In Uncategorized on 01/18/2017 at 16:38

No, not the engraftment of words by Jerry Livingston and Paul Francis Webster onto an old English folk tune. This is a designated hitter from the wordprocessor of Judge James S. (“Big Jim”) Halpern, retailing the plight of James L. (“Poor Jim”) McCarthy, Docket 21940-15L, filed 1/18/17.

Poor Jim was nailed for criminal restitution to the extent of about $1.2 million in USDC, and an order entered. Pursuant to the terms of said order, Poor Jim has to repay the whole thing in installments… of $1000 per month. While I am no Dr. Stephen Hawking, my mathematical skills tell me it will take poor Jim about 100 years to pay off the $1.2 mil.

IRS claims Poor Jim has assets held in trust, so bounces a proposed OIC and a proposed IA.

“As part of his CDP hearing, petitioner proposed an offer-in-compromise (OIC) under which he would pay $2,500 per month for 96 months in addition to the $1,000 monthly payments he was already required to make in satisfaction of his restitution obligation. Respondent’s Appeals office rejected petitioner’s OIC on the ground that it did not provide for full payment of petitioner’s court-ordered restitution within the 24-month period that respondent allows for periodic payment OICs. After the rejection of his OIC, petitioner proposed as a collection alternative an installment agreement under which he would make monthly payments of $3,000. Respondent’s Appeals office rejected that proposal as well, on the ground that it did not account for assets that, respondent alleges, are held by a trust as nominee for petitioner.” Order, at p. 2.

Both IRS and Poor Jim want partial summary J on abuse of discretion as regards the OIC.

Judge Big Jim has two problems wit’ that, as we say on my Lesser Outlying US Island. The lesser is the assets-in-trust, which is a question of fact.

The greater is whether it is an abuse of discretion when, having discretion, one can never exercise it. See my blogpost “Who Would These Burdens Bear,” 12/6/15, specifically the second part dealing with Quality Software Systems, discussed by Judge Big Jim.

“As we understand respondent’s position, no OIC that petitioner could have made would have been acceptable under the Internal Revenue Manual guidelines on which respondent relies. Petitioner could not have fully satisfied his restitution obligation within 24 months without substantially modifying the terms of the District Court’s restitution order. It thus seems that, under respondent’s position, no taxpayer who is obligated to pay tax-related criminal restitution over a period of more than 24 months can submit an acceptable offer to comprise that taxpayer’s non-restitution liability for the tax periods to which the restitution relates. We question how a policy allowing for the exercise of discretion that, as a practical matter, will never be exercised, regardless of the surrounding circumstances, can be other than arbitrary.” Order, at p. 2.

But neither IRS nor Poor Jim had read either Judge Big Jim’s explication of the conundrum aforesaid in the Quality Software case, nor my sermonette thereon. So they didn’t brief the issue.

Wherefore no summary J on that point.

And the fact question about assets-in-trust may moot the whole thing.



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