In Uncategorized on 02/17/2015 at 16:29

When it comes to deficiencies, there are two kinds of dismissals from Tax Court: want of jurisdiction, and everything else. Everything else includes, but is not to be deemed or construed in any way as limiting or abridging the generality of the foregoing (as my paid-by-the-word colleagues would say) lack or want of prosecution, or failure to state a claim.

See 26USC§7459(d): once Tax Court’s jurisdictional octopus has grasped the petition from a SNOD, the only way out is a win for the petitioner or a win for the IRS. No second-place winner.

So, on a day when teletubbying is the only show in snow-shrouded 400 Second Street, NW, Ch J Michael B. (“Iron Mike”) Thornton delivers the only order (!) on the Tax Court Board today; and it makes the distinction clear.

Even when the petitioner is dead, the basis of dismissal matters very much. See John L. Madden and Edna E. Madden, Deceased, John L. Madden, Surviving Spouse, 10989-14S, filed 2/17/15.

Edna, intestate, had gone to “a far, far better rest” when the SNOD arrived, but the SNOD was directed both to John L. and the late Edna. John L. timely sent in the petition. Unsigned. But he ratified it.

Ch J Thornton expatiates: “Hence, given that the death occurred prior to the filing of petition instituting this proceeding, and no fiduciary has been duly appointed by a court of competent jurisdiction, the record suggests that this case should be dismissed for lack of jurisdiction as to Edna E. Madden, Deceased. Conversely, the provisions of Nordstrom v. Commissioner, 50 T.C. 30 (1968), involving dismissals for lack of prosecution, would appear to be inapplicable.” Order, at p. 1.

So Ch J Thornton orders the parties to show cause why the petition should not be dismissed as to the late Edna.

As it is, John L. can fight on. And IRS can try to levy on whatever the late Edna left behind (which probably isn’t much, as there was no rush to appoint a personal rep).

But if the late Edna had died post-filing, and no personal rep continued the fight, then dismissal for want of prosecution would result in decision against the late Edna’s estate for the entire amount of the deficiency.

Takeaway– Might be a good idea to apply for letters, just in case, maybe to raise innocent spousery.

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