Attorney-at-Law

TWO-TIMING

In Uncategorized on 06/23/2017 at 02:16

No, I have not turned this blog into an advice for the lovelorn, or otherwise romantically disadvantaged. Today’s story involves two separate and distinct SNODs for the same year.

One just covers a single year, but the other covers six (count ‘em, six) different tax years, although the single year aforesaid is included in the six-pack SNOD.

Now there’s plenty of caselaw saying that when a SNOD has been issued but the taxpayer doesn’t timely petition, IRS can hit the taxpayer with another SNOD for the same year in order to assert a greater tax liability.

The theory behind the Section 6212(c)(1) single-shot rule (one SNOD per year) is to prevent a multiplicity of proceedings. If IRS wants to up the ante, claiming a SNOD was too low, and a petition was timely filed, IRS can assert increased deficiency in its answer and get the burden of proof thrown in at no extra charge. If the SNOD was too low and no timely petition filed, IRS can go again with a higher SNOD. Still only one proceeding.

But how if there are two SNODs for one year, and both were petitioned timely?

In today’s installment, IRS first moves to dismiss for duplication, but then withdraws, because it got the SNODs backwards.

SNOD No. 1 was for a smaller amount for year in question, but was petitioned after SNOD No. 2, which was for a higher amount for that year, but both SNODs were timely petitioned. So IRS wanted to drop SNOD No. 1.

No, says Ch J L Paige (“Iron Fist”) Marvel. The case is Azita J. Larijani, Docket No. 4966-17, filed 6/22/17, and I cite that docket no. because that’s the one that stays in for the year at issue.

IRS relies on caselaw where the first SNOD was never petitioned, so in the interest of judicial economy the second SNOD avoids the Section 6212(c)(1) hammer.

Here, even though SNOD No. 2 for the higher amount was timely petitioned before SNOD No. 1 was timely petitioned, the essentials for Tax Court jurisdiction were there for both: a SNOD facially valid and a timely petition.

The first SNOD is the lead.

So Ch J Iron Fist denies IRS’ motion to dismiss petition from SNOD No. 1, and instead sua sponte tosses so much of SNOD No. 2 as deals with the year in question.

So IRS can try to assert the higher deficiency in its answer, and bear the burden of proof if they do.

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