Attorney-at-Law

THE PHONE CALL – WRONG CALL

In Uncategorized on 07/26/2016 at 16:51

I’ve said it here often: I like conferences with the judge. If face-to-face, it lets me put a sympathetic face on my client (who may well need it). But even a teleconference lets me get a quick peek at the judge’s thinking, and spot any favorable view of my adversary’s case, or flaw in my own, that I need to counter.

But beware of picking up a judicial off-the-cuff as a hot tip, and altering your litigating position accordingly.

Case in point: an attorney I’ll call Harry, who narrowly dodges a Section 6673(a)(2) delay-of-the-game chop, in Pamela Hardin, Petitioner, and Robert H. Lattinville, Intervenor, 2016 T. C. Memo. 141, filed 7/26/16.

While Pam and Rob were still married (the years at issue), their MFJ 1040s were prepared and e-filed by Pam’s preparer, whom IRS finds to be a creative writer. And the only issue for Judge Chiechi is whether Pam gets Section 6015(f) equitable innocent spousery for the heavy-duty deficiencies said creative preparer unleashed upon her.

Pam was a CFP and money manager who ran a big-time money-management operation with a 99% client retention rate and hundreds of millions under management. Rob was a lawyer who minded his own business and only got hit for some relatively small creativity with respect to the K-1s he got from his law firm. Like Kay Corleone, he never asked about his spouse’s business.

IRS gave Rob only his own bad news, and gave Pam all the heavy lifting from her preparer’s creativity respecting her business.

Pam petitions. She never mentions spousal abuse or the disallowed deductions underpinning the SNOD, only that IRS shouldn’t have let Rob off the hook. IRS moves for summary J, saying Tax Court has no jurisdiction to decide what IRS gave Rob.

Judge Chiechi holds a teleconference. “…the Court held a telephonic conference… with petitioner’s counsel, intervenor’s counsel, and respondent’s [IRS’] counsel.  During that telephonic conference, the Court advised respective counsel for the parties that it does not have jurisdiction to address petitioner’s allegation in the petition that respondent erred in granting relief to intervenor under section 6015(c).  The Court further informed respective counsel for the parties during the… telephonic conference that it would deny respondent’s motion for summary judgment without prejudice and entertain a motion by petitioner for leave to file an amendment to petition or an amended petition.” 2016 T. C. Memo. 141, at p. 18.

Harry and Pam get creative their own selves.

“…petitioner filed a motion for leave to file amended petition and lodged an amended petition.  … the Court granted that motion and had petitioner’s amended petition filed as of that date.  In that amended petition, petitioner alleged that she is entitled to relief under section 6015(f) for each of the taxable years… because she was abused by intervenor and was not able to challenge the treatment of any items in the joint returns in question for fear of intervenor’s retaliation. …respondent filed an answer to the amended petition.  In that answer, respondent denied the allegations in the amended petition in support of petitioner’s claim to relief under Section 6015(f).” 2016 T. C. Memo. 141, at p. 19.

Pam’s case hangs on the seventh threshold provision in Rev. Proc. 2013-34, sec 4.01(7), 2013-43 I.R.B. at 399-400. Was she so abused she couldn’t object to Rob’s phony return?

“In support of petitioner’s contention that she was not able to challenge the erroneous items in question for fear of intervenor’s retaliation, petitioner relies only on her own testimony.  The Court did not find petitioner to be credible.  The Court found her testimony to be in certain material respects evasive, vague, conclusory, and/or inconsistent with certain other evidence in the record that the Court found to be credible.  The Court shall not rely on the testimony of petitioner to establish her position in this case.” 2016 T. C. Memo. 141, at p. 24 (Citation and footnote omitted, but I’ll put in the footnote.)

The omitted footnote. “Petitioner relies on her own testimony and on the respective testimonies of certain other witnesses in order to establish her claim that intervenor abused her.  At the conclusion of the trial in this case, the Court commented on the respective testimonies of those other witnesses, as well as the respective testimonies of petitioner and intervenor.  The Court will not repeat those comments here.” 2016 T. C. 141, at p. 24, footnote 9.

Judge Chiechi is not amused at using her teleconference as a springboard to bright ideas.

“We believe that petitioner’s contentions that she was abused by intervenor and that, as a result of that alleged abuse, she was not able to challenge the erroneous items in question for fear of intervenor’s retaliation were an after-thought that occurred to petitioner after the Court had informed respective counsel for the parties during the…telephonic conference that, as respondent maintained in respondent’s motion for summary judgment, the Court does not have jurisdiction to consider whether respondent should have granted relief to intervenor under section 6015(c).  Indeed, at the time of that telephonic conference, petitioner had not claimed in the petition in this case that intervenor’s alleged abuse prevented her from challenging the erroneous items in question for fear of intervenor’s retaliation.  Nor had she made that claim in petitioner’s Form 8857, in petitioner’s Form 12508, or in petitioner’s appeal during respondent’s administrative proceedings to consider petitioner’s claim to relief under section 6015.  The first time that petitioner claimed that intervenor’s alleged abuse prevented her from challenging the erroneous items in question for fear of intervenor’s retaliation was in the amended petition that the Court allowed her to file after the…telephonic conference in which it had advised the parties’ respective counsel, inter alia, that it would deny respondent’s motion for summary judgment without prejudice.” 2016 T. C. Memo. 141, at pp. 25-26.

So Judge Chiechi shows Pam the Section 6673(a)(1) yellow card.

And now the kicker.

“The Court believes that petitioner’s attorney of record multiplied the proceedings in this case unreasonably and vexatiously.  Nonetheless, the Court shall not sanction him at this time under section 6673(a)(2).  The Court cautions him that he may be subject to such a sanction if in the future he multiplies the proceedings in any case before this Court unreasonably and vexatiously.” 2016 T. C. Memo., 141, at p. 28.

The only one who should be vexatious is a US Davis Cup winner from 60 years ago.

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