In Uncategorized on 06/03/2020 at 17:18

How many times have I said it: “stipulate, don’t capitulate”? Too many. Here’s one follow-up, Vishal Mishra & Ritu Mishra, Docket No. 16492-18, filed 6/3/20. I’m sure all y’all will remember Vishal & Ritu; no?

Dig my blogpost “Backing Out,” 4/28/20.

Judge Albert G (“Scholar Al”) Lauber told Vishal & Ritu to dish why they should be let out of their stip to the Section 6662(a) chops.

“The stipulation reflected major concessions by both parties: Respondent conceded more than half of the deficiencies, and petitioners agreed that they were liable for the balance of the deficiencies and ’for accuracy- related penalties pursuant to I.R.C. §6662(a) for the 2014 and 2015 taxable years.’” Order, at pp. 1-2.

Judge Scholar Al asked Vishal & Ritu for their story back in April.

“petitioners filed a response to respondent’s motion stating that they did ‘not wish to concede that they are liable for an accuracy-related penalty.’

“Contrary to the plain language of the stipulation that they signed, they assert that ‘there was no mention of a 20% penalty being added to the agreed upon numbers.”” Order, at p. 2.

Judge Scholar Al holds them to the deal.

“Paragraph 5 of the stipulation of settled issues plainly states that ‘the parties stipulate and agree that petitioners are liable for accuracy-related penalties pursuant to I.R.C. § 6662(a) for the 2014 and 2015 taxable years.’ That concession is utterly unambiguous.” Order, at p. 3.

Judge, I most respectfully submit it is ambiguous.

Not to you, or to me, or to Vishal’s & Mitu’s able counsel.

Maybe so we’ve all of us been doing this too long, or maybe too often we’ve represented sophisticated clients who know as much as we do, if not more.

But I’ll wager a few quid that Vishal & Mitu don’t deal with IRC Sections every day. We know what the Section 6662 accuracy, negligence, and five-and-ten substantial understatement of tax 20-percenters are.

They don’t. A Code Section in the middle of a lengthy stip is gibberish to the unsophisticated. So maybe IRS, and certainly we practitioners, should put the precise dollar amount of the chops in our stips.

Lest anyone jumps on me for claiming unilateral mistake of law or fact voids a contract, take it slow. I know that they don’t. I know a stip is a contract.

Likewise before claiming I’m playing Monday-morning quarterback with Vishal’s & Mitu’s able counsel, I’ll confess that, under time pressure, I’ve also overestimated clients’ comprehension as I’ve read a document to them, and didn’t check for the deer-in-the headlights look.

Yes, I know interest is another story, and we can’t know precisely how much that will be.

But guys, I’m only giving a practice hint here.



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