Or, the $200,750 Misunderstanding

Maybe I’m slow-witted, but I thought motions for reconsideration or to vacate weren’t there to permit parties to undo arguments they’d made on the trial or in their motions, or reverse concessions, or undo stipulations.

Of course, that doesn’t go if there’s been fraud or a truly serious error.

But I can’t find fraud in the case I’m about to blog, and if IRS blew it on the law, why do they get a Mulligan? Would the same hold true for a taxpayer?

OK, here it is, a full-dress T. C. , Law Office of John H. Eggertsen P.C., 143 T. C. 13, filed 10/1/14, a unanimous opinion by Judge Chiechi.

Remember Lawyer John? No? Then see my blogpost “Medal Count”, 2/12/14, wherein Lawyer John was lead-off hitter, and he scored based upon Section 4979(a) and notification thereunder. It was a 3SOL case.

And IRS agreed that Section 4979(a) controlled.

Well, IRS says “whoops, we meant dear old Section 6501(c)(3), and Lawyer John never filed Form 5330 or any other return that would qualify.”

Judge Chiechi so holds, and gives IRS a decision of $200,750 (plus interest, of course) against Lawyer John.

Judge Chiechi: “…it was respondent’s [IRS’s] position that section 4979A(e)(2)(D), not section 6501, controls resolution of the statute of limitations issue.” 143 T. C. 13, at pp. 5-6. And she quotes a swath of IRS’s old brief, where IRS says exactly that, and expressly rules out Section 6501.

But now IRS changes their tune, and the words that go with it.

Now they argue: “[T]he limitations period under I.R.C. § 4979A(e)(2)(D) supplements but does not replace the general limitations period under I.R.C.§ 6501 or the specific limitations period under I.R.C. § 6501(c)(3). In this case, because the interaction between I.R.C. § 6501 and I.R.C. § 4979A was not discussed, the Opinion contains a substantial error of law when it implies that I.R.C. § 4979A replaces I.R.C. § 6501. Instead, because the limitations period under I.R.C. § 6501 is not superseded and has not expired, the period during which Respondent can assess the excise tax under I.R.C. § 4979A remains open.” 143 T. C. at p. 9.

Nostra culpa, says Judge Chiechi, we made a substantial error of law. Apparently the Court made the error because IRS argued it.

No matter. IRS wins.

I wonder if you or I had blown a concession like this, and came back with a Rule 160 or Rule 161 motion, what result we would get.

I hope Lawyer John has the cash left to bond this and appeal.

Edited to add, 8/24/21: He did, and lost, with a dissent.