STJ Lewis (Oh, the grandeur of that name!) Carluzzo echoes the words of The Man From Bombay from the latter’s Boer War epic, as he regretfully dispatches Lowell William Fryman, Jr. & Elizabeth A. Fryman, Docket No. 15085-10S, an off-the-bencher filed 5/5/15, an unhappy Cinco de Mayo for Low Will and Elizabeth.

Low Will and Elizabeth, relying on legal advice, didn’t bother to put in evidence concerning the SNOD that got them before STJ Lewis. That’s because they expect their bankruptcy discharge makes whatever debt they owe IRS go away.

IRS says no, but that’s not the point.

“We find that petitioners maintained their bankruptcy argument in good faith, but they are mistaken with respect to their expectation that this Court in this proceeding would decide whether any tax liabilities assessed as a result of the decision to be entered in this case are subject to the relevant bankruptcy discharge order. See Neilson v. Commissioner, 94 T.C. 1 (1990). Our role in this proceeding is to redetermine the deficiencies determined in the notice. See Section 6213(a). We cannot in this case consider what effect, if any, the relevant bankruptcy discharge order has on those deficiencies or subsequent tax liabilities.” Order, at pp. 5-6.

Maybe a CDP might yield a different result (doubt as to collectibility?), assuming IRS’s doubts as to discharge can be dispelled. But that’s not the case here.

Low Will and Elizabeth have the burden of proof in a redetermination of deficiency case. They need evidence, whether or not they got “a discharge in this war.”

“That did not happen in this case. Instead, confident that their … federal income tax liabilities were, or would be discharged as a result of the bankruptcy proceeding, petitioners ‘put all of their eggs in one basket’, so to speak.” Order, at p. 7.

Even though Low Will and Elizabeth acted in good faith, that avails them not.

Deficiencies sustained.

Takeaway– Practitioners, beware. There is no discharge in this war. Tax Court has not the broad jurisdiction of Article III Courts.