In Uncategorized on 09/16/2013 at 17:53

The Few (no not the RAF, the long-suffering readers of this blog) will remember, perhaps, the redoubtable Freddie. If you’ve mercifully forgotten this gem of the Tax Court Bar, see by blogposts “How Not To Do It”, 11/21/12, and “The Business As ATM”, 6/20/13.

This is not another tale of Freddie’s missteps. Unhappily, Freddie has a colleague who is living up (or rather, down) to Freddie’s standards.

Here’s the story of Ella Wallace, as told by Judge Cohen in 2013 T. C. Memo. 218, filed 9/16/13.

Ella wants Section 6015(f) relief. Husband Ronald was running a family business called American Haulers, and the Wallaces also owned an oil field servicing outfit, but Ronald fell ill (and was at death’s door, according to Ella’s attorney, whom we shall call Yeff). Ronald’s successor, Wilbanks, ran the haulers into the ground before dying “his own se’f”, as they say in East Texas.

There’s a little matter of $7800 in tax due for the year at issue, per the joint return Ella and Ronald filed. Ronald and Ella were still married during this time.

IRS assesses tax and interest. Ella timely filed Form 8857, but “(T)he information petitioner submitted through her counsel to the Appeals Office in support of her request for relief consisted primarily of information concerning Wallace’s health. The only submitted financial information reported that American Haulers was out of business; no personal financial information concerning income, assets, expenses, or liabilities was submitted.” 2013 T. C. Memo. 218, at p. 3. A wee bit sketchy for a Section 6015(f) case, whether old rules or new rules apply.

Nevertheless, IRS reviews under the new rules, Notice 2012-8, 2012-4 IRB 309. For further details, see my blogpost “Innocence is Bliss”, 1/6/12. The spectre of Sriram is off the table at IRS, and Judge Cohen doesn’t pick up on it here.

This is probably because she finds 2012-8 irrelevant. “(Although streamlined procedures have been proposed by Notice 2012-8, supra, economic hardship and knowledge are still factors to be considered under the proposal. Reconsideration of petitioner’s request during the pendency of this case is immaterial to the result). 2013 T. C. Memo. 218, at p. 6.

“Petitioner did not appear at trial, and the parties submitted the case fully stipulated under Rule 122. Her counsel represented that Wallace’s continuing illness prevented petitioner’s appearance. Respondent did not object to an affidavit signed by petitioner, and it was received in evidence. That affidavit, however, addressed only Wallace’s [Ronald’s] poor health, Wilbanks’  mismanagement of American Haulers, and Wilbanks’ death. Petitioner acknowledges that ‘our personal income during this time was from Wallace Tool[s].’[The oil well servicer] The affidavit did not address the material issues, to wit, whether petitioner knew or should have known that the tax reported on the 2007 return would not be paid, whether she would suffer financial hardship if required to pay it, and whether it would be inequitable to hold her liable for the unpaid balance.” 2013 T. C. Memo. 218, at pp. 5-6.

The result, of course, is that Ella doesn’t get innocent spouse treatment.

Now it’s true that a sloppy record alone is no reason why I should call attention to Yeff’s performance. After all, greater attorneys than he (inter alia, as the expensive lawyers say, F. Lee Bailey; see my blogposts “Service Trumps Sickness”, 4/2/12, and “A Victim Of His Own Success”, 4/4/12) have come to grief in Tax Court.

But Yeff, like Freddie, isn’t a first-time neophyte. “The Court takes judicial notice that counsel has appeared of record in numerous cases in this Court.” See Ella Wallace, Docket No. 20522-10, filed 9/5/13, at  p. 2.

Judge Cohen anent Yeff’s performance; for starters: “On August 9, 2013, petitioner’s Counsel was directed to show cause why he should not be subject to sanction for failure to comply with the Court’s Orders and Rules. On August 22, 2013, the Court received a document titled ‘Motion to Set Aside the Judgment and to Allow for a Late Filing of a Responsive Brief Tax Court Rule 162 and Federal Rule of Civil Procedure 60.’ That document could not be filed as titled because there was no judgment in this case. An opinion, much less a decision, had not been filed. The cited rules have no application in this situation. No reply brief was attached. The Clerk of the Court, therefore, was instructed to file the document as a Response to Order to Show Cause, as the content indicated it was intended. The content of that response, however, misstates the record, misstates the authorities, and cites irrelevant case law.” Ella Wallace, Docket No. 20522-10, filed 9/5/13, at p. 1.

But wait, there’s more: “A practitioner before this Court is required to carry out his or her practice in accordance with the letter and spirit of the Model Rules of Professional Conduct of the American Bar Association. Rule 201(a), Tax Court Rules of Practice and Procedure. Tax Court Rule 202(a)(3) specifically identifies as a ground for discipline any conduct that violates the letter and spirit of the Model Rules. For example, Model Rule 1.1 requires a lawyer to provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. Model Rule 1.3 requires a lawyer to act with reasonable diligence and promptness in representing a client. Model Rule 3.4(c) prohibits a lawyer from knowingly disobeying court rules and orders. Counsel’s conduct in this case seems to have been deficient on these and possibly other grounds.” Order, at p. 2.

I know that there but for the grace of you-know-Whom go any of us. And we’ve all blown cases, and sometimes blown ’em big-time. But isn’t it time for a competency test for Tax Court?


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