I place the question mark because the old maxim is so ingrained that no excuse seems possible. The old maxim is that misinformation, disinformation, misconstruction of law and regulation, and misdirection of taxpayers, by IRS servants, agents and employees does not excuse the taxpayer if s/he follows any thereof. The statute and regulations are paramount; all else is irrelevant. Believe IRS personnel at your peril.

Or maybe not.

Here’s Judge James S (“Big Jim”) Halpern, revisiting James L. McCarthy, Docket No. 21940-15L, filed 1/29/19 (hereinafter referred to as “Poor Jim”), and Poor Jim’s trusty attorney (hereinafter referred to as “Mr A”)..

All y’all will remember Poor Jim and his trust, but just in case the shutdown wiped your memorybank, see my blogposts “Futility,” 12/10/18, “When – Reprise,” 10/31/18, “Big Jim, Poor Jim,” 3/31/17, and “The Twelfth of Never,” 1/18/17. You see that Poor Jim has frequent litigator points here.

Appeals bounced Poor Jim’s OIC and PPIA after Mr A concluded there was no use sending in fresh financials, because the SO first told him to hold while Area Counsel pondered the matter, and after Area Counsel confirmed the SO’s view, the SO said Appeals was sticking to the trust-as-nominee.

In the last-named of my above blogposts, Judge Big Jim wanted to know if IRS was claiming that failure to update financials was a separate basis for bouncing the OIC and PPIA, regardless of the trust angle. And if IRS did so assert, let Mr A show that he was right to refuse to do so.

“In support of his claim, Mr. A refers us to SO M’s case activity report (Report). According to the Report, after our remand of the case, SO M requested an updated analysis from respondent’s Area Counsel on the issue of whether a trust created by petitioner’s accountant held specified properties on petitioner’s behalf as his nominee. In her initial communication with Mr. A after remand, SO M advised him that it ‘would be best to wait for * * * [the updated Area Counsel opinion] before potentially requesting any additional financial information or further discussing the issues.’ SO M had another call with Mr. A after Area Counsel advised her that it was adhering to its position that the trust was petitioner’s nominee. In that call, according to SO M: ‘I explained that upon my review of the trial transcript, I did not change my determination * * * [regarding the nominee issue]. I said that I followed up with a request for a second opinion and that the Counsel attorney said the same thing.’ She continued: ‘I stated that * * * [petitioner] could provide updated financial information and requested the information within 45 days. Mr. A pointed out that as long as Appeals is going to maintain its position with regard to the nominee situation, there is no point in providing updated financial information.’” Order, at pp. 1-2. (Names omitted).

Mr A gets a Taishoff “Good Job.” And Judge Big Jim seems to agree.

“Thus, the Report tends to confirm Mr. A’s claim. It shows that SO M discouraged Mr. A from providing updated financial information before she had received an updated analysis from Area Counsel and that, after she had received that analysis, she advised Mr. A of her intention to adhere to her determination that the trust was petitioner’s nominee. Although she went on to invite Mr. A to submit updated financial information, she did not tell him that the failure to do so would provide independent grounds for rejecting petitioner’s proposed collection alternatives.” Order, at p. 2.

It may be one thing to mislead, misdirect, misconstrue or misinform, but quite another to ambush.

So let IRS now explain if they want to assert nonproduction of current financials as a separate ground, and why, based on the futility of production thereof, Poor Jim shouldn’t be let off the hook.