In Uncategorized on 08/11/2020 at 16:30

If the IRS classifier (the Subject Matter Expert), who comes from an operating arm of IRS and not from the Ogden Sunseteers, eyeballs the tax returns of the target and finds them facially OK, are those returns part of the administrative record?

Not only I, but Judge James S (“Big Jim”) Halpern, would like to know. So would Eva Mitich, Docket No. 4489-19W, filed 8/11/20.

Eva whistled her landlord for unreported income and unpaid taxes. The ICEwoman (Initial Claims Evaluator) eyeballed Eva’s assertions, and shipped them to SME in SB/SE, whom scoped the returns of target, and found them facially OK. Sched E was there, showing property alleged and income therefrom.

So the ARM (Award Recommendation Memorandum) said the usual: speculative, no specific underpayments or violations. Eva is bounced and petitions.

The tale becomes cloudy when Eva seeks the relevant portions of target’s returns in discovery. IRS’ counsel answers that, per Reg. Section 301.7623-3(e), Eva already got the entire administrative record.


When counsel try to overlawyer, they often blow it. Counsel stated “Here, the administrative record demonstrates that the Commissioner did not proceed with any administrative or judicial action against the subject of your claim under section 7623. The administrative record further demonstrates that the Commissioner’s whistleblower office, in making its determination to reject your claim under section 7623, did not consider any of the contents of said taxpayer’s tax return. Accordingly, the contents of said taxpayer’s return are irrelevant in this case. [Emphasis added.].” Order, at p. 3.

Judge Big Jim suggested a phoneathon, and when he asked IRS’ counsel why the return Sched E wasn’t there when the SME said she’d scoped them out, counsel replied “those returns were not reviewed by Ms. B, who is employed in the WBO, but had been reviewed by Ms. P, who was an SBSE classifier, and SBSE is a unit in an operating division of the IRS and not a part of the WBO.” Order, at p. 4 (Names and footnote omitted, but the footnote says, citing IRM pt. (January 1, 2018), that SB/SE has operational responsibility for ICE.).

I award IRS’ counsel a Taishoff “Oh, Please,” first class, and entry in the no-prize lame excuse stakes, at no extra charge.

So Judge Big Jim expatiates on the necessity for a full record whereupon to decide if discretion was abused. He cites the Supremes, various CCAs, a couple USDCs (hi, Judge Holmes) and Tax Court cases, ending up Humpty-Dumptywise with “all documents and materials that the agency directly or indirectly considered, no more and no less.” Order, at p. 5.

So let Eva and IRS’s counsel “…file with the Court a legal memorandum addressing whether the record rule allows respondent to exclude from the record properly to be considered by the Court in this case the taxpayer’s return information reviewed by Ms. P.” Order, at p. 6.

I make the morning line 4 to 5 Eva gets the return info.

And to IRS’ counsel, I repeat an abbreviation I ofttimes used when I supervised other attorneys: RTFF. That means “Read The File.” The “F” is for emphasis.









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