I didn’t blog the Genius Baristas’ shutdown of USTC from November 20 through December 28, because I thought the blogosphere and the trade press would be all over the month-plus USTC offline, due to the installation of DAWSON (“Docket Access Within a Secure Online Network”).

Crickets.

As usual, the trade press and the blogosphere care little for pore l’il ole Tax Court, the “small court,” or its “dissions.”

But the October 7 press release contains one sentence that froze the electrons in my laptop.

“The Court does not anticipate issuing any orders or opinions during the time e-filing is inaccessible.”

Are y’all serious? Nothing for a month, with thousands of taxpayers and the IRS waiting on resolution of their cases, each of which is important to the parties involved, whether it be $10 or $10 million caught in this logjam up Dawson’s Creek without a paddle or a log Peavy.

I do not even consider mentioning that this shuts me down for a month, or however long it takes to get this latest coruscation up and running.

Given the schemozzle that occurred when the jazzy new homepage was unleashed in July, I can just see what December 28 will bring us, when the Genius Baristas push the “ENTER” key. “Shambolic” isn’t even close.

See my blogpost “If It Ain’t Broke, Don’t Fix It,” 7/20/20.

From an oldie but goodie, six years ago.

As Harry Golden, raconteur and essayist, put it more than fifty years ago, “The most famous expression among the immigrants on the East Side of New York was ‘A klug zu Columbus’n’ which, freely translated, meant that Columbus should have broken his head before he discovered it (America).  The expression was always used in good humor and often as a term of endearment, as we shall see.”

Mr Golden went on to describe Columbus as a folk-hero, a kind of mythic figure both praised and blamed, but ultimately the source of good-humored comment.

Howbeit, my readers, descendants of immigrants as we all are, whether our several ancestors crossed the Bering Strait coming from the Olduvai Gorge, or from the steppes of Central Asia, or even across the Atlantic or Pacific, I note that Tax Court is closed today, so I can bring y’all neither entertainment nor enlightenment.

Enjoy a day off, whether it be for you Indigenous Peoples’ Day or Columbus Day. And anyway, have a klug zu Columbus’n.

No, not that limerick. That’s for the reader in Peru, who must have tipped off eight (count ’em, eight) of his friends, because all nine of them viewed my blog today.

Before today, I’d had nineteen views from Peru in the last ten (count ’em, ten) years. A bonanza!

Now if the nine nice people from Peru would tip off their next-door neighbors in Bolivia….

No, not another one of those “what to pack for the cruise” thinly-concealed adverts for stuff you’ll never use again. Today, STJ Peter (“HB”) Panuthos (for the “HB” story, see my blogpost “Old-Time Head-Banging – Part Deux,” 9/4/20) gives the right-about-face to Shona S. Pendse, Docket No. 25665-17, filed 10/9/20.

Shona stiped out 8/30 when COVID-19 teletrial was set for 9/16. The stip said no tax due, no additions, no penalties, no overpayments. Stiped decision entered 9/3.

Shona now files for a vacation of the stiped decision, claiming conditions to do with a barred refund. IRS ripostes with e-mails and documents showing everybody agreed to everything.

So why am I bringing you this tale of settler’s remorse?

Because STJ HB Panuthos, seeing that IRS has gone the mile, goes the twain, thrain and quatrain. This is a checklist for those seeking to overturn a stip, especially one entered into on eve of trial.

To save time and electrons, I’ve omitted the “copious citation of precedent,” but get all the citations for your memo of law file.

Here’s the threshold. “The decision to grant a motion to vacate or revise a decision lies within the discretion of the Court. A motion to vacate is generally not granted absent a showing of unusual circumstances or substantial error, e.g. mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, fraud, or other reason justifying relief.” Order, at p. 2.

STJ HB Panuthos says he eyeballed the pictures, descriptions and accounts of the negotiations between the parties, and is satisfied Shona was onboard with the stip.

“We have held that ‘[a] settlement is a contract and, consequently, general principles of contract law determine whether a settlement has been reached.’ In settling a case each party agrees to concede some rights which may have been asserted against the opposing party as consideration for those secured in the settlement agreement.

“A valid settlement, once reached, cannot be repudiated by either party; and after parties have entered into a binding settlement agreement, the actual merits of the settled controversy are without consequence. This Court has declined to set aside a settlement duly executed by the parties and filed with the Court in the absence of fraud, mutual mistake, or other similar ground. Where the parties’ settlement leads to the vacating of an imminent trial date, the Court applies stringent standards to modify or set aside the settlement. In such cases the moving party must satisfy standards akin to those applicable in vacating a judgment entered into by consent. The Court has discretion to set aside a settlement agreement filed with it, but its discretion will not be exercised unless good cause is shown.” Order, at p. 2.

“Hear, read, mark, learn, and inwardly digest,” as a much better writer than I put it.

The forest fires lately ravaging Oregon won’t excuse a video non-appearance at teletrial for Bryan M. Griggs & Valerie D. Griggs, Docket No.  18035-16, filed 10/9/20, especially as (1) Valerie D. showed, (b) Bryan M. phoned in, and (c) all the rest of the calendared Oregonian parties showed.

Bryan M. claims he can’t get to the law library because forest fires, so he needs more time, and wants a continuance (that’s an “adjournment,” for you State courtiers). Judge Albert G. (“Scholar Al”) Lauber says this is a “pure substantiation case” (Order, at p. 1). Hence, there’s no law question, only facts. IRS moved to toss Bryan D. for want of prosecution (he hadn’t done any pretrial prep with IRS), but Judge Scholar Al held that off for the next day, telling Bryan M. to show.

Bryan M. now wants to appeal Judge Scholar Al’s refusal to continue the case. But Section 7482 says the appellant needs a certificate from Tax Court, and Judge Scholar Al doesn’t hand those out so fast.

“Certification for an interlocutory appeal under I.R.C. sec. 7482(a)(2) is appropriate when the Court verifies that an interlocutory order (1) involves a controlling question of law, (2) with respect to which there is a substantial ground for difference of opinion, and (3) an immediate appeal from that order may materially advance the ultimate termination of the litigation. All of these requirements must be met before the Court will certify an interlocutory order for immediate appeal.” Order, at p. 2. (Citations omitted, but get them for your memos of law file).

Interlocutory appeal fast-tracks a major question of law which, if dealt with up front, could be a walk-off homer, or a called third strike on the last hitter up. And it must be pure law, no need for the Appelicans to review the record or anything else.

Bryan M.’s alleged arboreal conflagrations are none of the above. Besides, Bryan M. is obviously stalling, says Judge Scholar Al.

“Mr. Griggs’ reasons for requesting a continuance are groundless. There is no substantial ground for difference of opinion regarding Mr. Griggs’ assertion that he could not participate in the trial as scheduled. He first petitioned this Court in August 2016, and he was notified of the trial date on July 7, 2020, more than three months ago. He has had adequate time to prepare for trial, and there were no technological impediments to his participating in the trial via Zoomgov or telephone, as shown by his participation in the calendar call and the other parties’ participation in the trial.

“Nor would an immediate appeal advance the ultimate termination of this litigation. Virtually by definition a continuance would delay it. For the past year Mr. Griggs has persistently declined to cooperate with respondent’s counsel in preparing this case for trial. The record of this case makes clear that his motions for continuance, followed by a request for interlocutory appeal, are part of an ongoing campaign to defer trial of this case indefinitely. The final judgment rule is designed to prevent precisely this sort of ‘dilatory and harassing appeal.'” Order, at p. 3 (Citation omitted).

Is Judge Scholar Al going to reach for the Section 6673 yellow card?

Edited to add, 7/23/21: Judge Scholar Al did not. He let off Valerie D. on innocent spousery, and whanged Bryan M. for the post-concession deficiencies. See Order and Decision, 6/4/21.

Francis I. Spagnoletti, 2020 T. C. Memo. 140, filed 10/8/20, was disputing the additions and interest for his two late-filed returns, but hadn’t paid the full balances shown thereon, nor had he paid estimateds on two subsequent years.

The SO at the CDP agreed that since the NITL issued without a SNOD (self-reporteds and arithmetic), Francis could contest. But Francis sent in no Form 433-A. He offered to pay the whole $1.9 million in 120 days, but the SO couldn’t give him an IA. She did hold off the NOD affirming the NITL until five weeks after the 120 days Francis wanted.

Francis paid nothing, and petitioned.

Judge Albert G (“Scholar Al”) Lauber has this one, but Francis hasn’t helped his case.

“Petitioner admits that he ‘did not raise an issue as to the reported tax due * * * for 2015 and 2016.’ But he asserts that he did dispute his liability for additions to tax and interest. He qualifies this assertion, however, by saying that he advanced such a challenge ‘to the best of his recollection.’” 2020 T. C. Memo, 140, at p. 7. 

Well, the SO’s notes don’t show that.

“The SO’s case activity record contains no reference to any challenge by petitioner to his liabilities for interest or additions to tax. Her summary of the… telephone call describes petitioner’s position as being that ‘he just need[s] the 120 days and he will full pay what he owes.’ The notice of determination states that the underlying liabilities were ‘not raised as an issue for the period(s) being considered in this hearing.’ And in his petition to this Court petitioner advanced no challenge to any portion of his underlying liability….

“In the light of this record evidence, petitioner’s assertion that he raised his liabilities for additions to tax and interest ‘to the best of his recollection’ is not sufficient to create a genuine issue of material fact. Petitioner appears to contend that he made this point inferentially by complaining that the IRS caused delay by not returning his initial phone calls inquiring about a payment plan. That complaint was not sufficient to raise a cognizable challenge to his underlying tax liabilities.” 2020 T. C. Memo. 140, at pp. 7-8.

I again quote an ancient saying: “Worst piece of paper better than best human memory.”

Judge Scholar Al notes that Francis is an attorney, 2020 T. C. Memo. 140, at p. 2. It was drilled into my head in my greenest moments at the Bar that the record is your friend: protect, preserve, and defend the record. And fill it with every material element you need. In writing.

Edited to add, 11/16/20: Francis tries a Rule 162 vacation, but it doesn’t go, even though Judge Scholar Al designates the order.

Or, a Bad Day in Ogden Gets Worse

Judge David Gustafson continues today’s tear, with the Ogden Sunseteers still down range.

John Worthington, 2020 T. C. Memo. 141, filed 10/8/20, blows on some multi-county law enforcers who grab tons of cash by way of fines, and bestow this largesse upon themselves. “The entity or operation (“the Target”) as to which Mr. Worthington sent information is the product of ‘interlocal agreements’ in which the ‘component entities’ are county law enforcement agencies in a State. Mr. Worthington has been involved in a controversy with the target and those agencies about whether, in what sense, and to what extent the target is a ‘legal entity’. 2020 T. 141, at p. 4.

Honest John has a court decision that he says holds this arrangement is not a legal entity. OS initial evaluater says may meet Section 7623(b) criteria. That’s discretionary award. But it’s not IRS’ function to determine any entity’s legal status in a State court proceeding. So the evaluater tries to get the file bucked to CI, but a senior evaluater overrules her. All the State court decision does, says senior, is toss Honest John because he’s sued a non-existent party. But the whole decision isn’t in the AR.

However, Honest John wants Judge Gustafson to order IRS to “really” review his information. But that means order an audit, and that Tax Court cannot do. And whether Honest John’s information crosses the $2 million threshold of Section 7623(b)(5)(B) isn’t jurisdictional.

“That is, where the WBO denies or rejects a whistleblower claim, we have jurisdiction to review its final determination whether or not the amount in dispute turns out to be $2 million. Consistent with that holding, the WBO issued to Mr. Worthington a determination that explicitly states: ‘This letter is a final determination for purposes of filing a petition with the United States Tax Court.’ We have jurisdiction to review that determination, and the Commissioner does not contend otherwise. Moreover, in a case like this one, where there has been no collection action, the WBO’s analyzing the claim under section 7623(a) as opposed to section 7623(b) makes no practical difference, and we perceive no harm to Mr. Worthington as a result of the label used by the WBO.”2020 T. C. Memo, 141, at p. 20.

Honest John doesn’t get summary J, but neither does IRS.

The initial evaluater wanted to send the file to CI, but was overruled. However, the senior who overruled did some research, and told the evaluater to do some more research.

“Such research seems to be inconsistent with what the regulations provide concerning a threshold rejection, and this ‘research’ by both SB/SE and the WBO tends toward characterizing the subsequent action as a denial. However, if the determination was a denial, not an action based solely on the claim, then the information generated in the research should have been included in the administrative record. Evidently it was not. The court opinion that Ms. [senior] quotes in her email seems to be missing from that record (except for the excerpt that she quotes). So it is difficult to characterize the process set out in the administrative record as leading to either rejection or denial.” 2020 T. C. Memo. 141, at p. 24. (Name omitted).

In Ogdenese, “rejection” means tossed out of hand; “denial” means “we looked at the stuff but it yielded nothing.”

Judge Gustafson man-‘splains.”…what we review is the actual determination reflected in the WBO’s letter. When we look to the final determination letter sent to Mr. Worthington, we see an apparent self-contradiction. It states: ‘The claim has been rejected because the IRS decided not to pursue the information you provided.’ (Emphasis added.) ‘[D]ecid[ing] not to pursue the information’ would seem, under the regulations, to indicate a denial; but the letter says the claim is being rejected.” 2020 T. C. Memo. 141, at p. 25. (Footnote omitted).

IRS’ summary J “…motion asks us to hold that ‘the Whistleblower Office did not abuse its discretion in rejecting petitioner’s claim for award’ and also asserts that “the Whistleblower Office did not abuse its discretion in denying petitioner’s claim for award”. (Emphasis added.) This inconsistency recurs throughout the motion.” 2020 T. C. Memo. 141, at p. 25.

When IRS’ motion speaks of rejection, the bounce letter uses the “not specific, credible or speculative” rejection language. But when it speaks of denial, it says no proceeding started nor funds collected.

“But the motion then seems to veer in order to state: “Therefore, the Whistleblower Office rejected petitioner’s claim”. (Emphasis added.) In the next sentence, however, the motion rights itself and states: ‘Because the undisputed material facts demonstrate the Whistleblower Office did not abuse its discretion in denying petitioner’s claim for award, this Court should grant respondent’s motion.’ (Emphasis added.) We cannot grant the Commissioner’s motion, because we cannot discern in it–nor in the WBO’s final determination–a coherent ruling consistent with the regulations and supported by the administrative record.” 2020 T. C. Memo. 141, at p. 27.

But the problem isn’t just IRS being “colloquial.”

“The problem, we stress, is not simply that of a poorly drafted determination. If the final determination made a ‘rejection’ that it explained poorly but that the administrative record justified, then we might be able to sustain the rejection. Or if the final determination made a ‘denial’ that it explained poorly but that the administrative record justified, then we might be able to sustain the denial. But in this instance we cannot tell what the WBO actually determined, and this unclarity in the final determination letter corresponds to a lack of clarity that arose in the preceding administrative process and that recurred thereafter in the Commissioner’s motion. We will therefore deny the motion and will order the parties to show cause why the case should not be remanded to the WBO for further consideration.” 141 T. C. Memo. 141, at pp. 27-28. (Emphasis by the Court).

Taishoff says Honest John has a valid point about excessive fines and selective enforcement being used to fund local law enforcement without appropriate legislative or judicial oversight, although WBO is not the place to go for redress. But as this is a non-political blog, I’ll say no more; at least not here. I have made my views clear elsewhere.

Or, a Bad Day in Ogden

Judge David Gustafson has been on a tear before, but today the Ogden Sunseteers are down range, and they lose two (count ’em, two) tries at summary J.

Lawrence W. Doyle and John F. Moynihan, 2020 T. C. Memo. 139, filed 10/8/20, blow on some 501(c)(3)s Messrs. Dole and Moynihan allege have strayed from the straight-and-narrow. And they have 100 exhibits, which contain 6000 (count ’em, 6000) pages of stuff, enough for someone at Ogden to write on the file “contains specific credible documentation,” although much is publicly-available. Meesrs. Doyle and Moynihan originally filed a 211 in the name of some corporation, but later filed same info as individuals. No corporate blowing allowed.

Initial evaluator bucked the stuff over to TEGE (Tax Exempt and Governmental Entities) for subject matter expertise. Judge Gustafson reckons that any toss thereafter must be “denial,” and not “rejection.” Wherefore, there must be enough in the AR to be worth looking into.

The TEGE SME got an e-mail from her boss to buck this on to Criminal Investigation; she does, but CI sends it back, saying it declined to go further. The 11369, which CI generated, said yes, the claim was “surveyed or declined.” And no investigation was opened. But it took CI three tries for CI to get the Form 11369 filled out right.

Meanwhile, “Petitioners allege–but the administrative record does not reflect–that, in this same general time period, one of them had a telephone conversation… with a Special Agent of the Federal Bureau of Investigation who said, ‘I can’t say enough about what you and your colleagues have done in filing your submission and providing your materials. We greatly appreciate everything you and your colleagues have done in your work.’ Such non-record information might be pertinent to a motion to supplement the administrative record, see Van Bemmelen v. Commissioner, 155 T.C. __, __ (slip op. at 15-16) (Aug. 27, 2020), or to a request to obtain discovery; but we do not consider such information in ruling on the Commissioner’s motion for summary judgment.” 2020 T. C. Memo. 139, at p. 7, footnote 2.

Chaps, that’s Judge Gustafson saying “nudge nudge, wink wink.”

Notwithstanding the foregoing, when TEGE got the file back, they “rejected” the claim, saying no credible information. Judge Gustafson notes that this incorrect nomenclature, but says TEGE was being colloquial. Should be “denied.”

But the OS bounced Messrs. Doyle and Moynihan, saying no collection. Doyle and Moynihan petition, claiming many governmental officials blessed their work, and wanting Judge Gustafson to breathe threatenings and slaughter in Ogden.

Well, post-Van Bemmelen, all Judge Gustafson can do on a summary J motion is examine the AR. A mere dispute of fact is irrelevant. “That distinction (the more demanding standard of denying the motion if the record simply shows a dispute of fact versus [emphasis in original] the less demanding standard of denying the motion only if the record fails to support the conclusion) does not affect the outcome in this case since, as we explain below, the administrative record does not support a critical premise of the WBO’s determination, and we therefore deny the motion even under the less demanding standard.” 2020 T. C. Memo 139, at p. 21.

Now non-collection is a winner, but the final bounce letter says “no proceedings.” You can collect without proceedings, but the bounce letter didn’t say so. And IRS is Cheneryed into what it did say, not what it could’a should’a would’a said.

Now Tax Court can’t oversee or direct Exam, Collection or CI to do anything. But here, it looks like IRS is weasel-wording, and Judge Gustafson is no fan of weasel-wording.

“Prompted by petitioners’ allegations–explicit and detailed, with names, dates, and locations–the WBO’s email put a single direct question to CI: ‘Can you please confirm that IRS CI is not working with these WBs on any investigation with these [target] entities?’ CI’s reply was a non-answer that looks like it may have been a deliberate evasion: ‘The claim was appropriately declined by criminal investigation.’

“But was CI ‘working with’ petitioners or not? CI did not say. And it gives us no confidence in the WBO’s determination to note (as the administrative record shows) that… CI had to be asked three times to complete its Form 11369 for this case, giving ‘unacceptable’ responses to the WBO and grousing that it’s ‘somebody else’s job’. We therefore hold that the administrative record, containing petitioners’ detailed allegations and CI’s non-response, fails to support the WBO’s conclusion that CI had not proceeded with any action based on petitioners’ information. Accordingly, we deny the motion on the grounds that the WBO abused its discretion in reaching its conclusion, because not all of its factual determinations underlying that conclusion are supported by that record.” 2020 T. C. Memo. 139, at pp. 26-27.

Time to supplement the AR…and how!

But wait…there’s more! See my next blogpost.

New Tax Court Rules have been announced. None deals with anything of substance. The antediluvian single-appearance Rule 24 remains, rewritten for stylistic purposes. Apparently law firms are unknown at the Glasshouse in the City of the Stateless.

Stealth Subpoenas are alive and well, twenty-nine (count ’em, twenty nine) years after the FRCP abolished them.

Comments on these revisions were received from such august bodies as American Bar Association, Section of Taxation; the Tax Clinic at the Legal Services Center of Harvard Law School; and the Office of Chief Counsel of the Internal Revenue Service.

No ordinary practitioner, whose shoes are not “exceeding white as snow; so as no fuller on earth can white them,” as a much more exalted authority put it, need apply.

There are a couple these (hi, Judge Holmes) today. I know, my readers, few in number but strong in stomach, will cry out as one “Those who read it don’t need it, and those who need it won’t read it!” But I have to try; to which they will again reply as one “Nous n’en voyons pas la necessité.”

First up, Richard W. Bandler, 21723-18, filed 10/7/20. Richard moves to amend his petition. Ch J Maurice B (Mighty Mo”) Foley whistles the play dead. “… the motion for leave was not accompanied by the proposed amendment to the pleading as required under Tax Court Rule 41(a).” Order, at p. 1. Note also that Rule 41(a) provides “(A) motion for leave to amend a pleading shall state the reasons for the amendment and shall be accompanied by the proposed amendment. The amendment to the pleading shall not be incorporated into the motion but rather shall be separately set forth and consistent with the requirements of Rule 23 regarding form and style of papers filed with the Court.”

Taishoff asks “why separately”? Our State court practice always included the proposed amended pleading in the motion, so the Judge (or more usually the Judge’s overworked law clerk) didn’t have to flip back and forth between documents.  Note FRCP 15 has no such prohibition as Rule 41(a).

Second, Jaroslaw Janusz Waszczuk, Docket No. 23105-18W, filed 10/7/20. This is JJ’s second appearance in this my blog. Last time out, JJ got tossed. See my blogpost “Blown or Tossed,” 7/9/19. JJ wants to appeal the toss to DC Cir, but doesn’t want to pay the filing fee for the appeal, and asks Ch J Maurice B (“Mighty Mo”) Foley for a waiver. This is a nonstarter.

“…petitioner filed this Court’s form for an Application for Waiver of Filing Fee (application). The filing of that application to request a waiver of the filing fee for the petitioner’s appeal is procedurally improper, as that form may be used only to request the waiver of this Court’s fee for filing a petition. Accordingly, we will strike petitioner’s application from the record.” Order, at p. 1.

JJ, try Form 4 on the Appellate Rules Forms page. See also FRAP 24.