In Uncategorized on 02/16/2018 at 13:39

We attorneys very often need to send our jackets to the cleaners; organic dry cleaners are good at removing the tire tracks left by the buses under which our clients have thrown us.

Here’s Timothy L. Blixseth, Docket No. 1422-14, filed 2/16/18. Tim’s counsel got IRS to drop Tim’s deficiency from $6 million to $1.3 million, and stipped to entry of decision in that amount.

Tim is unhappy with that. So unhappy is Tim, that he has his counsel move to have Tim relieved of the stip. Counsel claims that the magnitude of his error regarding an NOL Tim claims he had is so great as to shock the conscience.

Well, I don’t know about y’all, but as for me, it doesn’t even rate a Claude Rains Casablanca comment. And it certainly doesn’t for Judge Cohen.

Here’s Tim’s counsel’s story. “As the trial date grew near, most of my attention was focused in preparation for the expected trial in Timothy L. Blixseth v. Commissioner, docket number 24653-12. I did not give the Stipulation of Settled Issues the scrutiny it appropriately required. I glanced at paragraph 10 and believed that the amount that was being disallowed was the amount that was being allowed in that stipulation and that amount disallowed was the amount being allowed in the stipulation as the pass through loss.

“This was a unilateral error on my part. KB of District Counsel’s Office made no representation concerning the numbers and at no time tried to mislead me.” Order, at p. 2.

I will not, of course, name Tim’s counsel here. He’s suffered enough. I can’t think his carrier is particularly happy with his story, either.

But Judge Cohen, despite IRS’ “somber reasoning and copious citation of precedent” regarding not vitiating stips for unilateral mistake, told Tim and counsel last month that they could offer proof and try to show that could do better on a trial than they did by stipping out.

Of course they did, and can’t.

“Petitioner provides no reason to believe that he is likely to achieve a better result than the compromise reflected in the Stipulation, and a better result seems unlikely because of the unavailability of complete contemporaneous records, the necessity of estimates rather than reliable evidence of losses claimed, and the passage of time since 2008. His offer of proof shows no more than that witnesses would testify as to the preparation of returns in order to assert that the amounts claimed were correct.” Order, at p. 3.

Besides, going to trial would have a negative knock-on for another case, where Tim is tax matterer, that has been floating around for five (count ‘em, five) years.

“The record reflects substantial prejudice to the Court and to respondent if the settlement previously reached is vacated and trial preparations must begin anew. The record does not show an unconscionable result if the Stipulation is enforced. Neither legal precedents nor considerations of justice favor petitioner’s motion.” Order, at p. 3. (Citation omitted).

If I may draw an inference from Judge Cohen’s remarks, enough already.

If you want out of a stip, you’d better have a real good story. Especially if you just saved $5 million plus chops.


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