Attorney-at-Law

JUDGE ON A TEAR

In Uncategorized on 06/07/2019 at 17:43

An online dictionary defines one described in the title of this blogpost as “Engaged in a continuous, fast-paced procession of actions or events.”

The phrase certainly describes that Obliging (and energetic, fast-paced) Jurist, Judge David Gustafson, who gives us three (count ‘em, three) designated hitters today.

I’m going to pass on Johannes Lamprecht & Linda Lamprecht, Docket No. 14410-15, filed 6/7/19. The Lamprechts have been here before, but when they featured on my blog the previous four (count ‘em, four) times, we had the full story. This time it’s a throw-down about responses to interrogatories, but without full texts of both interrogatories and responses, it’s like trying to make out a telephone conversation when one hears only one party (and that not even in full). So whatever Judge Gustrafson conveyed to the parties, I can draw no conclusions for anyone else.

It’s a different story for Scott Alan Webber, Docket No. 14307-18L, filed 6/7/19. Scott is fighting a NITL, but IRS claims he’s a day late (and much more than a dollar short, like $9K) with his filing, as he used the return address from the wrong side of a two sided IRS one-size-fits-nobody Notice LT11.

I hasten to add the the “LT” designation of  this befuddling document has nothing to do with me. It’s six pages, and was sent with a blank Form 12153 and a window envelope, so that the party requesting a CDP could use one side of the LT11 to fold down and use to address the window envelope to Philly, enclosing the completed Form 12153.

Except on the other side of the same page was another address, in Kansas City, to use to pay up if you didn’t want to fight. And use the same envelope to send in your check.

Of course, Scott got it wrong, the 12153 went to KC, KC relayed to Philly, and IRS called the play dead because the 12153 got to Philly a day late, so Scott only got an equivalent (non-appealable to Tax Court) hearing, which he petitions. And IRS moves to bounce because you can’t get to Tax Court from an equivalent.

Judge Gustafson wants a supplemental memo from IRS. Reg § 301.6330-1(c)(2) Q&A-C6 says you have to send your 12153 to “the IRS office and address as directed on the CDP notice.”

What notice? There are two, each one for a different purpose, on the obverse and reverse of the same page of the same document.

Judge Gustafson takes judicial notice to a new height. ”Within recent memory the undersigned judge has paid a bill using an address slip of the sort the IRS employed here, and he inserted the address slip into the envelope wrong side out and sealed the envelope. In that instance, the wrong side was blank, the error was obvious, and the fix could be made by opening the envelope, turning the address slip around, and re-sealing the envelope. But if the wrong side had borne another similar (but incorrect) address, the error would probably have been overlooked, and the bill payment would have gone astray. That is to say, we sympathize with a taxpayer who is confused by the design of Notice LT11.” Order, at p. 8.

Now of course IRS has had to do more with less for years. IRS must deal with tsunamis of paper and electrons, from serried ranks of millions of taxpayers, deer-in-the-headlights, wits, wags and wiseacres, et hoc genus omne. And do it with fewer people and resources. Judge Gustafson is sympathetic. And the law is the law.

But.

“…where the IRS intends to require that a CDP hearing request be sent to a particular address, and where it takes the position that a CDP hearing request sent to a different address is invalid and ineffectual, and where it argues that the use of the wrong address ultimately deprives the Tax Court of jurisdiction over the case–in such a circumstance, we wonder whether an occasion for confusion is predictably and unfairly created by (a) combining the CDP notice with a gratuitous demand for payment, (b) providing multiple address slips back to back with multiple addresses , (c) putting the wrong address slip on the front page of the notice, and (d) failing to label the CDP address slip with any indication that it is the CDP address slip. It would seem reasonable for the IRS either to insist that a CDP hearing request must be sent to a specific address or to decide to make use of its mailing of a CDP notice for the additional purpose of soliciting payments to be mailed to a different address—but probably not both.” Order, at pp. 8-9.

So let IRS file a supplemental memo, explaining (1) why KC isn’t the right address, and (2) the “first levy” conundrum: IRS can’t levy until thirty days have passed since notice and no 12153 has been sooner filed, but if 12153 is filed then no “first levy” until (a) NOD and (b) if timely petitioned, then Tax Court decision and (c) Section 7481 finality thereof. So “first levy” is a future event that may never happen. But IRS has conflated lien (which is automatic and arises before notice need be given) and levy (which requires notice) in the LT11.

Unless, of course, IRS withdraws its motion to dismiss Scott’s petition (hint-hint, nudge-nudge, wink-wink).

Finally, the Return of the Palmolives, Palmolive Building Investors, LLC,  DK Palmolive Building Investors  CLC Participants, LLC, Tax Matters Partner, Docket No. 23444-14, filed 6/7/19. Here Judge Gustafson ascends  “to such rarefied heights of pure mathematics that it is said that there was no man in the scientific press capable of criticizing it.”

The Palmolives erected a wall of LLCs worthy of Game of Thrones. They sliced and diced the poor old Palmolive building into commercial spaces, residential condominiums, and the Building Base. Each LLC got a different piece, but each member of an LLC not only had a piece of one, but maybe a (different fractional) piece of another.

Then they split off the façade, so that the poor thing got sliced and diced in two directions.

Judge Gustafson turns to linear algebra, and propounds a series of equations worthy of Professor Moriarity in his prime. And in my checkered career I’ve done some slice-and-dice, chop-and-swap condominium deals, with Fortune 500s and a merry crowd of pirates (who all sued one another) in the mix…but enough of war stories.

“It is perhaps fortunate to have in this case a circumstance that seems to be rare in cases involving the valuation of a facade easement–i.e., a transaction in which portions of a facade are transferred separately from the building behind that facade. An arm’s-length transaction in which a facade was sold, separate from the building, might be good evidence of the fair-market value of that facade. As we have shown above, it appears in this case that, in the 2003 transaction, [X} transferred to [Y] [X’s] entire interest (both facade and associated building) for floors 5 to 15 but also transferred to [Y] [X’s] interest in only the facade of floors 1 to 4. The foregoing analysis is the Court’s attempt, unassisted by the parties or their experts, to identify that distinct value. If the Court’s attempt requires correction (e.g., as to the value received by [X], or the property rights transferred during the 2003 restructuring), then we would appreciate receiving that correction in the parties’ memoranda and in their presentations at trial.” Order, at pp. 6-7. (Names omitted).

However the numbers come out, the Palmolives get a Taishoff “Good Try, hors classe.”

 

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