In Uncategorized on 11/20/2019 at 16:50

IRS goes two for three today before CSTJ Lewis (“That Name Should be in Lights”) Carluzzo, who designates George Luniw, 17789-16SL, filed 11/20/19.

All y’all will recollect George, whose trifecta of 1040s (or maybe they weren’t all 1040s, but copies) so befuddled STJ Diana L (“Sidewalks of New York”) Leyden a year ago last March. If you don’t so recollect, see my blogpost “Three in One or One in Three?” 3/8/18.

George is clearly a fellow-rounder with Gwen Kestin, whose seven (count ‘em, seven) 1040s, including without limitation original and copies, gave me my blogpost “From the Serious to the Frivolous,” 8/29/19. Gwen got hit only for the original, not the salvo of copies.

But George doesn’t do as well as Gwen, who got seven frivolities for the price of one Section 6702 chop.

IRS goes two for three, as above-stated, but George still gets three for the price of two.

Number One is so clearly frivolous that STJ Lew only cites Crain without the “somber reasoning and copious citation of precedent” lingo. George is an all-zeroes type.

Number Two is next. “A second…Form 1040 (second Form 1040) was received by respondent…. The second Form 1040 was submitted by petitioner apparently in response to a letter… advising petitioner that respondent made changes to the first Form 1040. See sec. 6213(b)(1). Along with the second Form 1040, petitioner  submitted an affidavit of mailing in which the second Form 1040 is characterized as a ‘corrected return’. The second Form 1040 was printed from a digital image of a Form 1040 created by petitioner and apparently stored on an electronic device owned by petitioner, or to which petitioner has access. Both the first Form 1040 and the second Form 1040 show identical entries and both bear Petitioner’s original signature. The second Form 1040 also satisfies the definition of a frivolous return for the same reasons that the first Form 1040 does and again, we need say nothing more on the point.” Order, transcript, at p. 5.

Number Three is a knuckleball.  “A third…Form 1040 (third Form 1040) was received by respondent… apparently in response to a letter… advising petitioner that respondent considered the first Form 1040 to be a frivolous income tax return, subject to a section 6702(a) penalty. Like the second Form 1040, the third Form 1040 was printed from a digital image of the Form 1040 created by petitioner and apparently stored on an electronic device owned by petitioner, or to which petitioner has access. The entries on the third Form 1040 are identical to the entries on the first and second Forms 1040, except it is unclear whether the third Form 1040 bears petitioner’s original signature. In an affidavit of mailing included with the third Form 1040 petitioner characterizes the first Form 1040 as his ‘original’ 1040 (actually he refers to the form as a ‘2040’ but that reference is an obvious error), and he again characterizes the second Form 1040 as a ‘corrected 1040’, but he describes the third Form 1040 ‘enclosed’ with the affidavit as a ‘copy’.” Order, Transcript, at p. 6.

IRS whiffs on the knuckleball.

“Keeping in mind that the burden of proof with respect to the imposition of a section 6702(a) penalty rests with respondent, see section 6703(a), petitioner’s characterization of the third Form 1040 as a ‘copy’ constrains us to find that the third Form 1040 did not constitute the filing of ‘what purports to be a return of a tax’ within the meaning of section 6702 (a) (1) .” Order, Transcript, at pp. 6-7. Quoting Kestin, of course. So George goes down on Numbers One and Two, but gets Number Three at no extra charge.

I said it a few days ago: “Tax Court orders are where it’s at. It took me some time, but when I stated early on in this bloging life I lead that I would ignore small claimers and orders, I was utterly wrong.

“If anyone wants to see the gears meshing (or grinding), the wheels turning (or screeching to a halt), and which way the smoke is blowing, the orders are essential. The Stealth Subpoena is just one example; all the discovery moves, all the variances between Tax Court Rules and FRCP, all the gambits, are in the orders.” 26 USC § 2461, 11/13/19.

But this also brings to mind the raspy, cigar-roughened voice of my old law partner Sid (may he rest in peace), whenever I waxed rhapsodic about summary J. “Whether or not you win the motion, you educate your adversary.”

Now every rounder can bombard the service centers (and Gwen Kestin hit four (count ‘em, four) with endless copies (prominently labeled “COPY- SEE 153 T. C. 2) of frivolities, and get away with it.

No, I am not suggesting this.



In Uncategorized on 11/19/2019 at 21:55

Only Pay Your Taxes First

IRS gets summary J sustaining NITLs for two years at issue, although Judge Albert G (“Scholar Al”) Lauber tells Ronald Sylvester Sullivan, 2019 T. C. Memo. 153, filed 11/19/19, that he’s free at any time to file an OIC, or propose an IA, if he files his nine (count ‘em, nine) missing tax returns and proffers the requisite financial information. See 2019 T. C. Memo. 153, at p. 12.

Ron S.S. did none of the above in support of his CDP. He came to IRS’ attention only because of third-party reporting for two of said years, leading to unpetitioned SNODs.

To explain both why I posted this routine Memo., and why I have given such a mundane post this headline, let me quote only the following.

“Petitioner is a clinical professor of law at Harvard Law School and the faculty director of the Harvard Trial Advocacy Workshop and the Harvard Criminal Justice Institute.” 2019 T. C. Memo. 153, at p. 2.



In Uncategorized on 11/18/2019 at 18:11

Leciel L. Lowery, Jr., is a pilot on the Chesapeake, boarding incoming vessels on the bay and steering them to the harbor they were bound for. Leciel works in all weathers, clambering from the pilot boat (today’s version of the Baltimore clipper) to tanker and container carrier. At age 60, Leciel is wore out and plans to retire in eight years.

But Leciel L. Lowery, Jr. and Charlene A. Lowery, 2019 T. C. Memo. 151, filed 11/18/19,  also didn’t bother to pay nine (count ‘em, nine) years’ worth of income tax, which, with interest and chops, comes to $639,100.

IRS hits LLL with a couple NITLs (hi, Judge Holmes), LLL petitions the lot, and Senior Judge John Colvin gets to review the AOs work-up. It doesn’t cut it for Senior Judge John, so he remands, with a few hints to Appeals to steer a straight course.

LLL gets paid through the Pilots’ Association, which takes a bunch of stuff out of LLL’s pay, but the AO only allows some of the take-out. So Senior Judge John would like to know how LLL can pay with money he doesn’t get. “The AO did not treat amounts required to be withheld from petitioner husband’s distribution as reducing the amount of income available to petitioners because those expenses ‘were not allowed as expenses per the IRM.’ The AO did not cite an IRM provision to support that position…. On remand, the Appeals Office will have an opportunity to articulate the basis on which it determined that amounts subtracted from petitioner husband’s distribution should be treated as available to pay petitioners’ unpaid tax liabilities.” 2019 T. C. Memo. 151, at p. 11.

Likewise, the AO wants LLL to liquidate his IRA, but how is LLL to retire in his planned eight years? IRS claims he can make it back. Senior Judge John ain’t so sure. “We are unsure on what basis respondent concluded that eight years is long enough for petitioners to accumulate retirement savings in addition to fulfilling their other financial obligations.” 2019 T. C. Memo. 151, at p. 16.

And while you’re at it, Appeals, check out LLL’s age and physical condition and see if special circumstances don’t warrant not requiring LLL to liquidate his IRA.

LLL claims he had unreimbursed business expenses (overnight stays, special gear) and proffers credit card receipts to show same, but AO claims he never showed them. Well, Senior Judge John gives Appeals a chance to make it up, since there’s a letter in the record that shows LLL offering to provide same. Appeals shall “…review records previously made available by petitioners and consider whether or to what extent those records substantiate the amounts of petitioners’ reported unreimbursed expenses, and, to the extent respondent concludes that petitioners had unreimbursed employee expenses, why funds so expended should be considered available to petitioners to pay their back tax….” 2019 T. C. Memo. 151, at p. 18.

And Charlene is trustee under a trust created by her dad for her benefit and that of her two siblings. The only asset of the trust is a house in AZ that is rented but shows no income. Charlene has broad power to sell, so the AO wants Charlene to sell and hand over her share of the proceeds. But Senior Judge John reads AZ law to require trustees to act for benefit of all beneficiaries. So Appeals should check out AZ law to see if Charlene can sell to benefit herself, without regard to the other beneficiaries.

I want to give a Taishoff “good job” to Stephen P. Kauffman, Esq., and Terry L. Goddard, Jr., who represented LLL and Charlene. As they say in Gleesca, they are “verra thorough.”