Archive for February, 2014|Monthly archive page


In Uncategorized on 02/06/2014 at 15:32

Tax Court is trying valiantly to catch up with the tech revolution, but hasn’t yet. So Toni Marie Ognibene must refile her papers from a fixed platform. See Docket No. 9464-12 L, filed 2/6/14.

Toni Marie, obviously techsmart and streetwise, was ahead of Tax Court, and certainly ahead of William (“Old Bill”) Wise, Esq., of my blogpost “(Old) Technophobes, Rejoice!”, 12/18/13, and poor Louis Samuel, Esq., of my blogpost “Practicing in Tax Court Can Be Hazardous”, 1/28/14.

Here’s Ch J Michael B. (“Iron Mike”) Thornton: “…petitioner submitted two documents for electronic filing: (1) a Motion for Extension of Time and (2) a Notice of Change of Address. The Court’s electronic filing system does not currently support the submission of documents from a smartphone. Accordingly, cover pages were generated and filed in the case, but the documents that petitioner attempted to upload and file were not properly made a part of the record of this case. Petitioner may resubmit these documents for filing in this case. However, this should be done using a platform other than an unsupported smartphone.” Order, at p. 1.

Get with it, Tax Court. I don’t use smartphones, but I am in the “old” category for sure. The younger generation will soon be looking at Sir Andrew, my 2007-vintage  MacBook 13.3, like an escapee from the Smithsonian.

Join the 21st Century.


In Uncategorized on 02/06/2014 at 13:30

Target and Neiman-Marcus were bad enough, but now these cybercriminals have besmirched the fair name of the United States Tax Court.

From the Tax Court website homepage today, 2/6/14:

“SCAM ALERT: The United States Tax Court has been notified of individuals receiving an official looking letter/e-mail which appears to originate from the Court and solicits money from its recipient.  Please be aware the United States Tax Court does not solicit money via letter or e-mail.   If you are in receipt of such a solicitation letter or e-mail, please immediately report it to the Internet Crime Complaint Center (IC3 – and your local law enforcement office.”


In Uncategorized on 02/06/2014 at 00:58

No opinions or designated orders again today, 2/5/14, so again the diligent blogger trudges through volumes of “pay the $60 already” and “Simon Says answer the motion”.

The alternative is to romp through the muddy field of Rev. Proc. 2014-16, effective 1/24/14, among whose purposes are to provide: “…the procedures by which a taxpayer may obtain the automatic consent of the Commissioner of Internal Revenue to change to the methods of accounting provided in §§ 1.162-3, 1.162-4, 1.263(a)-1, 1.263(a)-2, and 1.263(a)-3 of the Income Tax Regulations and §§ 1.162-3T, 1.162-4T, 1.263(a)-1T, 1.263(a)-2T, and 1.263(a)-3T of the temporary regulations. This revenue procedure also modifies Rev. Proc. 2011-14 and provides the procedures by which a taxpayer may obtain the automatic consent of the Commissioner of Internal Revenue to change to a reasonable method described in § 1.263A-1(f)(4) for self-constructed assets and to change to a permissible method of accounting under section 263A(b)(2) of the Internal Revenue Code and § 1.263A-3(a)(1) for certain costs related to real property acquired through foreclosure, by deed in lieu of foreclosure, or in another similar transaction. Finally, this revenue procedure also modifies section 3.0 of the APPENDIX of Rev. Proc. 2011-14 regarding a change to the method of accounting described in Rev. Proc. 2011-43, 2011-37 I.R.B. 326, for taxpayers in the business of transporting, delivering, or selling electricity.” Rev. Proc. 2014-16, at pp. 1-2.

Sorry, readers, this is not my primary area of interest. I leave that sort of thing to the trade press, where battalions of CPAs at Big Whatever-The-Number-Is firms grind out newsletters, blogs and webinars.

No, today I would respectfully draw the reader’s attention to an off-the-bencher from The Judge Who Writes Like a Human Being, a/k/a The Great Dissenter, Judge Mark V. Holmes, decided 1/10/14, but filed 2/5/14, Lori A. Harris, Petitioner and Kenneth Donnelly, Intervenor, Docket No. 14290-12.

As is obvious, this is a Section 6015 innocent-spouser. All the facts are stipulated.

Lori and Ken split during the year at issue, but Ken prepared the joint 1040, and had Lori come over at 9 p.m. on April 15 of the next year, put the form in front of her and told her to sign. They’d never had tax troubles before, Lori says she was tired, had no time to get to a tax pro to scope out Ken’s arithmetic, so she signed.

Ken disclosed all their income and took no unwarranted deductions. But he didn’t include the 10% Section 72(t) chop for premature withdrawals from his IRA.

So IRS hits them both with a $6300 deficiency and a $1300 penalty. Lori claims innocence, IRS says no, and Lori petitions. While her petition is pending, IRS’ trial counsel agrees Lori is innocent, but Ken intervenes (as is his right, says Judge Holmes; when Judge Holmes makes remarks like that about a party, that party is in for a rough trip).

IRS’ guidelines are now found in Rev. Proc. 2013-34. See my blogpost “Innocence Is Bliss”, 1/6/12, which I optimistically subtitled “Less Work for Us Tax Court Bloggers?”. There was plenty of work until Rev. Proc. 2013-34 became final, but here it is, retroactively applied by its terms to Lori.

And though Tax Court must consider the guidelines in Rev. Proc. 2013-34, Tax Court isn’t bound by them.

Lori and Ken weren’t making fraudulent transfers (transfers pursuant to a divorce decree don’t count), knowingly trying to defraud the government, or hiding assets, and Lori’s sole basis for innocence is Section 6015(f) equitable relief. Now the issue of whose tax incident gave rise to the deficiency is a little tricky, as Lori and Ken were Californians, and the Bear Republic is community property country, so Lori has a one-half share in Ken’s IRA distributions under local law. But there’s a savings clause in Rev. Proc., 2013-34 that lets innocent spouses off the hook if they’re only on the hook because of community property laws.

So Lori crosses the Rev. Proc. 2013-34 threshold; now to see if she can pass the balancing-of-factors test. Judge Holmes: “The general rule is that I have to look at all the factors and all the facts and circumstances, and that I’m not limited to any particular group of factors. Nevertheless, as Tax Court has generally done, we look at the Revenue Procedure in effect at the time. This is particularly noteworthy in this case, because the current Revenue Procedure in Section 3.01 states that this Revenue Procedure ‘gives greater deference to the presence of abuse than [previous Revenue Procedures]. The Service  recognizes that the issue of abuse can be relevant with respect to the analysis of other factors, and can negate the presence of certain factors. This change is entitled to give greater weight to the presence of abuse when its presence impacts the analysis of other factors.’” Order, at pp. 9-10.

Now abuse is not defined in any of the Rev. Procs., old or new, except that it’s less than duress. Duress means “…any constraint of will so strong that it makes a person reasonably unable to resist demands to sign a return.” Order, at pp. 10-11.

But that negates innocent spousery, because a return signed under duress is not a joint return at all.

“But it’s abuse as a factor by itself, and not just as a relevant bit of evidence about one spouse’s state of knowledge, that I’m looking for in this case. It’s an important point because it liberates me from focusing on the moment the return is signed. The relevant abuse here precedes that moment. And there’s no suggestion in any of the Revenue Procedures, including the current one, or any other source of relevant law that limits my consideration to whether a spouse was abused only to abuse that causes a particular instance of non-compliance with the tax law.” Order, at p. 11.

So it’s not only “sign or I’ll slug you”, but rather a pervasive pattern.

Now, as Judge Holmes said in Brett Van Alen and Kimberlee Van Alen, 2013 T. C. Memo. 235,  pay attention: “This leads to the heart of my inquiry on this particularly important factor. What is abuse for purposes of innocent spouse relief? If there was verifiable physical harm, that would likely be sufficient. And here, in fact, there was verifiable physical harm to the two daughters, albeit not Ms. Harris, caused by Mr. Donnelly.” Order, at p. 12.

But there’s what lawyers call a caveat: “One has to be aware of the danger that requesting spouses, in trying to escape financial liability, may easily exaggerate the level of non-physical abuse. Innocent spouse cases often spring from the dissolution of troubled marriages, and there’s an obvious incentive to vilify the non-requesting spouse.” Order, at p. 12.

Ken never abused Lori, only their two daughters, causing permanent injury to one child’s shoulder, and constantly belittling them, to the point that neither wanted anything to do with Ken. You can read for yourself what Judge Holmes found in the divorce proceedings; it isn’t pretty.

But it’s enough to cause Judge Holmes to find Ken abused Lori.

“In the applicable Revenue Procedure, the Commissioner has instructed his employees– and I think it’s a good thing, and the Court will do it as well in this case– that abuse of the requesting spouse’s child or other family members living in the household may constitute abuse of the requesting spouse, depending on the facts and circumstances….” Order, at pp. 16-17.

Going through the factors, Judge Holmes tosses Ken and holds Lori innocent.

It’s unfortunate this off-the-bencher can’t be cited. But it sure can be argued.





In Uncategorized on 02/05/2014 at 12:15

Your transcripts, I mean.

IRS has a weblink that allows taxpayers to obtain, online, Tax Return, Tax Account, Record of Account, or Wage and Income transcripts or a Verification of Nonfiling Letter. PTIN-holders with POAs cannot access the site; it’s strictly the taxpayers their own selves.

So if you’ve nothing to do on this icy day, paste this in your URL bar: And read on.




In Uncategorized on 02/04/2014 at 16:40

No, not the weather forecast for NY or DC, although it might well be, as we anticipate yet another snowdump tomorrow. In fact, I spent a good part of today closing a transaction for a former boss who had gone to Alaska this week to get warm.

Rather, it looks like IRS is mulling over what course to take post-Rand. See Avraham C. Schutz, Docket No. 30420-12S, filed 2/4/14, a day of no opinions and no designated orders, which throws the hard-working blogger back on the unopinionated and undesignated.

Looks simple, right? Judge Lauber: “This case involves refundable credits and the accuracy-related penalty under I.R.C. § 6662(a). Respondent is requesting additional time to file an additional status report or submit decision documents after considering its position in relation to the Court’s recent opinion in Rand v. Commissioner.” Order, at p. 1.

Of course Judge Lauber gives IRS more time. The parties offered a stip of settlement on the trial date in November, Judge Lauber gave them until January to file decision docs, and IRS, albeit late, asked for more time. Judge Lauber doesn’t say whether or not Av objects, but gives IRS until April to let him know what gives.

Now we all remember Rand, right? If not, see my blogpost “The Rebate Debate – Part Deux”, 11/18/13, the story of Yitz and Shul Rand, and how IRS wanted to slug them with an understatement penalty when their tax due went below zero, by including the claimed refundable Additional Child Tax Credit as an underpayment. For further details, see also my blogpost “The Rebate Debate – Redivivus”, 11/22/13.

Tax Court was not amused, and I thought IRS was pulling in its metaphorical horns, even though no Action on Decision has yet floated my way through the Internet.

So what’s to consider? Maybe an appeal? Maybe a Notice?

Stay tuned.


In Uncategorized on 02/03/2014 at 16:43

Top Ten claimant among the Bard’s most famous sonnets (no. 18) gives me the segue into today’s small-claimer from the word processor of Judge Daniel A. (“Yuda”) Guy, Roj Carl Snellman and Patricia Snellman, 2014 T. C. Sum. Op. 10, filed 2/3/14.

Roj was employed away from home for part of the year at issue, but was he indefinite or temporary? And that, as another poet has said, made all the difference. Roj, living with wife and children in Florida, was employed for a single-shot project by an outfit called U. S. Fidelis, Inc., headquartered in Missouri, whence Roj was required to hie himself to work. While he was told he had an annual salary, he was hired in May for a term to end no later than December 31.

Well, rough winds did shake the darling buds of May, and Roj got canned November 2.

Roj claims he stayed in a local hotel from May 25 to June 10, but can produce neither credit card slip nor hotel bill. But from June 10 until he was discharged on November 2, he leased an apartment. And he negotiated an “early-out” clause in the lease, “which stated that if he lost his job with Fidelis and provided the landlord with 30 days’ written notice, he would be permitted to terminate the lease without having to pay a ‘lease break fee’”. 2014 T. C. Sum. Op. 10, at p. 4. So even though the lease term was through 12/31, Roj could walk sooner for free.

Judge Yuda: “Section 162(a)(2) allows a taxpayer to deduct travel expenses, including expenditures for meals and lodging, if the expenses are reasonable and necessary, incurred ‘while away from home’, and made in pursuit of a trade or business. Although the term ‘home’ (or ‘tax home’) in section 162(a)(2) normally means a taxpayer’s principal place of employment (and not the taxpayer’s personal residence), an exception to this rule arises when a taxpayer accepts employment away from his or her personal residence and the employment is temporary rather than indefinite. The purpose underlying this exception is to relieve the taxpayer of the burden of duplicate living expenses while at a temporary employment location, since it would be unreasonable to expect him to move his residence under such circumstances.” 2014 T. C. Sum. Op. 10, at p. 9 (Citations omitted).

See my blogpost “Home Is Where The Heart Is”, 7/21/11.

Temporary employment may cross the line and become indefinite employment “if it is expected to last for a substantial, indefinite, or indeterminate duration or due to changed circumstances or the passage of time.” 2014 T. C. Sum. Op. 10, at p. 10 (Citation omitted).

It’s time to march to Sir Eddie Elgar’s unwritten masterpiece, facts and circumstances. Well, Roj was temporary, as both the short term of his lease and the time he was engaged to work show, so he gets his lease rent, and some of his car mileage and meal expenses (using Fed standards for both), but loses out on his car log (concocted after the fact) and unsubstantiateds.

Still, if you’re temporary, make sure your employment terms, and your lease, summer or winter, “hath all too short a date”.