I promised y’all Judge David Gustafson’s checklist for those litigants facing a Graev reopener. If you’ve been following this my blog at all, you know that IRS has been dredging up Section 6751(b) Boss Hoss signoffs on chops in cases long since tried, ever since 2 Cir agreed with Judge Gustafson that the Boss Hoss must precede the chop-laden SNOD.

There’s a daily stream of orders reopening records and giving petitioners a chance to call foul, and I suspect we’ll see even more, as the “sleepers wake.”

Well, today it’s the turn of Abdul M. Muhammad, Docket No. 23891-15, filed 2/7/18, to bukh about the pain and strain that will descend upon him if a late-proffered “Penalty Approval Form” gets wild-carded in.

Judge Gustafson, obliging as ever, hands Ab, by way of a designated hitter,  a handy-dandy guide to repelling boarders.

“Mr. Muhammad shall file a response to the Commissioner’s motion to reopen the record, stating whether he disputes the authenticity of the ‘Penalty Approval Form’ or otherwise objects to the Commissioner’s motion. If he does object, then he shall explain why. He shall also explain, in the event the Court were to overrule his objection and reopen the record to receive evidence on the subject of supervisory approval of the penalty, (1) whether and how the granting of the Commissioner’s motion would prejudice him, (2) what remedy would be required to cure or mitigate that prejudice, and (3) whether there is any evidence that Mr. Muhammad would wish to offer into evidence (or would wish to attempt to obtain) or whether there is any witness whom he would wish to examine (and, if so, what testimony he would hope to evoke from that witness).” Order, at pp. 1-2.

Take a close look at that form, Ab; sometimes the forms the IRS wants to wildcard in are trifle ex post facto. By way of analogy, see my blogpost “Going to the Mat,” 1/24/18.

Old men are loquacious. I plead guilty. I tell war stories with the best of them; wear my sober pinstripes, white button-down oxfords and striped repp neckties like Old Grayback from Wayback; and at Bar Association functions glaze over the eyes of those hard-working attorneys young enough to be my grandchildren with my “when I was your age” natterings.

Well today The Great Dissenter/Concurrer, a/k/a The Judge Who Writes Like a Human Being, Master Silt Stirrer and Old China Hand, Judge Mark V. Holmes, does what in my young day half-a-century ago was called “resettling an order.”

Check out my blogpost “Settle Order on Notice,” 6/23/17.

Now when the State court judge had finally churned out the “order, judgment and decree,” at more or less rare intervals some party would claim the judge got it wrong. Rather than serving notice of entry and filing an immediate appeal, a motion to resettle the order would follow, replete with “sober reasoning and copious citation of precedent” (but sometimes including rich helpings of what the other side called “Bravo Sierra”).

Judge Holmes has his chance to resettle today.

Here’s Judith S. Coffey, Petitioner & The Government Of The United States Virgin Islands, Intervenor, Docket No. 4720-10, filed 2/7/18.

Last week Judge Holmes ended this long-running saga by calling IRS out-of-time. See my blogpost “Another Non-Virgin,” 1/30/18. He did it by finding no jurisdiction, as the SOL had run.

“The parties spoke with the Court on January 31, 2018 and it was suggested that the order be amended to state the effect of this dismissal which, by operation of IRC § 7459(e), is that no deficiency is due. This is technically a request to revise a decision….” Order, at p. 1.

Motion to resettle order granted.

It’s a slow day at the Glasshouse. That Obliging Jurist, Judge David Gustafson, has a designated hitter checklist for those litigants responding to a Graev reopening, and various judges are swallowing Judge Holmes’ Coffey decision (which he has revised in light of commentary from the litigants therein; “Settle Order on Notice,” anyone?) dealing with the wise Virgins (Islanders).

But Ch J L Paige (“Iron Fist”) Marvel is following precedent and allowing the parties to stip jurisdiction (despite Judge David Gustafson dissent in Pearson, as to which see my blogpost “Does Not the Wild Boar Break Cover Just as You’re Lighting a Weed?” 11/30/17) .

Here’s Frieda G. Oliner Irrevocable Trust, Marian Cohen, Trustee, Docket No. 12766-15, filed 2/7/18.

Marian and IRS agree that the envelope that reached the Glasshouse on the fourth day after the 90-day cutoff contained the petition, and showed a private postage meter mark of the last day of the 90 days. The four days apparently satisfied IRS that the envelope reached the Glasshouse, and the flailing date stampers and hard-laboring intake clerks who toil therein, in the usual time.

So Pearson? Yes, but.

“…because that petition arrived within the ordinary mailing time for an envelope properly addressed and sent by first class mail and bearing a timely U.S. Postal Service postmark date, the timely mailing/timely filing provisions of section 7502 apply.” Order, at p. 1.

So we are back to “as good as.” If the private frank, be it generated by private postage meter, stamps.com or whatever, gets the petition to the Glasshouse in the same time as it would have gotten there had the USPS clerk hand-cancelled their own self, it’s good enough.

Judges Gustafson and Holmes will get their own posts seriatim, as my already-on-their-second-18-yr-old-Macallan colleagues would say.

No, this is not a reprise of the old wheeze concerning what a certain privileged young lady makes for dinner. Unlike today’s one small-claimer (a reprise of the obsolescent unreimbursed employee business expense deduction) and Judge David Gustafson’s patient deconstruction of a virtually-uncontested NOD from a CDP, today we have an undesignated order containing a useful practice pointer.

Here’s Judge Goeke on making reservations dealing with disputed documents.

Parties may agree that certain documents exist, but dispute relevance and admissibility. The proponent of the documents will wish the adverse party to admit the documents as evidence, by way of a Rule 91(f) motion. The opponent will, of course, oppose.

Judge Goeke: “Pending before the Court is respondent’s Motion for Order to Show Cause Why Proposed Facts and Evidence Should Not be Accepted as Established Pursuant to Rule 91(f)…. … petitioners’ [sic] filed a Response to Motion for Order to Show Cause Why Proposed Facts and Evidence Should Not be Accepted as Established Pursuant to Rule 91(f). The documents that underlie respondent’s motion and petitioners’ response should be stipulated exhibits with objections reserved and the admission and characterization of those documents will be determined at trial.” Order, at p. 1.

IRS’ motion is denied.

Deciding admissibility of documents is as much the daily grist that comes to the judicial mill as the credibility of witnesses’ testimony.

Oh, the order is one of many in Estate of Rhoda-May A. Dallas, Deceased, Jane D. Miller, Executor, et al., Docket No. 4853-16, filed 2/6/18.

There is one more thing, a whistleblower case brought by a former client. When I saw the name on today’s linked Orders list, memories came flooding back from twenty-five years ago. The order was only a routine sealing, but I look forward to seeing how the case develops, and blogging any good stuff. I see the client does have new counsel, though, and I wish them both well.

No one can question that the universe is running down, and inevitably will approach some form of absolute zero, when all molecular activity will end. As a much more exalted authority put it, “Work, for the night is coming when no one can work.”

Well, personally, the last four weeks, with health and economic issues, have certainly pointed the way to that last gasp. And today the Glasshouse website has made its contribution to general collapse.

While the connectivity interruptus featured on its homepage seems to be abated, today we have 140 orders on the Orders Search, and only one (count it, one) order opens directly with a link. And both designated orders are similarly inaccessible.

Of course I e-mailed the Tax Court webmeister. I thought, however, that a phonecall might help the process. I reached an IT person who spent some time trying to get my attorney registration number (the relevance of which I could not ascertain, but I thought it might be subject to connection). At the end of his search (Tax Court’s software does not permit a name search), I explained the problem. The IT person promised to contact the webmeister. At this writing, however, no joy.

If you need to read an order, you’ll need to do a docket search.

The opinions do open directly.  Connie L. Minton a.k.a. Connie L. Keeney, 2018 T. C. Memo. 15, filed 2/5/18, ekes out innocent spousery per Section 6015(f), even after she works hard and comes up with the $6K deficiency she wants to lay at the door of her deadbeat ex, who can’t be found.

Connie can’t show she was defrauded, or that deadbeat ex stole the money to pay the tax, nor was she so abused that she couldn’t challenge what the return showed. While deadbeat ex lied about his business prospects, the tax was generated when Connie drew down her 401(k) to fund deadbeat ex’s get-rich-quickery, thus triggering tax.

Judge Pugh: “We reach a different answer with respect to the liability attributable to Mr. Keeney’s business. Unlike respondent, we conclude that liability is not attributable to petitioner because petitioner’s involvement in the business was nominal only. Therefore, we conclude that petitioner satisfies the threshold conditions for relief with respect to the liability (including self-employment tax) associated with the income from Mr. Keeney’s business. Our remaining analysis is limited to that liability.” 2018 T. C. Memo. 15, at p. 10.

Deadbeat ex’s tall tales about his great business saves Connie.

“We are convinced by petitioner’s testimony that she believed the Federal tax liability would be paid out of the proceeds from the ‘big contract’ that Mr. Keeney promised was coming. Given petitioner’s lack of sophistication and her position in the marriage, and taking into account Mr. Keeney’s duplicity and abuse, we also conclude that her belief was reasonable. Therefore, this factor weighs in favor of relief. Because respondent did not dispute whether the other factors favored relief or are neutral, we will not consider them further here. And because we find that this factor also favors relief, we conclude that relief is appropriate.” 2015 T. C. Memo. 15, at pp.  14-15.

Because Connie is plausible and sympathetic, even though she coughed up the whole deficiency, she can get a refund of whatever part thereof is attributable to deadbeat ex.

Homero F. Meruelo, 2018 T. C. Memo. 16, filed 2/5/18, is trying the “incorporated pocketbook” gambit to try to build basis in his melted-down Sub S. Judge Lauber isn’t buying.

Homero has a bunch of Sub Ss in his real estate empire, along with partnerships and LLCs, some of which were owned with others. The Black 08 (real estate pros need no explanation) put paid to the lot, and Homero wants a thundering NOL, but IRS says no.

“Here, petitioner seeks to treat as his incorporated pocketbook 11 distinct [Sub S] affiliates. Many of these companies had co-owners besides petitioner. And because the inter-company payments allegedly creating his basis involved netting hundreds of accounts payable against hundreds of accounts receivable, petitioner is necessarily contending that his ‘incorporated pocketbook’ not only disbursed funds but regularly received them. We have never found an incorporated pocketbook on such facts.” 2018 T. C. Memo. 16, at pp. 18-19.

There’s more, like a back-to-back loan argument, but defective paperwork torpedoes all that.

Finally, what’s a day at the Glasshouse without The Great Dissenter/Concurrer, a/k/a The Judge Who Writes Like a Human Being, Master Silt Stirrer and Old China Hand, Judge Mark V. Holmes, playing another variation on the Section 6751(b) Boss Hoss double concerto for taxpayer, IRS and orchestra?

Today it’s a designated hitter, Great Lakes Concrete Products LLC, Section 15602-15L, filed 2/5/18. The Great Lakers are on for trial in June, but they want a penalty abated. And it’s not one of the usual ones.

“The penalty involved is one for failure to deposit under I.R.C. § 6656. This prompted the parties to realize that this case raises yet another problem in the aftermath of Chai v. Commissioner, 851 F.3d 190 (2d Cir. 2017), aff’g in part, rev ‘g in part 109 T.C.M. 1206 (2015): Is the penalty under that section one that is ‘automatically calculated through electronic means’? I.R.C. § 6751(b)(2)(B). If it is not, then did the immediate supervisor of whoever made the initial determination to impose that penalty approve it in writing? And there are likely to be collateral problems as well, such as whether proof of the IRS’s compliance with § 6751 is part of the verification ‘that the requirements of any applicable law or administrative procedure have been met,’ I.R.C. § 6330(c)(1), or is part of a challenge to the underlying liability, I.R.C. § 6330(c)(2)(B).” Order, at p. 1.

Well, there is the statutory formula, and it doesn’t take N. deGrasse Tyson to do the numbers. But that’s maybe for someone else to decide.

Phoneathon time. And Judge Holmes gets both sides to agree to a remand. Really, when it comes to punting, Judge Holmes should try out for the Eagles.

But Judge Holmes doesn’t trust the vagaries of Appeals, or IRS’ focus.

“Any supplemental notice of determination should explain the IRS’s position on whether penalty abatement is a precluded issue for each liability at issue, a full explanation of whether Great Lakes met the reasonable-cause exception to penalties for each period at issue, and a statement and explanation of the effect of § 6751 and Chai on this case.” Order, at p. 2.

Sometimes the weight of the silt he stirs, to say nothing of writing like a human being, overtaxes the patience of The Great Dissenter/ Concurrer, Judge Mark V. Holmes.

Another leftover from the now-historical Virginity (Islanders) unguided Congressional largesse has reduced Judge Holmes to asking the parties to help him out.

Here’s Carrie L. Smith, Docket No. 19444-12, filed 2/2/18. Apparently Groundhog Day has so diverted the Glasshouse Gang that neither opinion nor designated hitter appeared.

Carrie was waiting for Coffey to be decided. Well, Judge Holmes got that one off the plate on Tuesday last; see my blogpost “Another Non-Virgin,” 1/30/18.

So Judge Holmes had a phoneathon with all parties, and tells them to “…file a status report suggesting how to bring this case to a conclusion, perhaps by cross-motions for summary judgment or trial on the residency issue or a stipulation to be bound by any final nonappealable decisions in the Coffey cases.” Order, at p. 1.

The immortal Estelle Reiner line from the 1989 comedy When Harry Met Sally immediately comes to mind.

Here’s a treatise I’d like to have handy, and that Obliging Jurist, Judge David Gustafson, has written a page thereof in Gwendolyn L. Kestin, Docket No. 18254-17L, filed 2/1/18.

Gwen is a firm believer in laying it all out. “…petitioner filed her petition (ECF 1). Its first two pages are the standard form petition, which she had filled out. On that form she refers to an ‘attached petition’, which evidently consists of the 121 additional pages that follow the form, containing argument evidently composed by petitioner, pages from the Congressional Record, pages of legislative history, correspondence with the IRS, copies of transcripts of account, and other documents. One of the documents included in her petition stated a website address, but a letter was evidently left off the address.” Order, at p. 1.

So Gwen makes a motion thus entitled: “Motion for Clerk to Amend Petition as Requested in Petitioner’s Reply to Respondent’s Response” (ECF 20).”

Judge Gustafson deems that to be a Rule 41(a) motion to amend petition, which he denies as moot.

The Clerk sent Gwen the usual “this might be evidence. Evidence gets put in at trial. Filing it with the Court does not put it in evidence.”

Then Gwen asks that her 121-page masterpiece not be excluded, and put in the missing letter, please.

Judge Gustafson on evidence: “Petitioner evidently misunderstood the Clerk’s notice. It did not have the effect of deleting the 121-page attachment from her petition. Rather, the notice correctly advised petitioner that the inclusion of the documents in her petition did not have the effect of admitting them into evidence. Instead, if there is any relevant document in her petition, then petitioner’s occasion to offer it into evidence will be at the trial of her case.

“Petitioner’s correction of the website address now appears in the record, by virtue of her motion to amend. There is no need to formally amend the petition to correct this detail. When the time is ripe for petitioner to cite this webpage (e.g., in her pretrial memorandum), she may do so (with the correct address, of course).” Order, at p. 2.

Now I’m not saying Gwen is a rounder. But it seems that 120-plus pages are almost the rounders’ flavor du jour. See my blogpost “The Jolly Rounder,” 3/16/15, where the number was 129 pages.

Halloween comes early for The Great Dissenter/Concurrer, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a Master Silt Stirrer and Old China Hand, Judge Mark V. Holmes.

Today his designated hitter strikes our old chums Kumar Rajagopalan & Susamma Kumar, et al., Docket No. 21934-11, filed 1/31/18. Y’all recall Kum and Sus, no? Well, for those recently tuned in to this my blog, check out my blogposts “Have a Heart, Guys,” 12/5/17, “Back From the Graev –Part Deux,” 7/9/15, and “Old-Time Head-Banging,” 6/5/15.

And my posts are going up late at night due to flu season and other ills that flesh is heir to.

Anyway, Kum and Sus are fighting about conservation easements, “…but penalties — and the Commissioner’s compliance with I.R.C. § 6751(b)(1) — have thus far taken center stage. We’ve already decided that it’s too late for the Commissioner to introduce additional evidence that he complied with § 6751(b)(1) for the 40% gross-valuation-misstatement penalties raised in his amended answers. See Rajagopalan v. Commissioner, Docket No. 21394-11, Order, Dec. 20, 2017. (We note, however, that he did produce some evidence of that compliance which the parties analyze in their posttrial briefs.) Now he asks us to reopen the record to let in evidence to show that he complied with that section for the 20% accuracy related penalties determined in his notices of deficiency. Petitioners object.” Order, at p. 1.

I missed the shoot-down of the 40% chop, but not surprising. I was Graev’ed out, as the IRS scramble to come up with Boss Hossery for cases long tried and awaiting opinion had turned into The Scramble of the Year.

Anyway, nobody raised Boss Hoss at the trial, but Kum & Sus mentioned it in their posttrial brief. Moreover, Kum & Sus FOIL’ed the IRS file and found a Boss Hoss for their partnership, but not them. IRS said mox nix, negligence applies at partner level. Oh TEFRA, thy sins survive thine exit.

So everybody knew about Boss Hossery, even though the trial was pre-Graev. But this is a close call.

And Judge Holmes predicted that, if a trial record was reopened for 20% chops but the Section 6751(b) signoff was for negligence, what about accuracy (the five-and-ten)?

Judge Homes said both sides were less than diligent for leaving out Boss Hossery on the trial. The evidence IRS wants to put in is business records properly authenticated, unlike the hearsay affidavit on the 40% chop. Kum & Sus yell “prejudice,” and failure to provide FRE 902(11) notice that they’re going to enter business records, but the evidence would change the outcome of the trial and is admissible. And 902(11) isn’t an insuperable obstacle. And it isn’t hearsay, like the 40% chop affidavit.

“But the penalty-approval forms here are different. They are evidence that we would likely have admitted at trial under the business-records exception to hearsay — just as we are doing now — and it is unclear how petitioners would’ve benefitted from cross-examination. Petitioners don’t make a convincing case that introducing these forms at trial would’ve made any difference to them: They primarily argue that they should be ‘entitled to question’ the supervisor and subordinate to confirm that the penalties ‘were properly asserted and whether [the Commissioner] complied with Code section 6751(b).’ The penalty-approval forms either answer those questions or they don’t; once they are in under the business records exception, they are in. And we can’t conclude this time that petitioners would be prejudiced.” Order, at p. 3.

True, IRS was slow-footed. But this was pre-Graev, so no one knew whether it was burden of production on IRS or affirmative defense on Kum & Sus. And Kum & Sus knew what was what when they FOIL’ed the IRS record, but didn’t raise it on the trial.

But to answer Judge Holmes’ hotly burning question, the penalty-approval forms are in… but only as to negligence, not accuracy.

So record closed, and time for opinion.