No, other plant life, namely green supplements, flax seeds and D-3, in the case of Kenneth Delano Humphrey, 2013 T. C. Memo. 198, filed 8/28/13.

So Paul Simon doesn’t feature in today’s blogpost.

KD was an officer in the US Dep’t of Homeland Security during the year at issue, and scheduled numerous deductions in his Schedule A, most of which Judge Goeke blows off for want of substantiation. But KD’s plant life gets a juridical OK.

“As part of phytotherapy, petitioner claimed as medical expenses the purchase of various natural supplements (green supplements, flax seeds, and D-3) to alleviate his prostate cancer. The regimen was based on medical guidelines by Johns Hopkins Medical Urology, Harvard Medical School, and the Mayo Clinic. Petitioner has been under the care of two doctors since 2008.” 2013 T. C. Memo. 198, at pp. 3-4.

“Petitioner seeks to deduct supplements and health foods as a medical expense. Medical care deductions are not strictly limited to traditional medical procedures but include amounts paid for affecting the structure of the body. Medical expenses for nontraditional medical care may be deductible under the broad view of medical care. The term ‘medical care’ includes amounts paid ‘for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body’.” 2013 T. C. Memo. 198, at p. 7. (Citations omitted).

Judge Goeke is willing to give KD the benefit of the doubt: “To prevail, petitioner must show that the health foods and supplements cure, mitigate, treat, or prevent his prostate cancer or affect any structure or function of his body. To be deductible, the treatment must be for the specific purpose of alleviating the prostate cancer, rather than for the general well-being of petitioner. Sec. 1.213-1(e)(1)(ii), Income Tax Regs. It is difficult to determine the difference, but here we feel petitioner has proven that the health foods and supplements were for alleviating his prostate cancer rather than just for general health.

“Petitioner provided receipts from a discount health food store to substantiate purchases of green supplements, flax seeds, and D-3. It is pertinent to determine whether the health foods and supplements were prescribed by a doctor. From the record we find that the expenses for health foods and supplements have been substantiated. Petitioner provided credible testimony that his doctors suggested the health foods and cited medical guidelines by Johns Hopkins Medical Urology, Harvard Medical School, and the Mayo Clinic.” 2013 T. C. Memo. 198, at pp. 8-9.

Takeaway- Don’t overlook those supplements. Good medical evidence wins the day.

 Will deter that obliging jurist Judge Gustafson from bringing a case on to trial. Although Frank is dead and Dulce’s health has seriously deteriorated since they petitioned in 2009, Judge Gustafson isn’t prepared to wait much longer to deal with whatever the issues might be in Estate of Frank San Pedro, Deceased, Alberto E. San Pedro, Personal Representative, and Dulce San Pedro, Docket No. 11905-09, filed 8/28/13.

Trial is set for a date certain less than three months away, but apparently Alberto asked for a continuance. Judge Gustafson doesn’t say who wants the time-out, but in any case he’s not obliging this time.

“The record shows that Frank San Pedro died in July 2009 (several months after the petition was filed) and that Dulce San Pedro’s health has seriously deteriorated. While such circumstances are sometimes a reason to continue a case, a continuance should be granted only if the passage of time will better enable the parties to try the case. In a circumstance like this, a continuance may have the disadvantage of making it only more difficult to locate witnesses and documents relevant to the case. The parties should therefore be aware that the Court will not reflexively grant any further continuance.” Order, at p. 1.

So file a status report, guys, and get with it.

On tour this week with the IRS Nationwide Tax Forum, I post here a rare personal reflection.

Echoing Paul Simon’s 1965 hit, I’m sitting in the National Harbor Gaylord Resort Hotel, with a railway ticket to my destination, but with two more days of CPE (gotta get those hours) ahead.

And I’m bored.

I’ve got no gripe with the lectures or the lecturers, but the 2013 tax law changes have lost their novelty, the Affordable Care Act has become this year’s l’Affaire Dreyfuss (take a look at that splendid Caran d’Ache cartoon “they spoke of it”), and there’s not a lot new with SFRs and ASFRs, and preparer penalties.

There is a new Form 8938 Statement of Foreign Assets to go with 1040s, and FBARs are now all going to be filed electronically, but that has been circulating for a while on the IRS website. Moreover, discussions of tax forms are not what I do best.

And Tax Court, the source of my blogposts, today has two pedestrian T. C. Memos only, and no interesting orders.

One reiterates yet again the TFRP rule that the entity’s liability has nothing to do with the responsible person’s obligation to remit the withheld funds, even when the entity bears the intriguing title of Hey Baby Enterprises, Inc. The case is Pamela L. Lengua, 2013 T. C. Memo. 197, filed 8/27/13, but the corporate name is the best part of the case.

Next is an old protester trying to relitigate his 1991 loss, and getting yet another Section 6673 jab from that usually welcoming, but now unsympathetic, jurist Judge Lauber. I pass.

So this evening I again turn to Mr. Simon: “But all my words come back to me/ In shades of mediocrity.”

I wish I were homeward bound.

Whoever your partner might be. No, not Historic Boardwalk Hall; see my blogpost “Honor Your Partner?”, 9/3/12. This time it’s Jimastowlo Oil, LLC, et al., John J. Petito, Tax Matters Partner, 2013 T. C. Memo. 195, filed 8/26/13*, a day to keep us bloggers blogging far into the night.

Judge Halpern is seeking the source, not Perrier, but the source partner, the partnership whence cometh all the FPAAs that Jimastowlo and its buddy Oil Coming We Are Humming LLC are fighting about. IRS hit Jim and Hum with FPAAs, claiming Section 469 passivity and imposing accuracy penalties.

But Jim and Hum were themselves owners of a couple of working interests in oil leases, the chief worker of which was Energytec, Inc., who sold Jim and Hum “income programs” in some played-out Texas wells.

After fighting through the FPAAs, Judge Halpern thinks maybe the real partnership is among Energytec, Jim and Hum, and so he has no jurisdiction because Energytec, the “source” partner, isn’t in the mix.

For those of us who don’t do oil deals, a working interest has been defined by Hank Black, the law dictionarian, as “(T)he rights to the mineral interest granted by an oil-and-gas lease, so called because the lessee acquires the right to work on the leased property to search, develop, and produce oil and gas, as well as the obligation to pay all costs.” 2013 T. C. Memo. 195, at p. 7, footnote 3.

OK, but were Energytec, Jim and Hum partners? Now usually in these deals there’s an operating agreement, spelling out who does what and who gets what and who pays what. But here there was none; the wells were worked by Energytec or its designee, who drilled, collected, sold, kept the books and distributed the net. Neither Hum nor Jim could do anything, take any oil or sell any oil. And when Energytec finally got around to proffering operating agreements, Hum and Jim refused to sign, for the reasons hereinafter in the next succeeding paragraph set forth, as the high-priced lawyers say.

At first Jim and Hum got paid based on the projected yields from the leases, but the projections were wildly optimistic, the payments got cut, and Jim and Hum wound up owing Energytec money. Jim and Hum yelled “Ponzi scheme” and sued. And claimed theft losses. Energytec filed chapter (what else?), and so far no decision on the fraud claims.

But was it a partnership? No, says IRS, so nail Jim and Hum on the FPAAs we gave them. Yes it was, say Jim and Hum, so toss the case for no jurisdiction.

Energytec never filed a 1065. Their 1120 said they were in the oil business, but made no reference to any passthroughs. Jim and Hum each filed their own 1065s, but said nothing about source partnerships; they were simply in what my daughter the Texan calls the “awl bizniz”.

So Judge Halpern checks out the statute and regulations. A simple expense-sharing arrangement is not a partnership, but when two or more are gathered together in a business entity, and aren’t a trust or corporation, they are a partnership.

And that means TEFRA, and FPAAs, and partnership-level and partner-level computations. And affected items, those that show up on partners’ returns but are passed through from the partnership.

Judge Halpern: “Because affected items depend upon partnership-level determinations with respect to partnership items, any issuance of notice of deficiency or FPAA regarding affected items, and any resulting litigation, must await the outcome of the partnership proceeding or the expiration of the time to initiate one. That rule applies equally to affected items reported by a ‘pass-thru’ partner that were derived from a lower tier or ‘source’ partnership.” 2013 T. C. Memo. 195, at p. 23. (Citations omitted, but Judge Halpern cites the Rawls case, the subject of two of my blogposts “Finishing the Play”, 3/26/12, and “Hail, All Hail Cornell!”, 12/5/12).

And it doesn’t matter that none of the partners knew they were partners, filed returns as partners, and even that IRS never claimed they were partners. “The principle… that we lack jurisdiction to redetermine affected items attributable to a source partnership before the source partnership-level proceedings have been completed, applies even when the members of the source partnership have failed to recognize that they have created a separate entity (i.e., a partnership) for Federal income tax purposes and have not, therefore, filed a partnership return on its behalf, and the Commissioner has neither conducted a source partnership-level audit nor issued an FPAA to it.” 2013 T. C. Memo. 195, at p. 24. (Citations omitted).

The Section 469 passivity and the penalties are partnership-level items for the source partnership, and that partnership, if it is a partnership, isn’t before Tax Court. And even economic substance and sham transaction, challenging whether there even was a partnership, are partnership-level issues. See Petaluma.

Guess what? It is a partnership. Even though some assignments of working interests were recorded late or not recorded at all, as among themselves Energytec, Jim and Hum were co-tenants. And some business was being done, however minimal. Some oil was recovered, collected, sold, and some bills were paid.

It was more than co-ownership or expense-sharing. “Each LLC was, thus, a coowner with Energytec (and others) of a working interest in an oil and gas leasehold, which working interest entitled the coowners thereof to find and extract oil and gas. To exploit the working interest, the coowners had to cooperate. During the audit years, Energytec, acting as common agent, operated the wells on a cooperative basis for the working interest owners. No working interest owner could take his share of production in kind or sell it independently of the other owners. The coowners were not merely sharing expenses. They were jointly carrying on a trade or business and dividing the proceeds therefrom.” 2013 T. C. Memo. 195, at p. 40.

Out go the FPAAs, and out goes the petition.

*jimastowlo oil 2013-195

Two 501(c)(3)s today, August 26, both Section 7428 declaratory judgments, as Tax Court releases a bushelbasketful of opinions.

First up, Partners in Charity, Inc., (“PIC”) 141 T. C. 2, filed 8/26/13. IRS revoked PIC’s exempt status retroactive to day one.

PIC was the brainchild of Chicago real estater Charlie Konkus. He claimed PIC was going to raise money to provide poor would-be homeowners with downpayments, if they could get mortgages.

What Charlie did was to get the sellers to front the downpayments, by paying Charlie the downpayments plus a little on the side, whereupon Charlie would use PIC to give the downpayment money (directly into escrow) for the buyers, and then funnel it back to the seller through the escrow at closing, thus permitting sellers to give the purchasers the downpayment, something prohibited by FHA regulations. And let the sellers charge more for their houses (as Charlie pointed out in his promotional materials). But FHA regulations allow charities to fund downpayments for the poor.

Of course, Charlie did not restrict his pseudo-largesse to the poor: anyone, rich or poor or in-between, could avail themselves; and, since Charlie had no controls to make sure his beneficence would only aid the poor, they did. Charlie hired his wife’s company to promote the business, and in two years racked up $3 million in profit.

Judge Gustafson, usually so obliging, is not amused: “Indiscriminately giving money away to anyone who will take it is not a charitable purpose, even if some of the recipients are poor people. Section 501(c)(3) requires more; it requires that the money be given away in such a way that it furthers a purpose of reducing poverty, promoting education, science, or religion, or promoting another public good. We conclude that… PIC’s DPA program did not operate for a charitable purpose.” 141 T. C. 2, at pp. 28-29.

It’s what you do, not what you say you will do.

PIC was a broker, not a charity. And IRS has discretion to revoke a 501(c)(3) exemption retroactive to day one, and here that discretion was not abused.

Next up, Judge Gustafson examines the gymnastics of Capital Gymnastics Booster Club, Inc., in 2013 T. C. Memo. 193, filed 8/26/13. Here the question is did the exempt income inure to the private benefit of insiders, and Judge Gustafson finds that it did.

The Capitalists, a 501(c)(3) athletic outfit, required member-parents to front the money for their children’s competitive efforts, in training and in competitions. Alternatively, the parents could “fund-raise”, that is solicit contributions to the Capitalists, receiving  a formulaic credit against the not-inconsequential annual membership dues and assessments for concomitant expenses connected with their offsprings’ handsprings.

“Capital Gymnastics computed the assessment at the beginning of each season by consulting with meet sponsors. Capital Gymnastics did not allow athletes to compete unless their assessment was paid in full, including any late fees. The record shows no conferring of ‘scholarships’ nor any other relaxation of this requirement.” 2013 T. C. Memo. 193, at p. 6.

But there was an out; fund-raisers and other special friends of the Capitalists didn’t pay the full freight. “For the families that chose to fundraise, Capital Gymnastics awarded points in proportion to the fundraising profit that each family generated. Each point was worth $10. The chairperson of each fundraiser also received a small number of points as an incentive to manage the fundraisers. Parents could earn additional points by filling certain board positions on Capital Gymnastics. Capital Gymnastics’ financial manager periodically tallied the points for each family and reduced the family’s unpaid assessment in dollars, according to the number of points that the family had earned.” 2013 T. C. Memo. 193, at p. 8.

The fundraisers got big discounts, the non-fundraisers (described by the Capitalists as “moochers” or “freeloaders”) got nothing.

Now fostering amateur sport competitions is a valid Section 501(c)(3) purpose, so the Capitalists’ aims are legit. What sinks them is the benefits to the fundraisers.

Exempts can’t benefit insiders or private parties. The Capitalists argue that the kids are the beneficiaries. IRS says no, it’s the fundraising parents, who are members, who are getting the benefit.

Judge Gustafson: “Applying the law to Capital Gymnastics’ facts and circumstances, we find that, in violation of section 501(c)(3), Capital Gymnastics allowed substantial private inurement to the parent-member-insiders who fundraised (by providing to those insiders relief from an economic burden in the form of ‘points’ applied to their assessments) and thereby conferred an impermissible substantial private benefit on the child-athletes of those parents only (as opposed to its child-athletes generally). Capital Gymnastics authorized parent-members to raise funds for their own benefit but under the name of Capital Gymnastics and trading on its tax-exemption ruling. Capital Gymnastics rigorously assured that its fundraising did not generally benefit all the child-athletes in its programs but rather benefited only the children of parents who did the fundraising.” 2013 T. C. Memo. 193, at pp. 19-20.

And Judge Gustafson makes clear the contrast between the occasional fundraiser (bake sale, car wash) and the Capitalists’ all-out drive. “…this is not a circumstance (like, say, a school band’s sale of candy or a church youth group’s carwash for a once-a-year event) in which the fundraising is a tiny fraction of the organization’s overall function; here, the fundraising is, instead, the admitted ‘primary function’ of the organization. This is not a circumstance in which the individual’s contribution of his share of the cost is optional or where scholarships are made available for those who cannot afford the cost. Nor is this a circumstance in which every member is required to perform fundraising and no one can buy his way out; rather, the fundraising was an option chosen by those who wanted to earn their assessments. The assessments at issue were not arguably de minimis charges that might be covered by a child’s paper route or babysitting, but rather were serious parental obligations….” 2013 T. C. Memo. 193, at p. 20.

In short, the money wasn’t spread around. No exemption.

No, not into R. M. Crawford’s 1938 “wild blue yonder”, but rather to imbibe taxational wisdom and CPE hours at the IRS Nationwide Tax Forum at National Harbor, MD, the situs I love to hate. Still, gotta get the hours. Again I’m lobbying to have the Big Show brought back to New York City.

Can’t leave out the Big Apple.

The subtitle of my blogpost “Give It Your Best Number”, 4/9/12, should serve as a warning to taxpayers who get hit with a deficiency; even before the SNOD, prepare to settle.

John V. Black, Docket No. 2260-12, filed 8/23/13 is an object lesson.

CSTJ Panuthos administers the lesson. First, the background: “…respondent [IRS] filed a Motion for Leave To File Amendment to Answer, lodging the corresponding Amendment to Answer. Respondent’s motion states that the notice of deficiency that forms the basis of this case was prepared using information returns provided by third parties. Thereafter, respondent performed a bank deposit analysis and determined that… petitioner received additional unreported taxable income from his business activity, which was not reported by third parties and therefore was not included in the original notice of deficiency. Respondent’s Amendment to Answer seeks an increased deficiency of $11,683 and additions to tax resulting from this alleged additional unreported income.” Order, at p. 1.

Sound familiar? See my blogpost “Pay The Man”, 7/31/12.

John objects to IRS’ proposed Amendment: “…petitioner alleges that he wants to settle his case and allowing respondent to amend his answer will result in ‘added costs, hassles and delay.’” Order, at p. 1.

But Rule 41, like FRCP Rule 51, is in favor of amendments.

CSTJ Panuthos: “Whether to permit such an amendment is a matter within the sound discretion of the Court. The touchstone in evaluating whether to allow an amendment is the existence of unfair surprise or prejudice to the nonmoving party. Such surprise or prejudice, in turn, rests largely on evidentiary and other considerations bearing on the nonmovant’s opportunity to respond. For instance, this and other courts may take into account whether the nonmovant would be prevented from presenting evidence that might have been introduced if the matter had been raised earlier and whether the movant delayed unduly in raising the matter.” Order, at p. 2. (Citations omitted).

In short, as we’ve seen before, the question is whether the Amendment is an ambush.

Not here, says CSTJ Panuthos: “Petitioner’s generalized allegations of hassles and delays lack persuasive specifics or value. Furthermore, we cannot find any undue delay, bad faith or dilatory motive on the part of respondent when the existence of this alleged additional unreported income was not known to respondent until respondent obtained petitioner’s bank records… in preparation for trial.”  Order, at p. 2.

Finally, CSTJ Panuthos understands what John wants, but “(W)hile we understand petitioner’s desire to settle this case based on the notice of deficiency as issued, Tax Court precedent is clear that ‘[w]e acquire jurisdiction when a taxpayer files with the Court and that jurisdiction extends to the entire subject matter of the correct tax for the taxable year.’” Order, at p.2. (Citation omitted).

Or in simple terms, once you file a petition, everything in every tax year in your petition is up for grabs.

So IRS gets its Amendment, to which John must respond.

That obliging jurist Judge Gustafson contradicts the title of my blogpost “You Can Have One Without The Other”, 7/31/13, but this designated hitter is not about spouses. It’s about an opportunity to contest a deficiency at the CDP stage.

The order is Albert Sofian, Docket No. 17960-12L, filed 8/22/13.

Al’s beef has to do with gains on securities sales. Al claims he never got the final notice of intent to levy, which claim Judge Gustafson says defeats IRS’ summary judgment motion to sustain Appeals’ NOD. IRS says Al had a prior opportunity to dispute. Al says no.

Al never raised non-receipt at his CDP, so IRS says he waived any chance to do so, whether or not he got the final notice of intent to levy.

Judge Gustafson says no: “On the record before us, we cannot fault Mr. Sofian for failing to effectively challenge liability at his CDP hearing. IRS Appeals’ letter… explicitly told Mr. Sofian, ‘You are not able to dispute the liability because our records indicate that you had a previous opportunity to challenge the liability under IRC 6330 when you were issued a Notice of Intent to Levy…. Therefore, you are precluded from raising the liability during this CDP hearing request.’ Appeals cannot announce such preclusions to the taxpayer and then support taxpayer-adverse outcomes by saying that the taxpayer failed to dispute the liability.

“We acknowledge that Appeals’ letter went on to say, ‘However, we will consider your original Form 1040 for the tax year… under general authority if you submit a completed and signed tax return to me within 21 days of the date of this letter’; and we have no doubt that Appeals made this offer in good faith. However, the letter made it clear that, for purposes of his CDP rights (which would include judicial review thereof) Mr. Sofian was precluded. Appeals cannot have it both ways–on the one hand telling the taxpayer that his submissions will not count for CDP purposes, but on the other hand arguing that the taxpayer’s nonsubmissions should count against him in the Tax Court’s review of the CDP hearing.” Order, at pp. 1-2. (Emphasis by the Court).

So Al will get his day in court.

However, lest Al should feel too elated, Judge Gustafson warns him that he has a double-barreled burden of proof: he has to prove he didn’t get the final notice of intent to levy, and, if he does so, then he has to prove that his liability was less than IRS said it was. Just saying “no” won’t get it.

Al seemed to think IRS has the burden of proof on his tax liability, but he is wrong, and Judge Gustafson makes it clear.

And Al and IRS must do their document exchange soon, and will be precluded from introducing anything they didn’t exchange.

Appeals may have to revise their form letter.

In the past I’ve awarded what I call a “Taishoff good try” for a novel, if unsuccessful, argument made in Tax Court, and one for an argument that succeeded. In substantiation of the foregoing, I offer my blogposts “Whose Line Is It, Anyway?”, 2/8/12, and “A Good Excuse”, 9/28/12.

But there are arguments that fall into a different category, and one of those I shall blog today in the category of “Oh Please!”, as in “you are joking, aren’t you?”. More to come, if time permits.

Today’s recipient is Pauline T. Golit, starring in 2013 T. C. Memo. 191, filed 8/21/13. Aside from the charitable donation to an out-of-country entity (barred by Section 170(c)), some unreported income, and the usual unsubstantiated employee business deductions (although Judge Halpern generously allows her more than IRS did), none of which is noteworthy, Pauline does come up with a reporting position worthy of a Taishoff “Oh Please!”.

Pauline claims HOH filing status and a dependency deduction for Albert Salako.

After the usual walk through Section 152, Judge Halpern deals with Albert: “Petitioner has failed to show that she is entitled to the dependency exemption deduction for Mr. Salako. Petitioner claimed on her 2008 return that Mr. Salako was her son. Mr. Salako was born on January 12, 1961, and was thus 47 years old at the close of 2008. Petitioner, born in 1959, is only two years older than Mr. Salako. Thus, he cannot be her biological son, and we do not find credible petitioner’s unsubstantiated testimony that Mr. Salako is her adopted son. Petitioner does not contend, and there is no evidence to find, that she bears any other familial relationship to Mr. Salako.

“Nor has petitioner shown that Mr. Salako was a member of her household during 2008. In order for an individual to be considered a member of a taxpayer’s household, both the taxpayer and the individual must occupy the household for the entire taxable year. Sec. 1.152-1(b), Income Tax Regs. Petitioner testified that Mr. Salako lived with her only ‘temporarily’ during 2008 and with a friend for the rest of that year. Although a temporary absence from the household will not prevent an individual from being considered as living with the taxpayer for the entire year, see id., there is no evidence as to the actual length of time Mr. Salako lived with petitioner during 2008. Consequently, petitioner has not shown that Mr. Salako satisfied the relationship requirements to be considered either a qualifying child or a qualifying relative.” 2013 T. C. Memo. 191, at pp. 9-10. (Footnote omitted).

Albert is too old for qualifying child and no evidence he is disabled (although Pauline claims he is), and no evidence as to whether Pauline or Albert provided more than one-half of Albert’s support in the year at issue.

So no HOH filing status or dependent’s deduction for Pauline, but she is the first recipient of a Taishoff “Oh Please!”.

 I remember a colleague being confronted, many years ago, by a particularly persnickety probate court clerk whose invariable incantation was “You have to fulfill the requirements.”

Well, Judge Kathleen Kerrigan isn’t particularly persnickety, but Eric Onyango didn’t, and neither did brother Maurice, so both of Eric’s cases get tossed in Eric Onyango, Docket No. 21922-11, filed 8/20/13.

First Eric petitions, but IRS claims they never sent him a SNOD, so petition number one gets dismissed. Then Eric petitions again, for the same years, and it turns out IRS did send him a SNOD after all. So petition one gets reinstated, but IRS claims Eric was late both times.

Eric says he didn’t get the SNOD until long after the ninetieth day after mailing, and anyway he designated brother Maurice as his fiduciary before day ninety, so the SNOD should have been mailed to brother Maurice in Nairobi, Kenya.

Wrong, says Judge Kerrigan. Eric didn’t get the designation right, and brother Maurice’s later correspondence didn’t cure the defect.

The Section 6903 regulations govern.

“Section 301.6903-1, Proced. & Admin. Regs., prescribes the manner in which the notice of fiduciary relationship must be filed. First, the notice must be given by the fiduciary. See sec. 301.6903-1(a), Proced. & Admin. Regs. (‘Every person acting for another person in a fiduciary capacity shall give notice thereof * * *’). Second, the notice must be signed by the fiduciary and must be filed with the I.R.S.Center where the return of the person for whom the fiduciary is acting is required to be filed. See sec. 301.6903-2(b)(2), Proced. & Admin. Regs. Third, the notice must state the name and address of the person for whom the fiduciary is acting and describe the nature of the liability, including the type of tax and the years involved.

“Section 301.6903-2(c), Proced. & Admin. Regs., provides that if the notice of the fiduciary relationship is not filed before the sending of the notice of a deficiency to the last known address of the taxpayer, no notice of the deficiency will be sent to the fiduciary. ‘In such a case the sending of the notice to the last known address of the taxpayer * * * will be a sufficient compliance with the requirements of the Code, even though such taxpayer * * * is under a legal disability * * *’. Id.” Order, at  pp. 4-5.

Neither Eric nor brother Maurice can furnish certified mailings of the correspondence they claim gave notice, and IRS claims what they did furnish doesn’t fulfill the requirements. Judge Kerrigan agrees.

So Eric is out, and his motion to restrain collection falls because there is no appeal from the SNOD nor valid petition before Tax Court to invoke the Section 6330(c) restraint.

But Eric does get his medical evidence sealed.

Takeaway– You have to fulfill the requirements.