Most people writing fiction hope to make money. The allure of best-sellerdom, with attached international translation and film rights, motivates the eternally hopeful to put paw to wordprocessor and hammer out the successor to Fifty Shades of Whatever.
Well, there’s a downside if you write fiction on a 1040. Here’s the tale of Giliard Schwartz, Docket No. 11996-15S, filed 5/24/16.
This is a designated hitter from The Judge With a Heart, STJ Armen. But STJ Armen has no balm for Giliard (sorry, guys).
Giliard claimed $330K in moving expenses. Except her address never changed since she previously adjusted her gross income therefor a year earlier in a much smaller amount. Her boss sent W-2s to that address, the local taxing authority billed her for the taxes there, and she filed her return for the year at issue from that address.
“Not surprisingly, petitioner’s… income tax return was selected for examination. But, neither during the examination phase of this case, nor the administrative appeal phase of this case, nor the litigation phase of this case did petitioner ever respond to requests for substantiation of her alleged moving expenses, and petitioner essentially ignored respondent’s personnel during these three phases of the case. For example, respondent’s counsel found it necessary to file a Rule 91(f) motion when petitioner refused to stipulate facts or documents as required by the Court’s Rules of Practice and Procedure.” Order, at p. 2. (Footnote omitted, but it says IRS’s asserted facts deemed admitted).
Giliard ignored IRS’s requests as above-stated. So STJ Armen set IRS’s motion to dismiss for want of prosecution for a hearing, and added, at no extra charge, a Section 6673 warning to Giliard. If she was writing fiction, that’ll cost her.
Came the trial date, and STJ Armen throws a rope to Giliard.
“Petitioner was given the opportunity of consulting with a pro bono attorney from the Tax Section of the Texas State Bar Association who was in attendance at the session to assist pro se taxpayers such as petitioner. The matter was then recalled several times. Ultimately petitioner, with pro bono counsel present, stated that she did not wish to try her case, that she would not oppose the granting of respondent’s motion to dismiss, but that she would not concede the factual allegations made in the motion regarding the fictitious nature of the alleged moving expenses. Petitioner expressly acknowledged that she understood the consequences of the Court granting the motion, i.e., that she would be liable for the determined deficiency in tax and accuracy-related penalty, as well as statutory interest. The Court then stated at length that it would grant respondent’s motion and also issue an order for petitioner to show cause why a penalty under I.R.C. section 6673 should not also be imposed. In that regard the Court made clear that such penalty would not be imposed if petitioner were able to demonstrate that there was some plausibility or some rationality to the $330,000 moving expense deduction that she had claimed, but that if petitioner were not able to do so then the Court would impose a penalty under I.R.C. section 6673 in an amount not to exceed $25,000. Petitioner was expressly advised by the Court that if she failed to respond to the show cause order, a penalty under I.R.C. section 6673 would be imposed.” Order, at pp. 3-4.
Well, if I told you that STJ Armen hit Giliard with a $10K Section 6673 chop, could you guess whether or not Giliard replied effectively to the OSC?
Writing fiction can be expensive.