Echoing the immortal words of RAF Sgt. “Jock” MacPherson in the World War II film classic “Target for To-Night”, I’m in the office and at my desk, but at 400 Second Street, NW, the flailing datestampers and the “somber reasoning and copious citation of precedent” are laid aside for today, Black Friday.

Yes, the boys and girls at USTC have taken the day off.

Here’s the skinny:

 “NOTICE

 “The United States Tax Court will be closed on Friday, November 28, 2014. For purposes of computation of time under Rule 25, Tax Court Rules of Practice and Procedure, November 28, 2014, shall be treated in the same manner as a legal holiday. See Rule 25(a)(2) and (b), Tax Court Rules of Practice and Procedure.”

No doubt we will have a busy day on Monday to start the final month of the calendar year, but for the moment I expect the crew is busy with whatever guided largesse Walmart, Target and Costco have to offer.

I wish all my readers, both constant and casual, a happy Thanksgiving.

And I’m thankful for, among many other things, blogpost 1000.

It’s been fun.

More to come, if time permits.

If your qualified plan gets revoked, you can go to Tax Court. But what happens when you get there? Well, Judge Buch will let you know in RSW Enterprises, Inc, 143 T. C. 21, filed 11/26/14.

If the contents and completeness of the administrative record is in dispute, you can get a trial.

Huh, you may well ask, isn’t the Section 7476(a) declaratory judgment proceeding limited to a strict review of the administrative record as to initial qualification or continuing qualification?

Yes, but.

The “but” is that a qualification is covered by Section 7476(a), but so is disqualification. And Rule 217(b)(2) permits summary judgment in a declaratory judgment (DJ) proceeding like this.

IRS claims Rule 217(b)(2) not only permits summary J in a qualification DJ, but mandates that only the administrative record can be considered.

RSW and its companion Key Lime Investments, Inc., claim the administrative record contains unsupported conclusions and doesn’t contain material facts that IRS disputes.

And Rule 217(a) allows summary J on the administrative record only when the parties agree that the administrative record is complete and that no facts are in dispute.

RSW and Key Lime claim they aren’t jointly controlled by The Waage Law Firm. IRS claims they are, as Ms. Waage and her sister are running the show at RSW and Key Lime via certain trusts, which IRS claims are shams. If jointly controlled, then The Waage Law Firm employees should be included in the RSW and Key Lime Defined Benefit Plans, which they aren’t and so the Waage Plan and the RSW and Key Lime are all DQed.

IRS’ one big case is a continuing qualification case (initial plan OK, but challenged when amended to comply with a change in law).

But that case arose in the context of a discovery demand by petitioners (disgruntled employees). “The legislative history of section 7476 makes clear that Congress did not expect the Court to conduct a trial de novo in declaratory judgment actions arising under that section, no matter whether that action arose with respect to the initial qualification or the continuing qualification of a retirement plan.” 143 T. C. 21, at p. 8.

But Rule 217(a) says the administrative record rules only where the parties agree it is complete and no facts therein are disputed.

When Rule 217(a) was adopted, Tax Court said “The distinction in treatment under this Rule for cases involving a revocation results from the difference in processing of such cases by the Internal Revenue Service, which usually bases its determination of revocation on its own investigation rather than by accepting the facts asserted by the applicant and which go into the administrative record in other cases. * * *” 143 T. C. 21, at p. 9.

So the plan’s proponent is at a disadvantage if it can’t challenge the facts adduced by IRS’ independent investigation.

Judge Buch: “Although RSW and Key Lime do not dispute the genuineness of the items in the administrative record, they maintain that the administrative record contains facts that are conflicting and in dispute. Further, respondent’s own motion states that respondent lacks evidence regarding the actions of the trustee and the stock transfers. The filings from RSW and Key Lime indicate that such evidence is available. Nothing in our Rules precludes RSW and Key Lime from producing this evidence or using it at trial.” 143 T. C. 21, at p. 11.

While IRS, RSW and Key Lime exchange argy-bargy about what Rule 217 means, Judge Buch has no doubt what it means in this case.

“The parties argue about the meaning of Rule 217. We hold that under that Rule, we are not limited to the administrative record in this proceeding concerning plan revocations because the parties do not agree that the administrative record contains all of the relevant facts and that those facts are not in dispute.” 143 T. C. 21, at p. 12.

No summary J, so go try the case.

Edited to add, 4/24/21: They apparently didn’t try the case. A stiped decision was entered 12/29/16, but the Genius Baristas have sealed it. Apparently the Genius Baristas never heard of Rule 27.

No, not Robert Browning’s verse drama, nor yet the sixth-class city in Knott County KY. This is a case where a Partial Payment Installment Agreement meets CNC meets a sole proprietorship, and gets sent back to Appeals.

Here’s Arleta S. Stover Reflections Counseling, Docket No. 15276-13L, filed 11/25/14.

It’s Arleta’s solo operation, but she owes a bushelbasketful of 941 money. Arleta filed the returns, but didn’t send in the cash.

Arleta requested CNC (Currently Not Collectible) in her go-round with Appeals, and sent in all manner of documentation. She had used one checking account for both business and personal moneys, which didn’t help, but I would point out that many small businesspeople do likewise, especially when the business income and expenses are really small.

And anyway, the SO found Arleta had little or no assets. But the SO denies CNC. So Arleta offers a PPIA.

SO says no, but here’s a straight installment agreement. Arleta says no, gets a NOD and heads for Tax Court. IRS wants summary judgment, but doesn’t get it.

Abuse of discretion is the guideline here. Arleta admits she owes.

“This Court has consistently held that an abuse of discretion cannot be established solely on the fact the Commissioner rejects a taxpayer’s PPIA proposal. However, the IRM offers guidance in granting or denying a PPIA: ‘Before a PPIA may be granted, equity in assets must be addressed and * * * in most cases taxpayers will be required to use equity in assets to pay liabilities.’ IRM 5.14.2.2(2) (July 12, 2005).” Order, at p. 9. (Citation omitted).

But the IRM isn’t law. “The IRM merely reflects the Commissioner’s internal procedures and does not have the force of law. Therefore, it does bind this Court. Vallone v. Commissioner, 88 T.C. 794, 807-08 (1987). When the Commissioner deviates from its own internal procedures, such action does not automatically render an abuse of discretion. Id. However, when the Commissioner bases its determination of a case wholly on misapplication of internal procedures, there may exist an abuse of discretion. See e.g., Fairlamb v. Commissioner, T.C. Memo. 2010-22.” Order, at p. 9.

Whatever the numbers might yield, the SO didn’t explain them to Judge Paris’ satisfaction. The SO didn’t explain why CNC should not be granted, and why the PPIA Arleta offered wouldn’t satisfy the Collection Status Expiration Date requirement. And ultimately the numbers showed, and the SO didn’t disagree, that Arleta has minimal collection potential.

But Arleta doesn’t win. She must go back to Appeals, and the SO should make the omitted explanations.

Now for a word of complaint on my part, not to do with Arleta or Appeals.

Judge Paris, you just wrote an order with a lot of useful learning for the in-the-trenches practitioner. You obviously gave this thought. But why do you bury it in eight pages of  “pay the $60” or  “continuance granted”? I can’t read every order coming out of Tax Court; I don’t think any rational human being could without suffering severely adverse effects. Please designate your orders; all of us, they, you and I deserve it.

Although candor should be applauded, this is not a good reason to fail to file returns, much less pay the tax due, especially if one has an unbroken twenty-year record of not filing returns.

And there is even a better reason not to say so to the IRS. It might prove fraudulent nonfiling, which sets up the 75% chop.

This is the lesson Judge Chiechi teaches Paul Neil Filzer, a successful attorney and investor, in 2014 T. C. Memo. 241, filed 11/25/14.

When it comes to the trial of the six nonfiling years at issue in this volume of Paul Neil’s saga, Paul Neil defaults. No brief, no show.

When he was still speaking to the IRS, Paul Neil said “…he had no good reason for not filing his tax returns, except that he knew he would owe a lot of money.” 2014 T. C. Memo. at p. 4 and p. 5.

IRS well-pleads all of Paul Neil’s various delictions and departures from the path in its answer, which Judge Chiechi quotes in extenso. So I’ll spare you; little irks me as much as CLE or CPE lecturers whose lectures consist of reading aloud their materials, which I already have in my possession, to me, as if I were illiterate.

There is a permissible inference, if not a rebuttable presumption, that attorneys, who are also Enrolled Agents, can read the English language, and possibly even comprehend what they have read.

Anyway, IRS gets a Rule 123(a) default against Paul Neil. That, you’ll remember (and if not see my blogpost “Defaulters”, 5/27/14) is not dismissal for failure to prosecute, but a real default (like what we call here in NY a default judgment), which means that IRS is deemed to have successfully borne whatever burdens of production or burdens of proof it might have had.

Hence Paul Neil gets the 75% fraud chops on everything.

So, while candor is to be applauded generally (there’s that word “generally” again), “telling it in Gath, and whispering it in the tents of the Philistines”, to misquote a much more exalted source, can get very expensive.

The SO thought that a NFTL was cast in bronze when sculptor Jim Budish wanted an installment agreement to pay off the $200K he owed Oom Sam, but Judge Halpern says not so, in James B. Budish, 2014 T. C. Memo. 239, 11/24/14.

Jim is a sculptor, and successful. He “works in cast bronze and sells his artwork through his wholly owned S corporation, Jim Budish Sculptor, Ltd. (Sculptor, Ltd.), for which he is a salaried employee. Over the years, petitioner has relied on a particular Arizona foundry (Metalphysic Sculpture Studio, Inc.) (foundry) to provide the material he uses in his sculptures and to do the actual casting. Typically, the sculptures are commissioned by the buyers who pay for them before casting. Thus, petitioner does not maintain an inventory from which he regularly sells his sculptures.” 2014 T. C. Memo. 239, at p. 4.

Jim doesn’t contest he owes big time, but claims he has zero assets, and whatever will pay the installment agreement must come from sales of his castings. The SO agrees with Jim’s staff of attorneys on the number for the installment agreement.

SO says IRM 5.14.1.4.2 mandates a NFTL because of all the money Jim owes.

Jim’s attorneys (all three of them) claim the foundry will cause Jim to founder if there’s a NFTL, because they won’t grant him the usual credit but will demand cash up front, the buyers will run because they’ll be afraid whatever they pay and their precious bronzes will be grabbed by IRS. Finally, American Express will cut off Jim’s ability to pay for stuff with his trusty “don’t-leave-home-without-it”.

Since Jim admits he owes, it’s abuse-of-discretion.

Whatever the IRM says, Section 6330(c)(3)(C) requires IRS to legitimately balance and weigh the interests of efficient governmental collection of taxes against the taxpayer’s legitimate concern that collection action be no more intrusive than necessary.

What ultimately bails out Jim is that lovely phrase “in general”. I love that phrase, because what invariably follows is any number of exceptions, waffles, wriggle-room and definite maybes.

Judge Halpern: “In IRM pt. 5.12.2.4.1, the term ‘in general’ in describing the circumstances, including the existence of large, outstanding liabilities, under which a notice of lien ‘should be filed’ clearly indicates that there may be occasions in which it is not necessary to file a notice of lien, even where such circumstances exist.

“As petitioner suggests, the filing of a notice of lien might not be in the Government’s best interests in this case if, as petitioner argues, the lien would hamper rather than foster collection of his outstanding liability. In arguing that this case presents one of those occasions in which a notice of lien would be counterproductive for respondent, petitioner points to the nominal amount of his net assets as compared with that liability and also to the fact that a notice of lien filing would put him out of business, thereby cutting off the only source of funds sufficient to discharge his liability and making it impossible for him to honor his commitment under the installment agreement.” 2104 T. C. Memo. 239, at pp. 18-19.

“It is also clear that IRM pt. 5.12.2.4 (Oct. 30, 2009) lists circumstances under which an ‘NFTL filing determination must be made’, not circumstances under which a notice of lien must be filed. Thus, pursuant to IRM pt. 5.12.2.4, the Appeals officer was required to make a lien filing ‘determination’, which petitioner does not dispute; but she was not required, by that provision, to determine that a notice of lien be filed.” 2014 T. C. Memo. 239, at p. 19.

The record isn’t sufficiently clear for Judge Halpern, so he remands.

But because this is an interesting case, he can’t resist telling counsel, both IRS’s and Jim’s Gang of Three, how to try the remand.

“On remand we anticipate that the Appeals officer assigned the case will want to investigate, facilitated by petitioner’s furnishing supporting documentation or affidavits where necessary, petitioner’s representations that the mere filing of a notice of lien will cause the foundry to drastically and unfavorably alter its working relationship with him and cause his customers to do the same, both resulting in a sharp decrease or stoppage of his income from the production and sale of sculptures, thereby causing him to default on the proposed installment agreement. In that connection we agree with respondent that counsel, in a letter to the Appeals officer, overstated the foundry’s reaction to the possibility of a Federal tax lien against petitioner’s assets. The foundry did not cite that possibility as ‘the impetus’ for its proposed changes in its business relationship with petitioner. Rather, it cited the actual suspension or delay of payments due it as the linchpin of those changes.

“We also anticipate that the Appeals officer will make a judgment as to the accuracy of petitioner’s representations regarding the value of his assets and the amount of his cashflow that might be subject to a Federal lien. In that connection, petitioner might want to make further arguments or submissions concerning whether the foundry work in process and/or the finished products are assets belonging to him, to Sculptor, Ltd., or, by virtue of their advance payments, to his customers. Presumably, a notice of lien against petitioner’s assets would not attach to the assets of either Sculptor, Ltd., or its (petitioner’s) customers.

“Petitioner might also want to explain why his rejection of a bond in lieu of a notice of lien, because of cost or otherwise, is reasonable under the circumstances.

“Lastly, we think it advisable that the Appeals officer, with the assistance of his or her counsel, if needed, consider the impact, if any, on his or her determination of section 6323(b)(3), which provides that a Federal notice of lien ‘shall not be valid’ against a purchaser of tangible personal property purchased at retail in the ordinary course of the seller’s trade or business unless, at the time of purchase, the purchaser actually intends the purchase to (or knows that it will) ‘hinder, evade, or defeat’ the collection of tax. Section 301.6323(b)-1(c)(2), Proced. & Admin. Regs., defines ‘retail sale’ to mean ‘a sale, made in the ordinary course of the seller’s trade or business, of tangible personal property of which the seller is the owner. That definition would appear to cover the sculptures sold on petitioner’s behalf by Sculptor, Ltd. Should it be determined that section 6323(b)(3) does apply herein, its application would appear to weaken both parties’ positions. On the one hand, the Government’s lien would not be valid as against a purchaser’s interest in petitioner’s sculptures, which would mean, assuming petitioner’s representations with respect to his lack of other valuable assets are true, that a lien would do little to protect the Government’s interests and, therefore might not be necessary. On the other hand, the failure of the lien to have priority over a purchaser’s interest in the sculptures would negate petitioner’s argument that it would effectively put him out of business.” 2014 T. C. Memo. 239, at p. 25-27.

In any case, let Appeals consider Section 6323(b)(3).

I can’t help thinking that Jim’s counsel should ask Judge Halpern if they should go home and let him try the case.

Takeaway–If you offer an installment alternative, and Appeals wants a NFTL or NOTL, tell them Section 6323(b)(3) trumps IRM 5.12.2.4.

While nonreceipt of an 1153 billet doux doesn’t invalidate the Section 6672 TFRP, it does raise the question (no it doesn’t “beg” the question, a locution that betrays an imperfect education) whether the petitioner had a chance to contest the penalty.

And here IRS loses summary J, because apparently it shot a blank at the late John W. Houston, co-resident of Omaha, NE, with the great Warren Buffet.

The late John’s cudgel is taken up by his surviving spouse Sarah, in Estate of John W. Houston, Deceased, Sarah V. Houston, Personal Representative, Docket No. 11561-12L, filed 11/24/14. Sarah cross-moves, but doesn’t win either.

The late John was CFO of Merit Transportation Company, LLC, but Merit had little Merit. It stiffed the fisc of $700K in withholdings a month before firing the late John, and filed bankruptcy thereafter.

Judge Paris checks out the late John’s job description. He was:“…in charge of overseeing the ‘comp controller [sic]’ and the individual in charge of the company’s payroll. Decedent was listed on one copy of Merit’s bank account signature cards, which appeared to give him authority to direct funds on behalf of the company. This signature card was not dated and the other bank cards were not signed by decedent and there is no evidence that decedent actually used this authority to write any checks.” Order, at p. 2.

A somewhat shaky case for IRS. And it doesn’t get better.

“Decedent’s Letter 1153 was purportedly sent to decedent and petitioner’s undisputed address in Omaha, Nebraska. … the Postal Service directed the envelope back to the sender because it was ‘not deliverable as addressed’ and ‘unable to forward’. The same day… respondent received and acknowledged the envelope returned from the Postal Service. The envelope was returned within 48 hours of the initial deposit into the mail and upon return, the revenue officer in charge of the case determined that besides waiting 60 days, no further notice action was needed to assess a trust fund penalty against decedent. The revenue officer determined the mere lapse of 60 days from posting the envelope was adequate notice.” Order, at pp. 2-3.

Well, that should do it, right? Section 6672(b)(2) says give the notice, wait 60 days, and then go get ‘em.

Not quite. There was a minor problem with the letter.

“On the copy of the envelope introduced into evidence, decedent’s address does not appear on the front side of the envelope that was supposedly sent to him. The envelope has a clear window, which is supposed to align with an address printed on a sheet inserted into the envelope’s enclosure. The clear window of Letter 1153 does not show any address; instead the window shows what appears to be a security pattern on either the inside of the envelope or paper within the envelope. In any case, the envelope does not display decedent’s address and raises the issue of whether a letter was ever properly inserted into the envelope or if the Postal Service’s prompt return reflecting that it was ‘not deliverable as addressed and unable to forward’ should have alerted the revenue officer of a failed mailing. Neither decedent nor petitioner protested the proposed assessment.” Order, at p. 3.

Appeals gave Sarah a hearing, but said the IRS’ self-generated certified mail receipt showing a letter sent to the late John’s last-known address (the correctness of which no one contests) means “game over” as far as contesting liability.

Sarah petitions.

It’s one thing if the nonreceipt is the result of a USPS error or malfunction. If IRS correctly addressed and mailed the letter, that’s it as far as contesting liability goes. And if the letter was stamped “UNCLAIMED” by USPS, or the addressee ducked delivery, likewise. But see my blogposts “You Didn’t Get It”, 5/31/13, and “You Didn’t Get It – Part Deux”, 5/31/13.

And here all IRS has is the self-generated certified mail receipt.

But maybe IRS can produce something from USPS showing proper mailing of the 3172; no summary J for IRS–yet.

And no summary J for Sarah.

No, not the Peter Fonda – Dennis Hopper 1969 tale, but the story of Ben Evans, a youth with what Judge Vasquez calls the natural talent and drive to race motorcycles at a professional level.

Young Ben lived in Boise, ID, a mecca for motocross, “a motorsport in which competitors race motorcycles at high speeds on dirt courses containing jumps and obstacles.” 2104 T. C. Memo. 237, filed 11/20/14, at p. 6.

In fact, so adept was Young Ben that in one year he “won the Amateur Motocross National Championship 458 Pro Sport class at the Loretta Lynn Motocross Ranch (Loretta Lynn) in Nashville, Tennessee. The Loretta Lynn title is the premiere title in the national amateur racing circuit. Every year 25,000 entrants compete to qualify to race at Loretta Lynn, but only 40 actually make it to the championship.” 2104 T. C. Memo. 237, at p. 4.

Just to make it clear that Loretta Lynn is the coal miner’s daughter and not an apparently failed nominee for Attorney General, Judge Vasquez footnotes: “The event is named after the country singer of the same name.” 2014 T. C. Memo. 237, at p. 4, footnote 4.

Anyway, Young Ben is ticketed for stardom, but Tax Court is concerned with Mom and Dad, William D. Evans and Caroline F. Evans. Mom and Dad’s personal tax return notes Dad’s income from his construction company, licensed in Idaho and doing business nowhere else.

And arriving at that income, Dad deducts money he spent on a motorhome to haul Young Ben and his motorcycles, which actually were carried in the motorhome, thus taking the motorhome out of the Section 179(d)(1) trap that knocks out lodging type property from the quick-kick deduction in Section 179.

Dad loses some deductions for a utility trailer for want of evidence, and he did put income and expenses on the wrong lines of his return, but as his trusty CPAs were qualified and had all the info, no penalty for Dad.

Finally, even though Young Ben’s racing took place afar from Boise, ID, there was some benefit to Dad’s construction business. There’s caselaw that supports racing as a promotional endeavor for construction firms. And even pizza purveyors.

But since Dad can’t show what was the industry standard for racing expenses, or what was the exact benefit his construction company got from Young Ben’s easy riding, Judge Vasquez gives Dad a Cohan approximation.

And while agreeing with IRS that just because the expenses Dad deducted were a small fraction of Dad’s gross receipts doesn’t make the expenses reasonable, Judge Vasquez allows that the Cohan rule covers this case.

So the lesson for the offspring of construction company moguls is “get on your bike.”

No, not a film noir account of a nighttime burglar, but rather the story of Omar Rohttis, Docket No. 6382-14S, filed 11/21/14, as told by CSTJ Peter Panuthos.

Omar lived on the second story of a building of a type commonly found in and about the outlying islands off the coast of North America, on one of which islands I dwell. Omar dwelt across the so-called East River, which really isn’t a river…but that’s another story.

Where Omar dwelt there was a store downstairs and a flat or two above. Omar’s mail was winding up in the store and not getting to him at his second-floor flat, so when he filed his tax return more than ninety days before IRS mailed the SNOD at issue, he noted his address as “2 Floor”.

IRS didn’t bother with the “2 Floor” on the SNOD as mailed.

Omar’s petition was nine months late, says IRS, so toss it.

CSTJ Panuthos says he will, but not for the reason IRS wants.

IRS concedes that there was enough time between when Omar filed his most recent return and the time the SNOD was mailed for IRS to correct its records to add “2 Floor.”

While it’s true that an inconsequential error (like the wrong zipcode; see my blogpost “Name and Number”, 6/9/11) won’t derail a SNOD, this wasn’t a minor error, based on Omar’s testimony concerning the configuration of the building (store downstairs, flats above) and that he wasn’t getting his mail.

“Respondent did not mail the notice of deficiency to the precise address set forth in the … return. Petitioner did not receive the notice of deficiency in time to file a timely petition. We conclude that respondent’s error prevented petitioner from receiving the notice of deficiency. Thus, respondent’s omission of the ‘2 Floor’ designation in the address on the notice of deficiency was not an inconsequential error. We conclude that the notice of deficiency was not sent to petitioner’s last known address, was not received by petitioner in time to file a timely petition, and was thus invalid.” Order, at p. 3.

So Omar’s petition is tossed because the SNOD was invalid as not sent to last known address.

A successful second story man.

From what appears to be a rich vein, here’s another of my sequels to Robert Gover’s 1962 novel, this time of the whistleblower variety. It’s a full-dress T. C., 143, number 20, filed 11/20/14, and stars Robert Lippolis.

Judge Colvin tells IRS’s counsel to move to amend the answer, and forget about dismissing for want of jurisdiction.

Rob apparently shopped an individual taxpayer and some of his flow-throughs for underreporting income, out of which shopping IRS came away with $844,746. The Ogden Sunseteers tossed Bob a discretionary  Section 7623(a) 15% award (don’t we give that to waiters?).

Bob, wanting more,  appeals to Tax Court. IRS claims Bob should be happy with what he got, because he  has no basis for claiming a Section 7623(b) mandatory 15%-30% award.

Section 7623(b)(5) only allows a Section 7623(b) mandatory award if the amount “in dispute” exceeds $2 million. IRS says this is a jurisdictional limit. If $2 million isn’t on the table, IRS bids Rob and Judge Colvin a nice day, but there’s nothing doing.

Judge Colvin says Section 7623(b)(4) gives Tax Court jurisdiction. The Section 7623(b)(5) $2 million is an affirmative defense, not a jurisdictional limit. And IRS admits that Section 7623(b)(5) is not “jurisdictional in character”, but Bob should be tossed anyway. 143 T. C. 20, at p. 6.

For the nonlawyers among you, a jurisdictional limit means the Court can’t say anything. An affirmative defense means that, if the defense can be established, defense wins, but the Court has to decide if they established it.

So Judge Colvin hauls out statutes where Congress made dollar-amount jurisdictional limits, and cases where Circuit Courts of Appeal and the Supremes have canvassed the issue.

Judge Colvin: “Specifically, courts are to review whether Congress ‘clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional’ * * * [b]ut when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional’ [in character].’ Moreover, the “jurisdictional analysis must focus on the ‘legal character’ of the requirement, * * * which * * * [may be] discerned by looking to the condition’s text, context, and relevant historical treatment”.143 T. C. 20, at p. 7 (Citations omitted, but save them for your next brief).

Legislative history sheds no light. And the mere fact that the limiting Section 7623(b)(5) follows the jurisdictional grant of Section 7623(b)(4) means nothing. “Mere proximity will not turn a rule that speaks in nonjurisdictional terms into a jurisdictional hurdle.” 143 T. C. 20, at p. 8 (Citation omitted).

And Judge Colvin finds any number of statutes where Congress was very clear about what constituted a jurisdictional limit, and this isn’t one of them.

But if Section 7623(b)(5) is an affirmative defense, it must be pled and proven.

And the term “in dispute” was only defined by Reg. 301.7623-2(e)(2) for claims made or matters open on or after 8/12/14.

Rob’s claim was made long before that.

Judge Colvin ducks. No need to decide what was or was not “in dispute.” Rob claims he can’t know, because only IRS has the records and they may involve taxpayer privacy.

Judge Colvin tells IRS to plead it and prove it.

“The Commissioner generally should have easy access to all of the records or documents that would show whether the amount in dispute in ‘the action’, i.e., ‘any administrative or judicial action’, sec. 7623(b)(1), initiated against the target as a result of the whistleblower claim exceeds $2 million. Those documents may not be available to the whistleblower and may constitute confidential taxpayer information of the target. It would be unduly burdensome to require the whistleblower to provide or perhaps even to know of the existence of those records.” 143 T. C. 20, at p. 12.

But Judge Colvin will give IRS a second chance.

“We will deny respondent’s motion to dismiss for lack of jurisdiction. Rule 41, Amended and Supplemental Pleadings, provides that ‘leave [to amend a pleading] shall be given freely when justice so requires’, and that ‘[a] motion for leave to amend a pleading shall state the reasons for the amendment and shall be accompanied by the proposed amendment.’ We will issue an order allowing respondent 60 days to file a motion for leave to amend the answer to raise the section 7623(b)(5)(B) affirmative defense and to include allegations of fact supporting the amendment to the answer. If the Court grants respondent’s motion to amend raising the section 7623(b)(5)(B) affirmative defense, petitioner will have 45 days from the date of service of the amendment to answer to file a reply or 30 days from that date within which to move with respect to the amendment. See Rule 37.” 142 T. C. 20, at p. 14.

I bet that even post-8/12/14, IRS will have to plead and prove what was “in dispute”.