In Uncategorized on 05/17/2019 at 15:55

It looked like Hisham N. Ashkouri & Ann C. Draper, Docket No. 17514-15, filed 5/17/19, might have caught a break when Clay & Osceola walked back the initial chop determination date to the 30-day letter.

Confused? See my blogposts “Indians Not Taxed – NOT!” 4/24/19, and “Here Comes the Silt,” 4/25/19.

Now Judge James S (“Big Jim”) Halpern finds IRS’ tell-all establishes the Section 6751(b) Boss Hossery, so he allows a reopener so IRS can dish.

Hish & Ann claim that after the RA and Acting Group Manager (his boss) confabbed as alleged, they went to Appeals and got their alleged deficiency cut by 50%.

No go, says Judge Big Jim.

“Petitioners base their opposition to respondent’s motion on the transfer of their case to Appeals after [AGM]’s involvement in it. Although petitioners do not explicitly address the standards we employ in considering a party’s request to reopen the record, they suggest that receipt of the evidence respondent seeks to admit would not affect the outcome of their case because it does not establish compliance with section 6751(b)(1). Petitioners allege that Appeals ‘amended’ their tax liability by reducing their deficiencies ‘by 50% of what was stated by [AGM].’ ‘This change in tax liability and amount of deficiency,’ they contend, ‘amounts to a fundamental change to * * * [what was] proposed by [AGM].’ They thus view Appeals’ offer of compromise as having ‘supersede[d]’ the 30-day letter.

“Contrary to petitioners’ argument, the evidence respondent seeks to admit would establish compliance with section 6751(b)(1). The plain terms of that section require the approval of ‘the initial determination’ to assess penalties. Clay & Osceola establishes that the initial determination to assess penalties occurs no later than the issuance of a 30-day letter to the taxpayer. Because a 30-day letter advises a taxpayer of his right to appeal proposed adjustments or penalties, the rule established in Clay & Osceola presupposes the possibility that a taxpayer’s case may go ‘beyond’ the examining agent and his immediate supervisor. Neither the statute nor our opinion in Clay & Osceola gives any indication that a determination to assess penalties must receive subsequent approval during consideration of the taxpayer’s case by Appeals. (Indeed, as noted above, such a requirement would be contrary to section 6751(b)(1)’s plain language.) Moreover, the compromise offered to petitioners by Appeals did not amount to a ‘fundamental’ redetermination of their tax liabilities for the years in issue. The offer–which the notice of deficiency demonstrates was never implemented—simply reduced each proposed adjustment by approximately half.” Order, at p. 3.

So this evidence is a game-changer, is material, and is neither cumulative nor impeaching.

Hish & Ann are “wrapped in white linen as cold as the Clay.”

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