 p.m. will bear the next day’s postmark.” I wonder if such a sign appeared in Joe’s local post office.

Many years ago, in its pre-USPS incarnation, the post office had a slogan: “Mail early in the day, It’s the better way.”

Just ask Joe.


In Uncategorized on 10/22/2014 at 22:32

Not Hardly

Older readers of this chronicle may remember STJ Lewis (“The Right Spelling”) Carluzzo in his role as tax return preparer. For the newer among the faithful, check out my blogpost “Tax Court As Preparer?”, 9/17/12.

Well, STJ Lew bailed on the tax return preparation gig, but Duane Morley Cox & Jeanne Cox, Docket No. 26501-13S, filed 10/22/14, want Ch J Michael B. (“Iron Mike”) Thornton to copy edit their amended petition.

“…petitioners filed a Motion To Change or Correct Caption. In that motion petitioners seek to have the Court ‘correct’ various typographical error [sic] in the exhibits attached to petitioners’ amended petition….” Order, at p. 1.

After all, Ch J Iron Mike tells them “…we issued an order correcting the spelling of Mr. Cox’s middle name from Marley to Morley.” Order, at p. 1.

So maybe Duane Morley and Jeanne were confused, and thought that only Tax Court Judges could proofread papers.

They should read some Tax Court orders for a couple days, as Judge Holmes would say. That would disabuse them of the notion that anyone proofreads these orders.

Howbeit, Ch J Iron Mike isn’t a proofreader.

“Petitioners are advised that if they wish to correct various typographical errors in exhibits attached to their amended petition, petitioners should do so by filing a motion for leave to file an amendment to amended petition and lodging therewith, an appropriate amendment to amended petition containing such corrected exhibits.” Order, at p. 1.

We don’t do tax prep and we don’t do proofreading.


In Uncategorized on 10/21/2014 at 17:47

No, Judge Whelan won’t allow that. Take a look at a small-claimer, Nanette J. Martarano and David Martarano, 2014 T. C. Sum. Op. 101, filed 10./21/14.

It’s the usual non-substantiation, but with a double twist.

The only one to show up for trial is Nanette. Nanette is what she calls “a tax professional.” Judge Whelan elucidates: “She has worked for H&R Block for five years, and she is working to become an enrolled agent of the Internal Revenue Service.” 2014 T. C. Sum. Op. 101, at p. 3.

Leaving aside the fact that an “enrolled agent” is anything but an agent of IRS, Nanette is not off to a great start.

First, Nanette claims that IRS’ transcript of her and Dave’s return introduced by IRS is incorrect, and she said so at audit and at the trial, although she stipulated that the transcript was correct pre-trial. She never puts in at trial what she claims is the true return, but puts her numbers in her pre-trial memo.

And she’s been in Tax Court on similar issues before.

Next, “At the start of trial in this case petitioner admitted that, after filing her petition, she did not contact respondent’s attorney and she failed to respond to the numerous attempts of respondent’s attorney to contact her. In addition, petitioner did not respond to respondent’s so-called Branerton letter, in which respondent offered to begin informal discussions and discovery through a pretrial settlement conference.” 2014 T. C. Sum. Op. 101, at p.9. So she also violated the Standing Pre-Trial Order, the “play nice and make nice”.

But Nanette is not done. “It was not until three days before the calendar call that respondent’s attorney received a packet of documents from petitioner. At trial petitioner also sought to introduce other documents not included in the packet and not provided to respondent’s attorney before trial. In an attempt to assure the fairness of these proceedings, the Court did not accept into evidence any document that was not included in the packet of documents provided to respondent’s attorney before trial. Furthermore, the Court did not accept into evidence copies of petitioners’ personal bank statements that had been substantially altered by redaction. Petitioners had not shown the original statements to respondent’s attorney before trial, and she did not have them available for inspection in Court.” 2014 T. C. Sum. Op. 101, at p. 9.

OK, Nanette’s attempted ambush fails, and she gets nailed for the deficiency asserted. So IRS won it all, right?

Not quite. Maybe IRS’ counsel was a trifle peeved at Nanette’s gameplaying, so counsel tries one on Nanette.

IRS moves to conform the pleadings to the proof. This is the Rule 41 “if you agree to try it, it doesn’t matter that you didn’t plead it” provision.

IRS claims that Nanette’s proof bespeaks negligence, and wants a 20% chop.

Judge Whelan isn’t biting.

“Respondent’s motion does not mention the reasonable cause exception for underpayments provided by section 6664(c)(1). Under that exception, the section 6662 penalty is not imposed with respect to any portion of an underpayment if the taxpayer shows that there was reasonable cause for, and that the taxpayer acted in good faith with respect to, that portion.” 2014 T. C. Sum. Op. 101, at p. 16.

Of course, Nanette billed herself as a “tax professional”, so reliance on experts is a very thin twig on which to hang one’s good faith.

Still, Nanette was ambushed. “Respondent’s motion was made at the end of trial. Indeed, respondent’s attorney made the motion immediately before the case was adjourned. We do not quarrel with the timing of respondent’s motion. A motion under Rule 41(b)(1) may be made ‘at any time.’ Nevertheless, except for respondent’s oral motion, there was no mention of the accuracy-related penalty under section 6662(a) during these proceedings and, thus, nothing to suggest that petitioners had any reason to suspect that respondent planned to assert the penalty.” 2014 T. C. Sum. Op. 101, at p. 17 (Citation omitted).

So no go on the penalty.

But I suggest Nanette put in some extra studying time on penalties and additions to tax, and Tax Court procedure, before she takes the SEE to become “an enrolled agent of the Internal Revenue Service”.


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