Habakkuk was lucky; he had Divine sponsorship. I make do with what little I’ve got.

But we both share a mandate: “Write the vision, and make it plain upon tables, that he may run that readeth it.”

With this blog, I’m trying to talk about taxes, principally as found in the US Tax Court, with clarity and brevity. I’m not writing law review articles. I’m not writing for the trade press. I presume anyone reading any blogpost here has the ability to read for themselves the decision, opinion, order or press release, which is the subject of the blogpost.

Therefore, I have no reason to expatiate on details. Likewise, I will not quote in extenso unless the quoted matter is essential. As aforesaid, y’all can read for yourselves.

Prof. Danshera Cords has nothing to fear from me: I have no intention of writing a treatise on Tax Court law and practice.

Nor am I trying to cover the entire spectrum of US taxation. It would take a Bloomberg to do that.

But a good deal of what happens in the Glasshouse at 400 Second Street, NW, and its far-flung outposts across this great land never makes it to the law reviews, the trade press and the blogosphere.

So I’m here. And I’m writing for the running readers.

Or, Judge Holmes’ Revenge

What’d I do to deserve this? C’mon, Judge, can’t ya take a joke (or two or three or fifty)?

A Friday afternoon, before a three-day week-end, the official start of the summer, and Judge Holmes unloads an 18 (count ‘em, 18) page dissertation on Ch 13 of the Bankruptcy Act in the guise of an order, and an undesignated one at that.

I, poor blogger, am left to deal with this megillah, after I read through 110 orders of the “pay the sixty bucks” or “yer auf’d, no jurisdiction” variety. Then I hit this gem. And the only designated hitter today was STJ Daniel A (“Yuda”) Guy unloading on a frivolous UPS driver while his spouse gets innocent spousery.

Gimme a break!

OK, so here’s Chang D. Bullock, Docket No. 11182-09L, filed 7/1/16.

IRS is trying to grab some of Chang’s $8K per month wages, but Chang got a Ch 13 wage earner plan confirmed. Chang yells automatic stay, but IRS says there’s wages not allocated to the plan to pay back the pre-petition creditors, like them. There’s a four-way split between various courts, a three-way split in the Circuits, and the Supremes were only partly helpful last year.

Ch 13 is a breathing-room help to struggling debtors. They keep their assets but have to pay back creditors over a limited timeframe. And get back whatever’s left at close of play if they have performed under the plan, whereas a Ch 7 liquidation is a sell-all-thou-hast.

The question is what happens with assets (like wages) acquired while the Ch 13 plan is churning away.

Chang got dumped in a CDP over pre-petition taxes issued after Chang filed his Ch 13 petition. He claims his post-petition wages are his, not IRS’s, and IRS is prevented by the automatic stay from going after them.

There’s a hole between 11 USC 1306 and 11 USC 1327. There are four ways to unscramble this. One writes 1306 out of the Bankruptcy Code (termination), the other writes down 1327 to uselessness (preservation), another tries a Solomonic slice-the-baby that raises more questions than it answers (transformation), and finally (ta-da!) a mechanical approach called “reconciliation.”

The Supremes blew off both termination and preservation, but didn’t get to transformation or reconciliation. However, in order to bring some sort of conclusion to this case, notwithstanding the difficulties likely to arise in future cases, the flavor du jour is reconciliation.  The post-petition wages are part of the bankruptcy estate.

If discussing the number of Urim doing the mambo on the head of a proton floats your cliché, this is your kind of stuff. Or if you’re a law reviewnik who needs a winning headnote, stop in here.

But does Chang get summary J? He wants it, plus legals and admins. IRS wants it, but is clearly trailing down the stretch.

Here’s the finale.

“11 U.S.C. section 362’s automatic stay — the provision that fences in debtor’s property and handcuffs creditors — is what would render the Commissioner’s notice of determination null and void. It can trip up a creditor up in a number of ways. And while the Commissioner doesn’t have as many obstacles as other creditors — no matter the timing of the tax debt, 11 U.S.C. section 362(b)(9) permits him to issue a notice of deficiency, assess of tax [sic], and even demand payment — he too must navigate the automatic stay’s general prohibitions when issuing a notice of determination. Although most of these prohibitions apply to pre-petition debt, the bankruptcy petition also stays ‘any act to obtain possession of property of the estate * * *.” 11 U.S.C. § 362(a)(3). This is a two-part test; the first part easy, the second beguiling: The notice of determination is invalid if (1) it is ‘an act to obtain possession of property’ and (2) the property is ‘property of the estate.’

“We’ve previously held that under 11 U.S.C. section 362(a)(1), a notice of determination is a continuation of an administrative action against the debtor to recover a pre-petition claim. While it’s true that the tax at issue here is a post-petition claim and thus 11 U.S.C. section 362(a)(1) doesn’t apply, we are satisfied that a notice of determination is also an ‘act to obtain possession of property.’ The notice is no courtesy letter; it’s a step the Commissioner must take to get at Bullock’s wages. See I.R.C. § 6330(e) (‘In no event shall* * *[the Commissioner levy on property] before the 90th day after the day on which there is a final determination in* * * [a CDP hearing].’). Because we’ve concluded that Bullock’s post-confirmation wages are property of his chapter 13 bankruptcy estate, the Commissioner’s notice of determination is an act to obtain possession of estate property under 11 U.S.C. section 362(a)(3). It therefore violated the automatic stay. “ Order, at pp. 17-18. (Emphasis by the Court). (Citations omitted).

So summary J for Chang?

Nope. The NOD from the CDP is invalid as violative of the automatic stay, thus no jurisdiction.

I often hear from colleagues, whose practices take them far from the realms of gold that comprise taxation, how dull and drab it must be to follow and blog hypertechnical, dry-as-dust discussions, where statutes and regs become numbers, and names of cases are flung about, all creating a meaningless miasma.

Well, it is that at times, but then it has a moment like this, a designated hitter off the bat of Judge Holmes. And I was so stunned when I read this yesterday I saved it for today, and even omitted Judge Holmes’ honorifics.

It looked like a routine SNOD. David M. Sweetman & Laura L. Sweetman, Docket No. 20268-12, filed 6/30/16. There were a couple motions (hi, Judge Holmes) pending, to dismiss or continue.

I’ll just print the order. To clarify what follows, McFarlane is attorney for Laura E. Sweetman, and Marble (phonetically “Marvel” below) is attorney for IRS.

“This case was on the Court’s… trial calendar for Phoenix, Arizona. When it was called, Mr. Sweetman did not appear. Dr. Sweetman also did not appear, but a lawyer whom she’d retained before her untimely death did. When the Court asked him about whether an estate or intestate administration had been set up, he replied

“Yes. She was a young lady. She came in. She, you know, we met, and two weeks later I get a call from her divorce attorney and said she died. We think that there was foul play. It’s being investigated.

“THE COURT: Wow.

“MR. MC FARLANE: Yeah, I know.

“THE COURT: And they let the body out for cremation? She was a neurologist.

“MR. MARVEL: I thought this was a simple substantiation case, Your Honor.

“THE COURT: She was in divorce proceedings?

“MR. MC FARLANE: Yes.

“THE COURT: Oh, now I can see where that’s going then.” Order, at pp. 1-2.

Well, a couple years pass (hi again, Judge Holmes), there’s still no estate or conclusion to any criminal investigation into the death of Dr. Sweetman, so Judge Holmes holds the motions in abeyance and punts the case back to the general docket.

Wow, indeed.

Once upon a time, a well-known New York clothier had a slogan that said in substance, “Select, don’t settle.” That slogan, somewhat mutated, was developed by various jurists into “Select or settle.” That meant to counsel either pick a jury and go to trial, or come back with a stipulation of settlement.

Well, Tax Court has no juries, but The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Imperturbable, Indefatigable, Illustrious, Incontrovertible, Ineluctable, Impeccable and Ineffable Foe of the Partitive Genitive, His Honor Judge Mark V. Holmes, has similar advice for Linda J. Martin & John A. Martin, Docket No. 10115-15, filed 6/30/16, in a designated hitter, no less.

But what happened next is a surprise, although not as big a surprise as my next succeeding blogpost. Stay tuned.

“This case was on the Court’s…trial calendar for Los Angeles, California. The Martins were not prepared for trial, and the Court stressed to them that they needed to get their case moving. We imposed a pretrial order and they met the first deadline — one for an entry of appearance for their new counsel. “ Order, at p. 1.

So buckle down, new counsel.

Except clients, bless them, resemble certain sheep.

After new counsel was on board and headed up to the bridge, “…they filed a pro se motion to shift the burden of proof.” Order, at p. 1.

I once had a corporate officer, sitting beside me at counsel table to handle the voluminous exhibits, decide to ask a question of the witness in the middle of trial.

The Judicial Hearing Officer, with a sense of humor and rare aplomb, interjected sotto voce, “pro haec vice.”

I turned to the corporate officer and said calmly, “I’m going home.” This implied he could try the case.

He apologized.

Judge Holmes just tossed the motion, as IRS requested, “…because once a party is represented he must speak to the Court through his lawyer, who also becomes responsible for the quality of such filings as the Martin’s motion. See Traficant v. Commissioner, 884 F.2d 258, 264-65 (6th Cir. 1989).” Order, at p. 1.