Archive for September, 2021|Monthly archive page


In Uncategorized on 09/27/2021 at 15:40

The current régime at the Clerk’s Office in The Glasshouse on Second Street seems to emit opinions one day a week, and Monday is not one such. Why this should be eludes me, as does the hesitancy to release opinions before 3:00 p.m., Eastern (US) time; why Europe and Africa should have to await the collective wisdom of the Tax Court bench until the morrow (unless they burn the midnight fossil fuel) seems unfair.

Howbeit, other than an order embodying a reprise of an admonition from Judge Morrison in a case I reported earlier this month (see my blogpost “Lord Chief Justice Campbell’s Dictum – Part Deux,” 9/8/21), which you can look up and read for yourselves if you’re looking to waste your time, there is nothing worthy of note.

I’m going to watch my daughter’s webinar; it’s much more interesting.




In Uncategorized on 09/24/2021 at 13:38

When He Has an Envelope

Ex-Ch J Michael B (“Iron Mike”) Thornton will sink his metaphorical teeth deeply into whatever comes, even the humble envelope that supposedly brought the disputed SNOD to Cameron Stewart, Docket No. 6771-19L, filed 9/24/21.

Note that Cam’s POA [sic] mistakenly calls him/herself a “POA” (probably means representative designated in a Form 2848) and the Section 6213 notice of deficiency a “NOD” whereas IRS correctly calls it a “snod”; did I copy them or did they copy me?

But ex-Ch J Iron Mike eschews such blather, and goes to the paper. Did IRS timely send a SNOD to Cam? It looks like not, after ex-Ch J Iron Mike goes through IRS transcripts replete with unintelligible codes, dubious notations from SOs at Appeals, and the purported envelope wherein was mailed the SNOD. When ex-Ch J Iron Mike gets through deconstructing the envelope and peripheral documents, not even a scrap remains.

Appeals proffers a contest of underlying liability (deficiency), but that’s a nonstarter absent a SNOD.

“The notice of determination notes petitioner’s assertions in his Form 12153 that he had received no notice of deficiency and that the IRS tax transcript that had been provided to him did not show the issuance of any notice of deficiency. In response to these assertions, the notice of determination states with little elaboration, ‘The Appeals Officer determined that you should be given the opportunity to challenge the liability during the appeal telephone conference.’ From this response it would appear that Appeals sought in effect to cure any defect in the mailing of the notice of deficiency by conceding petitioner the opportunity to dispute his underlying liability. Allowing petitioner the opportunity to dispute his underlying liability does not, however, perfect an assessment made in derogation of section 6213(a).” Order, at p. 10. (Citation omitted).

So the only issue here is a grab of State tax refund in partial satisfaction of the alleged deficiency. Cam’s POA (representative) says there isn’t any deficiency, as no SNOD was sent to Cam’s last known address, hence no valid assessment, and SOL has run on that year.

IRS wants summary J, magnanimously admits Cam gets the benefit of every favorable inference, but ex-Ch J Iron Mike was giving Cam that anyway.

Relinquishing jurisdiction, ex-Ch J Iron Mike sends Cam and IRS off to go try the case.


In Uncategorized on 09/23/2021 at 17:31

Maria Isabel Goode, Petitioner, and James T. Goode, Jr., Intervenor, 2021 T. C. Sum. Op. 34, filed 9/23/21 had an on-again, off-again marriage that ended in divorce. Maria Isabel had a similar relationship with the U S gov’t, working with JT for DoD in NM and AZ, before moving to FL when JT fell ill. Maria Isabel and JT each took loans from the Federal savings plan for retirees, known as the Thrift Savings Plan (TSP). This was supposed to pay living expenses for selves and kids while they found jobs in FL, but FL civilian life didn’t pay like Uncle Sam.

They ultimately defaulted on the loans and got 1099-Rs, hitting them for $35K in tax after withholdings. JT’s mom prepared their joint return, and Maria isabel knew neither JT nor her could pay. When they finally divorced, the decree said each owed half the debt. IRS and Maria Isabel now stip that 78.5% of whatever is now unpaid is her obligation.

Meantime, Maria Isabel, having shucked JT, rejoins Uncle Sam and has a six-figure salary.

Maria Isabel wants innocent spousery, but has no hardship. The protective order she got against JT was years after the tax liability was incurred, and no evidence of abuse before that.

But ultimately, whatever a mosey through the seven factors of Rev. Proc.  2013-34 may yield, it comes down to what Maria Isabel knew when she signed the return that gave rise to the liability.

Judge Vasquez: “In evaluating the relevant factors we conclude that the knowledge factor weighs too heavily against relief for petitioner. The … tax liability attributable to intervenor partially arose from defaulted TSP loans to which petitioner had consented. She knew the liability would not be paid when she signed the return. Given these facts, we find that it would not be inequitable to hold her responsible for the underpayment….” 2021 T. C. Sum. Op. 34, at p. 18.


In Uncategorized on 09/23/2021 at 15:46

Daniel Omar Parker and Chantrell Antoine Parker, 2021 T. C. Memo. 111, filed 9/23/21, is another employee business expense case, fact-bound and interesting only for IRS dropping the chops and the excess IRA contribution angle.

Danny O can’t tell Judge Albert G (“Scholar Al”) Lauber whence came the $64K Danny O and Chantrell deducted as an IRA contribution. If a rollover, like some of the other deposits they were consolidating into a new IRA, no deduction.

“Mr. Parker testified that he created the new ‘Solo 401(k)’ to consolidate petitioners’ retirement accounts. Evidence in the record (including petitioners’ prior tax returns) indicates that they had other retirement plan assets that could have been the source for the $60,444 slice of the cashier’s check. For 2013 and 2014 alone, petitioners claimed deductions totaling $82,363 for contributions to self-employed SEP, SIMPLE, and qualified plans. But they admit a rollover from their prior ‘Solo 401(k)’ of only $39,823. Viewing the evidence as a whole, we find that petitioners have failed to carry their burden of proving that any portion of the $60,444 contribution consisted of new cash rather than nondeductible rollover.” 2021 T. C. Memo. 111, at p. 13.

But here’s the headline-grabber that Danny O puts in his post-trial brief. He says he and Chantrell “…prefer to keep their savings ‘at home where they are protected * * * and safe from unscrupulous individuals including IRS agents.’” 2021 T. C. Memo. 111, at p. 13.

Judge Scholar Al comments with almost Olympian detachment, “This assertion does not satisfy their burden of proof.” 2021 T. C. Memo. 111, at p. 13.

Any further comment is superfluous.


In Uncategorized on 09/23/2021 at 15:27

High-flying insurance salesman Michael D. Brown, 2021 T. C. Memo. 112, filed 9/23/21, is back again, petitioning a NOD from a CDP, and still looking for the $80K TIPRA tip he plunked down with his OIC for the ten (count ’em, ten) years’ tax he owes. For the backstory, see my blogpost “High Flyer – Shot Down,” 9/16/19.

Well, Mike went to 9 Cir, who bucked the case back to Judge Kerrigan, asking her to sort out whether Tax Court has jurisdiction to order a refund of a TIPRA tip. TIPRA, the Tax Increase Prevention and Reconciliation Act, requires a 20% downpayment on the amount of your lump-sum OIC with the Form 656.

Judge Kerrigan: “Sections 6320(c) and 6330(d)(1) provide for judicial review of an adverse CDP determination. Therefore, the Court has jurisdiction in this case pursuant to sections 6320(c) and 6330(d)(1). Petitioner contends that pursuant to section 6512(b) the Court has express refund jurisdiction in a case in which the Court has already acquired jurisdiction. We disagree.” 2021 T. C. Memo. 112, at p. 5. (Citation omitted).

We all know that “no deficiency, no refund.” Tax Court has CDP jurisdiction here, not deficiency.

“Section 6512(b), contrary to petitioner’s contention, does not grant this Court refund jurisdiction in all cases in which the Court has already acquired jurisdiction. Rather, section 6512(b)(2) is an express grant of jurisdiction ‘to order the refund of such overpayment and interest.’ For a refund to be governed under section 6512(b), a notice of deficiency is required. The Tax Court’s jurisdiction in this case, however, does not derive from the mailing of a notice of deficiency. This Court’s jurisdiction under section 6512 cannot be invoked in this matter with respect to the TIPRA payment because this proceeding is not based on a postdecision action to modify a decision in a deficiency case under section 6213 or section 7481(c) or (d).” 2021 T. C. Memo. 112, at p. 6.

The two previous cases upon which Mike relies, his own and that of the famous Isley brother, went off on the finding that IRS did not abuse its discretion in bouncing the OICs there involved, so never considered if Tax Court could order a refund.

What might happen if an OIC was wrongfully refused and no refund made is another story. Note that Form 656 says the TIPRA tip is nonrefundable. And the legislative history shows “the legislative history of section 7122(c) refers to the 20% payment as a ‘partial payment’ or ‘down payment’ of the taxpayer’s liability. H.R. Conf. Rept. No. 109-455, at 234 (2006), 2006 U.S.C.C.A.N. 234, 420-421. The 20% payment of the offer amount is treated as a payment of tax rather than a refundable deposit under section 7809(b) or section 301.7122-1(h), Proced. & Admin. Regs. See Notice 2006-68, sec. 1.02, 2006-2 C.B. 105, 105.” 2021 T. C. Memo. 112, at p. 5.

So Judge Kerrigan tells 9 Cir that Tax Court has no jurisdiction.

Obviously, the TIPRA tip is Congress’ attempt to cool the ardor of the clientele of those who have turned making bogus OICs into a cottage industry.


In Uncategorized on 09/22/2021 at 15:28

No, not the 1914 20-episode thriller that the Libe of Congress designated “culturally, historically, or aesthetically significant” in 2008. This one is none of the foregoing.

Rather, today’s perils fall not upon Pauline, but upon her trusty attorneys, whom I’ll call Jeff and Ken. Jeff and Ken are attorneys in a law firm called MIJS.

Captive microinsurance dodges are the latest clay pigeons in IRS’ trapshooter. I’ve blogged a bunch of these, a list of which you can find in Footnote 1 of Judge Gale’s order today in  Pauline W. Liu, et al., Docket No. 3101-20, filed 9/22/21 (a special day at our house).

I’ll defer to Judge Gale for the story.

“The record indicates that MIJS wholly owns the entity MIJS Captive Management, LLC (MIJS Captive), which in turn wholly owns the entity Patriotic RE Insurance Company, Inc. (Patriotic RE). The record also indicates that both MIJS Captive and Patriotic RE were connected to the primary issue in these cases; that is, both were involved in the purported captive insurance arrangement at issue. Moreover, in certain filings with the Court, MIJS Captive and Patriotic RE have both made broad, general assertions of attorney-client privilege, raising questions as to the degree of MIJS’s involvement in the planning or promoting of the aforementioned purported captive insurance arrangement.” Order, at p. 2.

This triggers a Rule 24(g)(1) show-and-tell, whereby Jeff and Ken can hand in a sworn statement dishing as follows: “(1) whether he was involved, directly or indirectly, in the planning or promoting of the purported captive insurance arrangement at issue in these cases, including any involvement in the provision of legal advice or opinions by MIJS to MIJS Captive or Patriotic RE regarding such arrangement, such as opinion letters upon which MIJS Captive, Patriotic RE, or petitioners may have relied in planning or promoting such arrangement; and (2) the extent, if any, to which he was involved, directly or indirectly, in the operations of MIJS Captive or Patriotic RE.” Order, at pp. 2-3.

If the answer is “yes” to any thereof, Jeff and Ken can also “(1) secure petitioners’ informed written consent, if he has not already done so; (2) withdraw from this case; or (3) take whatever other steps are necessary to obviate any conflict of interest or other violation of the ABA Model Rules of Professional Conduct. If Messrs. [Jeff and Ken] obtain (or have already obtained) petitioners’ informed written consent, then they shall attach such to the statement filed with the Court.” Order, at p. 3.

Taishoff’s addition: Jeff and Ken, be prepared for The Phone Call.  And the Perils of Pauline.


In Uncategorized on 09/21/2021 at 15:14

The Bipartisan Budget Act of 2015 obliterated TEFRA, the 1983 multi-level litigation breeder, so complex that Congress had to insert a provision (Section 6231(g)(2)) in case IRS couldn’t figure out what was subject to TEFRA and what wasn’t. See my blogpost “Bamboozle Your Way to Victory,” 4/27/20.

But the demise of TEFRA (albeit to thunderous applause from all non-bamboozlers) via bipartisanship left us, in one respect at least, with the same problem we had before: the AWOL tax matterer (now representative). I told the story in my blogpost “The Case of the Missing Tax Matterer,” 7/26/21.

And the adventure continues. Today, Judge Alina I. (“AIM”) Marshall must again grapple with the attempt of GM Investments III, LLC (and its managing member, whom I’ll call Gerry) to sub in for the missing John Sfondrini, in Colorado Land and Holdings LLC, John Sfondrini, Tax Matters Partner, Docket No. 11875-20, filed 9/21/21.

Counsel (exactly for whom is still unclear) wants to substitute parties and amend the caption, so as to get a stiped decision filed and the case closed. He must want it very much, as my sources tell me Gerry is his senior law partner, known as a visionary; “your wish is my command” is a very feeble description of what counsel must be going through.

But counsel needs more time to assemble the partnership paraphernalia to establish that Gerry’s LLC is in fact the new tax matterer for the CO landholders. So Judge AIM holds the motion in abeyance while counsel scrambles.

At the risk of being Captain Obvious, I suggest that drafters of LLC operating agreements (or partnership agreements, or their equivalents in your jurisdiction) provide clear paths of succession for their tax representatives, as well as certification procedures, all as simple as necessary.


In Uncategorized on 09/20/2021 at 15:39

Spelled “barracking,” it means crowd abuse or heckling.  As used here, it means abusing the tax review system with frivolities. Today we have the author of the term, David C. Barrick, Docket No. 18912-19P, filed 9/20/21.

Barrick ran up $70K plus in unpaid tax liabilities. He wishes to litigate or relitigate same; some he failed to litigate because he either failed to petition or petitioned too late. To those for which he claimed he never got SNOD or NOD, Judge Buch puts paid comprehensively.

“Mr. Barrick’s claims must fail for multiple reasons. First and foremost, his claims are not properly before us in this case. As we held in Ruesch v. Commissioner, nothing in the text of section 7345 authorizes us to redetermine the underlying liability. Moreover, his claims are either unsupported or without merit. The liabilities underlying his passport revocation are a combination of self-assessed tax and assessable penalties, neither of which is subject to deficiency procedures. Thus, Mr. Barrick’s claim that no notice of deficiency was issued is without merit; the Commissioner was not required to issue a notice of deficiency. Lastly, Mr. Barrick claims that the Commissioner did not send him notices of determination. A notice of determination is issued at the conclusion of a collection proceeding, which is initiated by making a timely request following either a notice of intent to levy or a notice of federal tax lien. But Mr. Barrick never made a timely request challenging either of these collection actions, so he was never entitled to receive a notice of determination.” Order, at p. 5. (Footnotes omitted, but Judge Buch must have been on law review, as he was up to 21 (count ’em, 21) footnotes in fewer than five pages).

When I was a near-flunky On The Hill Far Above in a previous millennium, I used to say that law review authors, from whose ranks judges are recruited, measure success by the number of footnotes in their literary productions, much as certain generals measure success by body counts.

Howbeit, the only relief pore l’il ol’ Tax Court can afford under the Section 7435 passport-grab-certification is to order Treasury to tell State to back off. And here Treasury is right.



In Uncategorized on 09/20/2021 at 14:59

And I’ll go Nassau

A long time ago, I suggested to trusty attorneys for Celia Mazzei, Docket No. 16702-09, filed 9/20/21, that they forget about the useless Rules 161 and 162 vacation and reconsideration, and go for a direct appeal to 9 Cir. Tax Court routinely slugged those who played the now-defunct DISC-FSC Rothstuffer gambit.

For those who’ve forgotten or arrived late, see my blogpost “The Third Favorite Indoor Sport, 5/24/18.”

This last July, 9 Cir laid a whuppin’ on Tax Court, as Judge Mark V Holmes suggested (see my blogpost “Caligula in Tax Court?” 3/25/18) and I concurred two (count ’em two) months later.

Well, today Celia and trusty attorneys are looking for Section 7430 admins and legals, but ex-Ch J Michael B (“Iron Mike”) Thornton has to clean up the record first.

Emboldened as I am by these developments, I’ll go Nassau (double my bet on the back nine), and wager ex-Ch J Iron Mike finds enough to justify IRS and toss Celia and trusty attorneys.


In Uncategorized on 09/17/2021 at 14:14

I’m always trying to suss out the latest hacks, hints and kinks in the wrinkled skin of our tax law and procedure, specifically in and around The Glasshouse in The City Stateless. Now I can’t say with reasonable certainty, but there might could be one worth trying in an off-the-bencher today from Judge Buch, Martin J. Levins & Janet C. Levins, Docket No. 21853-19, filed 9/17/21.*

One good result among the very few that followed that shambolic schemozzle known as DAWSON is the posting of off-the-benchers on Fridays, formerly a day upon which no opinions or decisions appeared. Of course, the docket is sealed on this one, hence the PDF at the foot hereof, rather than a direct link; maybe one document was sealed, sealing all. The Genius Baristas, or is it the mysterious 18F, still haven’t fixed that glitch, among others.

You can read the opinion for yourselves. Martin’s IC-vs-EE argument has more holes than the PGA Tour. I won’t waste your time or mine abstracting Judge Buch’s prose.

The hack, hint or kink is that IRS folded the chops. Judge Buch doesn’t tell us if Martin had reasonable cause. He’d been an IC for years before signing on with a company that gave him several pounds of paper stating he was an employee, and he had his return prepared by a CPA, qualifications unstated, as was whatever Martin told him.

Based on the scanty facts Judge Buch gave us, it was at least worth IRS’ while to try the chops. So maybe if you petition your losing exams as small-claimers, and your client isn’t a total wit, wag or wiseacre, maybe IRS will fold the chops.

*Levins 21853-19 9 17 21