Attorney-at-Law

STIR, BABY, STIR – THAT SILT!

In Uncategorized on 12/20/2017 at 18:12

Graev matters are front-and-center today, as The Jersey Boys are back at the Graev site (but losing) in Lawrence G. Graev and Lorna Graev, 149 T. C. 23, filed 12/20/17, with ex-Ch J (and Dictionarian Extraordinaire) Michael B (“Iron Mike”) Thornton extending the reach of Chai west of the Hudson to the remotest boundaries of USA jurisdiction (according to Judge Holmes, now contending for the additional title of The Great Concurrer, Maybe).

Background is simple enough. In addition to the 20% chop on the noncash charitable contribution writeoff, IRS amended its answer to lay the 20% chop on the cash Larry and Lorna paid the architectural trustees of their fancy façade.

The Jersey Boys played the Section 6751(b) Boss Hoss gambit. Larry and Lorna lost below, then came 2 Cir with its overrule in Chai, which Tax Court grafted on to Graev. Then back on 3/31/17, ex-Ch J Iron Mike vacated the loss per Chai, and ordered supplemental briefing.

Well, now ex-Ch J Iron Mike embraces Chai, 2 Cir version, with the fervor of the convert. Gotta be Boss Hoss-approved before anything penitential, whether in 2 Cir or “to every living heart and hearthstone all over this broad land.”

Except it turns out for Larry and Lorna that IRS bore successfully the burden of production and the burden of proof (notwithstanding the language of Section 7491(c) that IRS only has burden of production) as imposed by 2 Cir, by the usual preponderance of evidence, because a General Attorney (as opposed to an Attorney General) in the Area Counsel’s Office got a signoff from the Associate Area Counsel, who was his boss. And then a Tech Services type prepared the final SNOD, with signoff from Tech Serv Territory Manager.

Problem: Who did what? Who was authorized to do what? What was the “initial determination”? Was it a “determination” (final, conclusive) or a recommendation (attorney’s advice on the law)? When was it made, if at all? If made, was it timely per Section 6751(b)? Judge Buch, dissenting, with that Obliging Jurist Judge David Gustafson undoubtedly in on the tackle, makes mincemeat of what was the “initial determination” to impose the penalty. With the RA, the RA’s Group Manager (Boss Hoss No. 1), the General Attorney and the AAC (Boss Hoss No. 2), the Tech Server and the Territorialist (Boss Hoss No. 3) all scrapping in the corner, the immortal words of the late great Louis Francis Costello are heard once again: “Who’s on first?”

But this is merely prelude. Into the pile-up leaps The Great Dissenter, Master Silt-Stirrer and candidate for the title of Great Concurrer, Maybe, eschewing his patented reverse judicial benchslap (see my blogpost “The Great Dissenter – Part Deux,” 2/15/12).

Judge Holmes suggests that, whether the majority got the law right in the warped and twisted logic of 2 Cir, ex-Ch J Iron Mike, Current Ch J L Paige (“Iron Fist”) Marvel and the rest should just have said “We bow to Golsen, no stip to appeal anywhere else, Larry and Lorna and their high-priced townhouse are all in Nueva Yorka, so the Section 6751(b) Boss Hoss has to be prior to whatever 2 Cir says, in NY, CT and VT. The other dozen Federal Circuits are on their own, and so are we.”

But no. Ex-ch J Iron Mike says “(H)aving considered the opinion of the Court of Appeals for the Second Circuit in Chai, and in the interest of repose and uniformity on an issue that touches many cases before us, we reverse those portions of Graev II which held that it was premature to consider section 6751(b) issues in this deficiency proceeding.” 149 T. C. 23, at p. 14.

Oh brother, says Judge Holmes, you tried to bring peace, but like a much more exalted Authority you have brought not peace, but a sword. Section 6751(b) is a statutory one-off, a hapax legomenon as that classicist Judge Lauber and that Master of Tohubohu Judge Holmes put it. It’s intended to keep lower-level RAs and Examination types from bludgeoning settlements out of terrified taxpayers by threatening chops.

But it doesn’t work. It speaks of “assessments,” but the vast majority of those happen automatically, nay, even electronically. Except where IRC says there must be a pre-assessment notice (primarily SNODs, and not even all of those; remember jeopardy assessments), assessments don’t need any advance warning to the taxpayer. And SNODs get reviewed de novo; the past isn’t even prologue. Mox nix what happened at Examination or anywhere else prepetition. Except now it does.

Besides, the greatest majority of low-level IRS RAs and Exam types are below the radar when it comes to bludgeoning. There never is a deficiency most times. What Tax Court don’t see, Tax Court can’t fix.

Judge Holmes has a bushelbasketful of statistics to provide the Section 6751(b) is much more honored in the breach than in th’ cliché.

And there are tons of Tax Court cases, both pending, posttrial but no opinion issued, Rule 155 beancounts or orders settled on notice, where the inexpertly drafted language of Congress, as mansplained by 2 Cir, will wreak havoc if left unchecked by the cool, clear review of another CCA.

Judge Posner, where are you?

Read Judge Holmes’ concurrence. There isn’t a partitive genitive in sight, but he lays out imaginary horribles in brigade strength. Or maybe not so imaginary.

Anyway, the Jersey Boys lost this one. But the silt that they stirred, as churned by Judges Buch, Gustafson and Holmes, will keep them busy for years.

And it’s starting now. Check out the designated hitters Judge Holmes unleashes today.

 

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