In Uncategorized on 03/15/2012 at 15:57

I wish Judge Halpern had been more explicit about good faith reliance in Salvador F. Neri and Guadalupe Neri, 2012 T.C. Mem. 71, filed 3/15/12.

The case was yet another Section 104 “no hurt, no exclusion” cases. I’ve blogged two others already, “No Hurt, No Foul?”, 11/1/11, and “Don’t Do It, Litigator”, 12/5/11, and Neri has nary to add to the basic principle enunciated time and again.

But what interests me about Neri is what Judge Halpern didn’t say. Sal excludes the $210K arbitration award he got on account of family and medical leave breaches by Sal’s employer, but neither his complaint nor the arbitration award talks about any physical injury, except tangentially mentioning a prior condition already cured. So game over, under Section 104.

Now comes the Section 6662 20% accuracy penalty. The only thing Judge Halpern mentions is that Guadalupe testifies on the trial that the Neri’s attorney told her and Sal the award was nontaxable. That attorney neither tried this case nor was called as a witness (and if he had tried this case, would he have been permitted to testify, even though no jury is involved?). Nothing stated in the decision touches upon that attorney’s tax qualifications, although he apparently shredded the defendant’s witness on the arbitration hearing.

Judge Halpern quotes the Regulations, Section 1.6664-4(b)(1), and says that the facts and circumstances let the Neris off the hook for accuracy. But Judge Halpern gives us no particularization of which of the facts and circumstances tip the scales Neri-ward. In the wilderness of single instances, which is the basis of our law, any thread from which we can suspend a reasoned evaluation in aid of our clients, and the public generally, is to be welcomed. And Tax Court judges, who encounter the good faith reliance argument every day, are those best fitted to guide us. I wish we had been given more guidance this time.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: