Yet another Taishoff prediction comes to pass, but it was too obvious for me to claim any credit. Judge Elizabeth A. (“Tex”) Copeland makes the trial of Craig Walcott, Docket No. 21820-22, filed 7/7/26, into a forty-page off-the-bencher.

As I said in May, “I expect we’ll hear more from Craig.”

He does avoid a Section 6673(a) chop, because, despite his frivolity, he does get a better deal than IRS put in the SNDs, getting all his COGS. and a couple bucks more (hi, Judge Holmes) of deductions. His rental realty sale is a break-even, so even though he doesn’t get the loss he claimed, he doesn’t get the gain IRS asserted.

His attempt to sanction IRS’ counsel would make good blogfodder, except the Genius Baristas have this in such format that I cannot copy-and-paste, so I must refer you to Transcript, at pp. 35-36.

For backstory, see my blogposts “Irrepressible,” 5/11/26, and “Doldrums?” 5/22/26.

The search for perfection is ever afoot in Tax Court. Judge Jeffrey S. (“Schwer”) Arbeit finds that Hough Beck & Baird, Inc., 167 T. C.2, filed 7/7/26, fail the test, even though they properly filed and paid the employment tax at issue. 

IRS accepted the return as filed, but erroneously assessed HB&B’s liability as zero, rather than the tax shown on the return. Then IRS refunded the (correctly owed) payment HB&B made with the return. It’s not like HB&B pocketed the refund and said nothing; when their accountant questioned IRS, he was told it was a COIVID Employee Retention Credit.

Two (count ’em, two) years later, IRS woke up and sent HB&B a letter requesting repayment. HB&B did nothing, so IRS made a Section 6204(a) supplementary assessment and gave HB&B a NITL at no extra charge.

 HB&B’s trusty attorney says IRS should have brought a Section 7405 erroneous refund civil action. Maybe so might could be SOL has run on that.

No, says Judge Schwer Arbeit, the assessment was not perfect, it was “imperfect or incomplete in any material respect,” just like Section 6204(a) says.

Of course, neither statute nor reg defines “imperfect” or “incomplete.” The only Tax Court case involved a Section 6651(a)(1) timely filing add-on that IRS abated but later discovered taxpayer had no reasonable basis for being late. So IRS put it back, and that was OK. See 167 T. C. 2, at p. 6. There are three (count ’em, three) USCCA cases that go IRS’ way, including a 9 Cir case, whence HB&B are Golsenized.

But there is an outlier, on which IRS and HB&B hang hats. There the parties stiped to assessed amount, which taxpayer paid without requesting a refund. IRS double-posted the payment and refunded the “overpayment.” There was nothing wrong with the assessment, the problem was the double-posted payment.

Here, there was one payment, properly posted, and an incorrect assessment. In the outlier, “the Court held that there was a ‘fundamental difference in character’ between the money the taxpayers received as a result of the Commissioner’s double posting error and the money they originally owed. Here however the money petitioner received as a result of respondent’s mistaken assessment is the same money petitioner originally owed. Petitioner’s employment tax liability has not been extinguished and remains outstanding.” 167 T. C. 2, at p. 8.

You’ll need to go to Google or your favorite search engine to find her, but she gives her name (now sometimes rendered as “Cinnamon”) to one who should’a gotten recognition as part of IRS’ winning team back in March. The opinion is Anthony A. Klein and Barbara N. Klein, T. C. Memo. 2026-29, filed back on 3/30/26. but now corrected as at 7/7/26.

I blogged the case as “Blowing Smoke,” 3/30/26, but you needn’t either reread my blogpost, nor read Judge Elizabeth A. (“Tex”) Copeland’s corrected fourteen (count ’em, fourteen) pages.

Judge Tex Copeland has kindly provided a one-page Order of even date herewith that tells the whole story.

The corrected T. C. Memo. “reflects the following revision on page 1: “Brian J. Sullivan and James H. Wonzy, for respondent.” is substituted with the following: “Keziah Dutchak-Leonard, Brian J. Sullivan, and James H. Wonzy, for respondent.” Order, at p. 1.

Sorry to nitpick, Judge, but I think James H.’s handle is “Wozny,” and not “Wonzy.”

Btw, Keziah, Job’s middle daughter, is a symbol of woman’s equality. See Job 42:14-15. She and her sisters get equal shares in Dad’s estate, rare back then.