Judges, even Tax Court Judges, are, after all, human. So despite IRS’s inveighing against remands to Appeals (see my blogpost “Demand For Remand”, 12/3/12), judges may find an incomplete record sufficient to punt a particularly heartrending case back for another chance for relief to the overburdened taxpayer.

Today it’s Judge Marvel, with IRS’s redoubtable test-taker John Schmittdiel leading for IRS (for an account of Mr. Schmittdiel’s scholastic prowess, see my blogpost “Go To The Head of the Class”, 3/26/14), in Kevin R. Gurule and Dawn M. Gurule, 2015 T. C. Memo. 61, filed 3/31/15.

Briefly, Kev and Dawn went through many trials and tribulations. Dawn has a neurological problem that prevents her from working. Kev moved from Minnesota to Missouri, lost his job, moved back, and their home got foreclosed. Then one of their sons died, and they can’t afford to put his ashes in a columbarium.

Kev borrowed against his 401(k)s, couldn’t pay his taxes, so he wound up in front of an SO whose approach was somewhat casual.

Kev and Dawn wanted an OIC based upon doubt as to collectibility. Kev found a job but had to repay his 401(k) loans. The SO said that Kev was repaying himself, and therefore the 401(k) is a dissipated asset. So Kev’s RCP is greater than he claims, and his OIC and installment offer are too low, so:

“Respondent contends that petitioners are not entitled to any adjustment to their monthly net income because petitioners are essentially repaying a loan to themselves and allowing an adjustment would result in double counting the section 401(k) plan account encumbrances. Respondent further avers that petitioners may not receive a reduction in the net realizable equity of the section 401(k) plan account because the additional loans Mr. Gurule took are ‘dissipated assets.’ 2015 T. C. Memo. 61, at p. 29.

Now it’s OK for IRS to ignore 401(k) loans in figuring RCP, to prevent wiseguys (and gals) from draining their 401(k)s without paying tax, and dispersing the money. The SO relented, though, as to some of the 401(k) loans, because Kev needed them for Dawn’s medicals and his son’s final illness.

But the SO got the arithmetic wrong, and the case summary just throws the loans out without stating why there was dissipation.

And the SO apparently didn’t consider the special circumstances of Kev’s and Dawn’s plight.

The record is therefore too scanty for Judge Marvel to decide that IRS followed all the laws and regulations that Section 6330(c)(1) requires IRS to follow.

Besides, I have a feeling Judge Marvel didn’t want to cast Kev and Dawn into outer darkness of the NITL after recounting their tale of familial woe.

So Judge Marvel punts Kev and Dawn back to Appeals to consider hardship, special circumstances and make a clearer record.