And Don’t Disqualify

That’s Judge Patrick J (“Scholar Pat”) Urda’s advice to Jerry J Sun and Sun N. Sun, Docket No. 14749-17L, filed 3/14/22, and IRS. Seems the SO on their CDP overlooked the fact that he had discretion per IRM part 5.14.1.4(5) to let Jerry and Sun keep their multimillion dollar home unencumbered and unliquidated; sure, the SO should consider whether to tell Jerry and Sun to encumber or liquidate their MacMansion to pay off their multimillion dollar deficiencies, add-ons, and chops, but not be more intrusive than necessary.

This case is back to Tax Court on a supplemental CDP, which IRS asked for. The “liquidate or encumber” issue arose out of the supplemental CDP, whereat three (count ’em, three) of Jerry’s and Sun’s “representatives” participated. I use the inverted commas, because only one of the three is shown as attorney for Jerry and Sun in the online docket. Except that the other two “representatives” are name partners in the attorney’s law firm.

OK, fair enough. But now comes one of my pet peeves.

After the trial started on the supplemental CDP, IRS said they might want the attorney for Jerry and Sun to testify. Judge Scholar Pat stopped the trial so the parties could brief the issue. Then IRS moved for summary J.

Judge Scholar Pat denies summary J. It’s a question of fact what the SO thought were the limits of his discretion to order liquidation.

Asking to have trial counsel testify in midtrial is dirty deck tennis, but Judge Scholar Pat is too much of a gentleman (and a scholar) to say so.

“We do not believe that current trial counsel is likely to be a necessary witness.  Three attorneys appeared on the Suns’ behalf at the CDP hearing, two of whom are available to testify and were listed as potential witnesses in the Suns’ pretrial memorandum. Even if we were to conclude that the Suns’ trial counsel was likely to be a necessary witness after the settlement officer’s testimony at trial, we would nonetheless permit continued representation given that disqualification in the middle of trial would work substantial hardship on the Suns (especially since their other representatives have not participated in the trial so that they might be available to testify).” Order, at pp. 3-4. (Footnote omitted, but it says IRS didn’t put the attorneys on their witness list).

I’m glad Judge Scholar Pat reads ABA Model Rule 3.7 and Rule 24(g)(2)(A) beyond just a knee-jerk disqualification when anyone suggests a party’s attorney might have to testify. The idea behind attorney-as-witness disqualification is that the attorney should not argue his or her own credibility; this confounds the disparate roles of attorney and witness.

This confoundment misleads a trier of fact into placing excessive weight upon what a witness-attorney says when not testifying; and the trier of fact who most needs this protection is a jury, composed of nonprofessional triers of fact. In US Tax Court there is no jury to be confounded or misled. As Judge Vasquez said many years ago “(S)ee Diaz v. Commissioner, 58 T.C. 560, 564 (1972) (stating that the process of distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, is the daily grist of judicial life).” See my blogpost “Practicing Accountancy Can Be Hazardous to Your Health,” 12/26/12.

I’m sure Judge Scholar Pat can distill with the best of them.

IRS does make a last-ditch try by claiming some shady numbers in Jerry’s and Sun’s 433-A would justify the SO telling them to liquidate or encumber, but those who move for summary J give the other side the benefit of the doubt, and Jerry and Sun get it.