In Uncategorized on 08/05/2020 at 17:08

No, this blog has not gone political. I express my political views, one might say vociferously, elsewhere. But Judy Yiu, 2020 T. C. Sum. Op. 23, filed 8/5/20, elected Section 6015(c)  to remove from her shoulders the burdens of her loved-once’s tax delictions. This election did not go well.

STJ Panuthos notes Judy was employed during the year at issue as a legal assistant in the Los Angeles City Attorney’s office. 2023 T. C. Sum. Op. 23, at p. 3. Though STJ Panuthos doesn’t state whether Judy had help from her colleagues, this might be another case where a little learning is a dangerous thing.

Her loved-once claimed $2500 of education credits on their joint return for year at issue, which IRS disallowed, and hit Judy with a SNOD therefor, amongst other things. Judy didn’t petition same, but filed a stand-alone, being then divorced and abiding separately from loved-once.

While stand-alone was pending, Judy paid the entire deficiency. IRS let Judy off the $2500, but hit her for the rest. Judy petitions for a refund of the $2500. She agrees that, for the year at issue, she doesn’t qualify for Section 6015(b) (innocence plus apportionment) or (f) (equity).

STJ Panuthos is blunt.

“… respondent allowed petitioner partial relief under section 6015(c). The parties agree that petitioner is not entitled to relief under section 6015(b) or (f). This should end the matter, except that petitioner paid the entire [year at issue] tax liability before filing a claim for relief under section 6015 and now seeks a credit or refund for the amount of relief granted. The problem for petitioner is the clear text of section 6015(g), which governs the allowance of credits and refunds in cases where the taxpayer is granted relief under section 6015(c).” 2020 T. C. Sum. Op. 23, at p. 6.

Section 6015(g)(3) is as clear as anything in the Code: “No credit or refund shall be allowed as a result of an election under subsection (c).”

And STJ Panuthos will tell you why.

“… Congress intentionally denied taxpayers any refund under sec. 6015(c). A House report…elaborated that an election under sec. 6015(c) ‘is limited to deficiency situations and only affects the amount of the deficiency for which the electing spouse is liable. Thus, the election cannot be used to generate a refund, [or] to direct a refund to one spouse or the other’. H.R. Rept. No. 105-817, at 63- 64 (1998), 1998-4 C.B. 253, 315-316.” 2020 T. C. Sum. Op. 23, at p. 6, footnote 4.

Practice point- Consider calculating whether to pay a SNOD in full, when Section 6015(c) is in play, or pay all but the contested amount. Underpayment and interest add-ons should tip the balance. Making a deposit to stop interest might not work, if refunds or credits are off the table.

And STJ Panuthos raps IRS’ counsel’s knuckles. Practitioners, take note. There was the usual Rule 91 stip, and therein lies the rub.

“Attached to the stipulation are two exhibits marked A and B, respectively. Exhibit A is 494 pages (identified as the ‘entire administrative record’) and exhibit B is 13 pages (identified as miscellaneous account transcripts). Rule 91(b) provides that stipulations shall be clear and concise and exhibits should be numbered serially. The parties have not directed the Court’s attention to any of the documents in the stipulation that are relevant to the very limited issue in this case. The attachment of an the entire administrative file of almost 500 pages as a single exhibit without identifying the particular documents creates a substantial burden in reviewing the record in a submitted case. We presume that this stipulation was drafted and exhibits compiled by counsel for respondent. We urge counsel to comply with the Rules.” 2020 T. C. Sum. Op. 23, at p. 3, footnote 3.

While herniating your opponent with paper might be a tactic, herniating the judge is less than a good idea.




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