In Uncategorized on 04/04/2019 at 16:14

Judge Patrick A (“Scholar Pat”) Urda has a chance to expatiate further on the penalty “automatically calculated through electronic means” within the meaning of sec. 6751(b)(2)(B), thus excusing same from Boss Hoss sign-off.

Here’s Vica Technologies, LLC, 2019 T. C. Sum. Op. 7, filed 4/4/19, and its manager, Mr Hyacinth Anyiam. Hy was having money troubles and accountant troubles, but neither was enough to get him off the late filing chop for the only year for which Judge Scholar Pat found he had jurisdiction. Hy had more, but he was too late for those.

Vica Tech was a check-the-box LLC taxed as a partnership, thus the month-late Form 1065 attracts a Section 6698 late-filing chop.

Y’all will recollect that the Sub S species gets chopped via Section 6699, thus the late filer thereof gets electronicuted. For the etymology of “electronicuted,” which I admit is a neologism, see my blogpost “Electronicuted,” 3/13/19.

Judge Scholar Pat relegates to a footnote his conclusion that the Section 6698 chop differs neither from the Section 6699 Sub S late-filing chop nor yet the five-and-ten substantial understatement chop in Section 6662(d).

“In his motion for summary judgment, respondent asserts that the penalty imposed under sec. 6698 constitutes a penalty ‘automatically calculated through electronic means’ within the meaning of sec. 6751(b)(2)(B) and is therefore not subject to the supervisory approval requirement of sec. 6751(b)(1).  Petitioner does not argue to the contrary, and thus we need go no further.  We nonetheless note our recent holding that a sec. 6699 penalty–the same type of penalty as is imposed under sec. 6698 here, just for S corporations–was automatically calculated through electronic means where the penalty was a simple and automatic computation and had been generated by the IRS computer system.  See ATL & Sons Holdings, Inc. v. Commissioner, 152 T.C.     ,  (slip op. at 21-25) (Mar. 13, 2019); cf. Walquist v. Commissioner, 152 T.C.     ,      (slip op. at 20) (Feb. 25, 2019) (concluding that a substantial understatement penalty under sec. 6662 that was ‘determined by an IRS computer program without human input or review’ was a penalty automatically calculated through electronic means).” 2019 T. C. Sum. Op. 7, at pp. 14-15, footnote 7.

For the Walquist story, see my blogpost “I Sing the Penalty Electronic – Part Deux,” 2/25/19.

It’s unfortunate that Judge Scholar Pat enunciates this principle in a “don’t quote me” small-claimer, which Section 7463(b) expressly excludes from precedential status. But I’m sure IRS will lift the language for future briefs.

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