I mean STJ Daniel A. (“Yuda”) Guy, who’s giving a slight judicial nod in the direction of us EAs, in James E. Kaminski, 2015 T. C. Sum. Op. 7, filed 2/3/15, a day when only small-claimers are being run.

James E.’s problems are the usual unsubstantiated deductions and dodgy travelogs, that stumble at the Section 274 fence. He does get some of the cellphone largesse handed out by the Small Business Jobs Act of 2009, even though some of the calls were to his insurance client who later became his wife; James E. is an insurance salesman, and he must sure throw a good sales pitch.

Eventually, Judge Yuda does a mix-and-match, but James E. is still in five-and-ten penalty trouble when the numbers sift out.

James E. relied on his trusty accountant, JRB. JRB is not a CPA. Now that is usually “game over” for any preparer whose efforts come before Judge Yuda; remember poor Charlene M., an H & R Blocker who was not a CPA, and received short shrift from Judge Yuda? No? Then see my blogpost “It Depends”, 10/22/13.

But JRB was an EA, having “…passed the Internal Revenue Service (IRS) examination for enrolled agents in 1992 and has been in the business of preparing tax returns for nearly 40 years.” 2014 T. C. Sum. Op. 7, at p. 7.

Well, leaving out the quibble that the Special Enrollment Examination (the EA exam) is administered by Prometric, a subsidiary of Educational Testing Service (which administered what was known in my young day as the college boards), Judge Yuda does admit “(S)tatus as an enrolled agent may tend to show competence as a tax professional. An enrolled agent is an individual who has displayed ‘special competence in tax matters’. 31 C.F.R. sec. 10.4(a) (2007).” 2015 T. C. Sum. Op. 7, at p. 17. (Citation omitted).

Thanks, Judge.

But I’m not through. Judge Yuda suggests that JRB was a wee bit casual in examining James E.’s dodgy logbooks. Well, again citing 31 C.F.R., this time 31CFR§10.34(d):

“A practitioner advising a client to take a position on a tax return, document, affidavit or other paper submitted to the Internal Revenue Service, or preparing or signing a tax return as a preparer, generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete.”

Perhaps JRB should have studied James E.’s logbooks more closely. But did he ignore implications? That’s a big step. EAs work for taxpayers, not IRS. We are not RAs, ROs or their managers.

EAs are on the front line. It’s a long way from there to 400 Second Street, NW.