Once again, this is a nonpolitical blog. Today Judge Patrick J. (“Scholar Pat”) Urda is ruling on when and for what purpose to admit chains of e-mails in Michael C. Giambrone, Docket No. 11109-18, filed 5/3/22.

On the trial, batches of e-mail chains were offered in evidence, but Judge Scholar Pat reserved decision. Mike and family claim they were the victims of a bank robbery, whereby the bank was stolen from him and family by fraud.

The first batch are e-mails sent by testifying witnesses. Judge Scholar Pat lets them in, but not to prove the truth of what they say. “We will first deny in large part the hearsay objection to the email chains that included emails sent by testifying witnesses. Hearsay is generally ‘a statement …offered in evidence to prove the truth of the matter asserted.’ Fed. R. Evid. 801(c). Statements, including emails, providing context for other admissible statements are not hearsay because they are not offered for their truth.” Order, at p. 2. (Citations omitted, but get them for your memo of law file).

Besides, Mike waived objections in the second stip of facts. So whatever came before Mike’s chains can be used to show context of admissible evidence.

But what came after the chains that Judge Scholar Pat lets in is another story. “These emails do not provide context nor does the Commissioner offer another compelling reason to overcome the pending hearsay objection.” Order, at p. 2.

Now the e-mail chains from the alleged bank robbers come in to show state of mind. And although it’s a close call, so do a couple e-mails (hi, Judge Holmes) from the alleged bank robber’s CEO to and from Freddie Mac, which show state of mind and context, but the rest don’t.

But letting the e-mails into evidence doesn’t mean they make the weigh-in.

“To be clear, our holding that these emails satisfy Rule 803(3) neither establishes their credibility nor dictates the weight to be given them. See, e.g., Kroner v. Commissioner, T.C. Memo. 2020-73, at *20–21; accord United States v. Peak, 856 F.2d 825, 834 (7th Cir. 1988) (finding that a district court does not have discretion to exclude testimony based on untrustworthiness); 30B Charles Alan Wright et al., Federal Practice and Procedure § 6834 (2022 ed.) (‘There is, of course, no authority for adding an additional “trustworthiness” requirement to Rule 803(3).’).” Order, at p. 3, footnote 4.

For the Bert Kroner story, see my blogpost “Imaginary Friend?” 6/1/20.

My arm’s too short to give myself a proper pat on the back, but Celia Mazzei, T. C. Memo. 2022-43, filed 5/2/22 has ex-Ch J Michael B (“Iron Mike”) Thornton tossing Celia’s Section 7430 admins-and-legals motion to the tune of $396K.

You’ll no doubt recollect that 9 Cir reversed Tax Court. If you don’t, see my blogpost “I Got It Right,” 9/20/21. There now, you see back then I went Nassau, even though it’s the loser on the front nine who has to double the bet on the back nine.

And I win again.

“Before petitioner filed in this Court her Motion for Litigation Expenses with respect to the trial proceedings, she had already filed in the Ninth Circuit—and the Ninth Circuit had already denied—petitioner’s appellate motion, which ‘protectively’ sought these same trial-level litigation expenses as well as fees associated with the appellate proceedings. These circumstances present a fundamental threshold issue about our authority to consider and decide petitioner’s motion for litigation expenses.” T. C. Memo. 2022-43, at p. 4.

But even pore l’il ol’ Tax Court can decide if it has jurisdiction.

And our old friend law of the case takes the lead. Once a superior court, or even the same court, has decided an issue, that’s it. Reargue, reconsider, or appeal, but if you don’t, you’re stuck.

Celia’s trusty attorneys had asked 9 Cir for the legals and admins, but all they got was a mandate for Tax Court to award Celia costs on appeal, a big $340.10. Don’t spend it all in one place, chaps. So they tried in Tax Court, without telling ex-Ch J Iron Mike in their motion but mentioning it in an attorney’s affirmation. And that this is labeled a “protective” claim to prevent IRS from arguing no jurisdiction is irrelevant;  law of the case governs.

9 Cir didn’t tell Tax Court nuthin’ ’bout no costs except the $340.10.

It’s our old friend In re Sanford Fork & Tool Co., 160 U.S. 247 (1895), at p. 255: “When a case has been once decided by this court on appeal, and remanded to the circuit court, whatever was before this court, and disposed of by its decree, is considered as finally settled. The circuit court is bound by the decree as the law of the case, and must carry it into execution according to the mandate. That court cannot vary it, or examine it for any other purpose than execution; or give any other or further relief; or review it, even for apparent error, upon any matter decided on appeal; or intermeddle with it, further than to settle so much as has been remanded.”

Celia loses.

Bu just to help out 9 Cir, ex-Ch J Iron Mike decides IRS was substantially justified. Only one appellate case had been decided when Celia Mazzei lost in Tax Court, and that doesn’t mean IRS was not justified in pursuing Celia.

I again quote The Great Chieftain of the Jersey Boys: “I have never met a client that thought incurring fees to contest an erroneously determined tax was fair.”

Judge Ronald L. Buch has been a distinguished jurist on the Tax Court Bench these last nine (count ’em, nine) years, but not since I welcomed him on 1/16/13 could I find an appropriate cognomen.

But today I find one I think is suitable, so here’s Judge Ronald L. (“Ingenuity”) Buch, who is never baffled by any conundrum he encounters.

Irmgard A. Klein, Deceased, Docket No. 16373-21, filed 5/2/22, never signed the timely petition, which led to the successful settlement of her case. Her son, and agent under a durable power of attorney, did so. But is the signature valid, and has son and agent Werner the authority to act?

“That durable power of attorney expressly gave Mr. Klein the authority to file legal actions on Ms. Klein’s behalf. If Ms. Klein was incompetent at the time the petition was filed on her behalf, and on the appropriate motion, Mr. Klein could have been appointed as her next friend. See Rule 60(d). No such motion was filed. If she was competent at the time, Ms. Klein could simply ratify the petition. See Rule 60(a)(1). But Ms. Klein passed away the day after the petition was mailed on her behalf, so she cannot ratify it. And death of the principal terminates the durable power of attorney.” Order, at p. 1.

Alas and alack, is the hard-won settlement “to blush unseen, And waste its sweetness on the desert air”?

Not while Judge Ingenuity Buch is on the case.

“We are not without a solution. In addition to having held a durable power of attorney when Ms. Klein was alive, Mr. Klein is also the sole heir after her passing. Accordingly, the Court can appoint him as her representative.” Order, at p. 1.

Who needs wills, probate, affidavits of heirship, letters testamentary, letters of administration (with or without the will annexed)? Norm Dacey has nothing on Judge Ingenuity Buch when it comes to avoiding probate.

With a stroke, Judge Buch appoints Werner as rep, amends the caption accordingly, and enters decision.

My kind of judge.

A “substantially justified” position is the chief bulwark of IRS’ defense to a Section 7430 claim for admins and legals. But when is IRS held to have taken a position, “substantially justified” or not?

STJ Diana L. (“Sidewalks of New York”) Leyden tells us in Nirav Babu, Docket No. 20070-19, filed 5/2/22.

Nirav got chopped for $249K for Section 6695(g) preparer EITC due diligence footfaults. IRS never issued a Section 6212 SNOD, just assessed. Nirav filed for a refund of $5K and abatement of the balance. Exam rejected the refund and abatement, and Nirav went to Appeals.

At Appeals, IRS abated $167K, hit Nirav with $81.5K, and Nirav and his representative signed off on the deal, but Nirav now wants admins and legals, claiming he “substantially prevailed.”

But when did IRS taken the position it now claims was “substantially justified”?

“With respect to the administrative proceeding in issue, the “position of the United States” means the position taken by the United States as of the date petitioner received the notice of the decision of the IRS Appeals Office. I.R.C. §7430(c)(7)(B). The IRS is not considered as having taken any position in an administrative proceeding prior to the issuance of the Appeals Office’s notice of decision. A notice of decision is a ‘final written document’ notifying a taxpayer that the Appeals Office has made a determination of the entire case (typically, adverse to the taxpayer). Treas. Reg. §301.7430-3(c)(2). The date that the Appeals Office issued the notice of decision for this case was when the IRS established its position in this case. The amount in controversy is the amount in issue as of the administrative proceeding date, meaning the date the Appeal Office issued a notice of deficiency, or a notice of decision, as happened in this case. Treas. Reg. § 301.7430-5(e).” Order, at p.4.  (Citation and footnote omitted, but the footnote says since there was no SNOD, Appeals’ notice of decision is the magic date).

And of course the two-thirds-one-third agreed split on the chop means that IRS had “a reasonable basis in fact and in law” for its position.

Nirav wants back the $5K, claiming it was a Section 7430(c)(4)(E)(i) qualified offer. He doesn’t get it.

I am sure my wise-and-wary readers will yell “If you settle a QA, no 7430 legals or admins!” And of course they’re right. The statute says “judgment,” and there are no “judgments” in Tax Court, only decisions, but it doesn’t matter to STJ Di.

“However, by its terms, this provision applies only where a ‘judgment’ is entered in ‘a court proceeding.’ I.R.C. § 7430(c)(4)(E)(i); see Treas. Reg.§ 301.7430-7(a) (‘The provisions of the qualified offer rule do not apply if the taxpayer’s liability * * * is determined exclusively pursuant to a settlement”); see Klopfenstein v. Commissioner, T.C. Memo. 2019-156. In this case, petitioner settled before any court proceeding began, and so his liability was not determined by a ‘judgment’. Thus, petitioner could not have made a qualified offer.” Order, at p. 5 (For Mark Klopfenstein’s story, see my blogpost “No SNOD, No NOD, No Admins,” 12/9/10).

Now I have some fellow-feeling for Nirav’s hardlaboring trusty counsel. They got a real good settlement, but clearly they put in a lot of work to get there. And this isn’t a LITC or calendar call commando kind of case; as my esteemed colleague The Great Chieftain of the Jersey Boys says “I have never met a client that thought incurring fees to contest an erroneously determined tax was fair.” So of course they had to go for Section 7430 admins and legals, however long a shot it was.

Today, May 1, 2022, a day that will live in my history, this my blog got its first view from The Plurinational State of Bolivia.