In Uncategorized on 11/19/2014 at 21:36

We all know that the record in a case is the key, the linchpin, the cornerstone; you win or lose on the record. An advocate’s whole art can be found in building the record.

No opinions out of Tax Court today, and the one STJ Lew (“He Can Spell”) Carluzzo designated hitter is a Rule 40(b) failure to state a claim by a frivolity merchant.

But here’s an example from The Judge With a Heart, STJ Robert N. Armen, Jr., who shows what happens when an advocate doesn’t build a record.

This is Dardanelle Community Hospital, LLC, Docket No. 303-14L, filed 11/19/14. And to show what a menschadicher dude I am, I won’t name IRS’s attorney.

IRS’s attorney moves for summary judgment. And STJ Armen gives the usual no-trial-is-needed, but nonmovant gets every favorable inference spiel.

But then IRS’ record crumbles. Badly.

STJ Armen: “The record in this case is sparse. In addition, the record lacks both a declaration by the settlement officer who conducted the hearing and certified transcripts of petitioner’s accounts.” Order, at p. 1. (Footnote omitted, but see infra, as my high-priced colleagues say).

Not a strong start. Procedure 101 taught us that summary J motions need to be accompanied by admissible proof, like affidavits, affirmations and declarations from persons with personal knowledge of the facts therein alleged, and copies of relevant documents, whose provenance is duly attested.

And the footnote hereinabove referred to doesn’t make things better. “Remarkably, although respondent did not offer certified (or indeed, any) transcript of account in support of his motion, petitioner attached as exhibits to its Opposition transcripts for two of the three taxable periods at issue in this case; notably, however, those transcripts were non-certified and temporally stale and therefore of little, if any, value. But even if we were to overlook respondent’s failure to offer certified transcripts of recent vintage, the fact remains that the record does not include any transcript for the most recent taxable period at issue.” Order, at p. 1, footnote 1.

When your adversary’s opposition papers include a hint of the essential evidence you left out, it is time to prepare for what someone, in a much more exalted position than anyone in IRS Counsel’s Office, called “the wrath to come.”

STJ Armen finds a couple of minor issues, like whether Dardanelle owed any taxes to begin with, and exactly what the SO verified by way of compliance with applicable law and administrative procedures.

So STJ Armen buries the summary J motion in a footnote. “In his motion, respondent invokes the bar of I.R.C. section 6330(c)(2)(B). In contrast, the settlement officer did not. Rather, the settlement officer ‘reviewed the documents submitted by the rep and the administrative record’ and ‘[b]ased on the evidence submitted by the taxpayer and the Service’s administrative record’ concluded that ‘[t]he taxpayer failed to meet the reasonable cause criteria.’ In so concluding, the settlement officer utilized a ‘four part multi-factor test to determine reasonable cause for non-compliance.’ In applying the test the settlement officer asserted that the taxpayer ‘has a long history with non-compliance dating back to 2010’, that the taxpayer ‘is not a first time depositor’, and that ‘[d]uring the time of the non-compliance the taxpayer paid all other creditors including pay checks to the LLC members.’ These are all factual matters, but there is no predicate to support them them [sic] in the record before us; and the ultimate issue of reasonable cause is, of course, a quintessentially factual matter, which is ordinarily not suitable for adjudication by summary disposition.” Order, at p. 2., footnote 2.

Better luck on the trial. And with your next summary J motion.


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