Attorney-at-Law

WHEN

In Uncategorized on 09/21/2017 at 15:11

It was the home of the 8th Coast Artillery when it was built around 1910, it occupies a whole large city block, and is now or shortly will be an ice palace. It was supposedly the largest armory in the world. But I remember it from the days of my misspent youth, when the Kingsbridge Armory provided the ultimate echo chamber under the Jerome Avenue “el.” And we sang “When,” the 1959 Kalin Twins hit, with the verve and reverb that many a record producer would have envied (or so we were certain, although none came to hear us).

But “when” forms the foundation for this gem from the wordprocessor of Judge Goeke, James A. McColman & Kari McColman, Docket No. 24543-15, filed 9/21/17.

It’s Jim’s tale, and a sad one. Jim was running a sole prop bill collecting outfit when he fell ill with a disabling disease. An audit was underway on a previous year, but Jim never responded to IRS’ appointment letters. Enter Bill S., Jim’s trusty attorney (miscalled POA by Judge Goeke; one who acts pursuant to a Power of Attorney is an “agent” or, in the case of Form 2848, a “representative”; a Power of Attorney is either a piece of paper or a concatenation of electrons).

Bill S. tries to work the problem, but Jim is out of it and the paperwork is not immediately to hand, so IRS hands Bill S. a SNOD for him, and Bill S. timely petitions. IRS’ counsel sends the matter off to Appeals, and there’s a great deal of backing-and-filling, as Bill S. digs up and sends in batches of paperwork to back up Jim’s deductions.

Judge Goeke time-lines it all. It’s twenty (count ‘em, twenty) months from when Bill S. gets on board with IRS until IRS concedes the deficiency, and offers to settle.

Bill S. says no, I want the $7700 in fees and disbursements I’m owed. Me, I don’t doubt Bill S. put in the time and effort, or incurred the disbursements. And Bill S. wants Judge Goeke to cut Jim some slack.

“Petitioners maintain that despite their failure to produce any records to the initial IRS examiner, respondent was not justified in issuing the notice of deficiency because at least a portion of the claimed expenses should have been allowed under Cohan v. Commissioner, 39 F.2d 540 (2d Cir.1930).” Order, at p. 5.

But IRS didn’t have to concede until it was reasonably satisfied that Jim’s numbers, as delivered by Bill S., were correct. Before that, IRS was justified. And the last of the numbers only came in a month before IRS caved.

“To be substantially justified, the IRS’s position must have a reasonable basis in both fact and law. The case law applies facts and circumstances test to weigh whether the IRS was reasonable. When IRS employees act promptly to resolve a case after receiving substantiation that the taxpayer is required to maintain, the timing of the production of the substantiation is a significant factor in deciding whether the IRS was reasonable. Sec. 301.7430-5(c), Proced. & Admin. Regs. The regulation does not, however, require the IRS to mediate the government’s position when there is a lack of substantiation by applying Cohan or some other relaxed standard. Petitioners do not offer us any authority for their position in this regard and we decline to introduce such a concept based on the facts of this case.” Order, at pp. 5-6. (Citation omitted).

As soon as Bill S. came in with the real goods, IRS folded in about a month. That’s good enough for Judge Goeke.

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