We have a designated hitter from Judge Gale, reversing an order from Ch J Maurice B (“Mighty Mo”) Foley, a rarity in the extreme. With the abundance of routine “OK to amend” orders, I can understand how this happens, and am glad it happens so rarely. I can easily see how any Ch J would get snowblind going through the daily barrage of routine.

Here’s William M. Hefley & Aimee J. Hefley, Docket No. 17455-16, filed 11/15/19. A quick internet search shows both Bill & Aimee are lawyers in the same firm. But not tax partners, apparently, as Aimee wants innocent spousery. But they both timely petitioned the same SNOD, and Aimee timely petitioned the NOD that bounced her innocent spousery, in the same petition.

Bill is listed as a criminal defense lawyer. So is Aimee. Bill may be a hot ticket in the Orange County, FL, criminal courts (the Aimee Hefley firm website says it specializes in DUI and domestic violence…cases, that is), but he needs to brush up his Tax Court skills. And send in the thirty Georges and a good standing cert to get on board.

Judge Gale: Bill “…electronically filed a Motion for Leave to File Amended Petition in which he sought leave to amend the petition to withdraw the challenge to the Notice of Determination. He purported to do so as ‘Counsel for Petitioner’. Attached to the Motion for Leave was an Amended Petition bearing the signatures of each petitioner. …the Court granted the Motion for Leave and filed the Amended Petition. The Amended Petition is identical to the Petition except that the references to the Notice of Determination are eliminated and an additional ground for contesting the Notice of Deficiency is added.” Order, at p. 1 (Footnote omitted, but it says “Objection to method of selection for audit as communicated by agent.” Greenberg’s Express, anyone?).

Judge Gale voids the motion to amend ab initio (that’s “from the getgo,” for you who went to reasonably-priced law schools).

“First, Mr. Hefley lacks authority to act on behalf of Mrs. Hefley with respect to review of the Notice of Determination. Although Mr. Hefley purported to act on behalf of Mrs. Hefley as her ‘counsel’ in the Motion for Leave, he has not entered an appearance in this case and in any event would be ineligible to do so because he is not a member of the Tax Court bar. More importantly, his purported representation of her is in direct conflict with the Model Rules of Professional Conduct in that Mrs. Hefley’s interests are adverse to his interests with respect to I.R.C. section 6015 relief. See Model Rule 1.7 Cmt. [1] (‘Loyalty and independent judgment are essential elements in the lawyer’s relationship to a client.’); see also Gebman v. Commissioner, T.C. Memo. 2017-184. Consequently, Mr. Hefley does not represent Mrs. Hefley and may not act on her behalf with respect to this Court’s review of the Notice of Determination. Second, although the Amended Petition contains what purports to be Mrs. Hefley’s signature, she stated in a telephone conference call between the Court and the parties on November 6, 2019, that she did not sign the Amended Petition.” Order, at pp. 1-2.

Judge Gale and I may be too harsh on Bill as regards the conflict of interest issue. In Gebman, supra, even the Great Chieftain of The Jersey Boys came unstuck on that score. See my blogpost “No Good Deed – Redux,” 9/18/17. I wish I knew all that Frantic Frank knows. For the rest, draw your own conclusions.

So what to do now?

When on a collision course, bifurcate.

IRS relied on the defective amendment and didn’t do any discovery on Aimee’s innocent spousery. Bill & Aimee disputed some of IRS’ initial discovery requests on Aimee’s innocent spousery, but IRS dropped taking that up with Judge Gale when Bill took innocent spousery off the table.

Judge Gale doesn’t say it, but post-Taxpayer First, which would apply here, IRS definitely needs all the discovery it can get, and then some. Judge Ashford, at least, will let everything in, new or old. See my blogpost “Taxpayer First – Maybe,” 10/16/19.

So try the SNOD issues first. Like on Monday, 11/18/19, as scheduled. But no evidence regarding Aimee’s alleged innocent spousery may be submitted thereat. And Judge Gale will schedule the innocent spousery trial later.