Or, Chutzpah in the First Degree
The Yiddish word chutzpah (the “ch” is gutteral, like clearing your throat, not hard as in “chew”) means impudence, nerve, gall. The classic example is the murderer of his parents who pleads for mercy because he is an orphan.
Joe Alfred Izen, Jr., Esq., gives a lovely example of this endearing trait in Karen L. Cooley, 2012 T.C. Mem. 164, filed 6/11/12. And the long-suffering jurist confronted with Joey A’s attempted raid on the Treasury is none other than The Great Dissenter, the Judge who writes like a human being, Judge Mark V. Holmes (even if he is ignorant of the partitive genitive; see 2012 T.C. Mem. 164, at p. 11, where he perpetrates the following: “couple rounds of briefing”; c’mon, Mark, do you have a cup coffee at breakfast?).
Karen happens to be Mrs Joey A, and works in his law office, although she has a post-nup with Joey A saying all money separate, files separately, and claims to be an IC. She sent in two checks on the same day, one to pay for one year’s tax and the other for an installment of her estimateds for the next. But on voucher two and check two, she reversed two numbers of her SSAN.
IRS struggles with this, gets it wrong, and sends a SNOD. Karen appeals, and the IRS tries to figure out what happened. Joey A shows IRS the front (but not the back) of check two. The back, of course, shows the wrong SSAN, which IRS encoded on the check based on the wrong information on the voucher.
Now voluntary payments can be applied as taxpayer directs (involuntaries can’t necessarily be). So when Appeals still shows Karen short, she petitions, and is represented by the redoubtable Joey A.
On eve of trial, Joey A. produces copies of voucher, and front-and-back of check two. IRS immediately drops the case, seeing they cashed the check, and corrects the error Karen caused.
Now Karen wants the USA to pay Joey A $30K in legal fees, claiming she prevailed. Nice, huh?
But Karen doesn’t have a retainer agreement with Joey A, or periodic billing statements, or anything that shows a legal obligation. Judge Holmes: “The single billing statement that we have is dated only days before Mr. Izen filed his motion. We find, as a result, that he prepared it solely for the purpose of the motion and that it does not reflect any obligation by Ms. Cooley to pay Mr. Izen $20,000 or $30,000 for this $2,000 dispute–an obligation we would be hardpressed without very persuasive evidence to think any but the unusually innumerate or incorrigibly stubborn would assume. The fact that Ms. Cooley and Mr. Izen entered into a postnuptial agreement and that she says she has paid him for legal services in the past is just not enough to prove she has a legal obligation to pay him in this case.” 2012 T. C. Mem. 164, at p. 16. (Citation omitted.)
Anyway, IRS was substantially justified, because neither Karen nor Joey A showed IRS the back of check two. “The reasonableness of the Commissioner’s position turns on whether he knew or should have known, based on the available facts and circumstances and the legal precedents relating to the case, that his position was invalid when he adopted it. A significant factor in making this determination is whether the taxpayer presented all relevant information under her control.” 2012 T.C. Mem. 164, at p. 19-20. (Citations omitted.)
Karen didn’t. And her designation of how her payments were to be applied was imprecise. And IRS did the right thing by dropping the case as soon as they had all the relevant facts, “professionally and honorably”, says Judge Holmes, 2012 T.C. Mem. 164 at p. 24. So IRS’s position was “substantially justified” at the relevant times, even if later their position was shown to be wrong.
So no payday for Joey A. But Joey A is quite a card. And he and Karen are quite a team.