In Uncategorized on 08/22/2018 at 16:46

You’re probably eligible for Medicare if you remember this Clark Gable – Lana Turner epic, but the thought is echoed by His Honor Big Julie, Judge Julian I Jacobs, hereinafter referred to as “HHBJJJIJ.” The thought is evoked by William Mark Scott, 2018 T. C. Memo. 133, filed 8/22/18.  There’s a second case, 2018 T. C. Memo. 134 of even date therewith (as my already on their second Grey-Goose-Gibson colleagues would say), but for today’s purposes it is much of a muchness.

By the way, it’s William Mark Scott, Esq., and his resume is impressive.

“Petitioner is the former Director of the Internal Revenue Service (IRS) Office of Tax Exempt Bonds (Tax Exempt Bonds).  He worked for more than 19 years at the IRS and the IRS Office of Chief Counsel; he has more than 30 years’ experience in the area of tax-exempt municipal bonds.” 2018 T. C. Memo. 133, at p. 2.

The tax-exempt bond game is a fertile field for wags and wiseacres. Long ago I had to deal with such, involving manipulating the sales prices of defeasance funds of Treasuries to generate huge profits for dealers therein, and disguising the true interest rate, thus ripping off the taxpayers.  But that’s another story.

Mr Scott claims to have discovered chicanery involving arbitrage yield restrictions in violation of Reg. 1-482-2, and drops a Form 211 on the Ogden Sunseteers.  Mr Martin’s Minions called in a subject matter expert from Mr Scott’s old squadron, who blew off Mr Scott’s claim. Mr Scott didn’t provide charts, tables or schedules showing how the SIDA fee should have been reckoned in as an investment fee in figuring out yield. Sort of like APR and APY.

So the subject matter guru bounces Mr Scott’s Form 211, and anyway, the bonds in question survived an earlier examination with a “no change.” Mr Scott engages in the usual epistolary volleyball with the Sunseteers, gets a second look by a different analyst, but all there is, is a difference of opinion between bond counsel for the issuer (and that’s quite a job) and Mr Scott; not enough to torpedo the exemption.

IRS wants summary J; Mr Scott wants discovery, as he claims the IRS tax-exempt bond types hide info on proceedings against bondholders rather than the issuer.

“Petitioner’s statements are not compelling.  First, we note that petitioner has no personal knowledge of the IRS actions upon which he reports.  He states that he has been informed of the IRS’ alleged malfeasance in other situations and presents what he has been told as true in this situation.  Rule 121(d) provides that ‘[s]upporting and opposing affidavits or declarations shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant or declarant is competent to testify to the matters stated therein.”  Our Rule 121 is modeled in large part after rule 56 of the Federal Rules of Civil Procedure.  Consequently, ‘”sheer hearsay’ * * * ‘counts for nothing”’ on summary judgment.” Order, at p. 9 (Citations omitted).

Hearsay isn’t a problem opposing summary J, if the hearsay can lead to admissible evidence, but all Mr Scott has is hearsay concerning other deals, not this one, so relevancy.

Finally, Mr Scott may need discovery, but that doesn’t defeat summary J. Just saying “somewhere I’ll find you,” while having no facts to go on, cannot defeat summary J, or summary J would be a nullity.

“To conclude, we hold that there is no genuine issue as to any material fact and we may render a decision as a matter of law.  As previously noted, the IRS  examined the bonds issued by the Agency and the examination was closed without any adjustments.  Respondent, via sworn affidavit, states that no proceeds were collected and petitioner presented no evidence that any such proceeds were collected in this matter.  Consequently, we shall grant respondent’s motion for summary judgment….” Order, at p. 11.


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