In Uncategorized on 05/27/2014 at 18:25

Though I never served in the British Army engineers (one Army engineers is enough, thanks), I remember hearing the famous bugle call “You can be a defaulter as long as you like, as long as you answer your name”. Well, Judge James S. (“Big Jim”) Halpern is sounding that call with a vengeance today, 5/27/14, as he deals with various defaulters.

What’s the difference between a default and a failure to prosecute? Turns out the difference is no big difference for Peter H. Jones, 2014 T. C. Memo. 101, filed 5/27/14, although procedurally it might make a difference in S. E. C. (Someone Else’s Case).

Here’s Judge Big Jim’s exegesis: “At least with respect to the deficiencies in tax that he determined, respondent [IRS] states that dismissal of petitioner’s cases pursuant to Rule 123(b) on account of his failure to properly prosecute would reach the same result that would be reached if we hold him in default under Rule 123(a). That is true. We have said: ‘A Rule 123(b) dismissal, as a sanction against petitioner, is available as to those issues for which petitioner bears the burden of proof. A Rule 123(a) default would be the proper sanction against petitioner as to those issues for which respondent bears the burden of proof.’ Lopez v. Commissioner, T.C. Memo. 2001-93, 2001 WL 388758, at *4 (citing Smith v. Commissioner, 926 F.2d 1470, 1476 (6th Cir. 1991), aff’g 91 T.C. 1049 (1988)). Petitioner bears the burden of proof with respect to the determined deficiencies. See Rule 142(a). Nevertheless, respondent has moved that we hold petitioner in default and dismiss under Rule 123(a), and we will do so.” 2014 T. C. Memo. 101, at p. 13, footnote 4.

Pete is a graduate of the Air Force College and a thirty-year contractor, but also a long-time non-filer and frivolity merchant. So he gets a bushelbasketful of chops.

But Judge Big Jim isn’t finished defaulting people. He even tells the IRS to default itself, and they do. Check out Jose Vega, Docket No. 10713-13, filed 5/27/14.

IRS got an order and decision against Jose on default back at the end of April, hitting Jose for $5K tax and a $700 Section 6662(a) penalty, but either IRS changed its mind or Jose paid up (Judge Big Jim doesn’t say which), so IRS makes a Rule 162 motion to vacate or revise.

Judge Big Jim’s order is such a gem that I cannot do better than print it in extenso:

“This case was called from the calendar…. There was no appearance by or on behalf of petitioner. Respondent [IRS] orally moved for default judgment against respondent at the suggestion of the Court. It is

“ORDERED that respondent’s motion to vacate or revise pursuant to Rule 162 is granted, in that the Court’s Order and Decision entered on April 30, 2014, is hereby vacated and set aside. It is further

“ORDERED that respondent’s oral motion for default judgment against respondent is granted. It is further

“ORDERED AND DECIDED that there is no deficiency in income tax or penalty pursuant to I.R.C. section 6662(a) due from petitioner for the taxable year 2010.” Order, at p. 1.

So IRS, with its counsel present in Court, declares itself in default, therefore its motion is granted, and Jose, who isn’t there and didn’t show up for either Court appearance, wins.

Ya can’t make this up.

Now you know why I love this stuff so much.


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