Sworn in yesterday, the latest addition to the Tax Court bench, Judge Christian N. Weiler, comes to us from LAland. That’s Louisiana, for the uninitiated.

I look forward to a cascade of blogfodder (and material for a good cognomen) from Judge Weiler.

This non-uncommon feature of mutual-benefit organizations puts the kibosh on The Korean-American Senior Mutual Association, Inc., 2020 T. C. Memo. 129, filed 9/9/20.

KASMA was supposed to provide funeral expenses for the poor, but they had to be dues-paying members. They were also supposed to provide scholarships for worthy needy students, but never did. They were also supposed to provide social opportunities for the elderly, but their activities consisted of one (count it, one) dinner at a Korean restaurant.

STJ Diana L (“The Taxpayer’s Friend”) Leyden finds this is not 501(c)(3)-worthy.

” KASMA argues that it serves a recognized charitable class: the elderly. However, because KASMA did not provide burial benefits to the elderly without regard to their ability to pay their funeral expenses or establish that the membership application fee of $150 and the other annual fees of $300 to $350 constituted nominal charges, KASMA did not operate to serve the recognized charitable class of the elderly.” 2020 T. C. Memo. 129, at p. 18.

Now helping out old folks is a real 501(c)(3) purpose. But KASMA didn’t.

“… KASMA’s primary activity was not directed towards meeting the special needs of the charitable class, the elderly, by relieving distress or providing a community benefit. KASMA provided burial benefits only to its members who paid dues, not to non-dues-paying seniors in the community. If a member failed to pay the required membership dues for 90 days after receiving a written notice requesting payment, KASMA’s board of directors could terminate the membership and its obligation to pay any burial benefits.

“Additionally, the amount of the burial benefit paid was calculated on the basis of the number of years the deceased member had paid the other fees rather than the inability of the deceased member to pay burial expenses.” 2020 T. C. Memo. 129, at p. 21. (Citations omitted). Nor were these charges shown to be nominal.

KASMA argues equitable estoppel, because they amended their organizational documents like IRS told them. But that’s a mistake of law on IRS’ part, not misleading facts.

KASMA argued that taking away its 501(c)(3) status would hurt its goodwill and also cause it to be liable for NYC real estate taxes on its high-priced condominium.

I feel their pain. “KASMA purchased a new office condominium in Flushing, New York, on February 24, 2008, and paid the full price without a mortgage. On its Form 990 KASMA listed the book value of this condominium as $817,362.” 2020 T. C. Memo. 129, at p. 11.

I called STJ Di “The Taxpayer’s Friend.” As a NYC taxpayer, I think I got that right.

All y’all will recollect Melissa Coffey Hulett, a.k.a. Melissa Coffey, the maybe-non-Virgin (Islander) who starred in my blogpost “Another Non-Virgin,” 1/30/18. Well, today Melissa gets a reprise as she bails out Robin J. Fowler, 155 T. C. 7, filed 9/9/20, whose proper and timely e-filed return got kicked by IRS for want of an IP PIN.

No, that’s not what you get when your heartthrob hands you his/her gold-and-carnelian from Iota Pi (Gimmel chapter, 1875), domiciled at that lovely old Victorian gingerbread on College Walk. That’s an Identity Protection Personal Identification Number (IP PIN), and Judge Travis A. (“Tag”) Greaves will tell you a lot more about that than you really want to know.

Robin’s ERO (Electronic Return Originator, one blessed by IRS to e-file returns) sent in Robin’s return on extension due date, with his CPA’s P PIN (Practitioner’s Personal Identification Number), and got back the 20-digit confirm. But IRS kicked same, saying PI PIN was invalid.

Two weeks later, Robin’s CPA sent a DocuSigned paper return (same info except PI PIN) to correct Service Center Certified RRR, and got a receipt signed by an IRS employee thereat.

Two months later, Robin got a billet doux from IRS stating he hadn’t filed. So four (count ’em, four) months later, Robin got his own IP PIN, e-filed his own self (same everything except IP PIN), and that got accepted. Then as the three years from the last of these filings was slip-sliding away, IRS hits Robin with a SNOD.

Robin says SOL.

The classic test is Beard and Hulett (a.k.a Coffey). Right form, enough info, good faith attempt and signed. IRS hangs whatever hat it has on “signed.” No IP PIN, no signed.

“Despite the authority delegated in section 6061, there is little regulatory guidance as to what constitutes a valid signature. Section 1.6061-1(a), Income Tax Regs., provides only that each individual “shall sign” his income tax return. Section 1.6695-1(b)(2), Income Tax Regs., directs a signing tax return preparer to ‘electronically sign the return in the manner prescribed by the Commissioner in forms, instructions, or other appropriate guidance.’ We therefore look to the instructions to the [year at issue] Form 1040 itself. Under the heading ‘IRS e-file: Electronic Return Signatures!’, the instructions state that the taxpayer ‘must sign the return electronically using a personal identification number (PIN)’, either a Self-Select PIN or a Practitioner PIN. [Year at issue] Form 1040 Instructions, at 73 (emphasis added). Here, Mr. CPA included a Practitioner PIN on petitioner’s efiled return in accordance with the instructions.” 155 T. C. 7, at pp. 11-12 (Emphasis by the Court). (Name omitted, but I bet the poor guy got The Phone Call from Robin, and Robin should apologize; and pay whatever part of the fee he didn’t).

IRS cannot disavow, rewrite, duck, shuck or jive to get around its own instructions. See Hulett, a.k.a. Coffey.

“Respondent does not refer us to any form, regulation, or other taxpayer-directed guidance that defines an IP PIN as part of the signature. Instead, respondent cites the Internal Revenue Manual (IRM), an explanation of IRS administrative practices, which provides that if an electronic return is filed with a missing or incorrect IP PIN, ‘the e-filed return will reject.’ IRM pt. 10.5.3.2.15(3) (Jan. 16, 2014). An IP PIN does not become part of the signature requirement simply because respondent’s software will reject an efiled return without it. Furthermore, the Modernized e-File (MeF) system, which the IRS uses to process efiled returns, see infra Part II.B, rejects returns for numerous errors that may not cause a return to fail the Beard test. None of the authorities Respondent cites makes the IP PIN part of the prescribed signature method.” 155 T. C. 7, at p. 14. (Footnotes omitted, but read footnote 10: “We do not decide here whether respondent may make the IP PIN part of the efiling signature requirement; we conclude only that the IP PIN was not part of the efiling signature requirement for the year at issue.” 155 T. C. 7, at p. 14, footnote 10)).

Robin wins, SOL, SNOD invalid.

Watch for the IP PIN mandate to become ubiquitous on campus.

And that’s another reason why I paper-file.

My debt to the divergence between Tax Court Rule 147 and FRCP 45 grows through the years. It’s given me endless blogfodder, and the phrase “stealth subpoena” has echoed far beyond these columns.

Of course, there has been no official attempt to harmonize the Rules, despite Judge Holmes’ and my efforts along those lines, and Sen. Grassley’s legislative efforts (see Section 7453).

The old jibe that it takes a surgical operation to get a joke into some peoples’ heads, may have to be amended so that it takes more than an Act of Congress to conform Tax Court Rule 147 to the FRCP Rule 45 notice provision that has been in effect for twenty-seven (count ’em, twenty-seven) years with no ill effects.

Judge David Gustafson obliged the forces of rational practice. See my blogpost “Stealth Shot Down,” 11/21/19.

And the newer members of the Tax Court bench have been waging an undercover campaign.

You’ll remember Judge Emin (“Eminent”) Toro held the torch high in my blogpost “The Stealth Cold War,” 8/13/20.

Today comes Judge Patrick J (“Scholar Pat”) Urda with Western Digital Corporation & Subsidiaries, et al., Docket No. 18984-18, filed 9/9/20. “ORDERED that if a party intends to serve a non-party subpoena for the production of documents, electronically stored information, or tangible things or the inspection of premises before trial, that party shall provide notice to the other party by serving notice and a copy of any such non-party subpoena on the other party at least five days before the subpoena is served on a non-party.” Order, at p. 1.

OK, Ch J Maurice B (“Mighty Mo”) Foley. Like the sneaker says, just do it.

No, not those from a much more exalted authority than even United States Tax Court. Rather, today Judge Albert G (“Scholar Al”) Lauber is engaged in a dictionary chaw over “petitions and requests filed or pending” from the post-7/1/19 Section 6501(e)(7), in Donna M. Sutherland, 155 T. C. 6, filed 9/8/20.

Donna signed off on a couple delinquent MFJs (hi, Judge Holmes) as her spouse was being sentenced. Donna says she was emotionally confused, and even though she had no independent liability, thought she had to sign. She did file innocent spousery, but didn’t check the mental-or-physical-problems box because she thought she needed a doctor’s note.

She got bounced, and went to Appeals, but her representative was convinced the AO would misapply the Regs. and NOD the bounce, so rather than put in all the evidence at Appeals, Donna went for the pre-amendment de novo review and petitioned pre-amendment. Now Donna wants to put in the missing evidence, but based on the amended Section 6501(e)(7) “newly discovered” rule, she can’t. So she wants remand to make it clear she can put into the administrative record all the evidence her representative didn’t put in.

Judge Scholar Al has to decide if the Section 6501(e)(7) amendment applies. Remember, Donna petitioned pre-amendment, but obviously her case isn’t yet decided.

In previous post-amendment cases effective date didn’t matter, so this is first impression, thus full-dress T. C.

“On its face the effective date provision is ambiguous. ‘[P]etitions or requests filed or pending’ could mean ‘petitions filed or pending, or requests filed or pending.’ Alternatively, it could mean ‘petitions filed or requests pending.’ If the former reading is adopted, so that ‘pending’ modifies both ‘petitions’ and ‘requests,’ subsection (e)(7) likely would apply here because this case was pending in this Court when the amendment was enacted. If the latter meaning is adopted, so that ‘pending’ modifies only ‘requests’ and ‘filed’ modifies only ‘petitions,’ subsection (e)(7) would not apply. Petitioner’s request for innocent spouse relief had been resolved by the IRS, and hence was not ‘pending,’ on or after July 1, 2019. And her petition to this Court was filed before that date.” 155 T. C. 6, at p. 10.

I’ve said it so often: a lawyer who can’t find an ambiguity should find another way to make a living.

“This is an example of structural (also called syntactic) ambiguity. It arises where a sentence is susceptible to more than one meaning because of the way the words or phrases are organized. Clues to the meaning of such sentences can be supplied by the context and by other linguistic and interpretive tools.

“For example, assume a municipal ordinance that is effective for ‘cars or boats parked or docked’ at a city marina after a specified date. This provision would logically be interpreted to refer to ‘cars parked or boats docked.’ That is because each adjective comfortably modifies only one noun.

“On the other hand, assume a sales tax that is effective for ‘cars or trucks sold or leased’ after a specified date. Unless the context suggested otherwise, this provision would likely be interpreted to refer to ‘cars sold or leased, or trucks sold or leased.’ Both adjectives comfortably modify both nouns, and it would be odd to have different tax treatment for similar transactions involving similar vehicles.” 155 T. C. 6, at pp. 10-11. (Citation omitted).

Judge Scholar Al goes for the second reading. It’s “requests pending” and “petitions filed.”

I’ll spare you the linguistic anfractuosities, because Judge Scholar Al, scholar though he may be, is a practical lawyer.

“But if subsection (e)(7) were to apply to cases such as this–where the conclusion of the administrative process and the filing of the petition both preceded July 1, 2019, but the case remained pending in this Court thereafter–a sort of ‘gotcha’ could occur. The taxpayer would have gone through the administrative process believing that the scope of review in this Court was de novo. But she would then learn, once the time came for trial, that the scope of review was not de novo and that she could be prejudiced for not having made a more complete administrative record.” 155 T. C. 6, at pp. 16-17.

No need for remand. Donna can put it all in on the trial.

Those are the real comfortable words.

I chose a double major in college, philosophy and political science. If a vacancy for post of philosopher-king came open, my resumé was ready. It still is.

In my studies, I found the debate between David Hume and Bishop Berkeley.

Hume posited that there is no objective reality; we only know what we perceive. Thus, Hume would say, neither I, nor my MacBook, nor you, dear reader, exist, save in my mind. Bishop Berkeley responded that this was nonsense; of course the world, and all that is in it, exists in the mind of God.

Well, modern skepticism has little patience with that argument. But if anything has supplanted the mind of God as the source of objective reality, it is the internet. If it exists, it’s on the internet.

In proof whereof, I offer the story of the late Winston Tease, Sr., May 21, 1937 – August 23, 2020. Neither IRS nor Judge Mark V Holmes are certain of the late Winston Sr’s whereabouts in Winston Tease, Docket No. 15466-07L, filed 9/8/20.

This is a CDP from a TFRP (Section 6672).”We’ve remanded it twice to the IRS, and the second remand ended earlier this year. We ordered the parties to respond to this second supplemental notice of remand by August 28, 2020. A check of the docket showed no response from Mr. Tease, and the IRS attorney suggested informally that the reason may be that Mr. Tease has passed away.” Order, at p. 1.

Judge Holmes, unwilling to accept informal suggestions from IRS, orders a response.

“ORDERED that on or before September 30, 2020, Mr. Tease notify the Court in writing if he is still alive and, if so, state his response to the June 26, 2020 supplemental notice of determination.” Order, at p. 1.

Judge, according to the internet, IRS’ informal suggestion was right on the money. Try Google.

“If all the year were playing holidays,
To sport would be as tedious as to work;
But when they seldom come, they wished-for come,
And nothing pleaseth but rare accidents.”

It’s more than five years since I lamented the want of what we called in my young day head-banging in US Tax Court. See my blogpost “Old-Time Head-Banging,” 6/5/15.

Since it’s Friday evening before a three-day weekend, I suppose the last thing any reader wants to do is look at a five-year old blogpost, when they could look at a fifteen-year old Speyside single malt (up, no ice, no water), so I’ll tell you what I said.

“There were old-school judges, men (sorry ladies, this was in the Bad Old Days) who dragged into chambers and robing rooms recalcitrant litigants and badgered settlements out of them.

“We called it “banging heads.”

“And it saved a ton of time, money, vexation and effort, which otherwise would be wasted trying a case before a somnolent jury whose principal concerns were lunch and getting out of there.”

Well, today I’m glad to see the practice imported to The Glasshouse by STJ Peter Panuthos, in Peter Brancovich Turek, Docket No. 15447-19S, filed 9/4/20.

Now I’m not saying that Peter (the petitioner) was recalcitrant, or that his case lacked merit; I haven’t seen the papers, so how can I know?

But STJ Panuthos (finally about to earn a Taishoff cognomen) is equal to the task. Teletrial was set for 9/24 in my hometown.

“On August 28, 2020, respondent filed a motion for continuance. On August 29, 2020, petitioner filed his opposition to respondent’s motion. On August 30, 2020, petitioner filed a motion to change place of trial to Portland, Maine.

“On September 2, 2020, the Court held a conference call with the parties. During the conference call, and after an extensive discussion, petitioner agreed to concede all adjustments as set forth in the notice of deficiency. Respondent’s counsel advised that she would prepare a stipulated decision document and send it to petitioner for review.

“The Court will require the parties to submit settlement documents or to provide further information on the status of this case in advance of trial and will hold the aforementioned motions in abeyance.” Order, at p. 1.

“After an extensive discussion.”

Now that brings a nostalgic grin to my battered visage. Henceforth, STJ Peter Panuthos shall be herein referred to as STJ Peter (“HB”) Panuthos. The HB stands for…I’m sure you know.

I should know better than to express surprise at anything out of Tax Court. Honoré de Balzac, thou should’st be living at 3:30 p.m. Eastern, when The Glasshouse unleashes each day’s installment of your classic series.

No designated hitters or opinions, it being Friday, but John N. Magbual, Docket No. 7452-20W, filed 9/4/20, has six (count ’em, six) blower cases, all of like tenor. This aggregation lands on Ch J Maurice B (“Mighty Mo”) Foley’s workstation on a Friday before a three-day weekend.

To add insult to injury, John never anted the sixty clams for any of them. Nor did he redact name, rank, and serial number of the targets of any thereof.

Ch J Mighty Mo gives John the redaction letter.

“…when filing or lodging documents in this case in the future, the parties shall refrain from including, or take appropriate steps to redact the name, address, and other identifying information of the target taxpayer and, when appropriate, either (1) concurrently file or lodge under seal a reference list that identifies each item of redacted information and specifies an appropriate identifier that uniquely corresponds to each item listed or (2) concurrently file or lodge under seal an unredacted version of any redacted document that is filed or lodged. Documents filed under seal must be submitted to the Court in paper form.

“If utilizing the first method, the parties shall file or lodge redacted versions of documents accompanied by a reference list of redacted information, which must be filed or lodged under seal and specifically identify and state each item of redacted information (for example, when the target taxpayer’s name is redacted, the reference list must identify that redaction and also state the target taxpayer’s name). Subsequent references in the case to a listed identifier will be construed to refer to the corresponding item of information.

“If utilizing the second method, the versions shall be clearly marked as ‘Unredacted’ or ‘Redacted”, as appropriate, and the redacted version shall be an exact duplicate of the corresponding unredacted version, including attachments and exhibits, except for the redactions made with respect to the identifying information of the target taxpayer.” Order, at pp. 2-3.

And John, while you’re at it, file a proper amended petition, with lettered statements why the Ogden Sunseteers are wrong, and lettered statements of the facts you will adduce on the trial to prove they’re wrong.

And ante the sixty Georges.

All the above in three weeks.

I make the morning line 4 to 1 it doesn’t happen.

Yet another in the never-ending tale where stipulation brings capitulation is Norman W. Bascomb, Docket No. 19317-18L, filed 9/3/20.

Norm petitioned five (count ’em, five) years’ worth of NITLs, but as trial loomed, stiped out all of them. Thirty-two days after the stip, Norm moves for vacation per Rule 162.

Norm says “… that he had been hospitalized and suffers from various health problems, and that he misunderstood the effect of the decision document.” Order, at p.2.

Judge Nega: “While the Court may be sympathetic to petitioner’s health problems and although petitioner may have been confused in respect to the effect of the Court’s Decision entered January 23, 2020, petitioner has not shown any proper basis for the Court to relieve him of that Decision, nor has he shown any substantial error or mistake by this Court in reaching its Decision entered January 23, 2020, that might support a different outcome in this case. Confusion by one party as to the procedural effect of signing a stipulated decision does not rise to a level similar to lack of formal consent, mutual mistake, fraud, or another similar ground.” Order, at p. 2.

The last sentence of the immediately preceding paragraph should appear in every stipulation.