In Uncategorized on 11/01/2019 at 15:57

Occasionally I get a headline that is so serviceable it impels me to reuse, repurpose and recycle it. Today is another example, a designated hitter from STJ Daniel A (“Yuda”) Guy, wherein he denies admins & legals to Paul Edwin Johnson & Susan H. Johnson, Docket No. 14429-18, filed 11/1/19.

Paul got a big IRA distribution and rolled it over, but he didn’t give IRS anything more than his say-so until after the CP2501 mismatch notice (the trustees of the rolled-into IRA did send in Form 5498, but it had no date for the rollover, so the 60-day barrier was still there), CP2000 proposed changes, SNOD, petition, remand to Appeals, and finally a stip of settlement agreeing that the IRA distrib was properly rolled.

Paul & Susan want admins, consisting of “$71 for out of pocket expenses (postage and the Court’s $60 petition filing fee), $3 for mileage expenses, $3,709 for preparation and filing expenses, and $9,703 representing a purported accuracy related penalty.” Order, at p. 3.

STJ Yuda treats this matter-of-factly, as is his usual wont. In a footnote. “The majority of the expenses that Mr. Johnson claims do not constitute ‘reasonable litigation costs’ as Congress defined that term in sec. 7430(c)(1)(A) and (B). Consequently, the Court limits its consideration to his claim for an award of $71 (i.e., postage expenses and the Court’s filing fee).” Order, at p. 3, footnote 2.

Maybe Mr. J. didn’t exhaust his administrative remedies, but STJ Yuda need not go there.

“…IRS received third-party information that Mr. Johnson received a pension distribution from ETC and an IRA distribution of $141,793 from Riversource, and that he made a contribution of $141,233 to an IRA account at ETC. In the light of this information, respondent was justified in seeking clarification from Mr. Johnson on three points: (1) did he receive a $20,000 pension distribution from ETC, (2) did he make a rollover contribution of the full amount of the IRA distribution from Riversource, and if so, (3) did he make the rollover contribution to ETC within the 60-day period prescribed in section 408(d)(3)(A)(i). As the owner and beneficiary of these retirement accounts, and having claimed the benefit of a rollover contribution on his joint tax return, Mr. Johnson should have maintained records of these transactions and readily shared them with respondent upon request. Unfortunately, petitioners failed to provide any documentation to respondent to assist in resolving these questions, leading to the issuance of the notice of deficiency.

“The Commissioner is entitled to maintain his position, for purposes of determining whether it was substantially justified, until adequate substantiation is received from the taxpayer. Where the resolution of adjustments hinges on factual determinations, the Commissioner is not required to concede the adjustments until he has received, and has had reasonable time to review, sufficient substantiation for the matter in question. Because petitioners did not provide any documents, records, or other objective evidence to show that Mr. Johnson made a timely and proper rollover contribution during the year in issue, respondent’s position in this case was substantially justified.” Order, at pp. 4-5. (Citations omitted).

If you’re going to claim legals & admins, by all means go all-in, but follow the rules. And when IRS wants information, see the title of this sermonette.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: