In Uncategorized on 01/13/2017 at 19:52

To a Peaceful Evening

Faithful readers are great; faithful readers who bring to my attention new developments are even greater.

But occasionally I need a break.

Nevertheless, this faithful reader gets a Taishoff “Well Done!” for bringing another slamjam from Seventh Circuit, directed at The Judge With a Heart, STJ Armen.

Here’s Robert H. Tilden v. Com’r, 15-3838, decided 1/13/17.

Y’all remember Robert H. Tilden, of course. What, no? Then see my blogposts “Stamp Out – Part Deux,” 7/20/15; “Yes, We Have No Jurisdiction – Part Deux,” 12/3/15; and “Yes, We Have No Jurisdiction – Maybe,” 6/17/16.

Rob’t’s lawyer used, online postageflogger, but STJ Armen, notwithstanding IRS and Rob’t stipulated that Rob’t petition was timely mailed, bounced Rob’t based on IRS track-and-confirm and the long delay between the alleged date of posting and date of arrival at The Glasshouse at 400 Second Street, NW.

Judge Easterbrook agrees that the explicit language of Section 6213(a) strips Tax Court of jurisdiction when a petition from a SNOD is untimely. Only Congress can change that, and all thine and thine adversary’s piety and wit, and all thy tears, can’t confer jurisdiction upon courts by agreement.

There’s much discussion about how the Supremes dealt with filing deadlines in other statutes, but Section 6213(a) is clear in language and strong in precedent, and Seventh Circuit won’t rewrite both language and history.

“But   it   does   not   follow   that   the   Tax   Court   may   disregard   the   parties’   agreement   that  a   particular   petition   has   been   timely   filed.   True,   litigants   cannot   stipulate   to  jurisdiction.   But   they   may   agree   on   the   facts   that   determine   jurisdiction.   For  example,  if  in  a   suit  under  the  diversity  jurisdiction, 28  U.S.C.  §1332,  the  parties   agree   that   the   plaintiff   is   domiciled   in   Illinois   and   that   the   defendant   is   incorporated   in   Delaware   and   has   its   principal place  of  business  in  Texas,  a  district  court  need  not,  indeed   must   not,   look   behind   that   agreement   unless   the   judge   suspects   that   the   allegations   are   collusive.   See   28   U.S.C.   §1359.   The   Tax   Court   did   not   suspect   that   Tilden and the Commissioner  are  colluding  to  expand  its  jurisdiction;  to  the  contrary, the Commissioner  initially  denied  that  Tilden’s  petition   was   timely.   So   the   judge   did   not   have   a   sound   reason   to   doubt   that   the   envelope   was   indeed   handed   to   the   Postal   Service… as the Commissioner  has  conceded throughout.   And   now   that   the   Commissioner has acknowledged that  all  requirements  of  (B)(1) have  been  met—not  only  deposit  on  [Day 90]  but  also  that  certified  mail  often takes   eight  days  to  reach  the  Tax  Court  from  Utah—the  only  basis for   dismissing Tilden’s   petition   would   be   a   legal   conclusion   that  (B)(3)  is  the  sole subsection entitled  to  a  controlling  role.

“On   that   subject   we   agree   with   the   parties   that   the   Tax   Court   was   mistaken.   Part   (B)(3)   of   the   regulation   specifies   what   happens   if   an   envelope   has   both   a   private   postmark   and   a   postmark   from   the   U.S.   Postal Service.   Tilden’s   envelope   had   only   one  postmark.   The   regulation   does   not   ask   whether   a   date   that   is   not   a   ‘postmark’ is as good as a postmark.  It asks whether  there  are  competing  postmarks.

“To  say  ‘A is as good as B”  is not remotely to show that A is B. ‘Vanilla ice cream is as good as chocolate’ does not mean that a customer who orders   chocolate must accept vanilla, just because the  customer  likes both. They  are  still different. Subsection (B)(3) does not make anything turn on a date as reliable as an official postmark. It makes the outcome turn on the date of an official postmark.” 15-3838, at pp. 6-7 (Emphasis by the Court; Citations omitted).

USPS never claimed track-and-confirm was the same as a postmark.

OK, so Section 6213(a) is jurisdictional, but maybe the parties can stipulate timely mailing absent contrary proof or collusion, at least in Seventh Circuit.

But there’s a takeaway for the practitioner here, and Judge Easterbrook nails it.

“Although the taxpayer   thus prevails on this appeal, we have to express astonishment   that a law firm… would wait until the last possible day and then mail an envelope   without an official postmark. A petition for review is not a complicated document; it could have been mailed with time to spare. And if the last day turned out to be the only possible  day  (perhaps the firm was not engaged by the client until the time had almost   run), why use a private postmark when an official one would have prevented any controversy? A member of the firm’s staff could have walked the  envelope to a post   office and asked for hand  cancellation. The regulation gives taxpayers another foolproof option by providing that the time stamp of a private delivery service, such as FedEx or   UPS, is conclusive. 26   C.F.R. §301.7502–1(c)(3).  [Law firm] was taking an unnecessary risk with Tilden’s money   (and   its   own, in the malpractice claim sure to follow if we had agreed with the  Tax  Court) by waiting until the last day and then not getting an official postmark or using a delivery service.” 15-3838, at p. 8.

Judge, it’s not every service UPS or FedEx offers that qualifies for Section 7502 largesse. I can’t count the number of petitions thrown out because the petitioner did not use one of the blessed communion, fellowship divine.


In Uncategorized on 01/13/2017 at 17:35

It’s Friday the thirteenth, I had a long drive from the airport at Fort Lauderdale after coming in on the Dawn Patrol from LaGuardia, and I had a great lunch at my favorite French bistro on Espinola Way.

I want to relax, but duty calls.

No opinions, of course, and the only designated hitter (from Judge James S. (“Big Jim”) Halpern) merely repeats the usual mantra about leave to amend being freely granted where opposing party fails to show substantial prejudice.

But once, long ago, Judge Holmes suggested the IRS sue itself. See my blogpost “IRS, Go Sue Yourself,” 3/11/14. So today Judge Big Jim appears to be telling IRS to respond to their own motion.

IRS moves to amend its answer out of time. Petitioners object.

Judge Big Jim: “… we filed respondent’s motion for leave to file first amendment to answer (motion) and lodged his first amendment to answer. … we ordered respondent to respond to the motion….” Order, at p. 1.

How does one respond to one’s own motion, Judge? With sustained, thunderous applause? Loud cheers?


In Uncategorized on 01/12/2017 at 21:15

No, this is neither a medical alert nor the latest computer alert that your e-mail has been hacked. This is the computer code IRS puts on your dossier when you file bankruptcy.

I’m going on the road again tomorrow, so I’m late with the sad tale of Silvia Santana, 2017 T. C. Memo. 14, filed 1/12/17, as told by His Honor Big Julie, a/k/a His Honor Judge Julian I. Jacobs, hereinafter HHBJJJIJ.

While Silvia and her trusty attorney were dukeing it out about Silvia’s deficiency, and reaching a negotiated decision, nobody told IRS that Silvia had filed a bankruptcy petition. I wonder if she told her trusty counsel; surely he would know about 11USC§362(a)(8) and the automatic stay therein.

Howbeit, IRS wakes up and agrees the decision must go. But IRS and Silvia agreed as to the deficiencies, waived SNOD and told IRS to go and collect.

Silvia’s petition is thereupon tossed. But some clerk forgot to clear Code TC 520 out of the computer thereat.

Because Silvia remained frozen, her returns for the next four (count ‘em, four) years never got applied to the old deficiency, neither did a previous overpayment just shy of the three-year SOL for claiming.

Notwithstanding the foregoing, IRS sent Silvia a NFTL promptly after Silvia exited bankruptcy. Silvia did nothing.

IRS applied all the refunds to the earlier year as of April 15 of the year for which the refund was due, even though the TC 520 wasn’t pulled until years later.

But interest was running.

When IRS hit Silvia with a NITL, she petitioned, claiming IRS charged her too much interest and contested the failure to pay additions to tax.

Appeals cut some of the additions, and 50% of the interest.

Silvia did get cash refunds for some EICs that were part of the deficiency, and that interest stands. She had the money.

Silvia claims reasonable cause for nonpayment.

HHBJJJIJ: “With respect to reasonable cause, we observe that petitioners have not provided the Court with their financial information. Thus, we cannot determine whether they exercised the ordinary care and prudence that they must to demonstrate reasonable cause. See, e.g., Taylor v. Commissioner, T.C. Memo. 2009-27 (where taxpayer failed to introduce evidence regarding her investment in a club or how the club’s failure affected her ability to pay her taxes, finding that ‘[b]ecause of the lack of evidence regarding petitioner’s investment in the club, we cannot conclude that the investment constituted reasonable cause for her failure to pay her 1998, 2000, and 2001 tax liabilities by their respective due dates’). Despite petitioners’ failure to provide Settlement Officer Andrews with the necessary information, she reduced, but did not eliminate, the section 6651(a)(3) addition to tax imposed on them. We will not disturb her determination.” 2017 T.C. Memo. 14, at pp. 16-17. (Footnote omitted).

Since Silvia could prove no reasonable cause, willful neglect is not discussed.

And since the NFTL should have awakened Silvia, she has no beef that she would have paid sooner had she known.

Takeaway- Don’t ignore IRS correspondence; it could be expensive.