Attorney-at-Law

Archive for March, 2014|Monthly archive page

THE FACADE COLLAPSES

In Uncategorized on 03/21/2014 at 17:03

You might remember all the blogposts I expended on the subject of appraisals of facades (I counted ten of them, but maybe there are more), in connection with the Section 170(h) giveaway.

Well, those who played fast-and-loose with the numbers, or pulled numbers from thin air, or who otherwise have been deemed by Karen Hawkins and her myrmidons at OPR to have transgressed, have been sent to the penalty box for an extended stay.

Check out IR-2014-31, 3/19/14. It’s a five-year vacation for the unnamed malfeasors.

As the IRS press releasors put it: “The appraisers agreed to a five-year suspension of valuing facade easements and undertaking any appraisal services that could subject them to penalties under the Internal Revenue Code. The appraisers also agreed to abide by all applicable provisions of Circular 230.

“‘Appraisers need to understand that they are subject to Circular 230, and must exercise due diligence in the preparation of documents relating to federal tax matters,’ said Karen L. Hawkins, Director of OPR. ‘“Taxpayers expect advice rendered with competence and diligence that goes beyond the mere mechanical application of a rule of thumb based on conjecture and unsupported conclusions.”’

Apparently the defrocked appraisers were the Mark Primoli safe-harborers.

“The appraisers prepared reports valuing facade easements donated over several tax years. On behalf of each donating taxpayer, an appraiser completed Part III, Declaration of Appraiser, of Form 8283, Noncash Charitable Contributions, certifying that the appraiser did not fraudulently or falsely overstate the value of such facade easement. In valuing the facade easements, the appraisers applied a flat percentage diminution, generally 15 percent, to the fair market values of the underlying properties prior to the easement’s donation.

“Specifically, the appraisers admitted violating Circular 230, Section 10.22(a)(1), for failing to exercise due diligence in the preparation of documents relating to IRS matters, and Section 10.22(a)(2) for failing to determine the correctness of written representations made to the Department of the Treasury.”

The appraisers consented to the press release, from which the foregoing is excerpted. Devotees of the Rule of Completeness can check out the whole story at:

 http://www.irs.gov/uac/Newsroom/IRS-Bars-Appraisers-from-Valuing-Facade-Easements-for-Federal-Tax-Purposes-for-Five-Years

 

 

 

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DELETION

In Uncategorized on 03/21/2014 at 14:39

Readers yesterday will note that I alluded to an earlier comment from John Henry Ryskamp (see my blogpost “Enough”, 1/8/14). I do not hide from those who want to post derogatory material about me.

However, I was obliged just now to delete John Henry’s comment, as I received the following e-mail. As I telephoned the sender and obtained oral permission to post it here, I will do so, in extenso.  I suggest it as a caution to those who wish to vent their spleen; no incitement, please.

From: Derrick Fitzgerald <donotreply@wordpress.com>
To: ltaishoff <ltaishoff@netscape.net>
Sent: Fri, Mar 21, 2014 1:24 pm
Subject: [The Taishoff Law Firm] Contact Us

Name: Derrick Fitzgerald
Email: derrick.fitzgerald@usdoj.gov
Comment: Mr. Lew Taishoff,

The United States Marshal Service (USMS) has the responsibility of 
safeguarding the United States Federal Judicial process by providing
protection to U. S. Federal Judges and other members of the 
Judiciary.  The USMS is able to fulfill the Court Security mission 
by investigating all reports of threatening and inappropriate 
communications directed at USMS protected persons.
On March 21, 2014 I was informed of a threatening statement which 
currently appears on your firms website at 
https://taishofflaw.com/2014/01/08/enough/#comments. 
See below 
“Since the Appeals office serves as the trial court (this by the way
is the reasoning of the dog Mark Holmes, who ought to be executed, 
the Notice of determination etc…”  
The statement dated 21 January 2014, 1400 at hrs. bears the 
signature John Riskamp.  This investigation has disclosed the 
existence of a John Henry Ryskamp who is a litigant appearing before
the U.S. Tax Court.  My present interpretation of the statement is
that it is a violation of 18 U.S.C.  2385 Advocating the overthrow 
of the government of the United States.  The statement may also fall
with the realm of 18 U.S.C. 115 Influencing, impeding, or 
retaliating against a Federal official by threatening or injuring 
etc…
The U.S. Marshal Service has the immediate protective interest in 
requesting the removal of the statement from your web site.  I 
appreciate your attention in addressing the security matter.  
Please advise if additional information is required to facilitate 
the request.
 
Thank you,
 
Derrick Fitzgerald
Protective Intelligence Investigator
U.S. Marshal Service D/DC
Office (202)353-0663
BlackBerry (202)359-7920
Fax (202)273-5036
Company: U.S. Marshal Service

ENOUGH – PART DEUX

In Uncategorized on 03/20/2014 at 23:48

In the absence of any T. C.s, and only one designated hitter that illustrated a sad situation rather than any point of law, I turn to an order from Judge Nega to John Henry Ryskamp, Docket No. 8888-13, filed 3/20/14.

Remember John Henry? Hint: he is a leading exponent of the proposition that flattery will get one nowhere. See my blogpost “Enough”, 1/8/14.

Judge Holmes booted John Henry. But John Henry wasn’t through. He had some remaining jibes. He responded to my blogpost. He sent me a lengthy rant in his usual ingratiating style, all of which is attached to my blogpost as a comment.

Delusion seems to be John Henry’s strong suit. Here’s a sample: “Dream on. Judge Nega is about to restore 013681-11L to the docket and vacate the decision. See 8888-13. You are a fool.”

There’s more, but I’ll spare you. Having served in the United States Army in wartime, and practiced law in New York City for 47 years, insults and jibes do not affect me. I have received them from better men than John Henry.

John Henry thought he won. Needless to say, Judge Nega was setting him up.

John Henry made six (count ‘em, six) motions. I won’t catalog them, except to say they were the usual.

Judge Nega: “On February 10, 2014, the Court allowed the parties to address the above- referenced motions, and both respondent and petitioner were heard on each motion. Without exception, petitioner made only arguments that are without merit in support of his motions. For example, petitioner asserted meritless arguments including the constitutionality of the Federal income tax, the authority and legality of the Internal Revenue Service, and the jurisdiction of the Tax Court. Petitioner made other meritless arguments which are more fully evidenced by the transcript of the Court’s February 10, 2014, San Francisco, California, trial session.” Order, at p. 1.

But John Henry is still entitled to due process. So Judge Nega gives him his chance.

“At the time the motions were heard on February 10, 2014, the Court scheduled this case for trial on that same afternoon. The case was called for trial on February 10, 2014. There was no appearance by or on behalf of petitioner. Voicemail messages were left for petitioner that his trial was rescheduled for February 11, 2014. The case was again called for trial on February 11, 2014. Again, there was no appearance by or on behalf of petitioner. At that time, respondent orally moved to dismiss the case for lack of prosecution. Respondent’s motion to dismiss will be addressed in a separate order.” Order, at p. 2.

I’ll bet it will, Judge. Do I hear a Section 6673 chop in the distance?

Anyway, Judge Nega kicks all six (count ‘em, six) of John Henry’s motions.

I suppose John Henry will move to vacate Judge Nega’s orders. And lose.

Enough.

BE CAREFUL WHAT YOU ASK FOR

In Uncategorized on 03/19/2014 at 18:21

The story of Jennifer Lynn Fields, featured in 2014 T. C. Memo. 48, filed 3/19/14, is an example of the truth of this headline, cribbed from my blogpost “Cracking Up”, 2/27/14.

Jenny had a 401(k) with that alleged corporate badguy Wal-Mart. When Jenny and Wally parted ways, Jenny took her 401(k) by check, asking Wally to withhold whatever tax she owed.

Wally took 20%, sent it to the Feds, and gave Jenny a 1099-R. Jenny reports the income and the withholding. Jenny was less than 59-1/2 years of age on the last day of the year in question. Jenny prepared her own return.

Need I say more? Battle-hardened practitioners can see the SNOD coming.

Judge Vasquez is sorry, but of course has no choice; Jenny owes the 10% excise tax on this early distribution. “…petitioner admits that the distribution was not used to pay medical expenses, health insurance premiums, or expenses attributable to a disability, or to make a first home purchase.” 2014 T. C. Memo. 48, at p. 3. So Jenny can’t use the safe harbors of Section 72(t)(2).

“Petitioner argues that she should not be required to pay any additional tax because she asked that all taxes be withheld at the time of the distribution. Despite her good intentions, petitioner should have reported a 10% additional tax on the distribution on line 58 of her return. Petitioner’s failure to do so caused her to improperly claim a $639 refund.” 2014 T. C. Memo. 48, at p. 5.

Judge Vasquez is “sympathetic to petitioner’s plight”, but the law is clear. Jenny owes the 10%.

And Jenny, don’t trust Wal-Mart to give you tax advice.

LEFTOVERS

In Uncategorized on 03/19/2014 at 17:40

In our house, I predominantly do the cooking ( “if you can call it that”, as some might add; still, my cooking sustains life, if it doesn’t ennoble it). So very often when I return home after a hard day of blogging and doing as little as reasonably possible, I might reach into the fridge for remnants of a previous repast, mess with it some, and serve it out. With enough wine, it’s always good.

So today I do likewise in the blogosphere, although I do have a new T. C. Memo. to blog as well, under separate cover.

This is an opinion filed yesterday, 3/18/14, which I didn’t have time to get to. It’s the story of an ETA OIC. No, that has nothing to do with aircraft. It’s short for “Effective Tax Administration Offer in Compromise”. OICs are the delight of continuing ed. instructors and appellants.

The story told in Stacey L. Bogart and Timothy P. Bogart, 2014 T. C. Memo. 46, filed 3/18/14 is simple. I’ll let Judge Kroupa tell it: “Petitioners are a married couple with four children. They operated a construction business during the relevant times. Petitioners treated the construction business as an S corporation for Federal income tax purposes. Petitioners were not wealthy, but they had accumulated $225,478 in assets in the form of real property equity, personal property, retirement accounts and other investments.

“Before 2006 petitioners relied on Teresa Sanak to prepare Federal income tax returns on their behalf. Petitioners expanded Ms. Sanak’s role in 2006 to serve as the bookkeeper for the construction business. Unbeknownst to petitioners, Ms. Sanak was a gambling addict.” 2014 T. C. Memo. 46, at p. 3.

You can guess the rest. It would seem Ms. Sanak’s ponies did about as well as mine, but I at least didn’t have to steal $116K from people who trusted me to make up for their slowness of foot (or hoof). Ms. Sanak played the old game of running money through her employers’ various accounts and out onto the track.

IRS audits hapless Stace and Tim, and in doing so discovers Ms. Sanak’s defalcations. The forces of justice put Ms. Sanak away and order her to pay back what she stole. Good luck with that, Stace and Tim.

Meanwhile, back at the office, IRS hits Stace and Tim with a SNOD for $69K plus interest. Stace and Tim claim they can’t pay because Ms. Sanak’s ponies are Ken-L-Ration, the money is gone with them, and Ms. Sanak hasn’t paid them back yet.

IRS hits them with a NIL (Notice of Intent to Levy, etc.), and Stace and Tim ask for a CDP.

Now here’s something that shows why Doug Shulman and Dave Williams were right in spirit, although short on legal authority. “Petitioners at first were represented by so-called Tax Resolution Services, Co. [sic](TRS). TRS twice requested additional time for petitioners to provide information. It appears that TRS never submitted information on petitioners’ behalf. Petitioner wife then contacted the settlement officer. Petitioner wife indicated that she would provide the information that her representative did not provide. Petitioners then represented themselves until counsel from the tax clinic at the University of Washington School of Law appeared in this matter.” 2014 T. C. Memo. 46, at p. 4, Footnote 3.

Judge Kroupa doesn’t state what Stace and Tim paid TRS, or what TRS undertook to do on their behalf; and as I don’t know whether any principals of TRS were CPAs, attorneys or EAs, I can’t say that that specific organization requires other or further regulatory oversight. But the late-night television ads I see, which promise speedy and successful resolution of all fights with IRS, make me seriously advocate for expansion of Circular 230 (by Congressional enactment if necessary) and stronger enforcement of its disciplinary sanctions.

Howbeit, three (count ‘em, three) Appeals SOs look over Stace’s and Tim’s OIC and deposits (Stace and Tim offer $10K), and all the requested information that Stace, Tim and the Washington tax clinicians provide. And one of the SOs does not “perceive” (the SO’s word) that there’s a public policy effective tax administration issue. After all, Stace and Tim have that quarter-million in assets, so no economic hardship for them to produce the $69K plus interest.

So Appeals gives IRS the NOD, and the Washingtonians petition.

Now before Judge Kroupa knocks out the NOD and sends Stace, Tim and the Washingtonians back to Appeals, I’d like to say a word in defense of the SO. While the Washingtonians argue for equity (after all, Stace and Tim were robbed), so was Ray Fouche, in the same way and for plenty; see my blogposts “The Cover-Up”, 11/23/11, and “The Cover-up Uncovered”, 4/24/13. Second Circuit didn’t care that Ray was robbed.

And although Nina (“The Big O”) Olson, the Taxpayer Advocate, claims Appeals too rarely uses equity, the examples in the relevant regulation aren’t in point, and the IRM provides that the SO must ask him/herself whether other taxpayers would think the OIC fair and reasonable.

So the SO, with however many other cases s/he has, must play King Solomon. And if s/he gets it wrong, somebody else in Appeals gets the case back.

Now I’m not arguing the SO shouldn’t do his/her job, and follow the regulations and the IRM. But remember, Stace and Tim have more than enough assets to pay in full, and after hearing an endless number of hard-luck stories (and as lenders’ foreclosure counsel in a former lifetime I heard them all), it is rarely the wrong choice to twist blasphemously a famous statement: “Sell all thou hast, give it to the IRS, take up thy cross, and get out of here”.

Judge Kroupa, assisted by the zeal of the Washingtonians (a hearty Taishoff “good try”, guys!), remands. “But at the administrative level respondent did not consider whether the theft loss constituted exceptional circumstances–even though petitioners requested relief on public policy and equity grounds. The administrative record indicates that respondent did not consider those grounds but focused solely on economic hardship grounds. He merely concluded that the ETA OIC did not merit consideration under public policy or equity grounds. Respondent did not adequately consider this issue.” 2104 T. C. Memo. 46, at p. 11.

Of course, the Washingtonians want to score from first base on a bloop single. Why not? I would: “…petitioners claim that they satisfied the requirements as a matter of law for respondent to accept the ETA OIC. See IRM pt. 5.8.11.2.2. We disagree. It is undeniable that Ms. Sanak perpetrated a fraud against petitioners. The Commissioner maintains, however, wide discretion when evaluating an OIC and determining whether a taxpayer demonstrated exceptional circumstances. The record does not establish as a matter of law that respondent was obligated to accept the ETA OIC.” 2104 T. C. Memo. 46, at p. 12.

Neither was the SO obliged to send the OIC to the OIC-NEH (non-economic hardship) squad. That’s in the SO’s discretion.

But the SO didn’t consider equity and public policy, so Judge Kroupa bounces IRS’ and the Washingtonian’s requests for summary judgment (without prejudice, so they can try again) and remands to Appeals.

UPDATE

The following was received by e-mail 7/14/14:

Name: Teresa Sanak Comment: I would like you to remove the post about me dated in March of this year. Your fact's are not correct and can cause personal harm to me. This is the post regarding The Bogart's. These are the incorrect facts. 1)The judge added and additional $10,000.00 to the judgment for their time and trouble, judgment amount incorrect. 2) I repaid over $7,000.00 to the Bogart's prior to going the prison. 3) I have made my monthly, court ordered restriction payment to them since I was released."

IMMUNOLOGY

In Uncategorized on 03/18/2014 at 17:25

Doesn’t save James Haber from the 40% chop. James has been dodging this one for years; see my blogposts “Ironbridge Over Troubled Waters”, 6/5/12, and “Getting Shifty”, 9/20/13, while the US Attorney in the Big Apple havered over prosecuting James or granting him immunity.

But the day of reckoning comes, and Judge Goeke is the man to deliver the reckoning in Humboldt Shelby Holding Corporation and Subsidiaries, 2014 T. C. Memo. 47, filed 3/18/14.

Humboldt Shelby and its progeny figured in my blogpost “Everything Has An End”, 10/10/12, when it jousted with IRS about turning over some tax opinions from the well-known and well-respected NYC law firm Pryor, Cashman, Sherman, and Flynn, LLP. I have friends there, and they’re good guys.

Well, apparently some of James’ legal fees (maybe the ones James paid the Pryor Cashman guys) get disallowed, but that’s not the main story.

The main story is that, even though James doesn’t testify, Judge Goeke says the tussle over whether to shift the burden of proof or the burden of persuasion proved to be meaningless after trial.

“After careful consideration of Mr. Haber’s circumstances, we determined that he could invoke his Fifth Amendment right to avoid testifying, but we declined to shift the burden of persuasion. After trial it is apparent that the burden of persuasion has no bearing on the resolution of this case. The evidence in the record would support our conclusion even if we had shifted the burden and even if Mr. Haber had testified as petitioner claimed in its offer of proof. Considering the significant objective evidence of his intent here, we would have given little weight to his self-serving testimony.” 2014 T. C. Memo. 47, at pp. 12-13.

It’s all about economic substance.

Judge Goeke: “Any seeming business purpose that existed here was merely a facade. The options could have resulted in a $320,000 loss or a $510,000 profit. These economic effects are inconsequential compared to the $25 million tax benefit the options were guaranteed to generate. Although the transaction had some profit potential, that potential was not significant enough to persuade us that petitioner engaged in the transaction for any nontax business reason.” 2014 T. C. Memo. 47, at p. 16.

James peddled mix-and-match shelters, as to which I’ve blogged so many I won’t cite them here. Judge Goeke does give a good explanation of the mechanics, though; see pages 7 through 10. In short, James wanted to do an asset-strip of two corporations with large built-in capital gains. He bought the stock of both at a price such that paying tax would have left him no profit; so he created partnerships which contributed digital options, which almost offset each other, but as to which one option was recognized to build basis, and the other disregarded, based on some juggling with Section 752. Don’t forget the sweet spot, but these were true Bialystoks.

Thus, when the partnerships were unwound after the options expired (never hitting the “sweet spot”, of course, due to jiggery-pokery with Refco, the options vender that later came monumentally unglued amidst allegations of massive fraud), the assets could be stripped with a capital loss to offset the gains.

Too good to be true, and James is a veteran shelter peddler.

So Judge Goeke blows up the whole roundy-rounder, with or without James’ testimony, and gets James the 40% chop. And his deductions disallowed.

He may be immune from prosecution, but from little else.

BIG DADDY’S DISCIPLE

In Uncategorized on 03/18/2014 at 15:37

Judge Gustafson, that obliging jurist, has finally had it with Henry J. Lazniarz & Gina M. Lazniarz, Docket No. 31002-09, filed 3/18/14. Apparently a day off on account of snow did not put Judge Gustafson in a better mood.

Remember Henry J.? No? Then refresh your recollection (as my high-priced colleagues say) with my blogpost “I Told You Once, I Told You Twice”, 11/14/13.

Henry J. had a trial, but trial counsel number one blew it, so Judge Gustafson let Henry J. have a substitution and a second chance, albeit that such beneficence is extraordinary.

Trial counsel number two was little better than number one, so Henry J. moved for another new trial. Judge Gustafson, apparently tired of Henry J.’s traveling circus, stamped the motion “denied”, with nothing more, so Henry J. (with trial counsel number three at his side, presumably) moves for reconsideration.

To explain the headline of this blogpost, Henry J. is apparently a disciple of the late great Gene (“Big Daddy”) Lipscomb, twice MVP lineman of the Super Bowl, in the glory days of the old Baltimore Colts. As Big Daddy used to say: “I just wrap my arms around the whole backfield and peel ’em one by one until I get to the ball carrier. Him I keep.”

Well, Henry J. is trying to wrap his arms around the whole Tax Court Bar until he finds a lawyer who can win his case, and him (or her) he’ll keep.

But Judge Gustafson calls the play dead.

A new trial is an extraordinary remedy, and rests within trial court’s discretion. It’s not automatic, and you’d better show the first trial was a disaster–or worse.

“The deductions that form the basis for this case are from tax year 2006, for which petitioners’ tax return was due in April 2007–six and a half years before their second trial. The IRS issued to petitioners the notice of deficiency on October 2, 2009–over four years before that trial. Thus, petitioners have long been on notice that they needed to assemble proof of their deductions.

“Moreover, at various stages in this litigation, petitioners have been allowed extra time to muster their evidence to substantiate their claimed deductions. When they first requested a continuance, it was granted; and when thereafter they moved for a new trial, that ‘extraordinary measure’ was allowed to them. A Tax Court litigant could hardly be entitled to more.” Order, at p. 3.

And save the Constitutional arguments for a criminal trial. “The Sixth Amendment to the U.S. Constitution provides that ‘[i]n all criminal prosecutions, the accused shall enjoy the right … to have the Assistance of Counsel for his defense’, and this provision provides the basis for a criminal defendant’s contention that he suffered from “ineffective assistance of counsel”. But this principle does not apply to civil proceedings. See Cupp v. Commissioner, 65 T.C 68, 85-86 (1975) (“The sixth amendment of the United States Constitution deals with criminal prosecution and is not applicable to a civil proceeding”). Tax Court petitioners are permitted but are not required to hire counsel to represent them, and most Tax Court petitioners are self-represented.” Order, at pp. 3-4.

Note that even gross negligence on the part of counsel isn’t enough to warrant a new trial in Tax Court.

Henry J. got the benefit of every break, and then some.

Besides, the “new evidence” Henry J. now produces is a bunch of papers, some new and some old, thrown together, without any explanation why they weren’t presented years ago.

So the party’s over. Judge Gustafson: “Especially since Mr. Lazniarz is a person of substantial intelligence with substantial expertise and acumen in financial business matters, petitioners must now be held responsible for their decision thereafter to hire their second lawyer and commit the matter to him. They are certainly not entitled to hire an indefinite series of lawyers and keep retrying the case until one of the lawyers finally performs to their liking.” Order, at p. 5.

Henry J., you aren’t Big Daddy.

 

 

SNOW JOB – PART DEUX

In Uncategorized on 03/17/2014 at 14:44

Tax Court is closed in DC, and the calendar call in Baltimore, MD, is postponed to March 18, but neither honors St. Patrick’s Day.

No, Our Nation’s Capital is snowed under yet again. Teleworkers were told to get on the telestick, and tele onward and upward. The rest can join once again in a chorus of Sammy Cahn’s and Julie Styne’s 1945 all-time classic hit. See my blogpost “Let It Snow”, 1/21/14.

But all will be back in action tomorrow, when I hope to bring you the latest and hottest from The Peoples’ Court. In the meantime, Tax Court, I do hope my readers are not, in Longfellow’s immortal words, “hanging breathless on thy fate”.

THE TURKISH CADET

In Uncategorized on 03/14/2014 at 15:59

No, I cannot retell the celebrated limerick concerning said Turkish cadet, at least, not in a blog meant for a family-valued audience. But the second line thereof, relating to the “darnedest one yet”, definitely comes to mind when reading the opinion of The Judge With a Heart, STJ Armen, in a designated hitter, Michael Coe Buchanan, Docket No. 14777-13 L, filed 3/14/14, another Friday, so no opinions out of 400 Second Street, NW.

Mike never disputed that he never filed for the year at issue, and that the SFR and SNOD were sent to his last known address, which is his current address. So he never disputed liability. But he did dispute the NIL (Final Notice of Intent to Levy) timely.

Mike asked for an installment agreement in his 12153, but sent in no 433-A nor was he currently compliant.

But Mike has an entry in the Taishoff no-prize excuses handicap that might just sweep the boards.

STJ Armen: “In addition, in a letter attached to the Form 12153 petitioner asserted that he had worked as a news reporter/anchor in Washington, D.C., for 40 years; that he had uncovered and developed a report regarding the planned scope of the 9/11 terrorist attacks; that he had been informed that publishing the story would endanger national security; that he had agreed to withhold the report; that in return for his forbearance an official in the Bush administration had granted him ‘tax immunity’; and that all of this could be confirmed by contacting Director Robert Mueller of the Federal Bureau of Investigation.” Order, at p. 2.

Mike gets a NOD denying his claims. He petitions timely.

STJ Armen again: “In his request for a hearing and in the petition, petitioner challenges the underlying Federal income tax liability on the ground that he was granted ‘tax-exempt’ status. Petitioner’s argument fails for any number of reasons, including: (1) exclusions from gross income must be narrowly construed, Commissioner v. Schleier, 515 U.S. 323, 328 (1995) (quoting United States v. Burke, 504 U.S. 229, 248 (1992)); (2) tax-exempt status is provided in section 501 and only specified organizations, and not individuals, may be tax exempt under section 501, see generally secs. 501-521; (3) no person in the White House, or in the Government in general, may confer tax-exempt status independent of the standards specified in the Internal Revenue Code, see sec. 501, allowing the Secretary to prescribe regulations and guidance necessary to carry out the provisions of the section, see also sec. 1.501(a)-1 et seq., Income Tax Regs.; and (4) and there is no provision in the Code or otherwise that supports petitioner’s theory. In short, petitioner has raised no justiciable challenge to the existence or amount of his outstanding liability. More fundamentally, petitioner is barred from challenging the existence or amount of his outstanding liability in the instant collection review action because he did not engage with SO … during the administrative hearing by failing to present any evidence to support his allegations. See Giamelli v. Commissioner, 129 T.C. 107, 115 (2007); sec. 301.6330-1(f)(2) Q&A-F3, Proced. & Admin. Regs.” Order, at p. 3-4. (Name omitted.)

Once again, “somber reasoning and copious citation of precedents” (see Crain v. Com’r, 737 F.2d 1417 (5th Cir., 1984) from Tax Court, proving once more that it’s so much better (and more fun) to blog than to opine.

Mike, great excuse. You’re in the lead in my no-prize handicap.

SUMMARY JUDGMENT – A CAUSERIE

In Uncategorized on 03/13/2014 at 17:03

A lot of the Tax Court (and other) cases I blog involve summary judgment. Not surprising, because a lot of summary judgment motions get made. And I myself am a great fan of the summary judgment motion.

For those who tuned in late, summary judgment is judgment without a trial. The sides tell their stories on paper, back them up with affidavits, declarations, copies of documents, and hand them to the judge.

Now trials are for finding out facts. We need to find out facts when there is a dispute about facts: who did (or didn’t) do what to whom and when and where and how?

But if there’s no dispute about facts (say everyone agrees that, for example, in the words of Ellie Greenwich’s and Jeff Barry’s 1963 hit, “I met him on a Monday and my heart stood still”), then no need for witnesses to testify or things to be introduced into evidence, just apply the law.

It’s also triple discovery, without the need for depositions (expensive), interrogatories (time consuming) or notices to admit (excuses to quibble). I say “triple”, because it gives me discovery from three parties: my client, the opposing party, and most importantly, the judge.

If I’m representing the moving party, my client had better lay out the whole story, because he or she is going to swear to it, and the other side will have it. Same for the other side: “marshal and lay bare your proofs” cuts both ways. It’s all in writing and sworn to.

And if we have to go to trial, the affidavits and exhibits to the motion and replying papers are handy tools for impeaching witnesses and limiting the scope of what stories the parties can tell.

Most importantly, as I said, the judge, in deciding the motion, educates me (and of course my adversary) as to what the judge thinks of the case and what the judge sees as the factual issues to be determined on a trial.

And if I did it right, even if the judge rules against me, my side of the story might just get the judge to lean a little toward my side of the case.

Now I’ve won some and lost some (as all attorneys will agree), but I never regretted making the motion.

Now we have a designated hitter today involving my indefatigable correspondent Robert “Uncle Bob” Jacobson, Docket No. 8447-13W, filed 3/13/14, from the desk of CSTJ Panuthos. IRS wanted summary judgment, but didn’t get it.

Uncle Bob listed a bunch of malefactors in his whistleblowing Form 211, but IRS dealt with only the lead entity, a nonprofit corporation since dissolved, whose assets were allegedly distributed to other nonprofits.

No good, says CSTJ Panuthos. Though Uncle Bob’s papers may not have been of the best, “(W)e are unable to conclude as a matter of law at this juncture of the proceeding that the claim does not relate to related organizations identified in petitioner’s claim and that there was no collection of tax proceeds as a result of administrative or judicial action with respect to the related organizations.

“Drawing all factual inferences against respondent, as the moving party in this motion, respondent [IRS] has not established that there is no genuine dispute as to any material fact. Summary judgment is not appropriate under these circumstances.” Order, at p. 2.

So there is an issue of fact; who were those other guys and what did IRS do about them, if anything?

But, as usual, the motion cuts multiple ways. Uncle Bob has told IRS what his case consists of. CSTJ Panuthos has told IRS what they need to do to meet, and maybe beat, Uncle Bob’s case. And Uncle Bob now knows something of what CSTJ Panuthos thinks of the case, if CSTJ Panuthos gets to try it, of course; he was only assigned the case to deal with the IRS’ motion.

Takeaway- It’s worth considering summary judgment. Even if you lose, you win.