This is an edited repost of a blogpost I inadvertently deleted while trying to edit a typo on the Firefox browser; Firefox is incompatible with WordPress, the platform wherein this my blog lives, moves, and has its being, as I found to my chagrin.

Brendan James Trainor, Docket No. 14996-22, filed 4/19/22, conflates liability with deficiency, and trots out some protester jive, but Judge Mark V. (“Vittorio Emanuele”) Holmes, but finds “a couple quirks that merit discussion” to spur his ongoing war with the partitive genitive. Order, at p. 1.

One, the deficiency doesn’t include any withholding credits. BJ owes less than the deficiency.

Two, BJ’s deficiency arises from unreported income based on third-party reporting, as reflected in an AUR. IRS’ counsel admits in its pretrial memorandum that they need proof of Section 6751(b) Boss Hossery, but says they’ll put in on the trial, which they don’t. There’s no CPAF attached to the SND, nor is there one in the parties’ stip. Order, at p. 3.

There is a saver, but IRS doesn’t pick it up. Judge Holmes sets it forth in a footnote.

“Section 6751(b)(2)(B) creates an exception to the usual requirement that the IRS has to show supervisory approval for a penalty for a penalty that is ‘automatically calculated through electronic means.’ And we’ve held that this exception applies to substantial-understatement penalties determined by the IRS’s computers in an Automated Correspondence Exam or through the Automated Underreporter program. Wahlquist [sic; should be Walquist] v. Commissioner, 152 T.C. 61, 70-71 (2019).” Order, at p. 3, footnote 1.

“We’ve also held that, when the only mention of a penalty under section 6662 is the generic language listing every type of penalty under that section – exactly the language that’s in the notice that the IRS sent to Mr. Trainor – we have to look to any more specific language in the approval form. See Rogers v. Commissioner, 118 T.C.M. 79, 91 (2019).” Order, at pp. 3-4.

For Walquist, see my blogpost “I Sing the Penalty Electronic – Part Deux,” 2/25/19. For Rogers, see my blogpost “I Must Make Amends – Part Deux,” 5/30/19.

No CPAF, no chops. 

Judge Nega cannot tell whether the response of Spencer Olson, Docket No. 16457-24L, filed 4/30/26, to the Section 6662 chop AUR laid upon him before issuance of the SND that gave rise to this CDP was acted upon, as abatement thereof never made it into the account transcript incorporated in the administrative record. 

Judge Nega Judge-‘spains why this matters.

“AUR penalties require supervisory approval to be included in the Notice of Deficiency if the taxpayer responds to a notice of the penalty prior to the issuance of the Notice of Deficiency. SO J appears to have concluded that petitioner made such a response in this case and that no supervisory approval was secured, making the penalty invalidly assessed when it was included in the Notice of Deficiency. See § 6751(b)(1).” Order, at p. 1. (Name omitted).

Moreover, “(A)fter deciding that the penalty must be abated, SO J appears to have completed a Form 3870, Request for Adjustment, on September 5, 2024, requesting that the section 6662 penalty be abated. This request is mentioned in the Notice of Determination issued on September 17, 2024, but nothing in the record makes it clear whether this request was actually processed.” Order, at p. 1. (Name omitted).

So let IRS’ counsel dish whether the chop is off the table, so Judge Nega needn’t deal with it.

Takeaway- Although electronically-assessed chops are Boss Hoss-exempt per Section 6751(b)(2)(B), there is an escape hatch for those who move quickly.

My long-running series on Tax Court depositions continues with Chad Burris & Julie Burris, et al., Docket No. 18712-22, filed 4/29/26. Judge Cary Douglas (“CD”) Pugh gives IRS more time to file document demands, based on Chad’s & Julie’s trusty attorneys slowplaying document production. See my blogpost “Scrapbook 3/27/26 and a Leftover,” 3/27/26.

But with trial 120 (count ’em, 120) days away, IRS says it may want to depose three (count ’em, three) nonparties, depending upon what’s in the aforesaid slowplayed documents.

That’s a bridge too far for Judge CD Pugh.

“Respondent also represents that depositions of three key persons may be needed depending on information respondent obtains through petitioners’ documents, informal communication with petitioners, and the stipulation process. The sudden need for depositions of three key persons comes too late, especially if the information may be obtained from other sources. We are reluctant to require a nonparty to incur the expense that necessarily accompanies a notice of deposition that the nonparty and petitioner might dispute unless and until we conclude that respondent has established that the information may not be obtained by other means.” Order, at p. 2.

Once again, Tax Court depositions are anything but the daily grist that comes to the mill in other courts.