Archive for March, 2019|Monthly archive page


In Uncategorized on 03/22/2019 at 16:20

It’s common for pro se petitioners (and even Tax Court admittees, occasionally) to conflate poor l’il ole Article I Tax Court with its much more puissant companions, the Article IIIs, like the USDCs and CCAs. Today I have just one example, Victor Maurice Brown & Kimberly Denise Brown, Docket 20102-17, filed 3/22/19.

Vic & Kim want damages from Kim’s former employer. They want to litigate a year as to which IRS conceded the deficiency. They want withdrawal of a tax lien for a different year when they had a SNOD, which they didn’t timely petition, and a NITL, which they also failed to petition timely. They may have gotten a NOD from an equivalent hearing, but that avails them not.

So whatever IRS did after that is not for Tax Court. They also want filing fees for an amended 1040s for the two years, although they never filed such amendments or amended their petition. And they want an agreed set of facts.

Judge David Gustafson, whose obliging nature has furnished this blogger with a cornucopia of blogfodder, cannot help Vic & Kim.

“We do not have jurisdiction to adjudicate any disputes between the Ms. Brown and her former employer nor to award Ms. Brown any damages from her former employer. (Their citation in this connection to the Federal Rules of Civil Procedure is wide of the mark. The Tax Court operates under its own rules, which make no provision for ordering a third party to be a defendant.) In the absence of a timely CDP request, a notice of determination pursuant to section 6320(a)(1) or 6330(a)(1), and a timely petition challenging such a determination, we do not have jurisdiction over any contention as to IRS liens, levies, or other collection activity. We do not have jurisdiction to award fees for filing amended tax returns nor any other fees other than those that might be allowed pursuant to section 7430. In the Tax Court it is the judge who makes the findings of fact, see sec. 7459(b), and the Tax Court is not authorized to conduct jury trials. The Anti-Injunction Act (sec. 7421) generally prohibits injunctions against the IRS, and the Browns showed no exception applicable here to that general rule.” Order, at pp. 5-6.

It’s true Vic & Kim did raise one year timely, but that was the one IRS conceded. “By attaching to their petition the … notice of deficiency, the Browns did properly invoke our jurisdiction to redetermine the… deficiency that the IRS determined against them in [sic]. However, in view of the Commissioner’s concession of that deficiency, there is nothing left for us to decide.” Order, at p. 6.

IRS moves to toss Vic’s & Kim’s Rule 91(f) OSC, to enter decision and to quash a subpoena Vic & Kim served.

“The Browns’ response to the motion for entry of decision and their motion for an order to show cause state issues that they call ‘new matter’—a phrase they draw from Rule 142(a), which they believe to be issues we should decide in this case. They evidently misunderstand Rule 142(a), in which ‘new matter’ consists of issues raised by the Commissioner beyond what the IRS asserted in the notice of deficiency. Moreover, the Browns have never moved for leave to amend their petition to add any new basis for relief. However, we cannot tell whether any of the ‘new matter’ really is new or is instead a rehashing or elaboration of the allegations in their petition. In any event, we cannot discern in their filings any issue within our jurisdiction that relates to their [conceded] tax year and that would not be resolved by our entry of a decision of zero deficiency.” Order, at p. 6. (Emphasis by the Court).

As for the subpoena, Vic & Kim didn’t proffer the witness and mileage fees required by Rule 148, asked for the documents to be produced at IRS counsel’s office and not at the courtroom at trial, and was overbroad because it included requests for documents relating to the out-of-jurisdiction year. Anyway, it’s moot as the out-of-jurisdiction year is off the table, and the in-jurisdiction year is moot.

Tax Court – the “sixty-buck ticket to justice” – is a first-class minefield.



In Uncategorized on 03/21/2019 at 16:27

I’m really sorry just to give a passing nod to Edward G. Kurdziel, Jr., 2019 T. C. Memo. 20, filed 3/21/19. It’s just another indocumentado too-much-fun Section 183 hobby loss case. But how can you resist a Judge Holmes opinion that begins thus? “Edward G. Kurdziel is the only man in America licensed to fly a Fairey Firefly.  He is also the only man in America who has a Firefly to fly.” 2019 T. C. Memo. 20, at p. 1.

Judge Holmes has a whole history of the Firefly, of course; I might even have seen one when I visited HMS Victorious when she called on Our Minor Outlying Island in 1957. Marx Bros. fans will know why I wish Captain Kurdziel had called his aircraft “Rufus T.” . But he didn’t.

The other T. C. Memo. today is a yacht and an RV that flunk the documentation test, and the rehab and conversion to rental of taxpayers’ primary residence don’t cut it for Judge Nega. Since one of the taxpayers is an attorney who has litigated tax cases, the Section 6662(a) chops are in play, despite the taxpayers’ highly-qualified CPA. Taxpayers should’a known they didn’t tell CPA the whole story.

But we have another entry in my sporadic, no-prize, “best excuses” sweepstakes. Here’s Christopher J. Bard, Docket No. 4965-18S, filed 3/21/19. Chris wants a vacation.

“In his motion to vacate or revise petitioner, a Chicago police officer who commenced the present judicial proceeding on March 12, 2018, as a selfrepresented taxpayer, states that he ‘was completely shocked when he recently discovered that his case had been dismissed’ because, ‘based on a misunderstanding and miscommunication with his tax return preparer, an enrolled agent,’ he ‘mistakenly believed that his only obligation with respect to this tax court case was to file the petition at the beginning of the case and to do nothing more.’” Order, at p. 1.

But Chris got the usual notice setting trial, and a separate reminder thereof, from the Tax Court clerk. He also got the motion papers when IRS moved to dismiss for want of prosecution, alleging Chris being “generally non-responsive.” “Respondent’s statement above about petitioner being ‘generally non-responsive’ is consistent with a statement made by petitioner himself in his pending motion to vacate or revise, i.e., ‘Petitioner ignored all correspondence from the Service relating to this case’ because of his mistaken belief that ‘his only obligation with respect to this tax court case was to file the petition at the beginning of the case and to do nothing more.’” Order, at p. 4.

Then the Court got back in the act, sending Chris an order to show up and bukh about why he should not be tossed. He didn’t, and he was.

Now I’ve called STJ Robt N Armen “The Judge With a Heart.” But STJ Armen hasn’t much heart for Chris’ excuse in this designated hitter.

“As the record in this case makes abundantly clear, petitioner received multiple warnings from the Court about the need to appear in court…, and about the possible consequence if he failed to do so. Petitioner was also warned by the Court about the need to cooperate in the preparation of this case for trial and about the possible consequence if he failed to do so. None of these warnings were in ‘legalese’ or used arcane language. Rather, all of the warnings were clear, concise, and written in plain English, and would be easily understood by a reasonable person. Thus, petitioner’s allegation that he believed ‘his only obligation with respect to this tax court case was to file the petition at the beginning of the case and to do nothing more’ strikes the Court as disingenuous. Surely a police officer would know that when a court says to a party in a judicial proceeding that the party needs to ‘show up’, the party shows up. Petitioner failed to do so and, at the time, failed to offer any reason that might have excused his failure to do so. And in his motion to vacate or revise petitioner fails to offer a convincing reason to justify his failure to appear.” Order, at p. 5. (Footnotes omitted; emphasis by the Court).

One footnote says IRS also contacted Chris about cooperating in trial prep, and the other footnote says Chris sent some documentation to Appeals after he began the Tax Court case, which puzzles STJ Armen. If he needed to do nothing, why send anything to anybody?

Of course, as Chris is a police officer, maybe in his cases when the court says “show up” to one whom Chris and his colleagues have collared, the party takes off, and Chris and colleagues have to go chase. But as such excursions rarely end well for the perp, Chris must know that it won’t end well for him.

No vacation for Chris.


In Uncategorized on 03/20/2019 at 18:17

I’m a great fan of summary judgment. See my blogpost “Summary Judgment – A Causerie,” 3/13/14. But the present Rule 121 needs a tweak. It allows the motion after pleadings are closed, but not later than sixty days before the scheduled trial session, without leave of court. And while Rule 121 carries a caveat that the motion cannot delay the trial, it sure can disrupt trial prep.

I routinely see IRS making summary J motions just barely outside the 60-day pretrial cut-off.

Here’s Linda Archie, Docket No. 7124-18L, filed 3/20/19. Trial is set for 4/15/19, IRS moved for summary J 2/14/19, and Linda replies 3/18/19, with exhibits. So Judge Goeke orders the parties to show up at calendar call, argue the motion, and set a date and time certain for trial.

This is just an example, and I’m not picking on Judge Goeke, nor on IRS’ trial counsel. There are bushelbasketsful of such motions, timed thus. The Rules say what they say; if they help your side, use them.

Now I know nothing of the facts of Linda’s case. From a docket inquiry I see she has counsel, she petitioned last April, IRS answered last June, and notice of trial was served last November. There are no discovery motions, and none directed to the pleadings. Therefore, I assume the parties were happy with whatever they pled, and Branertoned with no problems.

So if they had no discovery problems, and they knew in November that trial was on for April, even with the Great Shutdown in between, had IRS not the slightest inkling that there were no material questions of fact until last month?

Maybe it’s a good tactic to move for summary J at the last second, if the other side needs to assemble witnesses and documents and prepare for trial. It’s rare that witnesses can show up at the last minute, especially if trial is not in their home town or place of work, even if transportation and lodging can be arranged. Plenty of trials cannot be concluded in a single day. And anyone who has ever tried a case with witnesses knows that, television shows notwithstanding, it’s not only kids who say the darnedest things.

Old Sun Tzu, China’s master military mind, said the best way to win was to disrupt the enemy’s preparations. Viscount Field Marshal Slim of Burma, who had perhaps not read Sun Tzu but knew his doctrines, used them effectively.

To forestall repetition, perhaps a revision of the summary J cut-off rule is something to consider.


In Uncategorized on 03/20/2019 at 17:01

STJ Daniel A. (“Yuda”) Guy has a reminder for those who opt for small case treatment. Since you can’t appeal, the notice-of-appeal extension of time in Section 7481 doesn’t help.

The reminder is a designated hitter, Victor M. Crown, Docket No. 030082‑14S L, filed 3/20/19. Vic lost a small claimer in April two years ago, which I didn’t blog.

Now he decides to try for a Rule 162 vacation. He’s late, of course.

Vic is out unless “…the decision is shown to be void, or a legal nullity, for lack of jurisdiction over either the subject matter or the party, (2) the decision was obtained through fraud on the Court, or (3) there is a need to correct a clerical error in the decision.” Order, at p. 2. (Citation omitted.)

Vic can’t do any thereof.

So a small-claimer becomes final on Day 30, because the 90-day push for filing notice of appeal is meaningless, as there is no right of appeal. Section 7463(b) places a Congressionally-mandated jurisdictional bar on the appellate courts.



In Uncategorized on 03/19/2019 at 23:47

I will spare my readers any allusion to the 1976 Meredith Willson Broadway musical hit; it’s late, I had a fun-filled day of art and music, and I’m tired.

Bur I owe it to my readers to tell them about River City Excavation, Inc., Docket No. 22751-18L, filed 3/19/19. River City’s troubles have to do with the Section 6721 chops for filing messed-up information returns. There must be a ton of them, because River City is complaining about three (count ‘em, three) years’ worth.

IRS wants to toss all three for untimeliness, and River City folds as to two, but claims they got a NOD for the third year, and that one they timely petitioned.

It seems River City petitioned everything, and the SO considered it all, although not formally joining everything. River City argues that Reg. 301.6330-1(a)(3), Q&A-D2, obliges Respondent to combine CDP hearings where practical, and deal with everything.

But if the NITL and NFTL for the two untimely years were joined with the timely year, doesn’t that oust Tax Court of jurisdiction? Isn’t the NOD for the timely year a supplemental NOD?

Ch. Judge Maurice B (”Mighty Mo”) Foley wants to know. After all, remember LG Kendrick, LLC. What, you don’t? Then see my blogpost “Be Careful What You Ask For – Part Deux,” 1/21/16. Now LG Kendrick LLC involved Form 941s, and the forms in this case are information only, not payment.

But maybe the rules are the same.

Let both sides discuss, but let IRS tell Ch J Mighty Mo if they’re going to issue a new NOD for the one open year.


In Uncategorized on 03/18/2019 at 17:52

That Obliging Jurist, Judge David Gustafson, provides a really simple guide to the seeker for a piece of the action she stirred up, in Suzanne Jean McCrory, Docket No. 11798-18W, filed 3/18/19, a day when the two designated hitters concern only lost-in-the-woods pro ses.

Suzanne Jean starred in my blogpost “Remand? You Can Whistle For It,” 1/31/18, a T. C. Memo. Now she’s down to an undesignated order.

Suzanne wants a continuance for “formal and informal evidence gathering.” Order, at p. 1.

No dice.

“…when reviewing respondent’s determinations under section 7623(b), we limit the scope of our review to the administrative record, see Kasper v. Commissioner, 150 T.C. No. 2 (Jan. 9, 2018), so that, in the ordinary course, there will not be a trial in a whistleblower case. Rather, the parties will stipulate the contents of the administrative record (or, if they cannot agree, then a hearing might be held to determine the contents and sufficiency of that record), and the Court will order the filing of whatever briefs are appropriate to resolve the issues in dispute.” Order, at p. 1.

As for Kasper, see my blogpost “Two Old Cases,” 1/10/18. Chenery-style review is all a blower gets.

All that the administrative record should show is what Suzanne gave IRS, what they did with it (and why), and how much IRS collected (if anything).

If IRS looked over Suzanne’s proffer, either pursued or didn’t pursue, and if pursued got nothing, game over. If IRS looked and did nothing, or did something and got nothing, no second-guessing by Tax Court.

But if IRS got money, and claims they didn’t use Suzanne’s stuff, there’s more.

See my blogposts “Trust Me – It Wasn’t Yours,” 3/12/19, and “Qui Tam,” 9/12/12.

I’ve said this before. If the blower connected the dots, even though every dot was in plain sight, unless anyone could have connected them, the blogger is entitled to something. Edgar Allan Poe’s classic “The Purloined Letter” is a perfect example; the police spent time tearing up floorboards, sticking long needles into upholstery, waylaying and searching the thief, and found nothing. It took Dupin, who used his head and left preconceived notions behind, to find it, pinned to a wall in front of their noses.

Absent someone connecting the dots, nothing will be found.


In Uncategorized on 03/18/2019 at 16:41

You Still Have to Ask

The usual three-and-two lookback on refunds for overpayment (Section 6511) may be suspended by an informal claim per Section 6015(g). But you still have to ask.

Even that Obliging Jurist Judge David Gustafson can’t find that Jim Stuart Brooks, 2019 T. C. Sum. Op. 5, filed 3/18/19 asked. Judge Gustafson revisits Palomares, which I’d almost forgotten, until I looked back my own self and found my blogpost “8379 Does Not Equal 8857,” 12/2/14“8379 Does Not Equal 8857,” 12/2/14. And even though 9 Cir. generously reversed Tax Court to allow Teresa Palomares to recover the overpayments she made (but which were applied to the tax liabilities of nogoodnik ex), she did file the 8379. Jim Stuart only filed his returns, his Form 8857, his Form 656 OIC, and his petition.

Jim Stuart never showed what part of the overpayments were made by him and which from Mrs. Jim Stuart. Jim Stuart lived in SC; I doubt 4 Cir. is as generous as 9 Cir.

Jim Stuart entered into an IA,  but defaulted after one payment. He got an inheritance and didn’t pay any part of his liability. True, his tax problems arose from one very good year, but Judge Gustafson finds he didn’t set anything aside to pay his taxes. Mrs. Jim Stuart seems throughout to have contributed about 17% of the family’s income, and though they weren’t extravagant, Judge Gustafson finds that 83% of the problem is Jim Stuart’s.

And Jim Stuart’s statement of his living expenses was a ballpark guestimate, so no showing of economic hardship..

“Four factors favor retained liability:  Mr. Brooks lacked a reasonable expectation that the liability would be paid when he signed the [year it issue] return (and when he later entered into the installment agreement); he failed to prepay or set aside tax money during a ‘bumper year’; he chose to live off his inheritance rather than paying the liability; and Mrs. Brooks’s approximate share of the liability is relatively small.  Four factors are neutral (marital status, economic hardship, legal obligation, and subsequent tax compliance).  Only two factors weigh in favor of granting relief–Mr. Brooks’s physical health and the lack of significant benefit.” 2019 T. C. Sum. Op. 5, at p. 27.

Jim Stuart loses.


In Uncategorized on 03/15/2019 at 16:29

Is Coming to Our Island

Those of my readers who have followed the tangled trail of Jonathan Zuhovitzky & Esther Zuhovitzky, Docket No. 3489-16, filed 3/15/19, united in life but maybe not in tax status, will no doubt echo my surprise (a Taishoff “Mein! Was ist das?”) at the latest removal of their trial.

Judge Vasquez started us in Berlin, as Jonathan’s bad back (“severe scoliosis, nerve root compression syndrome, herniated discs, osteochondrosis, and sciatica”) prevented him from venturing beyond the banks of the Spree, requiring Jonathan and Esther to teletubby their trial.

But then came Tom Sawyer, Tax Attorney, a job description never dreamt of by Samuel Langhorne Clemens, to throw State Dep’t. shade on any Reality TV from the Prussian capital. The upshot thereof is that Jonathan’s back improves sufficiently for him to cross the North Sea to London, where Tom Sawyer Tax Attorney, State Dep’t., and apparently Terry May, are down with the Jonathan and Esther Show.

But now comes the kicker. IRS and Jonathan and Esther file a status report.

From this, Judge Vasquez is pleased to announce that “…this case is calendared for a one-week Special Trial Session on July 15, 2019, at 10:00 a.m. in Room 206, Jacob K. Javits Federal Building, 26 Federal Plaza, New York, New York 10278.” Order, at p. 1.

Judge Vasquez doesn’t state whether this will be a TV special or a live-from-New-York. But it should be a good show regardless. Plan your summer vacation now; New York is a summer festival.


In Uncategorized on 03/15/2019 at 16:15

That’s my esteemed colleague, fellow-blogger, gentleman, and scholar Peter J. Reilly, CPA. Mr. Reilly is self-confessed as one who finds postmark decisions “irresisitible.” (Private correspondence, 3/14/19).

So here’s Ch J Maurice B (“Mighty Mo”) Foley rebuking IRS for dodging Pearson when it comes to USPS Click-‘N’-Ship postage applied to the envelope wherein was placed the petition of Alexis J. Oleshytsky, Docket No. 24243-18S, filed 3/15/19.

Y’all will remember Pearson went off on timely arrival and stip by IRS as to timely mailing based on USPS info. If not, see my blogposts “Does Not the Wild Boar Break Cover Just as You’re Lighting a Weed?” 11/20/17, and “Private Postmark, Public Approval,” 2/7/18.

Please accept my best wishes for a happy Saint Patrick’s Day, Mr. Reilly.



In Uncategorized on 03/15/2019 at 15:34

I’ve lost count of the times I’ve repeated this mantra, or told the story of the Judge who granted my motion (dearly sought by the client) and set in train a monster.

Today I note its application even to the exalted personages on the learned and distinguished Bench of the United States Tax Court, even at the Senior Judge level.

Y’all will recall Oakbrook Land Holdings, LLC, William Duane Horton, Tax Matters Partner, Docket No. 5444-13, filed 3/15/19. Tax Matterer Billy D was leading the charge to knock out Reg. §1.170A-14(g)(6)(ii).

If not, see my blogpost “Perpetuum Fragile?,” 2/27/19.

There you are. Now you know Judge Mark V Holmes, aware that there might have been public comments submitted to the Treasury Department during the course of considering said Reg., was unable to extricate same by usual means (and neither was I, btw).

So, setting a tight deadline for a minimalist’s delight of briefing once said comments, if any, surfaced, Judge Holmes sent IRS to go find same.

Comes now the point of this little essay.

“On March 14, 2019 we spoke with the parties again and learned that the comments are approximately 2600 pages in length. The Commissioner will mercifully produce them in .pdf and indexed form with Bates-stamped page numbering.” Order, at p. 1.

So the briefs, though still minuscule, are put off for a couple months (this is Judge Holmes, after all).

And maybe Treasury can put this megillah online, now they’ve gone to the trouble of producing it. Judge Holmes must have forgotten that most commentators on proposed Federal regs are lawyers. As Tom Jefferson said, these are those “…whose trade it is to question everything, yield nothing, and to talk by the hour.”

Heed the title hereinabove at the head hereof set forth.