Attorney-at-Law

ABATE, DON’T DEBATE

In Uncategorized on 08/25/2014 at 17:00

No, not another child-of-Rand zeroing-out of the child credit, but we have got a child issue here. This is the story of Michael Swiggart, 2014 T. C. Memo. 172, filed 8/25/14, but it’s really about his hard-charging lawyer Eric William (“EW”) Johnson, Esq.

For the Rand story, see my blogpost “The Rebate Debate – Part Deux”, 11/18/13.

Mike files his return timely, claiming HOH but not stating the name, rank and serial number of the dependent who qualifies him for that status. Mike ducks, because he let the dependent’s mama claim the exemption for that year, which he doesn’t claim. Also Mike’s tax due is more than his withholding, and he doesn’t stump up the differential.

Mike is out on the differential, of course. But all is not lost, as IRS really loses the ball in the sun on this one.

IRS gives Mike a math error notice, with the usual “tell us in 60 days and we’ll abate the assessment”, thus setting Mike up for a SNOD if they don’t like his story. Sixteen (count ‘em, sixteen) days after the math error, IRS sends Mike a NITL.

Enter EW. He timely files the request to abate to the right address by certified mail. He timely files Form 12153, likewise certified and likewise to the address specified in the NITL. IRS replies to the math error letter with a letter with a number of inconsistencies, like EW isn’t authorized to represent Mike, but mails the letter to EW. Then Appeals rejects EW’s CDP with a NOD that looks pretty sloppy.

Judge Buch is not a fan of sloppy: “The notice of determination states that Mr. Swiggart raised and disputed the head of household filing status but also states that he made no challenges to the existence or the amount of the underlying liability. The notice of determination states both that the hearing occurred on January 11, 2012, with Mr. Johnson and that it occurred on January 17, 2012, with a representative named Nicole McGuire. It is clear portions of the notice of determination relate to another taxpayer’s hearing with a different representative.” 2014 T. C. Memo. 172, at p. 5, footnote 4

Mike timely petitions the NOD, and after IRS claims Mike had full opportunity to contest at the CDP, EW moves for summary judgment, conceding the underpayment of tax at HOH level, but contesting the rest. IRS caves on the classification, because you don’t need to claim dependency credit for the dependent that puts you into HOH status, just the magic days, and abates the excess to the extent thereof.

Mike wants administrative and litigation costs and fees. IRS, of course, says he didn’t prevail.

Oh yes he did, says Judge Buch. IRS argues Mike’s agreed shortfall was $7 more than the reclassification increase, but that’s not the issue. The issue was whether IRS wrongfully denied abatement of the math error notice and failed to recognize the law about abatement at the CDP. And here Section 6213(b)(2)(a) is mandatory; if the taxpayer disputes the math error, the assessment “shall” be abated, and deficiency procedures must be followed. IRS, to its credit, never claims that position was justified, because caselaw says that a CDP can’t cure an unabated disputed assessment on a math error notice.

And that’s the test. For the admins, what the IRS knew as of the date of the NOD is what counts.

Mike and EW can split $3100 in fees and costs. Of course, EW’s hourly rate is cut by at least one-third. But he can console himself with a Taishoff “Good job, first class”.

Oh yes, and Mike gets his $60 petition fee back.

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