In Uncategorized on 08/27/2014 at 15:44

This is another installment in my “Win Your Case” series. There has been a bushelbasketful of these orders arising out of listed transactions lately, principally a dodge known as the Sterling Benefit Plan. This particular shenanigan is rewarded with the Section 6707A chop.

These are nonassessables, that is, there’s no SNOD, but a trip to Appeals gives the alleged miscreant a chance to chip away the chop.

The exemplar I’m picking today is a designated hitter from Judge Kerrigan, Medi-Save Pharmacy, Inc., Docket No. 30058-13L, filed 8/27/14. And Judge Kerrigan seems to have gotten a bunch of these.

Medi got the chop, Medi’s counsel went to Appeals, Appeals sustained the chop ($10K), and Medi got a NITL. Medi filed a CDP, but didn’t take the phone conference offered or submit an alternative, so Medi got a NOD.

Medi petitions, saying “…that it is entitled to abatement of the penalty based on ‘an unexplained determination that related transaction and a provision of the Internal Revenue Code that is unconstitutional as a deprivation of due process’.” Order, at p. 2.

IRS moves for summary judgment and gets it, especially since Medi’s counsel doesn’t oppose.

The issue is whether Medi had a prior opportunity to dispute the chop.

“A prior opportunity to dispute a liability includes an opportunity for a conference with the Appeals Office offered either before or after assessment of the liability. Secs. 301.6320-1(e)(3), Q&A-E2, 301.6330-1(e)(3), Q&A-E2, Proc. & Admin. Regs. This Court has upheld the validity of these regulations. Lewis v. Commissioner, 128 T.C. 48 (2007). An opportunity to dispute tax liability under section 6330(c)(2)(B) includes an opportunity to dispute taxes to which deficiency procedures do not apply with the Appeals Office. See Mason v. Commissioner, 132 T.C. 301 (2009).” Order, at p. 3.

Win your case at Appeals. Or be prepared to go to the Court of Appeals.

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