In Uncategorized on 05/10/2016 at 14:32

For the first movement of this piece, see my blogpost “Reformation Symphony,” 1/12/15. And I bring you this second movement courtesy of Mr. Greg Barton, eagle-eyed case spotter at a Big Four accounting firm.

The principal soloists are Craig J. Kunkel, Kim M. Kunkel, and Integra Engineering, Ltd., and of course the contrapunctist is our old friend the Com’r. Conducting this ensemble is Seventh Circuit Judge Easterbrook.

You remember that Judge Cohen corrected a serious typo in a Form 872 SOL waiver, utilizing some fancy equitable jurisdiction that puzzled me.

Judge Easterbrook: “In this court, Taxpayers concede that the Tax Court has authority to reform a waiver, no matter how explicit the form’s language. But they say that the Tax Court may do this only if clear and convincing evidence shows the taxpayer’s true intent—and, since neither Taxpayers nor the IRS offered evidence from the persons who filled in the blanks and signed the forms, it is impossible to meet that standard.” Kunkel, No. 15-2232, filed 5/10/16, at p. 4.

Nice try, Kunkels, but the cases you cite rely on LA law. The Supremes have said many times that, when there’s money on the table, preponderance of the evidence is then the standard.

When the Kunkels try to argue that “true intent” of the parties governs, Judge Easterbrook goes back to objectivity.

“This means that the parties’ intents matter only to the extent that they are expressed to each other. When considering parol evidence a court looks to documents, and sometimes to oral exchanges, but never considers either side’s private thoughts and hopes. So the Tax Court did not need evidence about what B thought, or about what the person who filled in the blanks (whoever that was) believed would occur. Neither side has suggested that there is any evidence about documents or words exchanged between Taxpayers (or B) and the IRS.” Kunkel, at p. 5. (Name omitted.)

By the way, B was the Kunkels’ highly-credentialed attorney/CPA tax whiz.

Therefore the attempt at humor in the Kunkels’ brief on appeal meets with the usual scorn Seventh Circuit bestows upon all would-be wits and wags, not even sparing Tax Court judges.

“Taxpayers’ brief speculates that B thought that he was playing a practical joke on the IRS by signing without alerting it to the scrivener’s error. This seems unlikely; the adverse effect on B’s professional reputation could have been substantial. If the IRS came to conclude that B had tried to hoodwink it, he might find his credentials as a tax representative pulled. The best way to understand what happened is the way the Tax Court did: A typist misread the file, entering the dates on which limitations periods would expire rather than the dates on which the tax years ended, and then everyone else missed that error. We see no clear error or abuse of discretion in that conclusion.” Kunkel, at p. 5. (Name omitted.)

But the foregoing should not be deemed or construed to imply that Seventh Circuit wholly lacks a sense of humor.

“We are conscious of the irony in allowing the IRS to collect a 20% penalty for the errors in the Kunkels’ 2008 return, when the IRS has made an error of its own.” Kunkel, at pp. 5-6.

How nice to note that Judge Easterbrook picked up on my concluding comment in the hereinabove cited blogpost. “But the Kunkels have not asked us to compare the degrees of fault or to set aside the penalty, if the assessment was timely.” Kunkel, at p. 6.

Thanks again, Mr. Barton.

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