In Uncategorized on 10/29/2013 at 16:30

It hasn’t been a great week for lawyers, and it’s only Tuesday. And though I don’t want a penalty for piling on after the whistle, all is grist that comes to my blog mill. So I repeat Jimmy Durante’s immortal line from the stage version of Rodgers and Hart’s 1935 hit Jumbo, which The Great Schnozzola reprised three decades after in the 1962 filmed re-make. Durante, playing a circus clown in love with Jumbo the elephant, tries to sneak Jumbo away from the circus as the sheriff’s deputies descend to seize all assets, with writs in hand. “Where are you going with that elephant?” demands the deputy. With an expression of innocent bewilderment, Durante replies “What elephant?”

Well, Judge Cohen is confronted with a different kind of elephant in John T. O’Donnell and Ellen J. Norris O’Donnell, 2013 T. C. Memo. 247, filed 10/29/13.

Although Judge Cohen confirms Appeals’ denial of Dr. John’s and Ellen’s proposed installment agreement on other grounds, namely, that Dr. John and Ellen had funneled money to Dr. John’s stepson, that Dr. John’s and Ellen’s living expenses exceeded the local IRS norms, and that Dr. John’s and Ellen’s counsel had been dilatory in furnishing information to the SO, there remains one distinguishing feature in this case.

Dr. John’s and Ellen’s counsel furnishes the SO with a billing statement for its legal fees, which includes this gem: “preparation for meeting with clients. Prepared outline. Meeting with Dr. and Mrs. O’Donnell – reviewed all calculations and explained that bankruptcy is the only total solution to the problem but they need to wait before filing. We will try to reach a settlement at the CDP hearing to tide them over for one year or some portion thereof, and then file an Offer in Compromise based on a bankruptcy which should hold off IRS collection for another year or more.” 2013 T. C. Memo. 247, at p. 8.

The SO tells counsel it’s obvious you’re stalling, Dr. John and Ellen are funneling money out of their accounts to stepson, they’re over the allowable living expense limits, so I confirm.

Dr. John’s and Ellen’s counsel claim the SO misinterpreted the billing statement. I will not discuss whether litigation strategy should be discussed in a billing statement; or whether, even if it is appropriate, why anyone would furnish that information to one’s adversary.

Judge Cohen: “Petitioners in their brief suggest interpretations of the billing records containing discussion of bankruptcy strategy different from those drawn by the settlement officer in his notes. They contend that bankruptcy was intended only as an option, not as something intended to be done after time had passed to make more of their liabilities subject to discharge. This argument is apparently intended to counteract a question from the settlement officer concerning their sincerity about paying their Federal tax liabilities. There is no evidence in the record supporting petitioners’ explanation, and the settlement officer’s interpretations are not unreasonable. (His interpretation was validated by what subsequently occurred in this case.) In any event, the notice of determination does not rely on a subjective reaction to the billing records.” 2013 T. C. Memo. 247, at pp. 15-16.

OK, Judge Cohen, so there’s plenty of other material in the record; but didn’t the thought just possibly cross your mind: “What elephant?”

Takeaway from my 600th blogpost: Counsel, save the strategy discussions for letters marked “CONFIDENTIAL – PRIVILEGED – MATERIAL PREPARED FOR LITIGATION.” And let the bills say as little as reasonably possible.

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