Attorney-at-Law

GRAPE OF WRATH

In Uncategorized on 11/02/2016 at 18:00

As Christina M. Fitzpatrick was taking care of her desperately-ill son (and developing spinal stenosis by lifting him unaided), her husband imitated the man going to Jericho, and became an investor in a wine bar called Grape.

Although supposedly an equal partner, husband was supposed to be a passive investor. Christina, who finished high school and had minor business experience, opened the corporate bank account, signed checks when told, and delivered them when received from the payroll company.

Husband’s partner hires hotshot operator who runs Grape into the terroir, of course neglecting the quarterlies.

IRS’ bulldog, doing a cursory examination (relying on dubious e-mails from hotshot; no this is a non-political blog) and figuring Christina might have a few shekels, hits her with TFRPs.

The case is Christina M. Fitzpatrick, 2016 T. C. Memo. 199, filed 11/2/16.

Judge Vasquez has heard Christina and husband, and partner and hotshot. He reverts to his favorite saying:”… the process of distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, is the daily grist of judicial life.  We are not required to accept testimony if it is improbable, unreasonable, or questionable.  MacGuire v. Commissioner, 450 F.2d 1239, 1244-1245 (5th Cir. 1971), aff’g T.C. Memo. 1970-89.” 2016 T. C. Memo. 199, at pp. 20-21.

Judge Vasquez is surprised that partner and hotshot escaped unscathed at the administrative level, but the RO on the case was less than thorough. “RO W determined during this phase that petitioner was a responsible person (1) because of her alleged status as secretary of the corporation, (2) because she signed checks, and (3) because a ‘review of her financial statements shows equity in assets reflecting collection potential’.  However, we believe RO W did not conduct a thorough investigation.  For instance, RO W made her determination before she received and reviewed the relevant bank records.  She also failed to interview (or summon) Mr. partner, the president of the corporation. See Robert E. McKenzie, Representation before the Collection Division of the IRS, sec. 5.66 (2016) (‘The IRS normally begins its investigation of the * * * [TFRP] by interviewing corporate officers.’).  After reviewing the administrative record, we also believe that RO W was actively misled by Mr. hotshot regarding petitioner’s role at the business.” 2016 T. C. Memo. 199, at p. 24, footnote 24 (Names omitted).

There’s more, but that’s enough for now.

Why IRS was persuaded to take this case to trial, and put three (count ‘em, three) of their trial attorneys on this, eludes me. Did anybody bother to sweat the witnesses, or examine the documents?

 

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