Archive for March, 2020|Monthly archive page


In Uncategorized on 03/10/2020 at 21:18

When a substantive Constitutional right or freedom is not involved (and it rarely is when taxation is concerned), the only test for the constitutionality of a statute is the rational basis test: could the legislature conclude that the enactment would promote a legitimate governmental purpose.

Of course, the enactment must not involve a hostile and oppressive discrimination against a suspect class.

In such cases, it doesn’t matter if the courts could formulate a better approach.

Thus, Judge Emin (“Eminent”) Toro, newest ornament on the Tax Court bench, disposes of the Constitutional challenge to Section 72(t) mounted by Sandra M. Conard, 154 T. C. 6, filed 3/10/20, while your blogger was busy with a real estate closing that turned into a sitcom, with one-liners flying all over the place.

Sandra claims the 10% additional tax, s/a/k/a the “early withdrawal penalty,” for those who grab their IRA or other pension-like monies before becoming either disabled or 59-1/2 years old violates the equal protection component of her Fifth Amendment right to due process of law.

Judge Eminent finds that the Supremes have found that neither age nor disability is a suspect class where taxes are concerned. And most importantly, there is an eminently rational basis (sorry, guys) for the age and disability carve-outs in Section 72(t).

“In proposing the enactment of section 72(t) as part of what became the Tax Reform Act of 1986 (TRA), Pub. L. No. 99-514, sec. 1123(a), 100 Stat. at 2472, the Senate Finance Committee reasoned that ‘[t]he absence of withdrawal restrictions in the case of some tax-favored arrangements allows participants in those arrangements to treat them as general savings accounts with favorable tax features rather than as retirement savings arrangements.’ S. Rept. No. 99-313, at 612 (1985), 1986-3 C.B. (Vol. 3) 612 (1985).” 154 T. C. 6, at pp.10-11 (Footnote omitted).

“If taxpayers face no disincentive for withdrawing amounts from qualified retirement plans long before their retirement years and without suffering any disability, it is easy to imagine that such amounts might be ‘diverted to nonretirement uses,’ thereby frustrating Congress’ objective of encouraging taxpayers to save for periods of their lives when they might not be able, or wish, to work. By the same token, allowing a disabled person–defined by the statute as a person who ‘is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration,’ sec. 72(t)(2)(A)(iii), (m)(7)–to receive distributions from a qualified retirement plan without paying the additional tax would be fully consistent with Congress’ objective of encouraging taxpayers to provide for times when they might not be able to work.” 154 T. C. 6, at pp. 12-13 (Footnote omitted, but it says even if judges might draw the lines elsewhere, that does not rise to a Constitutional impairment).

Be it tax or penalty, the 10% early withdrawal hit has a rational basis.

Sharon falls down under “her heavy burden of ‘negat[ing] every conceivable basis which might support’ the legislative arrangement under section 72(t).” 154 T. C. 6, at p. 13 (Citations omitted).





In Uncategorized on 03/09/2020 at 19:28

No T.C.s, Memos., or Sum Ops, or designated hitters today, but there are some appearances from old cases. So in case anybody cares, here they are.

Suzanne Jean McCrory, Docket No. 17861-18W, filed 3/9/20, folds a trio of whistleblowings, but Judge Patrick J. (“Scholar Pat”) Urda wants IRS to weigh in. Y’all will remember Suzanne Jean, the petitioner whom Judge Vasquez thought could never get a remand. But ex-Ch J Michael B (“Iron Mike”) Thornton thought she could, and gave her a full-dress T. C. See my blogpost “Anyone Can Whistle – And Get Remanded,” 4/11/19.

Next is an even older relic, Estate of Jeanette Ottovich, Deceased, Randy Ottovich, Harvey Ottovich, and Karen Rayl, Executors, Docket No. 25781-12L, filed 3/9/20. Unfortunately, today Judge Mark V Holmes has no more glorious old historical tidbits, such as the gem to be found in my blogpost “Trust Judge Holmes,” 4/20/18. Today it’s only a holding pattern until CA probate sorts out who administers what the late Jeanette owned, and substantiates the estate tax deductions.

Finally, Good Fortune Shipping, S. A., Docket No. 25327-12, filed 3/9/20. This is the follow-up to my follow-up to my blogpost “The Secret Sharer – Part Deux,” 11/1/18, as updated 2/21/20. The Good Fortunates’ attorney, having won in DC Cir, thereby tossing IRS’ blanket-toss of bearer stock in the Section 883 maritime largesse stakes, wants to bail: “…petitioner’s assets had been sold after the year in issue, that the corporate petitioner is defunct, and that his putative clients did not wish to spend any more money on the case.” Order, at p. 2.

My kind of clients; having grabbed the boodle, they scarpered.

Judge Mary Ann (“S.E.C. = She Eschews Cognomens”) Cohen tells us the rest of the story.

“Respondent filed a Motion to Dismiss for Failure to Properly Prosecute on the ground that petitioner had abandoned the case. Petitioner’s counsel declined an opportunity to respond to the motion.” Order, at p. 2. So would I have done, if my client had hied themselves off and told me they weren’t paying me.

The sole issue is whether the secret sharers were US persons, and they had the burden of proof thereon. Having not brought forth anything but hearsay declarations and presented no witnesses, Judge Cohen tosses the Good Fortunates and hits them with the $143K deficiency.

Note to IRS- Best of luck finding them. I’ll wager that, in the immortal words of the late great Charles Edward Anderson Berry, they’re “gone like the cool breeze.”


In Uncategorized on 03/06/2020 at 16:03

Only today it’s a filing that cannot be made electronically. I mean the Limited Entry of Appearance, as more particularly bounded and described in Administrative Order 2019-1, May 10, 2019.

Judge Gale gives us a designated hitter to man’splain the process to counsel for Betty A. Jenkins & Lincoln C. Jenkins, III, Docket No. 722-19L, filed 3/6/20.

Counsel, whom I’ll hereinafter designate as M, wants to enter a limited appearance so as to move to dismiss this petition from a CDP.

But M cannot file a Limited Entry of Appearance electronically or sooner than the commencement of the trial session wherein she seeks to appear. And that session doesn’t begin until Monday.

So, not being recognized as counsel for Betty & Linc, Judge Gale tosses M’s motion to dismiss along with her Limited Entry of Appearance.

May I suggest that M, or Betty & Linc, go find some CPA or EA and have them electronically file a motion to dismiss? See the list of e-fileable documents by pro ses at p. 83 of the Petitioners’ Guide.  It seems that CPAs and EAs get their documents accepted in Tax Court faster than attorneys.


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.

E. A. = USTCP?

In Uncategorized on 03/05/2020 at 15:26

Back in the day, I would query then Ch J L Paige (“Iron Fist”) Marvel when letters and other communications were proffered on behalf of nominally pro se petitioners by Certified Public Accountants, and accepted by Ch J Iron Fist. See, e.g., my blogpost “CPA = USTCP?” 6/6/16.

I thought one either had to be an attorney or a United States Tax Court Practitioner (USTCP) to appear on behalf of a petitioner, with certain specifically enumerated exceptions (officer for a corporation, tax representative for an entity taxed as a partnership, trustee for a trust, personal representative for a deceased person). Even where an attorney or USTCP appears, that person must file an Entry of Appearance (Form 7). And attorneys admitted in any US jurisdiction must still obtain admission to US Tax Court, again with specifically enumerated exceptions.

But Ch J Maurice B (“Mighty Mo”) Foley, though so far as I can tell barring the door at The Glasshouse to Certified Public Accountants, seems to be developing a soft spot for Enrolled Agents.

For the skinny on this happy crew, to which I am proud to belong, see 31CFR§10.4. Notwithstanding the foregoing, my Tax Court admission is based solely on my admission to the Bar of the Empire State fifty-three (count ‘em, fifty-three) years ago three weeks from tomorrow.

So how come Vinicio Rovere, Docket No. 18305-19, filed 3/5/20?

IRS says Vini owes neither deficiency nor chop, and stips to the same with Vini. But when petition, answer, and stip all fail to consider jurisdiction, you know Ch J Mighty Mo will want some ‘splainin’ or else lock the Glasshouse door.

IRS shoots in the PS3877 that shows Vini is too late.

“…a Letter… by Sabita Balloo, E.A. on behalf of petitioner was filed in this case. Therein Ms. Balloo states, among other things, that petitioner acknowledges that the petition was not timely filed. No other response was received from petitioner.” Order, at p. 2.

So did Ch J Mighty Mo bounce the case for want of response by petitioner, on whom falls burden of proof that the Court has jurisdiction? Or did he take Ms. Balloo’s letter as an admission? If the former, why not state that the letter from Ms. Balloo is rejected, as she is neither a USTCP nor an attorney admitted to Tax Court, and therefore petitioner has made no response? If the latter, how does Ms. Balloo get to represent Vini or anyone else unless she is an attorney admitted in Tax Court or a USTCP, in which event her qualification as an EA (like mine) is irrelevant?

A quick docket search shows Vini is pro se.

Looks like EAs have taken over from CPAs. I hasten to add that some of my best friends are CPAs.


In Uncategorized on 03/04/2020 at 16:07

Judge Courtney D. Jones gets a Taishoff “Good Job” in her whistleblowing debut. Michael J. Keane, Docket Nos. 22897-18W and 23240-18W, both filed 3/4/20, claims a REMIC (Real Estate Mortgage Investment Conduit, a subspecies of REIT) fraudulently stole his home.

Unhappily, the classifiers, and then the Ogden Sunseteers, tossed Mike’s claim. In each case the Ogden Sunseteers listened to Lacey and handed off to SBSE, or maybe LBI, so their classifiers could lay a blast on Mike’s Form 211. And it doesn’t matter to Judge Courtney D. (cognomen to follow: nominations accepted, but no prize for winning entry; watch this space) Jones whether the classifier worked for LBI or SBSE. In any case, “…the information provided was speculative and/or did not provide specific or credible information regarding tax underpayments or violations of internal revenue laws.” Order 897, at p. 5.

The pages aren’t numbered in the original, so you’ll have to do your own counting.

OK, so Judge Courtney D. (NCY = No Cognomen Yet) Jones got it right. But why a “good job”?

Because she picks up on Judge Gustafson’s pickup of my pet peeve.

“The WBO’s form letter contained the same ‘and/or’ conjunction that led to a lack of clarity in Lacey v. Commissioner, 153 T.C. __,__ (slip op. at 39-40) (Nov. 25, 2019). Here the record establishes that two of the three reasons stated in the letter are justified. As a result, this case will not turn on the general lack of clarity attendant to the ‘and/or’ conjunction. But the Court continues to be concerned that, in a closer case, this form text may create confusion when we review a summary rejection of a whistleblower claim. See Alber v. Commissioner, T.C. Memo. 2020-20, at *8-9 n. 5.” Order 897, at p. 3, footnote 5.

“And/or” is the sloppy writer’s expression of sloppy thinking. Or perhaps timidity at being unable to make a decision.

But Judge Courtney D. (NCY) Jones can make a decision: summary J for IRS in both cases. No abuse of discretion, as they listened to Lacey.


In Uncategorized on 03/03/2020 at 22:10

I can understand and appreciate travel restrictions, what with this latest concern about COVID-19, or whatever the latest ailment is called, that’s going viral.

But I cannot believe that the disease can be transmitted via the internet.

And yet, since February 29, I have not had a single hit on this my blog from outside the USA.

Are foreign nations banning this my blog for fear of viral transmission?

Has Corona shut down the international internet?


In Uncategorized on 03/03/2020 at 16:17

Whatever the ferment on the political front, US Tax Court remains cool, calm and collected. Neither opinion nor designated hitter features in today’s releases from The Glasshouse at 400 Second Street, NW, in The City of Taxation Without Representation.

So your blogger is cast back upon minor practice tips and free advice (which is worth what you pay for it).

As always, “those who need it won’t read it, and those who read it don’t need it.” But try I must.

Here, then, are Barton A. Biche & Laura Biche, Docket No. 13344-19, filed 3/3/20. It isn’t Bart & Laura’s story, but that of their trusty attorney, whom I’ll call Dan’l.

Newly-re-elected Ch J Maurice B (“Mighty Mo”) Foley, fresh from his electoral triumph, is in no mood to deflect, even by a hair’s-breadth, strict compliance with the Rules.

Back in January, Ch J Mighty Mo told Bart & Laura to ratify their petition.

Thereafter, “…a joint proposed stipulated decision was electronically filed with the Court. Petitioners’ counsel signed the proposed decision on behalf of petitioners. Petitioners’ counsel’s entry of appearance does not serve to ratify the petition. Thus, the petition has not yet been ratified.” Order, at p. 1.

Either sign and file the petition yourself, counselor, with entry of appearance included, or have the client sign the petition, and then (or even simultaneously) submit the entry of appearance.

So, Dan’l, call the Clerk at 202-521-0700, ask the Clerk to fax or e-mail you the Ratification of Petition form (and ask why it isn’t a PDF-fillable form on the “Forms” page on Tax Court website; tell ‘em Taishoff sent you), have your clients wet-ink it, and send it certified to The Glasshouse at 400 Second Street, Washington, DC 20217. Make sure it is received on or before March 24. Check the tracking and save the screenshot.


In Uncategorized on 03/02/2020 at 22:27

“Incoherent” is in quotes, because that’s what Judge Kerrigan said about Marsha Gaye Lambert A.K.A. Marsha Lambert Maines d.b.a. Marsha Maines Alvarado, Docket No. 22395-18W, filed 3/2/20.

Specifically, Judge Kerrigan characterizes Marsha’s response to IRS’ motion for summary J sustaining the Ogden Sunseteers’ toss of Marsha’s Form 211 thus: “Petitioner’s response did not raise any coherent argument or contest the administrative record or respondent’s assertions.” Order, at p. 1.

Before anyone gets their cliché in a sheepshank, I stress I have not read either IRS’ summary J motion and any supporting papers, or Marsha’s reply and any papers in support of her reply. All these are locked in the impenetrable bosom of The Glasshouse at 400 Second Street, NW, where PACER cannot penetrate, much less bloggers, and where (presumably) neither rust nor moth can consume. So I cannot opine concerning any thereof, nor Judge Kerrigan’s conclusions in respect thereof.

But I can again lament that none of the papers are available online. Why pore l‘il ole Tax Court is the orphan child of the Federal internet eludes me.

Howbeit, Marsha seems to allege “…that an individual, Taxpayer 1, and a corporate entity, Taxpayer 2, had committed bankruptcy fraud related to stolen identity and theft of funds.” Order, at p. 1.

The Ogden Sunseteers, having apparently listened to Lacey (see my blogpost “The Whistleblower Office – Blown,” 11/25/19 for the skinny), bucked Marsha’s story on to an LBI classifier (a classifier is an operations type whose task it is to winnow the cliché from the chaff). The classifier gave thumbs down, stating “…that petitioner did not identify any tax issues and that petitioner’s allegations were ‘not specific, credible, or [are] speculative.’ He recommended that petitioner’s claims be rejected and not pursued by the LBI unit so the claims were referred back to the WBO ICE unit.” Order, at p. 2.

Wherefore the toss, the petition, and summary J for IRS. Judge Kerrigan finds proper review, no admin action and no recovery.

Edited to add,4/16/22: Ms. Lambert Maines sent me a comment, which I choose not to publish. It merely reinforces ChJiW Kathleen (“TBS = The Big Shillelagh”) Kerrigan’s conclusions. Whatever Ms. Lambert Maines’ complaint, it does not belong in Ogden or in Tax Court.


In Uncategorized on 03/02/2020 at 16:41

Once again a whistleblower hits the statutory wall that constricts Tax Court. Charles Stuart Pulcine, 2020 T. C. Memo. 29, filed 3/2/20, wants Tax Court to tell IRS “…that the IRS is ‘legally obligated to not show leniency’ and requests the ‘IRS demonstrate an equal level of unrelenting diligence to collect from the taxpayer and follow-up with me as to wiring 20% as my reward.’” 2020 T. C. Memo. 29, at p. 7.

Judge Wells: “We interpret petitioner’s contention to be that respondent erred in failing to assess or collect any additional tax, penalties, interest, or other amounts.  While we have jurisdiction to review the Commissioner’s award determination, we do not have authority to ‘review the Commissioner’s determinations of the alleged tax liability to which the claim pertains.’ Nor do we have authority ‘to direct the Secretary to proceed with an administrative or judicial action.’” In other words we cannot order respondent to reexamine the taxpayer’s returns for additional deficiencies or conduct our own examination.” 2020 T. C. Memo. 29, at pp. 7-8 (Citations omitted).

It happens that, on the same day Charles Stuart dropped the Form 211, the target filed the delinquent returns Charles Stuart was blowing about, IRS checked everything out, and gave the target a clean bill.

Once again, the review covers a lot less than first appears.