That’s the sad plight of Steven N. Levi & Cristina Levi, Docket No. 10903-13, filed 7/6/15. Now I’ll bet you thought their troubles were over after you read my blogpost “Utterly Powerless,” 6/29/15, wherein Judge Dawson wiped out the MFJ 1040 filed by Ms. S., the attorney for Steve & Cris, which neither Steve nor Chris signed.

But wait, there’s more! Judge Dawson isn’t finished with Steve and Cris, because IRS isn’t finished with them either.

IRS asked for info on Steve’s health insurance and dog-breeding business, not one word of which appeared in the SNOD, or in the Answer or Amended answer.

So what is left to decide? A lot, says Judge Dawson. Even though the return isn’t valid, there is still a deficiency. A deficiency, remember, is the difference between what the taxpayer owes and what the taxpayer paid, not the difference between what’s on the return and what the taxpayer owes; that’s another issue, which can encompass, inter alia, as my white-shoe-wearing colleagues would say, fraud, underwithholding, and self-assessed-but-unpaid chops.

Judge Dawson goes back to 1956 to find that Fourth Circuit said Tax Court can determine a deficiency even where the return is invalid, and even when Tax Court thought it couldn’t. And Judge Dawson marches down the sands of time to the present, strewing “copious citations of precedent” over two pages to establish that Tax Court has jurisdiction to inflict other and further pain on Steve & Cris.

But the only deficiency before the Court is what IRS put in the SNOD, before the health insurance and dog-and-pony show.

So IRS should file a motion to amend the amended answer, and lodge (that is, submit) their proposed amendment to the amendment to the answer.

And remember, IRS, “Rule 41, Tax Court Rules of Practice and Procedure, governs amended and supplemental pleadings. Rule 41(a) covers amendments generally and provides in effect that after a responsive pleading is served or after 30 days if no responsive pleading is permitted, ‘a party may amend a pleading only by leave of the Court or by written consent of the adverse party’. Whether to grant leave to file an amendment to answer is a matter within the sound discretion of the Court, and the disposition of such a motion turns largely on whether the matter is raised timely so as not to unfairly surprise, disadvantage, or unduly prejudice the taxpayer.” Order, at p. 3.

So, IRS, if you want to do it, get on your bike, and Steve & Cris, have your opposition ready.

Of course, Judge Dawson did not designate this order. Heaven forfend that valuable practical information should ever find its way to the in-the-trenches preparer and adviser.

But have no fear, gang: Taishoff is here!