In Uncategorized on 07/07/2020 at 16:44

I learn something new all the time blogging USTC. I had always thought the word “fulsome” meant exaggerated, principally in exaggerated, excessive praise or flattery. But there’s a secondary meaning, and David Frank Ruppert, Docket No. 20594-18W, filed 7/7/20, put me wise, for which I now thank him.

David Frank objects when IRS claims in their answer that they started nuthin’ and collected nuthin’. He says “…the Whistleblower Office’s review of his information was not ‘fulsome or sufficient”….” Order, at p. 1. I doubt the Ogden Sunseteers think flattery will get them anywhere. I was ready to have some fun with this, but the better angels of my nature caused me to take a wee dictionary nibble.

“Fulsome” also means “of a large size or quantity.”

STJ Diana L (“Sidewalks of New York”) Leyden is less interested how large was the Ogden Sunseteers’ scrutiny of whatever David Frank handed them, than how they rejected it.

Turns out the OS Final Decision said they tossed David Frank “…because the information provided was speculative and/or did not provide specific or credible information regarding tax underpayments or violations of the internal revenue laws.” Order, at p. 1.

No mention that IRS didn’t start or collect. They first raise that in their answer, and move for summary J.

“After respondent’s motion was filed, the Court held that, while we do not review the IRS’ decision whether to audit a target in response to a whistleblower’s claim, we may review for abuse of discretion the Whistleblower Office’s determination rejecting a whistleblower claim, even where no administrative or judicial proceeding is commenced and no proceeds are collected. See Lacey v. Commissioner, 153 T.C. __ (Nov. 25, 2019). However, respondent did not state as a basis for rejecting petitioner’s claim that no administrative or judicial proceeding was commenced or that no proceeds were collected. As a result of our holding in Lacey, respondent has not demonstrated in his motion that there is no genuine dispute of material fact concerning whether respondent abused his discretion with respect to petitioner’s whistleblower claim. We must therefore deny respondent’s motion.” Order, at p. 2.

I’d have thought that the “nuthin'” claim would be boilerplate in every Final Decision, so that the rejection of the blower would be thoroughly fulsome.





In Uncategorized on 07/07/2020 at 16:14

A silt-stir after Judge Holmes’ heart issues forth from the wordprocessor of Judge Albert G (“Scholar Al”) Lauber as a designated hitter, Jesus R. Oropeza, Docket No. 15309-15, filed 7/7/20.

It was chop time, and the RA sent JR “…a Letter 5153 and attached Form 4549-A, Income Tax Discrepancy Adjustments, commonly referred to as a ‘revenue agent report’ (RAR). The RAR asserted a 20% accuracy-related penalty under I.R.C. § 6662(a) ‘attributable to one or more of the following’: (1) negligence or disregard of rules or regulations; (2) substantial understatement of income tax; (3) substantial valuation misstatement; and (4) transaction lacking economic substance. See I.R.C. §6662(b)(1), (2), (3), (6). The RAR has a space for an increased 40% penalty under I.R.C. § 6662(h), (i), and (j), but states that the ‘underpayment to which 40% Section 6662 penalty applies’ is zero’.” Order, at p. 1.

What’s missing from this picture? My ultra-sophisticated readers, locked down but not locked out, will cry with one voice “Boss Hoss! Clay!”

IRS tries to rescue the miscue two weeks thereafter with a Boss-Hossed CPAF asserting 20% substantial understatement and nothing else.

Four (count ’em, four) months later, RA and supervisor approach an attorney from OCC with a memo recommending a hike from 20% to 40%, due to nondisclosed noneconomic substance transaction per Section 6662(b)(6). Alternatively, the 20% chop should be negligence or substantial understatement. Said memo is signed off by Boss Hoss and OCC attorney.

The SNOD incorporating same follows five (count ’em, five) days later.

Cue my readers.

Judge Scholar Al, classical scholar that he is, enwraps RA, supervisor and OCC attorney like the son and grandsons of Acoetes. In this race, giving Judge Scholar Al an allowance for the snakes, Athena fades in the stretch. For those who didn’t attend a high-priced college, Google “Laocoön.”

“In light of these facts, the Court would find it helpful to receive additional briefing from the parties. We ask that they assume, for the purpose of argument, that the IRS did not secure timely supervisory approval for the penalty or penalties asserted in the RAR, and then address two questions: (1) Should the RAR be regarded as asserting all four types of 20% penalty, including the 20% penalty for engaging in a noneconomic substance transaction under section 6662(b)(6)? and (2) If the section 6662(b)(6) penalty was asserted in the RAR but not timely approved, can respondent urge that he secured timely approval for a ‘40% section 6662(b)(6) penalty’ under section 6662(i), even though the latter subsection operates only to increase the rate on the base-level section 6662(b)(6) penalty, which by hypothesis was not timely approved?” Order, at p. 2.

Oh, where is Scholar John Schmittdiel, the star of my blogpost “Tax Court Admission Exam,” 9/6/13, now that we need him?




In Uncategorized on 07/06/2020 at 10:52

Too often we find (and judges too) that the experts retained by litigants are more advocates for a party’s position than educators of the Court, or anyone else.

So a certain Family Court (jurisdiction unstated, but petitioner filed from NV), wearied of the Wild West scene, had an approved panel of experts, from which litigants were required to pick and pay, removing the experts’ temptation to get their opinions where they get their cornpone, as a much finer writer than I put it.

Peeved at having to fork over $13.5K for “the services of several attorney, physician, and psychology service providers,” as she and loved-once jousted over custody of their lineal descendants, Monique Epperson, Docket No. 20287-18W, filed 7/6/20, dropped a bunch of Forms 211 on the Ogden Sunseteers.

The above quoted matter is found in the aforesaid order, at p. 2.

Monique claims Family Court never filed 1099s on the recipients of this judicial largesse. She also claims that the Gang of Four providers never paid tax on the credit card, check and cash payments she gave them over two (count ’em, two) tax years.

The Ogden Sunseteers, facing this volley, bobbled the ball. Judge Elizabeth A. (“Tex”) Copeland explains.

“Upon receiving the initial Forms 211, the WBO assigned master claim number 2018-003598 to the Family Court (identified in the administrative file as Taxpayer A), and related claim numbers to the Contractors: 2018-003599 (Contractor B), 2018-003600 (Contractor C), 2018-003601 (Contractor D), and 2018-003602 (Contractor E). First, in the WBO’s electronic tracking system (e-trak), the WBO classifier coded the claims as falling within the purview of the Small Business and Self-Employed division (SB/SE) of the IRS. Then…the classifier re-coded the Family Court claim as belonging to the Tax Exempt and Government Entities division, particularly the sub-division responsible for Federal, State, and Local Governments (TEGE). Additionally, the classifier placed the Contractors’ claims in suspense based on the related master claim, with instruction to ‘follow any action taken on the related claim.'” Order, at pp. 3-4. (Footnote omitted).

The TEGE subject matter guru rightly concluded that Family Court paid nobody, so they weren’t required to file anything. The right Boss Hoss signed off, so the OS analyst sent Monique a bounce letter, stating “Allegations are Not Specific, Credible, or are Speculative.”

The OS analyst followed instructions, and simultaneously bounced Monique’s Contractors claims.

Judge Tex Copeland gives IRS summary J on Family Court. Monique paid the Contractors directly.

As to her Contractors claim, Monique can’t tell if any or all of them cleared the $200K Section 7623(b) gross income limit, but for summary J Judge Tex Copeland will give Monique a bye. The Section 7623(b)(5)(B) $2 million amount-in-dispute limit is another story.

Though Monique only claims $13.5K, the $2 million stop-strip is an affirmative defense, not a jurisdictional bar. And IRS only raises that in its summary J motion.

Too late, says Judge Tex Copeland. “An affirmative defense cannot be raised, for the first time, in a motion for summary judgment. Our rules require that an answer ‘be drawn so that it will advise the petitioner and the Court fully of the nature of the defense. * * * [T]he answer shall contain a clear and concise statement of every ground, together with the facts in support thereof on which the Commissioner relies and has the burden of proof.’ Rule 36(b); see also Whistleblower 14376-16W v. Commissioner, T.C. Memo. 2017-181 at *14.” Order, at p. 8.

For the story of Six One Six Whiskey, star of the immediately aforementioned, see my blogpost “Voluntary Malgré Lui,” 9/18/17.

As to the Contractors, the record shows right church, wrong pew. Yes, a TEGE subject matterer sussed out Family Court. But an SBSE sachem never weighed in. The record is incomplete. There remain questions of fact as to what, if anything, SBSE did or concluded.

But IRS can try again. I make the morning line 8 to 5 for a motion to remand.