Amad Zaker Eram is joining in Sister Sledge’s 1979 hit, in 2014 T. C. 60, filed 4/7/14, as his Section 911 foreign earned income exclusion gets the OK from Judge Vasquez.

Amad, Iraqi-born, moves to California and becomes a US citizen. He marries and starts a family. He divorces, marries again, has more children, gets divorced again and remarries again.

A busy fellow, Amad gets a job with the Defense Intelligence Agency. He goes first to Qatar, but instead of going home, spends six months in Mexicali, Mexico. Then he gets a job with defense contractor Torres Advanced Enterprise Solutions, LLC, translating Iraqi Arabic to English in his ancestral homeland.

Unlike James F. Daly (as to whose adventures and misadventures see my blogpost “At Home Abroad”, 6/6/13), Amad lives off-post, visits in-country relatives, but has an APO address for snail-mail and has a USA banking facility.

Amad had transportation furnished, so he never got an Iraqi driver’s license, and he helped one of his sons buy a house in Chula Vista, CA, where he resided when he came back home.

IRS concedes that Amad was out of the USA for the requisite 330 days, but claims his tax home was CA.

Judge Vasquez: “In prior section 911 cases, we have examined and contrasted a taxpayer’s domestic ties (i.e., his or her familial, economic, and personal ties to the United States) with his or her ties to the foreign country in which he or she claims a tax home in order to determine whether his or her abode was in the United States during a particular period.” 20-14 T. C. Memo. 60, at p. 14.

So the issue is whether Amad’s tour was “limited and transitory”, so that his tax home is California.

But Amad is a native Iraqi. “…when petitioner first left for Iraq, he had divorced his first two wives, rarely saw his children, and was separated from his third wife. During the relevant period, petitioner’s contact with his family in the United States was minimal, and he saw his family only during his two vacations. Moreover, petitioner’s ties to his family in the United States had weakened several years before the relevant period, in the light of petitioner’s decision in 2006 to follow up 14 months working in Qatar by spending 6 months in the Mexican border town of Mexicali, rather than returning to see his family in San Diego.” 2014 T. C. Memo. 60, at p. 18.

“Respondent has presented some evidence of petitioner’s other domestic ties, including petitioner’s U.S. bank account, driver’s license, vehicle, and purchase of the Chula Vista house for his son. However, in the light of petitioner’s testimony about his familial ties, his lack of a home in the United States during the relevant period, and the other evidence in the record, we find that these other ties are not enough to support a finding that petitioner’s ties to the United States were strong during the relevant period.” 2014 T. C. Memo. at pp. 18-19.

And even though Aram was in Iraq on a contract with an expiration date, the contract was extended and Aram got three (count ‘em, three) extensions on his Letter of Authorization from State. So he wasn’t just temporary, transitory or limited.

But the key is family.

It’s Friday, but the enterprising Tax Court blogger can hardly say “TGIF”, because there’s rarely if ever an opinion out of Tax Court on Fridays, so I’m digging through the orders. and it’s a barren lot today. But The Judge With a Heart, STJ Robert N. Armen, Jr., saves the blogger’s day with a designated hitter that paraphrases the directive blasted from the loudspeakers of the New York City subways: If you see something, say something.

Well, per STJ Armen, the word now is: If you want something, say something. And for Tax Court purposes, say it using the downloadable form of petition from the Tax Court website, number your alleged IRS errors, and letter your material facts. Then sign with blue ink and snail-file the same timely, with check for $60 or Application for Waiver.

Unhappily for her, Rocky Brock, Docket No. 21494-13, filed 4/4/14, didn’t. She “…submitted to the Court a copy of the notice of deficiency, which copy was filed as an imperfect petition. Concurrently therewith petitioner also submitted (and the Court filed) completed and executed Tax Court forms for (1) Application For Waiver Of Filing Fee and (2) Request For Place Of Trial, both of which forms were reproduced from the Court’s website. Although the Court’s form for a petition is also available on the Court’s website, petitioner did not submit the petition form nor did petitioner otherwise state her disagreement with respondent’s deficiency determination. Nevertheless, the Court treated the notice of deficiency as a timely-filed (albeit imperfect) petition for redetermination of the deficiency pursuant to section 6213(a). See sec. 7502(a).” Order, at pp. 2-3.

Unless I got the dates wrong (which see at order, p. 1), Rocky was five days late with her imperfect petition, but we’ll let that alone for now.

IRS responds to the imperfect petition with a perfect motion to dismiss for failure to state a claim, per Rule 34(b).

STJ Armen gives Rocky two thirty-day extensions and has the Clerk send Rocky the petition form to fill out, so she can tell her tale. But, like Hamlet, “the rest is silence.”

So STJ Armen tosses Rocky. “The imperfect petition in this case does not assign any error or allege any fact in support of any justiciable claim nor does it satisfy the requirements of Rule 34(b)(4) and (5). Any issue not addressed by a clear and concise assignment of error in the petition is deemed to be conceded. Rule 34(b)(4). Lacking any averments tending to show error in respondent’s basis for the deficiency, petitioner is deemed to have conceded the correctness of respondent’s determination. See Swain v. Commissioner, 118 T.C. 358, 362 (2002). Moreover, petitioner has not stated what relief she seeks from the Court; therefore, the petition also does not satisfy the requirement of Rule 34(b)(6).” Order, at p. 2.

So Rocky, the deficiency stands. And Rocky, if you want something, say something.

Today’s T. C. involves the lineman leasing game. Remember that dodge? No? See my blogpost “The Wichita Linewoman”, 5/23/12, for the story of Kathleen Murray and her sidekick, Ernie The Cable Guy.

But now it’s the ostensible lessor who’s on the line, in SECC Corporation, 142 T. C. 12, filed 4/3/14, with Judge Colvin writing for a galaxy of Tax Court jurists: Ch J. Thornton, and JJ. Halpern, Foley, Vasquez, Gale, Wherry, Kroupa, Holmes, Gustafson, Paris, Morrison, Buch, Lauber, and Nega.

SECC claims their linebackers are ICs, but IRS says no, they’re EEs, so SECC owes FICA, FUTA, penalties and interest. However, IRS didn’t say “no” by certified or registered mail.

Both SECC and IRS claim Tax Court has no jurisdiction, but come to very different conclusions therefrom. “Respondent [IRS] contends that dismissal would deprive this Court of jurisdiction over this case, leave the assessment in place, and allow the IRS to proceed with collection.

“In contrast, petitioner contends that the failure to issue an NDWC means the assessment is invalid and the IRS may not collect the disputed employment taxes unless and until an NDWC is sent. Under petitioner’s theory, issuance of an NDWC would trigger the right to file a petition and seek our determination under section 7436.” 142 T. C. 12, at p. 8.

The problem with this, of course, is that if either side is right about no jurisdiction, Tax Court has no jurisdiction to decide anything, but must toss the case altogether.

By the way, a NDWC is a Notice of Determination of Worker Classification, Letter 3523 to you. And IRS never issued one, but Appeals sent a letter to SECC telling them they owed the FICA, etc. And that was enough for the Tax Court majority to find there was a determination, but to start the 90-day clock it had to go registered or certified, and it didn’t. But we’re getting ahead of ourselves here.

Tax Court of course has jurisdiction to decide if they have jurisdiction. And guess what? They decide they do, although Judges Kerrigan and Goeke wish they hadn’t, and dissent accordingly.

Section 7436 gives Tax Court jurisdiction over worker status claims. The key is whether there is a determination by IRS after audit one way or the other. Judge Colvin parses Appeals’ letter at length and says it is; the dissent disagrees, of course, but reading the letter it looks like one to me. How about this? “Unfortunately, we were unable to reach an agreement on your case. The employment tax liability as determined by Appeals will be assessed and you will receive a Notice and Demand for payment of the tax, penalty, and interest owed.

“If you would like to challenge our determination in court, you may file a complaint in the United States District Court or the United States Court of Federal Claims. If you decide to do this, you must first pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. Once the claim for refund is denied or 6 months elapse without any action by the Service, you may initiate suit.” 2014 T. C. 12, at p. 7.

Well, notwithstanding no NDWC was ever sent, and the petition came months too late if the ninety-day bar for SNOD and NOD reviews applied, and that an IRS Notice says the NDWC is a jurisdictional prerequisite to a Tax Court proceeding, Judge Colvin goes for the jugular in a footnote.

“We disregard the Commissioner’s statement in Notice 2002-5, 2002-1 C.B. 320, 321, that ‘[b]ecause the Notice of Determination constitutes the Service’s determination described in §7436(a), * * * [it] is a jurisdictional prerequisite for seeking Tax Court review of * * * determinations regarding worker classification, §530 treatment, and the proper amount of employment tax under those determinations.’ We owe no deference to what an administrative agency says about our jurisdictional bounds. See Fox Television Stations, Inc. v. FCC, 280 F.3d 1027, 1038-1039 (D.C. Cir. 2002). This is so even if an agency directly or indirectly interprets the bounds of our jurisdiction through the implementation of regulations construing a statute which it administers. See also Adams Fruit Co. v. Barrett, 494 U.S. 638, 650 (1990) (the delegation of power to an agency to administer a statute does not empower that agency to ‘regulate the scope of the judicial power vested by the statute’). The dissenting opinion argues that we lack jurisdiction because the IRS did not intend for us to have jurisdiction. See dissenting op. pp. 35-36. The concurring opinion, which is joined by 11 of the Judges who voted yes, makes a similar point, see concurring op. pp. 27-28; and we note that it is the statute, not the IRS, that grants us jurisdiction.” 2014 T. C. 12, at p.16, footnote 5.

The dissent is upset about the two-track SNOD-NOD vs. classification procedures the majority seems to be adopting, but the statute is clear. If not sent registered or certified, the clock hasn’t started.

And Judge James S. (“Big Jim”) Halpern, concurring, is even more emphatic about IRS game-playing if IRS could hold off sending a NDWC and relegate a taxpayer to the USDC or USCFC (requiring them to pay first, ask for a refund and sue later).

“Moreover, respondent’s position, reflected both in this case and in Notice 2002-5, 2002-1 C.B. 320, 321, that only his issuance of a notice of determination as described in Notice 2002-5 may confer jurisdiction on this Court to resolve a worker classification or RA ’78 sec. 530 issue would improperly permit the Commissioner to determine, in his sole discretion, whether a taxpayer shall have access to this Court in order to resolve any such issue raised on audit. Were we to adopt respondent’s position, the Commissioner, by refusing to issue a notice of determination, would be able to deny the taxpayer access to this Court, which he may be tempted to do whenever he feels his chance of success on a worker classification or RA ’78 sec. 530 issue is better in either the District Court or the Court of Federal Claims than in this Court.” 2014 T. C. Memo. 12, at p. 27.

Or when a taxpayer can’t afford to pay a monumental assessment of FICA, FUTA, penalties and interest without going out of business altogether.

Or, in high-school French, beat it, Franco-American taxpayers, some of your French social security taxes ain’t deductible or creditable.

Remember James Cecil & Anne-Marie Swank? No? Then see my blogpost “Don’t Sweat the Small Stuff”, 8/7/13. Jim and Anne-Marie were scrapping with IRS in a small-claimer over the creditability of the French la contribution sociale généralisée (general social contribution or CSG) and la contribution pour le remboursement de la dette sociale (contribution for the repayment of social debt or CRDS). But STJ Armen, the Judge With a Heart, sent Jim and Anne-Marie to cool their heels while IRS fought out their battle in a fully-briefed full-dress Tax Court T. C., because small-claimers aren’t precedential and can’t be appealed.

Well, Jim and Anne-Marie get their questions answered, and I’ll wager they’re no happier with Judge Lauber’s answer than the stars of the T. C. STJ Armen was talking about, Ory Eshel and Linda Coryell Eshel, 142 T. C. 11, filed 4/2/14.

If CSG and CRDS are taxes that would exempt Ory and Jim and Anne-Marie and Linda from paying US FICA or SE, then they’re not creditable under Section 901 because “section 317(b)(4) of the Social Security Amendments of 1977 (SSA), Pub. L. No. 95-216, 91 Stat. at 1540, nevertheless precludes credits for these taxes.” 142 T. C. 11, at p. 3.

Taking a leaf from Richard Wagner’s Die Meistersinger von Nurnberg, Act III, Scene V, you may ask “Mein! Was ist das?”

It’s the totalization agreement. No, it’s got nothing to do with pari-mutuel betting. It’s a US-France treaty that prevents double taxation for social security-type purposes and credits people who work for a time in each country, so they get full benefits. For an example of how totalization works, see 142 T. C. 11, at p. 11, footnote 3.

But experts aren’t in agreement that CSG and CRDS are social security taxes (not creditable) and not income taxes (creditable).

Judge Lauber: “The parties agree on all questions of basic fact and have expressed that consensus by filing cross-motions for summary judgment. The parties disagree on one point that may be relevant in interpreting the international agreement at issue–namely, how the French Government, at various times, has characterized CSG and CRDS for purposes of EU law and internal French law….. We conclude that this disagreement does not give rise to a material factual dispute that would prevent the Court from deciding this case on summary judgment.

“Under Rule 146, this Court’s determination of foreign law ‘shall be treated as a ruling on a question of law.’ As a result, disputes about the proper interpretation or characterization of a foreign law are not disputes of material fact that preclude summary judgment.” 142 T. C. 11, at pp. 5-6 (Footnote omitted).

It doesn’t matter how the French interpreted the laws, the European Court of Justice bounced them on their interpretations. Since the statutes creating CSG and CRDS were enacted post-totalization, the question is whether they “amend or supplement” the French social security system. If they do, then the Social Security Act precludes a credit for them against US income tax, as FICA and SE aren’t excluded from US income tax.

And Judge Lauber finds that, notwithstanding French waffling on the terms of the totalization agreement post-ratification (by which the US isn’t bound), the revenue from the taxes go to pay for shortfalls in French social security.

And that’s enough. No credit.

A misquotation, both from B. Traven’s novel and from the Humphrey Bogart classic movie, but even so, rated as American Film Institute’s 36th all-time greatest movie quote.

But two attorneys, having left one firm, continue to represent that firm in trying to secure a piece of Fighting Joe Insinga’s not-yet-and-maybe-never whistleblower recovery per Section 7430, while also purporting to represent Fighting Joe as he fights on toward that goal. And go charging into Tax Court, with or without any basis.

Whether or not representing Fighting Joe and his former firm (which seeks money from Fighting Joe’s recovery) is a conflict of interest, and whether or not waivable, I leave for the ethicists.

Suffice it to say, that Obliging Jurist, Judge Gustafson, is way less obliging than usual in Joseph A. Insinga, Docket No. 9011-13W, filed 4/2/14, a designated hitter.

The boys start out with an Entry of Appearance on behalf of Fighting Joe’s former law firm. That’s interesting, says Judge Gustafson, because the only parties are Fighting Joe and the IRS, and said law firm hasn’t moved to intervene.

Of course, it can so move, if it has standing, but that’s another story. Intervention in Tax Court is an obstacle course in itself. See my blogposts “Statute of Limitations? Maybe Not”, 12/28/10 and “Missed It, But Better Late Than Never”, 8/24/11, where Tax Court and Third Circuit wrestle with Tax Court intervention in the celebrated Virgin islands Appleton case.

Likewise, Fighting Joe hasn’t won anything yet (and the odds on him don’t look too good so far).

Nevertheless and notwithstanding anything otherwise or to the contrary elsewhere herein set forth, as my yacht-owning colleagues like to say, the boys want to assert an attorneys’ lien for their former firm on any recovery they might pry from the National Fisc on behalf of Fighting Joe.

For the civilians amongst you, if an attorney works on a case and is relieved (otherwise than for misconduct), the attorney has a lien on any recovery by the erstwhile client for the fair value of services rendered to date of discharge. This is to keep deadbeats from tossing hard-laboring peasants like Your Humble Servant under the proverbial on the eve of victory and scampering with the boodle.

There’s a couple problems here (if I may use Judge Holmes’ favorite grammatical form without approving of it, but rather as a tip of the old Stetson to a loyal reader).

Judge Gustafson: “If Mr. Insinga prevails, this Court’s work will culminate in its entry of a decision. This Court does not cut checks to successful petitioners, and the undersigned judge is unaware of any grant to the Tax Court of jurisdiction to compel any agency to cut a check or to give it directions in doing so. The Tax Court does not oversee the execution of its decisions, and if the responsible agency were to fail to pay an award that the Tax Court had determined, or were to pay the award to the wrong person, we know of no statute authorizing us to entertain any request for enforcement of a judgment.” Order, at p. 2.

In short, boys, we ain’t got no stinkin’ jurisdiction, and you ain’t got no justification for filing anything here, so show cause why Judge Gustafson shouldn’t trash your papers, and bid you the best of luck.

Footnote to the foregoing:  By Order dated 5/2/14, Judge Gustafson tossed the boys and their Notice of Appearance.

As it’s April Fools’ Day, let me once again quote the Sage of Concord: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.” Ralph Waldo Emerson, 1803-1882.

But consistency is foolish when an electing Section 927(f) foreign sales corporation meets the Section 4973 excise tax on Roth IRA contributions after it’s too late for IRS to reallocate the distributions from the FSC to the individual shareholders thereof (as their tax years have closed).

So says Judge Chiechi in Celia Mazzei, 2014 T. C. Memo. 55, filed 4/1/14 (happy palindrome day, by the way).

But some with long memories will cite my blogpost “Foolish Consistency”, 5/5/11, when Judge Nimms in Ohsman, 2011 T. C. Memo. 98, filed 5/3/11, gave IRS the right-about-face, when IRS treated the taxpayer one way for income tax purposes and another for excise tax (excessive Roth IRA contributions) purposes.

The game used to be (prior to 2004, when Notice 2004-08, 2004 IRB 4, 1/26/04*, the abusive IRA Notice, put paid to such shenanigans) that a business owned by the taxpayer would pay commissions or dividends to a C Corp, all the shares of which were owned by the taxpayer’s Roth IRA, getting around income tax (dividends or commissions actually property of taxpayer, not C Corp), and excise tax on excessive Roth contributions. And the C Corp would be a tax-favored vehicle, like a DISC or a FSC.

Well, IRS didn’t go after Celia’s income tax (because those years were closed, IRS didn’t pick up on the Roths, and fraud wasn’t alleged), so going after the excise tax is inconsistent, isn’t it?

No, says Judge Chiechi. IRS didn’t assess income tax against Celia because the years in question were closed years. Unlike Ohsman, IRS never tried to assess Celia’s additional income taxes, because if they had, it would have been futile.

But the Roths are still in play for excess contributions.

*IRB 2004-04 (Rev. January 26, 2004) – irb04-04

Here’s a designated hitter from one who reads my blog. The case is Nerida Patrica Lopez, Docket No. 2601-13, filed 4/1/14, and there’s no interesting point of law, or even interesting facts, but there is evidence that the exalted author thereof reads my blog.

Offer of proof in substantiation of the foregoing: “She produced a couple boxes, see nationalorganizationopposingforever.wordpress.com (regarding grammatical point), to prove that she has offsetting deductions, but these included nonsense like a brochure describing how to operate an alarm system and a photo of a house scattered among disorganized records.”Order, at p. 1.

Check out the URL cited; it’s interesting, but that doesn’t make it correct.

And guess who wrote the order? No prize for the correct answer.

This one is for the IRS, says Ch J Michael (“Iron Mike”) Thornton in Roosevelt Powell, Docket No. 26454-13S, filed 3/31/14. Note well that letter “S”, for thereby hangs the tale.

IRS wants a Rule 37(c) order that undenied allegations in their answer be deemed admitted, because Roosevelt didn’t serve and file a reply to IRS’ answer denying them.

But Ch J Iron Mike reminds IRS of Rule 173(c). In a small-claimer (“S”) like this, petitioner (taxpayer) Roosevelt is barred from serving and filing a reply unless the Judge tells him, failing which any affirmative allegations in the answer are deemed denied.

IRS never asked for a reply, Ch J Iron Mike never told Roosevelt to reply, so IRS’s desired admissions that Roosevelt committed fraud on his 2001 return (thus opening an otherwise closed SOL) are deemed denied.

Ordinarily I’d give IRS a Taishoff “good try, third class”, but this falls below even my minimal standard for crafty. More like desperation, when they haven’t got “clear and convincing” evidence.