Well, Not Quite

No, not quite the Robert Allen Zimmerman ballade, in the best tradition of Francois Villon, which he launched on the world just fifty years ago. This is the story of two homesteaders, one of whom had a home that knocked out his deductions, and the other had no home, but that knocked out his. This is a tale of two petitioners, Joel B. Evans, 2015 T. C. Memo. 15, filed 1/20/15, and Shalom Jacobs, 2015 T. C. Sum. Op. 3, filed 1/20/15. Joel has a tax home, but it isn’t the one he claims. Shalom doesn’t have a fixed tax home, and the one he has isn’t the one he claims either.

Joel is an oilman, but not the kind that wears a suit to the office. No, Joel was out on Sakhalin Island during the years at issue. That Garden Spot East of Siberia was where Joel supervised drilling crews. Joel couldn’t bring his family there (though he tried for a visa for his daughter, he got a “nyet”). Joel lived in employer-provided housing with employer-provided meals and an employer-provided car and driver (Joel’s visa didn’t permit him to drive his own self). And Joel owned a house back in the USA, which he never rented but where his second wife and daughter lived. And where he stayed when he came home on leave. And where he was registered to vote and registered his car during the years at issue. You can see where this is going.

Joel’s Section 911(a) gambit hits the dry hole of Section 911(d)(3). Joel’s “abode” is back home in West Monroe, LA. Judge Lauber: “A taxpayer posted abroad will invariably have some connections with the foreign country in which he works, but if his ties to the United States are stronger, we have held that his ‘abode’ remains in the United States.” 2015 T. C. Memo. 15, at p. 8 (Citation omitted). It’s the old cocktail of economic, family and personal ties, not the legal definition of “domicile”. And “abode” does not equal mere physical presence. Joel is clearly taxable onshore, abroad at home.

But since he relied on Brad, an expert whose credentials, though unstated in this opinion, impress Judge Lauber, Joel escapes the Section 6662(a) chops.

Shalom is a long-haul truckdriver. He claims to share a house with fellow ex-pat Shimon, a sort of Minnesota kibbutz, to which he claims he contributes much money for upkeep (but can’t prove it). Worse, he testifies he sleeps in the “guest room”, where other sojourners sleep between times. Shalom’s life is apparently of the “six days on the road but I’m a-gonna make it home tonight” variety. But is it his “home”, or rather, his tax home?

No, says Judge Holmes. Unlike Gary A. Lyseng, Shalom doesn’t need to be in Minnesota to be “stickin’ to the union” for employment. See my blogpost “I’m Stickin’ to the Union”, 9/21/11 for Gary’s story. Shalom has no reason to be in Minnesota, or anywhere else, except for personal reasons. Judge Holmes sums up Shalom’s condition: “Cases decided over many decades give us the answer–a taxpayer who’s constantly in motion is a ‘tax turtle’–that is, someone with no fixed residence who carries his ‘home’ with him.” 2014 T. C. Sum. Op.3, at p. 5. (Citations omitted).

Shalom has no principal place of business except the cab of whatever rig he’s in at the time. He’s an itinerant, and his living expenses of whatever kind aren’t deductible. Shalom does get a substantial understatement chop. He claims there are three different kinds of truck drivers, each with separate tax issues. Judge Holmes is skeptical of that one but, as Shalom never bothered to tell whichever specialist he consulted about some 1099s he accumulated but never reported, good-faith reliance goes under the truck.

Whether you have a home or not, you might end up owing tax.

And Guiana, and Inner Mongolia and Outer Mongolia, and Chad, and Kyrgyzstan–nobody in these countries reads my blog. At least take a look-see.

Even though the doings at 400 Second Street, NW and 1111 Constitution Ave, NW, chronicled in my blogposts, may have minimal impact within your borders, to say nothing of your daily lives, they may evoke a sly giggle to brighten your day.

So join with the rest of the world–read taishofflaw.com.

Just in case–the foregoing may constitute attorney advertising.

No, not the long-running Britcom from Grace Brothers department store, nor the current lament from Nina E. (“The Big O”) Olson, National Taxpayer Advocate, that taxpayers and us professionals telephoning IRS cannot get through the understaffed eye-of-the-needle to get even wrong answers that cannot be relied upon. Congress has cut the IRS budget and is mad about the politicizing of the audit process as regards PACs. So if you’re counting on reaching IRS by phone this filing season, best of British luck to you.

Check out The Big O’s annual weep at http://www.taxpayeradvocate.irs.gov/2014-Annual-Report/

Today’s story is about an old chum who finally does get served, namely and to wit, Billy F. Hawk, Jr., GST Non-Exempt Marital Trust, Trustee, Transferee, Nancy Sue Hawk and Regions Bank, Co-Trustees, Et Al., Docket No. 30024-09, filed 1/16/15.

Remember Billyhawk, Mrs Hawk and the Hawklings? No? Then take a gander at my blogpost “Game Ends In No Score”, 5/30/12. This is another MidCoast Financial ring-a-ring-rosie with a C Corp with a huge gain and a basis of bortscht (please pardon an obscure technical term).

The key to the case is what I said back then: “Although the hawklings swear MidCoast got funds to close the purchase of Billyhawk Inc from Mid-Coast’s own monies and a private loan from an offshore, and didn’t strip Billyhawk Inc’s proceeds from the sale to Corley, they don’t have checks, bank statements or anything else to prove it. Every payment to the hawklings came out of MidCoast’s attorneys’ escrow account. If MidCoast did get outside funds, then Billyhawk Inc wasn’t rendered insolvent when the hawklings got the boodle, as the Corley cash was still aboard, so no fraudulent conveyance.”

OK, so now it’s time to prove. And guess what? IRS (or their pals at DoJ) has the dope.

Judge Wells takes up the tale. “One of respondent’s [IRS’] theories in support of transferee liability is that MidCoast purchased the stock using Holiday Bowl’s [Billyhawk Inc.’s] own funds rather than funds from an unrelated third party. After the Holiday Bowl transaction, respondent opened a tax shelter promoter investigation of stock acquisitions by MidCoast and its related entities. The investigation resulted in the convictions of several individuals, including John Ivsan, who is a former partner of Morris Manning & Martin LLP involved in the stock sale of Holiday Bowl.” Order, at p. 1.

Apparently Johnny Esq. was a lead batter in doing the nasty at MidCoast. And Johnny Esq. had the pictures, descriptions and accounts.

“Petitioners have requested from respondent certain unredacted Morris Manning & Martin, LLP ledgers (ledgers) allegedly created by John Ivsan. Petitioners also requested forty-four (44) boxes of evidence respondent provided to the Department of Justice in connection with the criminal investigation of MidCoast Financial, Inc. (DOJ evidence).” Order, at pp. 1-2.

IRS says oh no, this stuff is all ultra-top-secret, sealed with the seal of Section 6103(b)(2), which renders sacrosanct “return information”. The magic boxes and the ledgers name taxpayers and show payments to and from them.

Judge Wells awards IRS an “Oh Please, Second Class”.

“We find respondent’s argument unpersuasive. ‘Taxpayer identity’ is ‘the name of a person with respect to whom a return is filed, his mailing address, his taxpayer identifying number * * * or a combination thereof.’ IRC sec. 6103(b)(6) Respondent does not contend that the ledgers include either mailing addresses or taxpayer identification numbers. At most, the ledgers may contain the names of certain individuals or businesses to whom Morris Manning & Martin, LLP made disbursements or assigned credits and/or debits. Such listing of a name is insufficient for us to conclude that such persons are persons ‘with respect to whom a return is filed’, and neither do such entries identify the nature, source, or amount of income or any other data with respect to a return.

“Even if petitioners are seeking ‘return information’, the ledgers are directly related to the issue of the consideration paid for petitioners’ stock. See IRC sec. 6103(h)(4)(C). If the ledgers show that third party funds were designated for the purchase the Holiday Bowl stock, then it is some evidence, or would likely lead to evidence, that the transaction occurred as contended by petitioners. See T.C. Rule 70(b).” Order, at p. 2.

As for the DoJ stuff, IRS says it doesn’t have that, but has got electronic copies, and makes the same “return information” argument that just failed.

Judge Wells tells IRS to hand over the ledgers and whatever electronic files they have that relate to Billyhawk.

You’ll remember back in May, 2012, IRS was worried about the Billyhawk litigation compromising the criminal investigation of MidCoast. Well, it didn’t, and if the evidence IRS was hoping for did fall from the sky, as the Hawk Squad suggested, it might could be that evidence wins it for the Hawks.

Stay tuned.

Before we take off for the three-day weekend, two rounders show to the front, and that Obliging Jurist, Judge David Gustafson, shows that when someone asks him to go the mile, he will go the twain–and then some.

Following on Judge Gustafson, STJ Lewis (“Love That Name”) Carluzzo shows rounder David Loven Nelson, Docket No. 26547-12, filed 1/16/15, that two’ll get ya ten.

First is Judge Gustafson obliging Curtis E. Leyshon to check out 123 pages (and they all appear as attachments to this order) from his wife Lisa’s Tax Court non-trial back in August, 2012. And Curt should tell Judge Gustafson why he shouldn’t take judicial notice thereof. You can read it all in Curtis E. Leyshon, Docket No. 20983-13, filed 1/16/15.

Curt was at the table with Lisa in Judge Goeke’s courtroom back in August, 2012. Read the transcript of the hearing at the end of the 123 pages. It tells the story.

A primer on judicial notice. “Rule 201(b) of the Federal Rules of Evidence, provides in relevant part that a court may take judicial notice of a fact that is not subject to reasonable dispute because it ‘can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.’ Rule 201(e) provides a party the opportunity to be heard on the propriety of taking judicial notice and the nature of the fact to be noticed. A formal hearing is not required in all circumstances.” Order, at p. 1. (Citation omitted).

Hint: Curt, don’t play the protester game.

Dave’s case is simple. Judgment on the pleadings, which is neither a motion to dismiss or strike the petition, nor a motion for summary J. It’s what in my youth we called a demurrer, as explicated by Prof. Gray Thoron, On The Hill Far Above long ago, thus: “Everything you say is true–so what?”

“The pleadings establish that in 2009 petitioner received $161,365 in wages as a pilot for Northwest Airlines. Petitioner failed to report this income on a Federal income tax return, and the deficiency here in dispute is attributable to his failure to do so. Petitioner does not deny receiving the wages in the amount shown in the notice; rather, he contends that his compensation is not taxable. His position on the point is frivolous, and, despite the warnings, he has continued to maintain it throughout the proceeding. Because petitioner has not raised any issues on which he can prevail in his petition, respondent’s motion for judgment on the pleadings will be granted.” Order, at pp. 1-2 (Citations omitted).

But wait, there’s more, as the late-night TV pitchpeople say. Dave has been there before, back in August, 2012 like Curt’s spouse Lisa. Apparently 2012 produced a bumper crop of rounders, and Tax Court harvested them in August that year. And Judge Marvel hit Dave with a $2K Section 6673 chop when he was in Tax Court that time.

So STJ Lew, seeing Dave unrepentant, hits him with a $10K chop.

Enjoy the weekend.

It must be nearly sixty years since my boyhood friend Richard inveigled me to the old Marshall Chess Club on Tenth Street to watch the game at which he excelled and I could never assimilate. From that rather embarrassing experience I came away with the title for today’s blogpost, which features two such gaffes.

Finger-fehler (German: means “finger errors”) are errors made by touching the wrong piece or pawn at chess, which require the errant party to move the piece or pawn, notwithstanding that the party intended not so to move or that any such move would spell disaster. There’s even the celebrated Finger-Fehler Mate, but I’ll spare you.

Today we have two examples thereof.

Leading off, Mercedes Ochoa-Bunsow, Docket No. 21759-13, filed 1/15/15.

Merc claims her lawyer signed a stip of settled issues and a stipulated decision, to which she did not agree. She claims she never knew, never consented, never signed, fired lawyer and brought in new counsel (who enters appearance).

Merc claims her former lawyer was going to withdraw and also she quotes from a letter supposedly sent by former counsel admitting his deeds, but doesn’t produce same. Merc claims her new counsel will show how the stips are wrong.

Not good enough, says Judge Nega, and holds Merc to the deal.

The stips are clear enough, contract law governs, Rule 23(a)(3) requires either party’s or counsel’s signature (not both, although see my takeaway infra, as my small-batch-craft-Bourbon-drinking colleagues would say), and unless you can show real injustice, stips stand.

“This Court has repeatedly declined to vacate a stipulation for settlement. The Court regularly enforces settlement stipulations, written or oral, unless for reasons of justice a party should be relieved from the stipulation. A stipulation is treated like a contract and general principles of contract law are used to determine whether a settlement has been reached and whether it is binding and enforceable. ‘Under such principles, we enforce a stipulation of settlement that has led to the cancellation of the trial, absent a showing of lack of formal consent, fraud, mutual mistake, or some similar ground; a mistake by just one party to a stipulation of settlement is not a sufficient ground to disregard the stipulation.’ Order, at p. 3 (Citations omitted, but check them out carefully.)

So Merc is hit with a bushelbasketful of deficiencies. What she will do to her former lawyer is nowhere stated, but I most respectfully urge my readers not to find out what possible remedies she may invoke, should a like event befall them in their own cases.

Next is “Samuel Israel, an attorney”, but he’s only a bit player in the ongoing, long-running drama Pacific Management Group, BSC Leasing, Inc., Tax Matters Partner, et al., Docket No. 6411-07, filed 1/15/15. There are forty (count ‘em, forty) cases under this rubric, but one will suffice to lead you into this morass.

Sam an attorney is claiming attorney/client privilege or attorney work product privilege (Order, at p. 1) for some documents in the trial subpoena duces tecum he got back on October 30 last year. Sam an attorney didn’t show on the trial date (this past Monday) and hadn’t told IRS or Judge Lauber that he wouldn’t.

The documents in question, both paper and electronic, related to “the arrangement”, which is apparently what is at issue in these cases.

On Tuesday, Sam an attorney proffers a privilege log listing a dozen documents. But Sam an attorney never mentions e-mails.

Judge Lauber is kinder than I would have been, were I a Tax Court Judge (which I thank whatever gods may be will never happen).

Of course Sam an attorney must produce all the e-mails, unless he can claim privilege for any.

Worse, Sam an attorney’s privilege log lists a certain letter from Sam an attorney to petitioners’ trial counsel (who also was one of the creators of “the arrangement”). Though this case gives me grounds for plenty of them, I will spare you my usual conflict-of-interest remarks.

But yet worse: as one of the dozen was handed over at discovery and stipulated into the trial record, Judge Lauber finds privilege waived as to all Sam the attorney’s dozen documents, unless he can establish which specific ones do not relate to “the arrangement”.

So Sam has until 5:00 p.m., tomorrow, to produce at the Courthouse all the foregoing for in camera inspection, to claim whatever privilege he can for the e-mails, and to claim (in writing) whatever of the dozen do not in any way relate to “the arrangement”. And if Sam an attorney fails to do any of the foregoing, Sam an attorney is due in Court next Tuesday in person at 0930.

Takeaway Number One– If you’re doing a stip settling a case, have the client sign it. And make sure the stip says in bold-faced type “I the client have to pay $Y now”, with the client’s initials next to it. Keep a fully-signed duplicate original in a safe place.

Takeaway Number Two– Don’t wait until trial has begun to object to a subpoena duces tecum you got two months before. And if you have trial counsel, make sure they haven’t already handed over what you claim is privileged.

Takeaway Number Three– Judges get peeved at last-minute shenanigans. Don’t pull them unless well-prepared for the consequences, including without limitation judicial and client retaliation when they fail.

Takeaway Number Four– If not heeding the three (3) previous comments, keep one bottle of that small-batch-craft Bourbon handy; you may need it. Me, I’m an Old Grand-Dad guy.

No, it’s not a Tax Court Snowden spilling the clichés; it’s none other than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Illustrious, Indefatigable, Ineluctable, Indestructible Foe of the Partitive Genitive, Judge Mark V. Holmes, putting Randy Jenkins and friends wise to getting a low-cost or no-cost transcript of their trial, all nine (count ‘em, nine) volumes’ worth. And not one that fell off the Capital Reporting Co. truck.

Nope, it’s a designated hitter, Randy Jenkins, et al., Docket No. 27139-11, filed 1/14/15. Randy and the et als must get en charette with their post-trial brief. And Randy has a problem, which carries over to the et als.

For the nonce and yet a while after, Randy is an involuntary guest in a governmentally-owned and operated residence for the penally-challenged. In short, the Stony Lonesome.

Randy and the et als need help. They ask Judge Holmes to toss them the nine-volume saga. For free.

Judge Holmes: “Petitioners do not address the relevant factors:

“Do petitioners need the transcript to write their briefs?;

“Do petitioners have the financial means to pay for the transcript?; and

“Does the case present a substantial question?

“See Taxpayer Information: After Trial, http://www.ustaxcourt.gov/taxpayer info after.htm#AFTER9 (last visited Jan. 12, 2015).

“The Court therefore denies the motion, but without prejudice to renewal on a proper showing.

“Petitioners are advised that the Court customarily uses the form for seeking a waiver of the filing fee in considering the second question. See http://www.ustaxcourt.gov/forms/Application_for_Waiver_of_Filing_Fee.pdf.” Order, at p.2.

Judge Holmes extends the briefing deadlines by 60 days, but neither he nor Tax Court will spring for a free copy of the nine-volume saga.

But Randy and the et als can reapply. And they shouldn’t go to a guy in a black raincoat standing outside the Glass Box at Second Street, NW.

Taking up the words of the 1943 hit sung by the King Cole Trio, as written by the late great Nat King Cole and Irving Mills, but using his “softer, gentler” style, Judge Gale joins the ranks of the obliging Tax Court jurists with Melanie L. Thomas-Kozak, Docket No. 802-12S, filed 1/14/15, another Tax Court teletubby day.

You remember Judge Gale gave Melanie the boot. No? Then see my blogpost “He Gave Her the Boot”, 11/11/14.

Melanie and IRS were scuffling over Melanie’s deductions, most of which tanked, but Judge Gale did allow Melanie the deduction for her metatarsal safety boots. IRS conceded some, and Judge Gale allowed a couple others (as Judge Holmes would say).

So off went Melanie and IRS to a Rule 155 beancount.

IRS came up with numbers, but Melanie didn’t, so that should be “game over, decision per IRS’ numbers”, no?

No.

IRS’ numbers left out some of their own concessions and ignored some of Judge Gale’s findings, which Judge Gale itemizes in the order above described, complete with a concordance to his opinion, more particularly bounded and described in my blogpost above referred to.

So Judge Gale again gives the boot, this time to IRS’ motion for entry of decision, and tells IRS to show him where IRS’ numbers include their concessions and Judge Gale’s findings.

IRS, straighten up and fly right.

Caltex Oil Venture meets SECC Corporation up in the air; or rather, on the blocks as the pilot turns off the “fasten seatbelt” sign.

Sufficiently confused? Well, start by checking out my blogpost “Classified”, 4/3/13, for the story of SECC Corporation and when IRS has made a RA ‘78 Sec 530 determination, even if they haven’t told anybody. Then dig my blogpost “Drill, Baby, Drill”, 1/12/12, for how to construe a statute.

Now you should be cleared for takeoff in American Airlines, Inc., 144 T. C. 2, filed 1/13/15 (and Happy Birthday to a family member firmly on the ground).

AA is fighting Subtitle C employment taxes for the cabin attendants paid by its foreign branches (not subsidiaries) as AA and Judge Paris stress, 144 T. C. 2, at p. 5.

The cabineers are local nationals in the Coño Sur, hired by the local branches, paid in local currency (with local taxes withheld), fly from offshore to Miami, FL only, stay in the Land of the Free only for mandatory rest stops (24 hrs or less) and TDY ANACDUTRA (and if you know what TDY ANACDUTRA is, my condolences). They have C1/D aircrew nonimmigrant visas, prohibiting work in the USA. Moreover, “They currently are paid on a ‘block-to-block’ basis, meaning that they are compensated only for the period beginning when the aircraft pushes off from the blocks of the departure gate and ending when it arrives at the blocks of the destination gate. The foreign flight attendants are uncompensated for any other time they are required to be at work, including pre- and post-flight time and training sessions.” 144 T. C. 2, at p. 5.

No, Judge, the blocks are removed before pushback (not “pushoff”), but that’s a detail.

Notwithstanding anything to the contrary hereinabove stated, as my two-Martini-lunch colleagues say, and an earlier IRS audit that accorded the cabineers RA ’78 Sec. 530 relief (once a non-employee, always a non-employee), IRS comes back trying to hit AA with FICA, FUTA and all that jazz.

Now there is a material fact (did AA change how they treated the cabineers since the audit years they got off on?), so all we have is partial summary J: does Tax Court have jurisdiction?

You may well ask whether or not SECC Corporation settled IRS’ hash. But not a whit dismayed, IRS tries again–and loses.

IRS hangs its fifty-mission-crush on Section 7436(a), but wants to ignore Section 7436(a)(2), which specifically mentions RA ’78 Sec. 530 determination. IRS claims neither Section 7436(a)(1) nor Section 7436(a)(2) gives Tax Court jurisdiction.

Judge Paris doesn’t care about (a)(1), but says Tax Court has jurisdiction under (a)(2).

“As the Court has noted previously: ‘[I]n response to the expressed intent of Congress to provide a convenient, prepayment hearing, this Court and the Courts of Appeals have given the jurisdictional provisions a broad, practical construction rather than a narrow, technical meaning.’ Therefore, where a statute is capable of various interpretations, the Court is inclined to ‘adopt a construction which will permit the Court to retain jurisdiction without doing violence to the statutory language.’” 144 T. C. 2, at p. 13. (Citations omitted).

You can see there’s turbulence ahead for IRS.

There’s a four-part test for Section 7436 relief, and AA has it all. There’s an audit, a determination that RA ’78 Sec 530 doesn’t apply, a real controversy and an appropriate pleading. IRS caves on first and last, fights about “determination” (but Judge Paris shoots that one down based on SECC Corporation) and “controversy” (but no need for fight about employment status, only RA ’78 Sec 530 relief; read the statute, IRS).

No specific form for determination, and IRS’s deficiency notice says it all. As for statutory construction, see Caltex Oil Venture.

IRS claims that “failure to agree” by AA to IRS’ denial of RA ’78 Sec 530, which Judge Paris invokes, isn’t a determination, because it doesn’t start the 90-day petition clock running. OK, but as SECC Corporation pointed out, IRS must send a registered or certified letter that starts the clock. Taxpayer isn’t hurt until the letter is sent, so no hurt, no foul. 144 T. C.2, at p. 20, footnote 10.

Tax Court doesn’t need to decide now if AA treated the cabineers as its own employees, or whether RA ‘78 Sec 530 applies.

The issue here is: has Tax Court jurisdiction to decide that, and whatever else the parties are scrimmaging about.

The answer is “Yes.” Partial summary J for AA.

No, not Felix Mendelssohn’s Fifth, Op. 107. This is an essay by Judge Cohen on Tax Court’s power to reform a couple of Forms 872 that recite what Judge Cohen finds to be mutually mistaken dates for SOL expiry.

The opinion is Hartland Management Services, Inc., et al., 2014 T. C. Memo. 8, filed 1/12/15. The “al”s, by the way, are la famille Kunkel and another Corp. (hereinafter designated collectively as “the crew”). The crew were represented by an attorney/CPA, and IRS was auditing the crew extensively.

IRS prepared 872s for the crew, but got the dates wrong. They meant to extend the SOL for assessments for years under audit and nearing the three-year limit, but put in extending the SOL for the current year, which hadn’t even ended yet, much less was subject to audit.

The issue was the Section 6662(a) chops. The crew gave up on the deficiencies, and they weren’t small. Moreover, the case went up on stipulated facts, and the crew put in no reasonable reliance evidence.

Judge Cohen finds that Tax Court can reform the Forms 872.

First, the party asserting SOL has ultimate burden of persuasion, even though it can shift burden of proof; but if the other side (the non-asserter) can show evidence that SOL hasn’t run, the ball goes back to the asserter.

Here, “Respondent and petitioners chose not to present their cases at trial. As a result, there is no testimony to affirm, contradict, or be weighed as to the intent of the parties. Similarly, there are no relevant documents in the record that clearly state the intended taxable periods. Instead, both parties rely solely on the stipulation of facts and attached exhibits.” 2014 T. C. Memo. 8, at p. 8.

Judge Cohen: “While it is long established that the Commissioner ‘takes the risk of any defect in the documents upon which he relies as waivers’, this Court nevertheless has the power to reform Form 872 to conform to the intent of the parties. Reformation is an equitable remedy used to reframe written contracts to reflect the real agreement between the parties when, because of mutual mistake, the writing does not embody the contract intended.” 2014 T. C. Memo. 8, at p 9. (Citations omitted).

I can hear some of my readers saying “Huh? How come? I thought Tax Court had no general equitable jurisdiction.” And that’s true.

But there’s an out, and a good explanation can be found in Kelley v. Com’r, 45 F.3d 348 (9th Cir., 1995). While Tax Court hasn’t general equitable jurisdiction, so that it can extend the statutory limits of its jurisdiction to bail out someone in need, it can apply equitable principles in a case where it has jurisdiction and need not go outside the statutory stockade to apply those principles.

And here Judge Cohen does so. “The only rational interpretation is that the initial Forms 872 were implemented and signed by the parties to cover the years for which assessment was about to be barred without some form of extension. Petitioners’ conduct following execution of the forms was consistent with this intent. Not only did petitioners act as if the period of limitation… had been extended, but they also had negotiated for months and months with the IRS regarding the disputed years and, through their counsel, knew that the disputed years would be the only logical years for extensions at the time respondent made the requests. We conclude that the parties’ intent was to extend the period of limitation for the disputed years.

“Accordingly, we hold that respondent has established by clear and convincing evidence that petitioners intended to extend the period of limitation for the disputed years and that the initial Forms 872 may be reformed to conform with the intent of the parties. As a result, respondent’s notices of deficiency are not barred as untimely under the period of limitation.” 2014 T. C. Memo. 8, at p. 14.

Notwithstanding that the crew had an attorney/CPA onboard, they put in no reasonable-reliance-on experts defense. I find this strange, but hey, it’s what that great New York scholar Prof. Siegel of Albany Law School called “S.E.C”–Someone Else’s Case.

Let IRS be so advised. And who better so to advise than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Indefatigable, Indomitable, Irrepressible, Illustrious (but never Inscrutable) Foe of the Partitive Genitive, Judge Mark V. Holmes?

Judge Holmes tells it in the plainest words possible: “The Court urges the IRS to make this index comprehensible to a nonlawyer.” Order, at pp. 1-2.

If desirous of perusing Judge Holmes’ direction and the bases therefor, the reader is directed to Estate of Antonio Santillan, Deceased, Marcos Santillan, Special Administrator, Docket No. 9848-13L, filed 1/9/15.

It’s a CA-based petition from a NOD, which means “record rule”. For those tuning in late, the “record rule” is the contrapositive of the old Yellow Pages slogan: “If it’s not in here, it’s not out there”.

So all Judge Holmes can consider is what Appeals had before it. And the question in advance of judicial review is “what did Appeals have before it?” Marcos and IRS should agree, but if they can’t, IRS should give Marcos a list of what IRS claims Appeals had before it…in people language.

Then Marcos can fight about what documents weren’t before Appeals that IRS claims were, and what documents were before Appeals that IRS left out.

Of course, if Marcos and IRS can’t agree, Judge Holmes will sort it out at the hearing.

Anyway, Judge Holmes “…will also hear at that time any arguments from both parties about whether or not the IRS did abuse its discretion in upholding the lien, and about whether there is any reason to send the case back to the IRS for reconsideration because of new evidence or a change in circumstance since the collection due process hearing was held.” Order, at p. 2.

Judge Holmes loves remands (see my blogpost “Back to the Future”, 8/1/11) almost as much as he loves Chenery (see my blogpost “He Loves Chenery”, 12/17/14).

But he loves writing like a human being even more. And inciting others to do likewise.