The trusty attorney for Jon B. Novak, T. C. Memo. 2026-52, filed 6/127/26, gets a Taishoff “Good Try, Third Class” for her run-the-checklist attack on the filing of the NFTL, but Judge Rose E. (“Cracklin'”) Jenkins heaves the IRM at her, taking down her petition.

The date when the NFTL was prepared is irrelevant. While the RO may tell the taxpayer that s/he is considering rejection of the CA, s/he may not tell taxpayer that the CA will be rejected until the CDP is concluded. And Jon got all the breaks. 

“The Internal Revenue Manual (IRM) instructs IRS employees that although the intention to recommend rejection of an installment agreement should be communicated to a taxpayer, actual rejection of agreements must not be conveyed before independent administrative review. IRM 5.14.1.4(11) (Mar. 31, 2023).7 It also instructs that enforcement action may not be taken while installment agreements are pending. Id. However, it also specifically provides that NFTLs generally should be filed in connection with installment agreements to ensure the government’s interest is protected. See IRM 5.14.1.4.3(1)(a) (Dec. 23, 2022); see also IRM 5.14.1.4.3(2) (noting that NFTLs may be filed while installment agreements are pending and during the rejection process); IRM 5.12.2.6(1) (Oct. 14, 2013) (providing that an NFTL should generally be filed if the aggregate unpaid balance of assessments is $10,000 or more). It instructs that taxpayers should be advised in advance about the plan to file an NFTL and given an opportunity to make full payment. IRM 5.14.1.4.3(1)(b). The RO followed the protocol set forth in the IRM by conveying the intent to reject the installment agreement before the rejection was actually effected, as well as by indicating that an NFTL would be filed and providing petitioner an opportunity to fully pay his liabilities before that. It is generally not an abuse of discretion to follow IRM guidelines. Cf. Mission Organic Ctr., Inc. v. Commissioner, Nos. 6937-23L, et al., 165 T.C., slip op. at 10 (Dec. 16, 2025). Petitioner had an opportunity to avoid the NFTL filing by fully paying the liabilities, and he had the opportunity to dispute the NFTL filing after the fact through the CDP process. He also had the opportunity to request withdrawal of the NFTL, potentially invoking section 6323(j)(1)(C), given his claim that the NFTL impeded his ability to liquidate assets to pay his liabilities. See IRM 5.12.9.4 (Sep. 6, 2019); see also Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. Accordingly, petitioner’s rights were not nm violated.” T. C. Memo. 2026-52, at pp. 10-11.

For the Mission Organic’s story, see my blogpost “Expensive Pottery,” 12/16/25.

Judge Christian N. (“Speedy”) Weiler is the judge for the job in Adrian D. Smith and Nancy W. Smith, et al., T. C. Memo. 2026-50, filed 6/16/26, as he unveils the tax treatment of these various Mideastern research projects of these world-famous architects.

Key points: Loss of potential profits on premature termination do not render research unfunded; payment for work to date is sufficient. Merely meeting commonly-agreed standards is insufficient; detailed specifications, itemized criteria, and. numerous checkpoints (like 1,000 pages of specifications) which must be met are necessary for unfunded Section 41’s ultra-guided largesse. Pre-Loper Bright cases deferring to Chevron are still good law, and Judge Speedy Weiler follows them. The architects do get the lower Reg. Section 1.41-4A(d)(3) substantially retained rights to the research credits in four (count ’em, four) of the six (count ’em, six) exemplars.

The independent investor test for reasonableness of compensation to researchers is the test under Section 174, even though a carryover from Section 162 learning. Here, however, the record is too scanty for Judge Speedy Weiler to do the numbers. Taishoff says, settle this out guys, talk among yourselves.

Contract drafting is the key. Specialists should read and heed, especially when amending or terminating. And choice-of-law clauses only work when contract terms are ambiguous, so be prepared to show chosen law definitely impacts the written contract (and if chosen law does, why the contract wasn’t drafted accordingly).

A Taishoff “Good Job” to the Smith-Gill trusty attorneys for rescuing as much of this desert storm as they did.

Rule 161 reconsiderations are rare beasts, but when both petitioner and respondent (IRS) agree the judge got it wrong, even so strong-minded a jurist as ex-Ch J Kathleen (“TBS= The Big Shillelagh”) Kerrigan gives heed. 

Ex-Ch J TBS tossed Robert S. Koenigsberger & Dilek I. Koenigsberger, Docket No. 12537-10, filed 6/16/26 (no misprint, this case is antique) back in November, 2023, when they sought overpayment relief for the enhanced Section 6662 accuracy chop they claim they paid, because the Ks still owed tax, interest and penalties. Turns out the Ks were in one of those depreciated currency partnership dodges, but a partner other than the TMP settled out for a 10% Section 6662(a) chop back in 2009.

Now the Ks want to settle out the whole deficiency and the 10% chop just like the former partners did, just a wee bit late.

“After the Court issued its Order, petitioners made an additional payment for [year at issue]. The parties also stipulated that petitioners have paid the entire amount of tax, penalty, and interest that would be due if respondent’s determinations in the notice of deficiency and notice of computational adjustment are sustained. Additionally, petitioners submitted a refund claim in response to the notice of computational adjustment.” Order, at p. 2.

Obviously, this is under the now-defunct TEFRA régime. Chops were partnership items, hence affected items as to partners, so couldn’t be litigated at partner level, even if included in a SND. No Section 6512(b) overpayment jurisdiction unless compliance is had with Reg. Section 301.6611-1(b) , namely, “the entire tax liability (including any interest, addition to tax, or additional amount is satisfied.” Order, at p. 3.

Well, it has, belatedly.

But aren’t Rule 161s post-trial? Generally (love that word) but see Bedrosian, 144 T. C. 10, and my blogpost “Mox Nix,” 3/17/15.

Changed circumstances, so ex-Ch J TBS tosses the former toss and leaves the parties to clean up.

And a Taishoff “Good Job” to the Ks trusty attorneys for getting the client to pony up what has to be a heavy-duty amount and getting IRS to agree.