In Uncategorized on 03/07/2019 at 16:31

In this season of reflection and penitence, I confess my fear that I am a bad influence on Judge Mark V Holmes. While he occasionally has referred to musical comedies in the past (cf. my blogpost “Chenery on the Roof,” 2/4/15), my addiction to such allusions seems to have seeped into Judge Holmes’ serious evaluation of David F. Burbach, 2019 T. C. 17, filed 2/7/19.

Judge Holmes quotes Meredith Willson’s 1957 operetta, about trouble with a capital T that rhymes with P and that spells Pool. Because Dave is a swimming-pool designer of note throughout the Midwest, bringing summer R&R to municipalities, reaping substantial rewards and promptly filing returns and paying taxes thereon, until he falls into the clutches of an incoherent self-styled EA, whom I’ll call GTE.

GTE manufactures a phony foundation to house Dave’s Ford Motor Company memorabilia, creates a phony self-employed pension plan (although Dave is really an employee of one of the corporations that GTE sets up for him), and otherwise fiddles Dave’s tax picture.

Dave confronts GTE. And what GTE tells him is clessic (no, not a misprint…that’s how it should be pronounced). A C Corp has six years to file its returns.

Dave wants to use this for his good-faith defense against chops. I may be a bad influence on Judge Holmes, but that’s nothing compared to what GTE did to Dave.

Judge Holmes seems to relish GTE’s high-priced prose: “’Are you a Beleaguered American Taxpayer?  Is the Grizzly Bear {the IRS} feasting sumptuously in [sic] your money that you have earned by work? * * *  Are you ever going to use Rule of Law to stop paying maximum taxes to the Grizzly Bear?  Do you have the heart to use Rule of Law through me? * * *  What is your decision?” 2109 T. C. Memo. 17, at p. 8.

“Burbach’s testimony is laced with references to [GTE]’s status as an enrolled agent, but the Commissioner correctly points out that Burbach never verified [GTE]’s status with the IRS or even looked into what an enrolled agent actually is.  Even if he had, Burbach’s initial contacts with [GTE] should’ve thrown up more red flags than Florida in hurricane season.  Burbach paid [GTE] $1,200 for a two-day class at which [GTE] provided a class handout that is comprehensible only in its descriptions of aggressive tax-avoidance schemes—[GTE] encouraged Burbach to apply ‘Rule of Law’ to ‘stop the 445 legal thieves’ in Washington and ‘stop paying maximum taxes to the Grizzly Bear’.” 2019 T. C. Memo. 17, at p. 44.

Dave turned to one of GTE’s ex-employees, who straightened out some of Dave’s problems, but not nearly enough. Finally Dave came up with his own numbers.

He does get some Section 179 equipment write-offs. But the “director’s fees” he tried to funnel into his pension plan crater, because he’s an employee of a corporation, not self-employed, and the “director’s fees” were paid for working, not promulgating policy and oversight.

EAs, don’t do this.

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