In Uncategorized on 09/25/2017 at 16:19

“Your kids can stay insured if they’re your dependents, even if they’re out of school.” A selling point for that beleaguered statute, the Affordable Care Act, has some unintended and unpleasant consequences for Benjamin J. Gibson, Sr. and Delores B. Gibson, 2017 T. C. Memo. 187, filed 9/25/17.

Senior and Delores are over the limit for Section 36B tax credits. The Section 36B rigmarole was the stuff of many CPE classes that I sedulously avoided. But they get nailed for excess credit, via Junior.

Junior did not live with Mom and Dad. Junior was on his own and working, but applied for Section 36B largesse. All this unbeknownst to Senior and Delores. Until.

Until IRS hit them with a SNOD for Junior’s advance payments of premium tax credits.

Senior and Delores say “we knew nothing of Junior’s delictions.”

Tough, says Judge Pugh.

“Advance payments of the premium assistance tax credit made on behalf of a taxpayer or members of the taxpayer’s household, including a dependent child, must be reported on the taxpayer’s Form 1040.  If the advance payments exceed the premium assistance tax credit to which the taxpayer is entitled ultimately, the excess increases the tax owed by the taxpayer and reduces any refund otherwise payable to the taxpayer.  Sec. 36B(f)(2); sec. 1.36B-4, Income Tax Regs.; sec. 1.36B-4T(a)(1)(ii)(A), Temporary Income Tax Regs., 79 Fed. Reg. 43628 (July 28, 2014) (“A taxpayer must reconcile all advance credit payments for coverage of any member of the taxpayer’s family.”); see McGuire v. Commissioner, 149 T.C. at __ (slip op. at 12).” 2017 T. C. Memo. 187, at p. 4-5.

For the McGuire story, see my blogpost “Refurbished, Reupholstered and Re-Engineered,” 8/28/17.

Senior and Delores claim that Junior never had insurance from ACA, only from his employer.

But IRS has the Form 1095-A with Junior’s last known address for the year at issue, and the insurance company who wrote the policy has all the pictures, descriptions and accounts, and hands them over to IRS. Junior puts in an affidavit, but never shows for the trial.

Junior’s employer insured him only for the year after the year at issue.

I understand Congress has this in hand to remedy. Cain’t hardly wait.



In Uncategorized on 09/25/2017 at 15:53

A Question of Fax

I step out of my accustomed role as reporter on this blog. to assume that of advocate, my general off-blog occupation.

And today it’s again about ABA Model Rule 3.7. You know, the one that says a party’s attorney can’t be a witness. At least, that’s what everyone thinks it says.

But that’s not all it says. Even though many judges echo the immortal words of my old Bronx and Upper West Side neighbor E. A. Poe, “only this and nothing more.”

See my blogpost “A Non-Christmas Carol,” 12/23/13.

Well, today that Obliging Jurist Judge David Gustafson wants IRS and Tarig Gabr’s trusty attorney, whom I’ll call Johnny E, to bukh, as they say in the world’s largest democracy, about said Model Rule, first in a phone-a-thon next week and two weeks later at an evidentiary hearing.

Read all about it in Tarig Gabr, Docket No. 24991-15L, filed 9/25/17, a designated hitter to oblige this hard-laboring blogger.

IRS hit Tarig with a Section 6694(b) chop. Those of us in the racket know this is the preparer chop, so no SNOD and straight to assessment, collection and a NFTL. Johnny E gets on the horn with IRS, who gives him a fax number to fire off the 12153 requesting a CDP. Maybe Tarig never got the actual NFTL over to Johnny E, so he could see where to shoot off the 12153. Wouldn’t be the first time an attorney had to hurry the throw with the clock running down.

Howbeit, Johnny E faxed it as directed, he says, but to the wrong ACS (Automated Collection Services) office. It went to KC, not Philly. The KC IRS guys reprised the immortal words of Brian Friel and shouted “Philadelphia Here I Come.” Only the 12153 got to Philly after the 30-day cutoff, so Philly offered Tarig an equivalent hearing, from which, as we know, one cannot petition the “small court” in the Glasshouse at 400 Second Street, NW. And the equivalent hearing established Tarig was too late for a CDP.

Johnny E petitions the equivalent hearing, claiming IRS drew him offside.

Now we all know that mistaken advice from anyone at IRS cuts no Grey Poupon. So Tarig and Johnny E are out, yes?

Not quite. See  I.R.M. “…”if it is determined that the taxpayer received erroneous instructions from an IRS employee resulting in the request being sent to the wrong office,’ the postmark date for when the request was sent to the incorrect office is used to determine timeliness.” Order, at p. 2. That’s strictly for CDPs; don’t try this with a SNOD. Better still, have the NFTL in hand when preparing the 12153.

The Reg., 26 C.F.R. sec. 301.6320-1(c)(2), para. A-C6. says “sent or delivered.” Note it doesn’t say “mailed.” Wherefore, the fax that Johnny E sent, which everyone admits was timely, would have been OK but for going to the wrong IRS ACS office.

So we have a question of fax (sorry, guys). Did an IRS agent give Johnny E the wrong number?

But there are only two people who can testify for sure, namely, to wit and viz., Johnny E and the IRS person.

But Johnny E is Tarig’s trusty attorney; he sent the fax, signed the petition, and will be standing by Tarig’s side when the trial starts in the Glasshouse.

So we come to Rule 3.7. Attorneys can’t be witnesses. Except.

I’ll quote: “A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless: (3) disqualification of the lawyer would work substantial hardship on the client.” ABA Model Rule of Professional Conduct 3.7, which Tax Court Rule 202(a)(3) hangs on the Glasshouse wall.

Johnny E was there at the beginning. Having Tarig find another lawyer to handle the evidentiary hearing is clearly onerous. Johnny E is the sole witness for Tarig.

And most importantly, this is a hearing, not a trial. There are no jurors to be confounded, confused or misled. The trier of fax (or fact) is one who can echo the old phrase “the process of distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, is the daily grist of judicial life.”

Judge Gustafson is obliging, but I doubt very easily taken in by random lawyer blather.

So read the whole Rule., and let Johnny E tell his tale.


In Uncategorized on 09/22/2017 at 14:47

A true old-time South Carolinian, that Obliging Jurist Judge David Gustafson has an old-time Southern word for Tyler James Arnold, Docket No. 18858-16, filed 9/22/17, even though Ty is apparently a Yankee from the Upper Midwest.

Back on Monday, in the Motor City, Judge Gustafson had Ty’s case called for trial. IRS’ gunner from Chief Counsel’s Office was standing tall, but Ty was nowhere to be found. The gunner opened up, and Judge Gustafson decided to enter decision based upon said opening, and hits Ty with a $4K deficiency.

But the Obliging Jurist goes even farther than the twain or thrain that he ordinarily goes, when asked for barely a millimeter.

“However, the Court directs petitioner’s attention to Tax Court Rule 162, which permits the filing of a Motion to Vacate within 30 days of this Order being entered. If petitioner had reasons for failure to communicate with respondent and failure to appear at the Trial Session, petitioner should state those reasons in a motion to vacate.” Order, at p. 1.

Now I don’t know if there are special circumstances here. A docket search only shows IRS’ motion to dismiss for lack of prosecution a week before the calendar call, with no statement of facts , and Judge Gustafson’s order hereinabove cited.

But I’ve never see one of these second-chance invitations, and I call on my readers, that learned assemblage, to enlighten me if this is SOP.