Melvin Collins, 2020 T. C. Memo. 50, filed 4/23/20, besides having “…a bachelor of science degree in electrical engineering, a master of business administration degree in finance, and a master of science degree in applied mathematics and computer science,” (2020 T. C. Memo. 50, at p. 6), ran his tax prep business out of his wife’s basement.

And in the four years at issue, Mel turned out around a thousand returns, not counting his own, because for two of those years he didn’t file at all, and got hit for fraudulently failing to file. The other two were late.

While Judge Tamara Ashford (I can’t find a cognomen to suit) finds Mel and his wife Nikta “genuine and candid” on the stand, (2020 T. C. Memo. 50, at p. 25) that doesn’t make up for the want of evidence. Candid. self-serving, uncorroborated testimony is still not evidence. So Mel goes down for Section 6663 fraud.

What draws me to this case (which is just another indocumentado) is the twenty-two (count ‘em, twenty-two) bank accounts that Mel was running at five different banks.

Mel must have picked up a whole lot of toasters.

The RA who did the bank deposits reconstruction should get a vacation.

Ian D. Smith, Docket No. 25605-15W, filed 4/23/20, is back in Tax Court. Y’all will remember that ID upended the Ogden Sunseteers when they tried to short-change him back in ’17. What, no? Then you’ll want to read my blogpost “What Price Glory?” 6/7/17, to get the skinny on ID, whereupon you can “follow me, if you will,” as Prof. Curtiss used to say on The Hill Far Above.

After ID’s earlier win, he moved for summary J and to shift BoP. IRS countered with a motion to remand, apparently to straighten out their earlier miscues.

Judge Morrison got this one, after then-Ch J L Paige (“Iron Fist”) Marvel took Judge Gerber off the case after the above-referred-to upending.

ID claims that remand is unnecessary and prejudicial. There are no new facts. Tax Court should decide this de novo, not on abuse-of-discretion, and not be immured within the administrative record. Finally, if remand, ID would have to file a fresh petition within 30 days if he didn’t like what the OS did, hence prejudicial.

Judge Morrison says Kasper (which I’ve blogged too many times to count) put paid to de novo review; thus the admin record is the gold standard. Likewise, ol’ Whistleblower 769-16W says remands in blower cases are copasetic; see my blogpost “Anyone Can Whistle – And Get Remanded,” 4/11/19. Also, blowers are Golsenized to DC Cir, which says a “new legal case” can result in remand.

Lo and behold, as my late and much lamented colleague Stan D. would have said, ID’s win first-above-hereinbefore-stated (as my sequestered-but-still-high-priced colleagues would say) is a “new legal case.” And DC Cir would much prefer the administrative agency do the heavy lifting, rather than itself try to sort these matters out. Expertise and familiarity, y’know.

Finally, “…we are not convinced that petitioner would be prejudiced by a remand. Petitioner argues that he would be prejudiced because he claims he would need to file another Tax Court petition after receiving a supplemental determination on remand. But the Tax Court will retain jurisdiction over the case during the remand and after the Whistleblower Office makes a supplemental determination. See Whistleblower769-16W v. Commissioner, 152 T.C. at 180. Therefore, a new petition will not be necessary.” Order, at p. 4-5.

And ID’s BoP motion remains in abeyance, in case he needs to try the case.

A Taishoff “Good Try” goes to ID’s trusty attorney, Shine Lin, Esq.

Judge Gale has designated a discovery geeks’ delight in Adrian D. Smith & Nancy W. Smith, et al., Docket No. 13382-17, filed 4/22/20. This latest episode is a follow-up to my blogpost “Evasive or Not Fairly Directed,” 3/12/20, wherein Judge Gale told IRS to lay out what they were contending and what were the bases therefor.

IRS provided supplementary responses by way of reply.

Ad & Nancy claim that fourteen (count ‘em, fourteen) of the supplementary responses to their interrogs, seeking the legal and factual bases upon which IRS rests the SNOD at issue “remain insufficient” and consist of “untimely objections, * * * incomplete responses, and * * * theories bankrupt of both legal and factual support.” Additionally, petitioners assert that the Supplemental Answers “are neither under oath nor made in good faith.” Order, at p. 2.

I think that Ad’s & Nancy’s counsel meant “bereft” rather than “bankrupt.” Watch that spellcheck, guys.

Howbeit, Judge Gale lets in seven of the fourteen as being close enough. But they’re not signed nor are they sworn to. Rule 71(c) says they have to be, and USCFC caselaw says IRS counsel is the one to sign and swear. So do it.

The aim of these interrogs is to get the material facts that underpin a party’s contentions. And answers like “all the papers you sent me” aren’t answers.

“…respondent repeatedly asserts that in support of his stated position or contention he relies on ‘petitioners’ bates-numbered [sic] document productions’. However, respondent does not identify the Bates numbers of the particular documents on which he purports to rely for his stated position or contention. Such a position is contrary to well established discovery principles. ‘An attorney who is faced with ‘contention’ type discovery must identify the witnesses and documents he/she has marshaled in a way to support his/her client’s position and to help illuminate the issues to be resolved as the responses and answers are due.’” Order, at p. 5 (Citation omitted).

For you civilians, Bates-stamping relates to a mechanical device for numbering paper pages. Now there are computer programs to do that. But the name sticks.

Of course you can’t demand all this stuff before the other side has had a fair whack at discovery. But this case is almost three (count ‘em, three) years old, and the time for formal discovery is past. “We therefore agree with petitioners that respondent has had ‘ample time’ to formulate and state his positions and contentions, particularly in view of the Court’s granting the vast majority of his extensive and highly detailed discovery requests.” Order, at p. 5, footnote 9.

And claiming you’ll prove your case out of the mouths of your adversaries and their employees (a well-worn tactic for opening statements to a jury, if, and only if, you can deliver) doesn’t cut it. Name your witnesses, says Judge Gale. Now.

Read Judge Gale’s opinion. He’s written your discovery brief for you, if contention interrogatories are the flavor du jour.

Tax Court is the waitstaff’s dismay, as everything in The (Sealed) Glasshouse at 400 Second Street seems to require separate checks.

Here’s Crowded Group, Inc., et al., Docket No. 26450-17, filed 4/21/20. And it is a crowded group, hosting six (count ‘em, six) docket numbers, notwithstanding current social separation edicts. But it isn’t the Crowd’s problem, it’s their trusty attorney’s, whom I’ll call Jenny.

Jenny changed her address and, per Rule 21(h)(4), told her new whereabouts to Tax Court. Only she put all six docket no.s in one Form 10. That’s logical and economical, but for whatever reason USTC dances to its own tune. And the Rule says so.

Ch J Maurice B (“Mighty Mo”) Foley puts Jenny wise.

“…counsel for petitioners provided a Notice of Change of Address. However, while the submission listed all six cases, it was filed only in the lead case at Docket No. 26450-17. In contrast, Rule 21(b)(4) of the Tax Court Rules of Practice and Procedures specifies: ‘A separate notice of change of address shall be filed for each docket number.’” Order, at p. 1.

Separate checks, Jenny. And everybody else.

Even more is this the case for Mahaffey Tent & Awning Co., Inc., et al., Docket No. 5061-17, filed 4/21/20. Tax Court is stressed, and Mahaffey isn’t helping.

Judge Kathleen Kerrigan voices what is probably a universal sentiment from the sequestered Glasshouse Gang. “Many court personnel are working remotely, and this has created a strain on the Court’s case management system.” Order, at p. 1.

All y’all will recollect that Mahaffey was in a jumpball with IRS about handing over contracts with customers. What, no? Well, see my blogposts “Contents of Contracts,” 9/19/19, and “Judge Kerrigan’s Solution,” 12/24/19. OK, now you’re up to speed.

But it seems Mahaffey is doing a document dump, and the Glasshouse servers are buckling under the strain.

“ORDERED that any documents over 500 pages that are e-filed with the Court should be divided into consecutively numbered parts (e.g., Part 1, Part 2, etc.) of no more than 500 pages each and the page numbers for the entire document should be consecutive.” Order, at p. 1.

So if you’re unloading via e-file, keep it below 500 (count ‘em, 500) pages a throw, separately stated and numbered.

We’re all familiar with CP504, the State tax refund grab IRS pulls off. Paulette Etoty, 2020 T. C. Memo. 49, filed 4/20/20, had one such grabbed, but at the time was in CNC.

IRS admits that CNCs don’t get their State tax refunds grabbed, and promises not to do it again. Appeals did not sustain the NITL.

But Paulette wants to make sure IRS doesn’t grab her Federal tax refund, for a year she hasn’t filed yet. She was offered an OIC by Appeals, but never filed the Form 656.

Judge Albert G (“Scholar Al”) Lauber cannot oblige.

“…IRS issued a notice of determination in which it did not sustain the levy on petitioner’s State tax refund because her account had been placed in CNC status. The notice determined that ‘the Notice of Intent to Levy no longer balances the efficient collection of taxes with your legitimate concern that the collection action be no more intrusive than necessary.’

“Although the levy was not sustained, petitioner sought review in this Court. In her timely filed petition she asked that the IRS be prevented from taking any future tax refunds because she has ‘very limited income.’ … respondent moved for summary judgment. Petitioner filed a response stating that she would have proposed an OIC if she had understood what was required of her. She asks that interest on her … tax liability be waived and expressed willingness to execute an installment agreement requiring payments of $15 a month for 120 months.” 2020 T. C. Memo. 49, at p. 5.

Of course, an offset is not a levy. The Feds grabbing a Federal overpayment instead of refunding same to taxpayer isn’t a levy. See my blogpost “An Offset Isn’t a Levy,” 2/21/12.

And Judge Scholar Al really wants to help.

“While we are sympathetic to petitioner’s situation, she received a favorable outcome from the CDP hearing in that the levy was not sustained. That was the only relief the Appeals Office could offer without further documentation from her. Her failure to submit a Form 656 during the CDP hearing, however, does not prevent her from entering into an OIC or other collection alternative with the IRS. She is free to submit to the IRS at any time, for its review and possible acceptance, a collection alternative in the form of an OIC or an installment agreement, supported by information about her current financial circumstances.” 2020 T. C. Memo. 49, at pp. 9-10. (Citation omitted).

Given Paulette Etoty’s difficult circumstances, Judge Scholar Al points out “(S)he was incarcerated from 2009-2015; upon her release her poor health prevented her from resuming her previous work as a docketing clerk.” 2020 T. C. Memo. 49, at p. 2. I hope she has been rehabilitated.

STJ Panuthos finds that Dale W. Laue and Alicia Laue, 2020 T. C. Sum. Op. 14, filed 4/20/20, unlike Rudy Kipling’s hero Exeter Battleby Tring, is not exempt from the Law of Fifty and Five.

The Law of Fifty and Five for STJ Panuthos is Section 72(t)(2)(A)(v). That says that distributions from a qualified retirement plan (in this case Dale’s pension from his ex-employer) are exempt from the 10% whatever-it-is if “made to an employee after separation from service after attainment of age 55.”

Dale got laid off years before, but thirteen (count ‘em, thirteen) years thereafter, he took a lump-sum pension payout from the successor to his former employer.

Y’wanna hear a hard-luck story? I’ve heard ‘em by the bushelbasketful, but Dale‘s is a first-class bummer. Ya see, Dale got the $25K payout and cashed the check when he was 59, but not yet 59-1/2.

I know what I would have told Dale if he’d asked me before, but I will keep that to myself. And I’m sure in such case my readers (if any) will shoot out their lips and wag their heads, saying nothing.

But STJ Panuthos must go by the letter of the law.

“When we interpret a statute, our purpose is to give effect to congressional intent. To accomplish this we begin with the statutory text, which is the most persuasive evidence of the statutory purpose. Statutory text is ambiguous where ‘the ordinary and common meaning of the statutory language supports more than one interpretation’. Where ‘statutory language is ambiguous, * * * we may consult legislative history to assist us in interpreting the language in question.’ We may also consult a statute’s history to assure that a plain meaning application of the statute’s text does not ‘thwart the purpose of the overall statutory scheme or lead to an absurd or futile result.’” 2020 T. C. Sum. Op. 14, at pp. 5-6. (Citations omitted).

The Conference Report lays it out: “In all cases, the exception applies only if the participant has attained age 55 on or before separation from service. Thus, for example, the exception does not apply to a participant who separates from service at age 52, and, pursuant to the early retirement provisions of the plan, begins receiving benefits at or after age 55.” H.R. Conf. Rept. No. 99-841 (Vol. II), at II-456 to II-457 (1986), 1986-3 C.B. (Vol. 4) 1, 456-457.” 2020 T. C. Sum. Op. 14, at p. 6.

Poor Dale, who was laid off at age 46, is clearly not exempt from the Law of Fifty and Five.

To Jorge Castillo, Docket No. 19507-19, filed 4/20/20, who asserts entitlement to relief from the 90 day bar to his petition from a SNOD per Section 7508(a)(1)(c) because he was situated as above set forth on the magic ninetieth day, I can only respond “as you were then, so was I once.”

But though Ch J Maurice B (“Mighty Mo”) Foley is sympathetic, he rules that boot camp in South Carolina is not sufficiently a combat zone or a contingency operation to warrant statutory relief.

“I.R.C. section 7508(a)(1)(C) extends the time to file a Tax Court petition with respect to a notice of deficiency if an individual is in military service in a combat zone or contingency operation. Nothing that petitioner submitted has established that I.R.C. section 7508(a)(1)(C) is applicable to this particular case.” Order, at p. 2.

Judge, there were times I couldn’t tell the difference. I bet Jorge feels the same way. Jorge, good luck, man.

This COVID-19 business has upended whatever I thought was normal heretofore. I had no idea that Judge Albert G (“Scholar Al”) Lauber, MA Clare College (Cantab.), was also familiar with Blues Traveler’s 1994 hit off the bat of John Popper.

Lest Francis I. Spagnoletti, Docket No. 10204-19L, filed 4/20/20, think he’s being given the runaround, Judge Scholar Al gives Francis some good advice.

Francis’ response to IRS’ motion for summary J was due the day after Tax Court locked down last month. Both before and after lockdown, Francis asked IRS’ counsel for more time.

“…respondent filed a status report in this case. In his report respondent’s counsel represents that petitioner contacted him… to request extensions of time to file a response to the Motion for Summary Judgment. Although petitioner apparently mailed extension requests to the Court, we were unable to process those incoming documents. Respondent does not object to granting petitioner an extension of time.” Order at p. 1.

After suggesting that Francis get electronic, Judge Scholar Al, aware that these resources are not yet universally available, gives Francis the means to do as the headline hereof suggests.

“If petitioner is unable to register for eAccess and file his response electronically before that date, he shall contact the chambers administrator for the undersigned, X@ustaxcourt.gov…, and explain the situation. If petitioner is unable to contact the chambers administrator for the undersigned by email, he may leave a voice message for her at 202-521-xxxx. Petitioner is advised that he may NOT file documents with the Court by email.” Order, at p. 2. (Name and number omitted).

Takeaway for the technophobic and tech-disabled: Read and heed.

My colleague and pleasant luncheon companion, Peter Reilly, CPA, in the past has gently chided me for my “dated pop culture references.” See his response to my blogpost “Days of Our Lives,” 1/13/20. I regret I must once more try that gentleman’s patience in that direction, without even being able to offer the balm of paying for lunch at Legal Seafood at Harborside, or the Union Oyster House in his hometown. Being confined to quarters at Firebase Taishoff, and doing fatigue duty receiving resupplies from Amazon and other online supply depots via USPS and UPS (and my deepest thanks to the warehouse crews, deliverypeople, and essential retail staff, including without limitation one of my nearest and dearest; ladies and gentlemen, stay safe, stay strong!), I cannot oblige.

I can only beg that Mr. Reilly will, for the moment, take the will for the deed, until I can substitute the deed, when the lights go on again all over the world.

Today is Friday, so no opinions. But Judge Albert G (”Scholar Al”) Lauber is not one to let a pandemic wither or stale his trusty word processor, as this Friday he echoes the immortal words of Sergeant Joe Friday: “Just the facts, ma’am.”

Scholar Al gifts the eager blogger with a designated hitter, Little Horse Creek Property, LLC, Little Horse Creek, LLC, Tax Matters Partner, Docket No. 7421-19, filed 4/17/20.

Now when I see stacked LLCs, with cutesy, outdoorsy names, I see Section 170 conservation easements, Swiss cheese cutouts, the rule for perpetuity, and IRS seeking summary J.

Judge Scholar Al and the parties don’t disappoint me. IRS wants a stay of discovery pending order on its summary J motion. Neither Tax Court Rules nor FRCP 56 grants an automatic stay, unlike our New York Civil Practice Law and Rules Section 3214(b). But that doesn’t deter IRS.

The Little Horses object, claiming “…that responses to its First and Second Requests for Admissions will support its defense against respondent’s Motion for Partial Summary Judgment and will support a potential cross-motion for summary judgment on one or more issues.” Order, at p. 2.

Judge Scholar Al is interested in the donor improvements issue. The deed of easement here contains the much-contemned language exempting the worth of donor improvements post-easement from the all-proceeds-of-extinguishment-to-the-501(c)(3) required clause. See my blogpost “The Old Texas Maxim,” 2/5/20, for some backstory.

Still, maybe the Little Horses can stave off the Boss Hoss’ chops. So Judge Scholar Al throws the Little Horses out onto the trail.

“In considering the donor improvements issue, it would seem desirable to have all relevant material before the Court at the same time, to enable the Court to determine (among other things) whether there exist any genuine disputes of material fact. Accordingly, we will deny respondent’s Motion to Stay Proceedings insofar as respondent seeks to be relieved of the duty to respond to petitioner’s First and Second Requests for Admissions, previously filed.” Order, at p. 2.

However, the Little Horses don’t have free rein.

“We will grant respondent’s Motion to Stay Proceedings insofar as he seeks to defer other forms of discovery until after the Court has disposed of respondent’s Motion for Partial Summary Judgment and any cross-motion that petitioner may file on the donor improvements issue.” Order, at p. 2.

Mr. Reilly, I hope to see you very soon.