Sorry, STJ Armen, The Judge With a Heart, it didn’t look close to me.

At the end of a banner day in Tax Court (five, count ‘em, five posts today, a new personal best), as with the card at Aqueduct, we end with a small claimer as the dusk settles in.

This one is Gary W. Andersen and Linda C. Andersen, 2013 T. C. Sum. Op. 100, filed 12/9/13. And the whole story is about $1223 accuracy penalty.

Try this as a sad story. Gary and Linda have a 50 year unbroken record of timely filings, with not a single exam (or even a math correction). But their returns are complicated; they have some farmland they’ve rented, and they each have pension income and employment income from various employers.

So they go to their trusty CPA, with every scrap of paper that could have anything to do with income and deductions, just as they’ve been doing for the five years preceding the year at issue.

And he isn’t just your ordinary CPA (sorry, all you CPAs out there who read my blog, I know you’re all extraordinary because you do read my blog). No, this is Curtis Trader, CPA, MA in Accountancy from Brigham Young U., 20-year veteran of tax preparation and chair, as at the time of trial,  of the Utah Tax Review Committee, to which exalted post he was appointed by the Governor.

Now Curt knew Linda was thinking of hanging up her scrubs (she was a RN), so when she didn’t hand him a W-2 for the year at issue, but a 1099-R for her showed up in the shopping bag he gets from the Andersens, he reckons Linda has finally done it.

Except she hasn’t. Her employer has gone digital, so Linda gets the digit, but not the paper. And her employer doesn’t tell her to check the website, pick a password and download her W-2. So she has no idea she had a W-2.

And when they check out the return Curt prepared, it comes within $1K of the previous year’s numbers (or 0.67%), so nobody is the wiser.

Except IRS, which got the digit that Linda didn’t get, and which fires off a SNOD. That same day they get the SNOD, Gary and Linda send a check for the entire amount of underpayment as stated by IRS.

Now IRS wants the five-and-ten, substantial underpayment. Technically correct, but on these facts?

STJ Armen: “Admittedly, this is an exceptionally close case. However, after weighing all the evidence, and in particular the testimony of the witnesses, we think the balance shifts in petitioners’ favor.” 2013 T. C. Sum. Op. 100, at p. 9.

“Exceptionally close”? Give me a break, Judge!

You state that Gary and Linda are credible witnesses, that Curt is a top-of-the-line expert, that the mistake was honest, that Gary and Linda obviously made a good faith effort to assess their tax liability as they had done every year for the preceding fifty (count ‘em, fifty) years, and that they corrected it the minute they got the SNOD.

How about ol’ Raul Salvagno and his next friend, young Alex Salvagno, the haunter of law libraries, who fiddle around for six years before Judge Kerrigan finally loses patience? See my blogpost “With Friends Like Him”, 2/26/13. And what price  all the other wiseguys and sharpshooters, many of whom have shown up on my blogposts, of whom the accounts of their delictions litter the files at 400 Second Street, NW?

So I’m glad that, at the end, STJ Armen shows he’s still A Judge With A Heart: “Clearly, petitioners made a mistake. But we think it was an honest mistake and not of a type that should justify the imposition of the accuracy-related penalty. In short, we think that petitioners’ diligent efforts to keep track of their tax information, hiring a C.P.A. to prepare their tax return, reviewing their return with the C.P.A. when it was completed, and prompt payment of the deficiency upon receipt of the notice of deficiency, together with the other facts and circumstances discussed above, represent a good-faith attempt to assess their proper tax liability.” 2013 T. C. Sum. Op. 100, at p. 12.

That’s the holiday spirit, Judge.