In Uncategorized on 05/26/2017 at 15:06

This phrase is more often heard among those who “breathe short-winded accents of new broils, to be commenced in strands afar remote” than those who frequent the halls of the Glasshouse at 400 Second Street, NW.

But it’s being heard more often lately.

Elizabeth M. Jacobson voluntarily exited from her whistleblower case; see my blogpost “A Hotly Burning Question What Has Swept This Continent – Part Deux,” 2/8/17.

We all know you can’t voluntarily bail from a deficiency (SNOD) without having decision taken against you for the whole boat; see Section 7459(d). You can, of course, bail from a NOD (levy or lien), per Wagner. But what happens next in such event may be less than felicitous.

Well, how about bailing as an intervenor in a Section 6015 innocent spousery?

The question arises in a designated hitter from CSTJ-in-waiting Lewis (“A True Chief’s Name”) Carluzzo, and CSTJIW Lew will enlighten us.

Here’s Caitlin Dennis, Petitioner, and John Wilcox, Intervenor, Docket No. 17166-16, filed 5/26/17, with John as the lead actor.

IRS wants a Rule 37(c) undenied-deemed-admitted, but CSTJIW Lew puts that on hold, while he deals with John’s bailment request. Caitlin petitioned a NOD denying her innocent spousery, IRS answered and John intervened.

Now John wants out.

“In his motion Mr. Wilcox claims that respondent has already granted him section 6015 relief…. He goes on to note that he resides in New York State, while Richmond, Virginia, is the designated place of trial, and he lacks the resources to continue to be a party to this litigation. He now takes the position that he has nothing to gain by remaining a party.” Order, at p. 2.

OK, but how does CSTJIW Lew justify letting John bail?

“Presently, our Rules do not address the withdrawal of an intervenor in a proceeding such as this one. Rule 1(b) provides that in any instance where there is no applicable rule of procedure, the Court or the judge before whom the matter is pending may prescribe the procedure, giving particular weight to the Federal Rules of Civil Procedure (FRCP) to the extent that they are suitably adaptable to govern the matter at hand.” Order, at p. 2.

Well, FRCP 21 lets a USDC Judge drop anyone dispensable, except when the drop would kill diversity. And Tax Court don’t need no stinkin’ diversity.

But is John dispensable? If John and Caitlin filed MFJ for the year at issue, and there’s any deficiency or other misdoing therein, then either someone is innocent and someone is guilty, or they’re both guilty, whether in whole or in part.

“Considering the disputed issues between petitioner and respondent, and although intervenor might very well be called as a witness for one or the other of the parties, we are satisfied that he is not an indispensable party to this proceeding. The Court has no jurisdiction over intervenor’s [year at issue] Federal income tax liability, if any, in this proceeding, and petitioner’s entitlement to section 6015 relief in no way is dependent upon intervenor’s status as a party. Accordingly, we will grant his motion to withdraw.” Order, at pp. 2-3.

While I’m a fan of my fellow Lew, I’m not so sure about this. Is there a possibility of an inconsistent result here, a double-reverse whipsaw where John walks and Caitlin wins, notwithstanding that tax, chops and interest are definitely owing?

If John cannot join with the late Gen. George Brinton McClellan and yell “On to Richmond!” for want of cash, he can always put in Rule 91 stipulated facts. If IRS granted John innocent spousery, IRS’ counsel should be down with that.

But this should be a case for one-and-done.

And I’m betting this non-precedential order is not the last we’ll hear about this.

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