In Uncategorized on 04/18/2017 at 14:01

I fancy myself a punster. But a trilingual pun is a summit I rarely achieve. Today, however, the enduring nature of the Second Circuit’s decision in Chai v. Com’r, 851 F.3d 190 (2 Cir., 2017), is my springboard to gold in the punster’s Olympics, claiming a pun in Chinese, Hebrew and English.

You remember Jason Chai, of course, A. Beer’s cousin-in-law and frontman. No? How fleeting is fame. OK, dig my blogpost “The Jersey Bounce – Part Deux,” 3/22/17, and accelerate from the “on” ramp to the fast lane.

Well, Jason had his day in court while cousin-in-law A. Beer and cohorts were getting slammed for their shelter-flogging. But Jason’s Second Circuit score off the failure of the Section 6751(b) Boss Hoss signoff to justify the chops inflicted upon him came after cousin-in-law and cohorts finished their trial, with chops hanging over their collective heads, and not a mention of the Section 6751(b) to meliorate their plight.

And no decision has yet issued from the week-long trial two years ago.

Judge Lauber deals with inventive counsel in Endeavor Partners Fund, LLC, Delta Currency Trading, LLC, Tax Matters Partner, et al., Docket No. 8698-12, filed 4/18/17.

The boom about to fall, counsel files a status report, reminding Judge Lauber of Second Circuit’s blow-off of ex-Ch J Michael B (“Iron Mike”) Thornton’s dictionary-tear.

“In their status report, however, petitioners do not simply bring this supplemental authority to the Court’s attention. In addition, they advance a new argument–that the accuracy-related penalty determined by respondent in these cases should not be sustained because respondent did not meet his burden of production to show written supervisory approval for the penalty, as the Second Circuit in Chai interpreted section 6571(b)(1) to require. But regardless of which party bears the burden of demonstrating compliance with section 6751(b)(1), petitioners ‘had the responsibility of arguing in the Tax Court that the Commissioner had not complied with the statute in order to put the Commissioner on notice that the issue was in dispute.’ Kaufman v. Commissioner, 784 F.3d 56, 71 (1st Cir. 2015) (emphasis in original). As far as the Court has been able to determine, petitioners did not make this argument in their pleadings, during trial, or in their post-trial briefs.” Order, at p. 1.

Irrespective of the outcome of this ploy, I give counsel a Taishoff “good try, first class.”

And I note counsel is a fellow member of the ABA/NYSBA Tax Subcommittee on the Taxation of Cooperatives and Condominiums, s/a/k/a Charlie’s Pizza Party. Really good job, EZ.

Now of course one doesn’t make motions by means of status reports. EZ came in through the window immortalized by Sir Paul McCartney in 1969. Judge Lauber wants him to enter through the front door, so he must move to amend his pleadings.

And of course The Jersey Boys, who litigated Chai, raised the Boss Hoss issue in their initial post-trial brief, whereas EZ came somewhat tardily to the feast. So IRS gets a chance to bewail the same.

“If petitioners do file a motion for leave as described above, we will give respondent an opportunity to respond to that motion. Together with any such forthcoming response, respondent may file, if he deems it appropriate, a motion to reopen the record for the purpose of including any documentary or other evidence relevant to the question of whether supervisory approval within the meaning of section 6751(b)(1) was secured for the penalties at issue in these cases. If we do grant one or both of these motions, we will then order supplemental briefing on the requirements that section 6751(b)(1) imposed on respondent and whether he satisfied them.” Order, at p. 2.

So move, EZ, and best of luck.


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