In Uncategorized on 07/21/2020 at 18:32

Jesus R. Oropeza and Fabiola Anaya Oropeza, 2020 T. C. Memo. 111, filed 7/21/20, engaged in micro-captivity (no, that’s not the prequel to Fifty Shades of Grey, that’s a micro-captive insurance company that siphons taxable income). With the SOL running out, Examination offered J and F a Form 872 waiver of SOL, or an immediate SNOD with a 40% insubstantiation chop (there was a cool million bucks-plus of extra income at issue). This was conveyed via Letter 5153.

J&F elected neither, so they got the SNOD at no extra charge.  Though the SNOD included the 40% chop, the underlying CPAF only mentioned 20%, and showed zero for the 40 percenter. And the SNOD wasn’t issued until RA, Group Manager, and IRS Chief Counsel Attorney eyeballed same.

My diligent readers surely by now will have divined that this was a Graev mistake.

And Judge Albert G (“Scholar Al”) Lauber is on this blunder like couple color on a Hopkins brindled cow.

IRS claims that J & F neither got issued a thirty-day letter nor a sixty-day letter, therefore that was no final determination when the 40% chop was first broached. “A 30- or 60-day letter is one way of communicating to a taxpayer that the Examination Division has concluded its work. But it is not the only way. The Letter 5153 clearly communicated the same message to petitioners: It told them that they could now go to Appeals, but only if they first executed a Form 872 that would give Appeals enough time to consider their case.” Order, at pp. 8-9.

Having disposed of IRS’ argument, Judge Scholar Al turns to J and F and their trio of trusty attorneys. They claim the Group Manager didn’t look closely enough at the penalty issue, and signed only one page of the CPAF.

As for the latter “(T)his argument is a nonstarter. Both pages are part of a document that is denominated ‘Civil Penalty Approval Form.’ Page 1 of the form contains a space at the bottom for ‘Group Manager Signature’ and ‘Date.’ Group Manager P affixed his signature and date in the spaces provided; there is no space on page 2 for a signature, and he was not required to interpolate one. We have repeatedly relied on Civil Penalty Approval Forms signed and dated as this one was.” Order, at p. 2 (Citations and name omitted).

As for the former, all the statute requires is the sign-off by the right overseer. Nowhere is Tax Court empowered to go behind the hoofprint of the Boss Hoss.

The twenty percenter was timely Boss Hossed. The forty percenter was unhorsed.




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