In Uncategorized on 07/24/2018 at 16:19

Silt is the winner, as Master Silt-Stirrer Mark V. Holmes affirms TC’s SOL shootdown of IRS in Coffey v. Com’r. The arguments of IRS and ex-Ch J L Paige (“Iron Fist”) Marvel  don’t impose a consent requirement on filing a return, only on making the return. Here’s Judith S. Coffey, Petitioner & The Government of The United States Virgin Islands, Intervenor, Docket No. 4720-10, filed 7/24/18.

Backstory is found in my blogpost “Another Non-Virgin,”1/30/18. IRS, relying largely on ex-Ch J Iron Fist’s dissent in Coffey, wants reconsideration. They get it, but it doesn’t give them what they want.

First, IRS claims they never conceded that a third party (not the agent of taxpayer) can file a taxpayer’s return. Remember, Virgin Islands Bureau of Internal Revenue covered-over Judith return to IRS. But Judge Holmes met them with a retelling of an account from a much higher source.

“A taxpayer on his way to mail his return to the IRS gets mugged. He drops the return, but a Good Samaritan picks it up and mails it to the IRS, who receives it…. The Commissioner’s counsel’s response was simple: ‘it’s filed…..” Later during the hearing the Commissioner’s counsel said that the return the IRS received from VIBIR didn’t count because the Coffeys hadn’t sent it, but we reminded him of his answer to our hypothetical…. He then asked for an opportunity to further consider the hypothetical, and said he would produce a written response to it.

“He never did.” Order, at p. 2.

The better answer might paraphrase another saying from that much higher source: “Whoever does my will is my agent.” But that answer was never given. Perhaps IRS’s counsel considered and rejected it, or didn’t know the source or the saying.

As for starting the SOL, the question is whose return starts it. It’s the taxpayer’s return, not any party who files a return (or anything else) from which the taxpayer must derive items to be reported on the taxpayer’s return. Humphrey Bogart’s question from Treasure of the Sierra Madre (“Why doesn’t everybody smoke their own?”) is answered. Everybody must smoke their own, that is, their own return starts the SOL.

In short, as long as the taxpayer followed the Beard foursome in preparing a document, it doesn’t matter how it gets to the right IRS service center. Once filed, it’s a return, and starts the SOL.

“The Code, regulations, and caselaw all show that a taxpayer’s intent is not relevant to the question of whether his return is ‘filed’. ‘On the other hand, it does have a role to play in determining whether a filed document constitutes a valid return.’ Mem. in Supp. Of Resp’t’s Op. to the Mots. for Recons. Filed by Pet’s and Intervenor at 6 n.3 (emphasis added). Because this is the law we followed, there was no substantial error.” Order, at p. 8.

IRS claims a computer processed the covered-over Coffey stuff VIBIR sent them. So what, says Judge Holmes. IRS processed it. Playing a big role here is Marty Dingman; see my blogpost “The Check’s The Thing,” 6/1/11.

And before truth, the right stamp.  “Second, the Commissioner says that VIBIR, not the IRS, stamped the top of the return ‘U.S. Claim.’ Resp’t’s Mot. for Recons. at 6. But when we said the IRS stamped it, we weren’t talking about that stamp — we were talking about the one on the left-hand side of the first page of the Coffeys’ return that says ‘RECEIVED 02082005 IRS – PHILA., PA.’ See Coffey, 150 T.C. at __ (slip op. at 12-13, 45). In light of this evidence, it wasn’t error to find that the IRS’s Philadelphia service center received the Coffeys’ returns.” Order, at p. 9.

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