Attorney-at-Law

ELEGY IN A GRAVEYARD – PART DEUX

In Uncategorized on 06/07/2021 at 16:09

I’m sure all y’all will recall the inventive Glenn R.  Johnston, flogger of cemetery dodges. Well, if you don’t, see my blogpost “Elegy in a Graveyard,” 8/12/14. Among those whose heavy-duty charitable deductions went the way of all cliché, we have today Kannarkat P. Verghese, Deceased, Annie P. Verghese, Personal Representative, and Annie P. Verghese, Petitioners, 2021 T. C. Memo. 70, filed 6/7/21.

Annie was here before, fighting about interest abatement. See my blogpost “Net Worthiness – Part Deux, ” 2/16/21.

The FPAAs (herein consolidated) that followed Glenn’s undoing were put on hold while the Federales put Glenn in the stony lonesome. Now Annie, as pers rep and personally, wants interest abated on the partner-level deficiency thrown off by Glenn’s skullduggery, of which Annie claims she was completely unaware.

Unhappily, Section 6040(b) precludes abatement of income tax interest. So IRS can’t abuse its discretion where it has none.

But that Obliging Jurist, Judge David Gustafson, cuts Annie a wee bit slack on five months’ worth thereof, allowing her some discovery as to whether IRS unreasonably delayed for five (count ’em, five) months. For the rest, the criminal proceedings put the TEFRA litigation and settlement on hold. And most of the continuances were stiped by both sides.

Annie says IRS never told her she could make a deposit of the tax due and stop the running of interest. But lack of a personal invitation isn’t delay, even if Judge Gustafson agrees Annie would’ve paid if invited.

“We first address petitioners’ argument that the Commissioner’s failure to inform them of the opportunity to suspend the running of interest by making a ‘deposit’ constituted an act of ‘delay’ within the meaning of section 6404(e). SO E found no evidence that such a “failure” occurred, and moreover concluded that ‘the statute doesn’t provide for interest abatement when the IRS doesn’t advise the Taxpayer to post a bond.’ Although (as we have assumed) the Commissioner did not specifically advise petitioners of the opportunity to post a cash bond, the IRS has since 1984–long before the years at issue–published guidance advising all taxpayers of the opportunity to remit to the IRS a deposit in the nature of a cash bond and (relevant here) has also advised how to do so before the assessment of the tax upon which interest may be assessed. The accrual of such interest could be reduced or eliminated by following those procedures. See Rev. Proc. 84-58…, and other published guidance…. Because this information was available to the public, petitioners’ failure to make a deposit to halt interest accrual cannot be attributed to delay or failure of the IRS to advise them personally of this information. The supposed absence of a personal invitation to make a deposit did not give rise to an abuse of discretion when SO E determined that section 6404(e) does not provide for interest abatement under such circumstances.” 2021 T. C. Memo. 70, at pp. 44-45. (Name, citations, and footnote omitted). Note Rev. Proc. 84-58 was superseded by Rev. Proc. 2015-18.

I suspect whoever was Annie’s counsel at the time will be getting The Phone Call. I suggest to my readers that they give a copy of the cited Rev. Proc. to their clients at retention; it will save one part of The Phone Call.

As for the holdup during the criminal proceedings, that wasn’t ministerial or managerial but discretionary, and anyway, litigation delay of itself isn’t grounds for abatement.

But once the criminal and the TEFRA litigations were done, IRS did move for entry of decision, withdrew that, and refiled, hence the five-month delay. SO E apparently didn’t check that out, so maybe discovery will sort that out.

Finally, some three months were consumed with the Rule 248(b) sitout for nonparticipants. See my blogpost “Settle Order on Notice – to the Nonparticipant,” 10/26/17.

So Annie loses most of the interest (which by now is more than the deficiency).

As is not uncommon, a footnote shows interesting sidelight. We all know that Golsen mandates Tax Court to follow CCA precedent where taxpayer resided at petition in a jurisdiction subject to that Circuit. But that’s not a jurisdictional bar. “see also Lardas v. Commissioner, 99 T.C. 490, 495 (1992) (explaining Golsen v. Commissioner, 54 T.C. 742 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971), and stating ‘[i]t should be emphasized that the logic behind the Golsen doctrine is not that we lack the authority to render a decision inconsistent with any Court of Appeals (including the one to which an appeal would lie), but that it would be futile and wasteful to do so where we would surely be reversed’).” 2021 T. C. Memo. 70, at p. 18, footnote 6. (Underlining by the Court). But nothing stops counsel from taking an appeal and arguing in good faith that precedent is wrong.

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