In Uncategorized on 03/05/2020 at 16:40

Most wits, wags and wiseacres in the Section 6702 frivolous returns league follow the well-trodden paths of all-zeros 1040s, Form 4852 substitutes, and protester jive cribbed from the internet.

But when a 6702 type tries a new gambit, there’s a joy in novelty that overtakes my usual sense of “here we go again.” So today, Sun River Financial Trust, Jay A. Greek, Trustee, 2020 T. C. Memo. 30, filed 3/5/20, brings a smile to my battered visage. And even makes me forswear all the obvious puns I could have used as a headline for this blogpost or to designate the dodger in the text hereof, sending me back to Charlie Dickens’ memorable pal of Ollie Twist.

Jay gets hauled for a quartet of 1040s, showing taxable income that IRS concedes is correct. The all-zeros only comes up with the 1099s, A, B, and OID, which Jay uses to yield no tax due, and all of which IRS claims are bogus.

The 1099-OID dodge isn’t new. See my blogpost “Fact-OID? No, Fraud-OID,” 2/2/15. But in this variation lies the novelty.

Jay says IRS is wrong, because the Government Accountability Office (GAO) says IRS’ computers are “…’unreliable, inaccurate, untrustworthy and lack proper security.’  Contending that the IRS’ computers are ‘unable to produce a believable result’, petitioner stated that it was ‘reluctant’ to pay the penalties assessed against it without ‘proof that the mathematical calculations * * * [were] correct.’  Petitioner did not advance any additional arguments or request any collection alternatives.” 2020 T. C. Memo. 30, at p. 4.

While I am no fan of dodgers, however artful (or high-priced, or politically connected, or whatever), I gotta give Jay a Taishoff “well-played.”

But Judge Vasquez is not similarly inclined.

“Although petitioner was entitled to challenge the section 6702 penalties during the CDP hearing, petitioner did not present evidence or arguments addressing the merits of its liability for the section 6702 penalties.  During the hearing petitioner’s sole contention was that it was not liable for the section 6702 penalties because the IRS’ computers are not reliable.  On the basis of this contention petitioner demanded proof that the assessments of the section 6702 penalties were mathematically correct.

“Petitioner’s demand of proof does not equate to a meaningful challenge to its liability for the section 6702 penalties.  Petitioner did not alert SO D to any specific errors on its account.  Nor did it contend that its returns contained sufficient information or lacked frivolous positions.  Instead, petitioner made general allegations about the unreliability of the IRS’ computer system without connecting the GAO reports to the assessments at issue.  Accordingly, we find that petitioner did not properly raise its underlying liability for its section 6702 penalties during its CDP hearing.” 2020 T. C. Memo. 30, at pp. 11-12  (Name and footnote omitted, but see infra, as my high-priced colleagues would say).

“In addition we deem petitioner to have conceded the issue of whether it is liable for the sec. 6702 penalties because its petition contains no specific allegations or supporting facts regarding them.  See Rules 34(b)(4), 331(b)(4). Petitioner’s arguments at trial also do not raise any legitimate issue regarding these penalties.” 2020 T. C. Memo. 30, at p. 12, footnote 9).

I haven’t the slightest idea why I should, but I love this stuff.

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