Archive for March, 2019|Monthly archive page


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.


In Uncategorized on 03/14/2019 at 16:05

The frivols get a break today, Pi Day.

First, Robert Wesley, 2019 T. C. Memo. 18, filed 3/14/19. Rob is back before Judge Albert G (“Scholar Al”) Lauber. The last time Robert got chopped for frivolity to the extent of $7500. Back then Robert “…had made ‘baseless allegations of fraud against respondent’ and had submitted to the settlement officer a purported amended return for 2010 showing zero gross income and zero tax due.  In support of this ‘zero return’ he cited ‘irrelevant Code sections and IRS regulations’ and alleged that he had no obligation to file an income tax return because ‘he is not dead and is not * * * an executor of an estate.’” 2019 T. C. Memo. 18, at pp. 2-3. Robert may have forgotten the $2500 chop he got back in 2002.

Judge Scholar Al hasn’t forgotten.

But IRS conceded the 10% Section 72(t) addition, and the nontaxability of $737 in miscellaneous income. Judge Scholar Al isn’t quite so forgiving, but he’ll let it go. “We do not believe that respondent was obligated to concede the inapplicability of the section 72(t) additional tax or the nontaxability of $737 in miscellaneous income.  For purposes of deciding this case, however, we will give effect to these concessions and to respondent’s agreement to abate the portion of the 2012 tax attributable to those amounts.  We assume that further abatements may be required with respect to self-employment tax and for portions of the sections 6651 and 6654 additions to tax.” 2019 T. C. Memo. 18, at p. 16, footnote 4.

Ultimately, Robert catches a break.

“Petitioner has raised many frivolous arguments during this litigation.  We sanctioned him on two prior occasions for advancing frivolous arguments, and in this case we repeatedly warned him to desist from doing so.  We struck from his amended petition 10 paragraphs containing frivolous arguments, yet he persisted in advancing those very same arguments in discovery motions and at trial.  He has wasted considerable resources of the IRS and this Court.

“Given this track record, we believe petitioner to be deserving of a very severe sanction.  But because respondent (rather generously) made several concessions in this case, petitioner by filing his petition has secured some relief despite his own worst efforts.  We will accordingly require him to pay in this case a penalty of only $10,000.” Order, at p. 20.

So do a Rule 155 beancount.

Ex-Ch J Michael B (“Iron Mike”) Thornton has an off-the-bencher designated hitter for Keith William Brown, Docket No. 5817-18, filed 3/14/19. KW only gets a yellow card for stating in his petition that “…as his basis for disagreeing with the determination in the notice of deficiency, petitioner states: ‘irreconcilable differences’. And for the facts upon which he relies: ‘the facts are many and span a period of 37 years, beginning in 1981’.” Order, transcript page 6.

And of course the deficiency in the SFR IRS gave KW at no extra charge is sustained.  And the additions for nonfiling, nonpayment and underwithholding are sustained as well. KW’s arguments on that score are frivolous, but ex-Ch J Iron Mike only warns KW against trying this tack again.


In Uncategorized on 03/13/2019 at 17:40

Well, Neither Form 2848 Nor Form 4868 Is

The short answer to the question Zedd asked via Foxes back in 2012 is set forth hereinabove. But Judge Buch tells the whole story in Damian K. Gregory and Shayla A. Gregory, 152 T. C. 7, filed 3/13/19.

I put in dates because they’re necessary.

D and S moved between June, 2015 and filing 2014 on extension in October. When 2014 was examined, they had already sent in a Form 2848 Power of Attorney in November 2015, and an Application for Automatic Extension to File, Form 4868, in April, 2016, showing new address. IRS send a SNOD to old address in October, 2016.

Everyone agrees D and S never were aware of the SNOD until just after the 90 days had run, in January, 2017. They petitioned same day. D and S argue IRS knew of new address via the 2848 and the 4868.

“Last filed return” is one test. “These forms do not fall within the class of documents that are typically considered to be returns.  Most commonly, a return is a document that is used to report a tax liability.  See. e.g., Beard v. Commissioner, 82 T.C. 766 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986). Under what is commonly called the Beard test, for example, a return must meet the following criteria:  ‘First, there must be sufficient data to calculate tax liability; second, the document must purport to be a return; third, there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and fourth, the taxpayer must execute the return under penalties of perjury.”  Id. at 777.  Neither Form 2848 nor Form 4868 meets any of these criteria:  They do not provide any data necessary for calculation of a taxpayer’s tax liability, they do not purport to be returns, and they cannot reasonably be considered attempts at making a return.” 152 T. C. 7, at pp. 7-8.

Anyhow, Rev. Proc. 2010-16 says neither one is a return.

“Clear and concise notice” is the other test. If either the 2848 or the 4868, both of which showed new address, gave “clear and concise” notice to IRS of new address, then SNOD invalid.

Well, once upon a time they did. But not now.

Back in 1997, the 2848 did give notice. But that ended prior to 2014. Now the instructions to both forms follow Rev. Proc. 2010-16, and explicitly state that neither of these give “clear and concise” notice to IRS of a change of address. Form 8822 Change of Address, to which the applicant is directed in the instructions to the Form 4868, is the form to use.

D and S are out.

Once again, those who need this won’t read this, and those who read this don’t need this.