No argument from me that Judge Albert G (“Scholar Al”) is a master of the intricacies of IRS’ determinations to assess chops. Today he has an essay on the official Tax Court view of Section 6751(b) Boss Hossery in Oxbow Bend, LLC, Parkway South, LLC, Tax Matters Partner, T. C. Memo. 2022-23, filed 3/21/22.

And Judge Scholar Al cites and explicates each and every opinion, all of which state that a “determination” means a written statement. I’ve blogged therm all.

The Oxbows claim that when the RA examining their AL scrub conservation easement mentioned penalties in a phoneathon with IRS Counsel and their representative, that was when Boss Hossery came into play, not later when she sent out the FPAA.

“Petitioner thus contends that RA S was obligated to secure her supervisor’s approval for the penalties before convening the telephone call.

“We disagree. The word ‘determination’ has ‘an established meaning in the tax context and denotes a communication with a high degree of concreteness and formality.’ Belair Woods, LLC v. Commissioner, 154 T.C. 1, 15 (2020). An ‘initial determination’ signifies a ‘consequential moment’ of IRS action. Ibid. (quoting Chai v. Commissioner, 851 F.3d 190, 221 (2d Cir. 2017), aff’g in part, rev’g in part T.C. Memo. 2015-42). A ‘mere suggestion, proposal, or initial informal mention’ of penalties does not reflect an examining agent’s ‘initial determination.’ Tribune Media Co. v. Commissioner, T.C. Memo. 2020-2, 119 T.C.M. (CCH) 1006, 1010. Rather, ‘the ‘initial determination’ of a penalty assessment will be embodied in a formal written communication” that notifies the taxpayer of the decision to assert penalties. Belair Woods, 154 T.C. at 10; see Oropeza v. Commissioner, 155 T.C. 132, 138 (2020) (‘[A] taxpayer may receive this notification in a notice of deficiency, or he may receive the notification in a document that the IRS sent him at an earlier date.’).” T. C. Memo. 2022-23, at p. 5. (Name omitted).

The Oxbows lose.

Taishoff says, don’t get me wrong, I’m not saying the Oxbows are injured innocents; read the facts as stated in the order and decide for yourself.

But I do say, once again, what Congress thought they were doing didn’t happen. Congress wanted to prevent low-level IRS employees from bludgeoning taxpayers by threatening chops to extract settlements. But most of that bludgeoning takes place, if at all, long before FPAAs or SNODs. And while Judge Scholar Al waxes eloquent about problems of proof and taxpayer gameplaying if oral communications were considered as “determinations,” T. C. Memo. 2022-23, at p. 8, when does he think the bludgeoning takes place, if at all? If Boss Hossery needn’t happen before an IRS employee issues a formal, written statement, then the employee will bludgeon away. I’m sure Don Vito Corleone never issued a “formal, written statement” in his life.