Archive for June, 2022|Monthly archive page


In Uncategorized on 06/23/2022 at 15:51

Michael D. Brown, 158 T. C. 9, filed 6/23/22, is back, still trying to get his OIC from his $50 million-plus tax liability accepted. Nothing if not resourceful, Mike claims 27 (count ’em, 27) months had gone by from Mike’s submission until Appeals issued the NOD bouncing same, so Section 7122(f) says the OIC is deemed accepted.

There’s much backstory on Mike on this my blog, going back to 2013, but I’ll spare you the catalogue now. But see infra, as my expensive colleagues say.

Mike sent in his OIC, but six months later the collection specialist handed it back to Mike, saying there were other investigations pending at the time that might affect his delinquent account. While Judge Albert G (“Scholar Al”) Lauber doesn’t elaborate, maybe it was some of the SDLIAs Mike was flogging. See my blogpost “Not Ready For Prime Time,” 12/2/13.

Mike and Appeals jousted, but finally Appeals issued the SNOD. Mike tries the “deemed accepted” gambit, even though he’d lost that once before in 9 Cir.

Judge Scholar Al: ” For purposes of section 7122(f), petitioner’s OIC was ‘deemed pending only for the period between the date the offer [wa]s accepted for processing and the date the IRS return[ed] the offer to [him].’ Treas.  Reg. § 301.7122-1(d)(2). His offer was accepted for processing… but it was returned six months later…. See Rev.  Proc. 2003-71, § 5.06, 2003-2 C.B. at 518 (‘An offer to compromise is considered to be returned on the day the Service mails, or personally delivers, a written letter to the taxpayer informing the taxpayer of the decision to return the offer.’). Because the IRS returned petitioner’s OIC within 24 months of submission, his OIC was not deemed accepted under section 7122(f).” 158 T. C. 9, at p. 8.

The NOD terminates the CDP; the hand-back terminated the OIC. Mike tries to conflate the two, and that doesn’t fly.

“It is not uncommon for taxpayers to submit an OIC (as petitioner did here) at the outset of a CDP hearing. If that offer is returned by the COIC unit, the taxpayer may urge the SO to reverse that decision, but the taxpayer may also pursue other options. He might challenge his underlying liability, request ‘innocent spouse’ relief, propose an installment agreement, or seek withdrawal of a tax lien filing. These issues may require the SO to evaluate multiple submissions of financial information, seek assistance from the IRS Examination Division, and/or consult with the IRS’s Cincinnati Centralized Innocent Spouse Operation. Even absent a pandemic, these events may consume a considerable amount of time and possibly prolong the CDP case beyond 24 months. The Secretary recognized this possibility in Notice 2006-68, § 1.07, 2006-2 C.B. at 106, directing that ‘[t]he period during which the IRS Office of Appeals considers a rejected offer in compromise is not included as part of the 24-month period.’

“Acceptance of petitioner’s argument—that Appeals must issue the notice of determination within 24 months after an OIC is submittted—could place the SO in a dilemma. If the SO by that deadline has not resolved every issue raised by the taxpayer, the SO could be motivated to issue a notice of determination prematurely, lest the OIC be ‘deemed accepted.’ But doing so would risk reversal and remand for failure to address all ‘relevant issue[s] relating to the unpaid tax or the proposed [collection action].’ § 6330(c)(2)(A). That would prolong the case even further, defying logic and undermining Congress’ intent.” 158 T. C. 9, at p. 12. (Footnote omitted, but it says that if Mike’s reading is correct, wits, wags, and wiseacres might send in an OIC with their Form 12153, and try to yoick the collection specialist and Appeals around until the 24-month clock ran out, and claim deemed acceptance).


In Uncategorized on 06/23/2022 at 15:04

Hurry up and read High Rocks, LLC, Jeffrey Bland, Tax Matters Partner, Docket No. 14944-20, filed 6/23/22, before the Genius Baristas remove the Post-It Note® they left at page 4.

Now for the rest of the story, from Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan. The High Rockers are another GA boondockery, backwoods scrub with an asserted $6 million conservation easement charitable write-off. IRS says they left off the statement of basis or acquisition cost; the High Rockers claim their attorneys and CPAs told them they didn’t need it.

“An appraisal summary must include the cost or adjusted basis of the donated property. Treas. Reg. § 1.170A-13(c)(4)(ii)(D). Failure to comply with this requirement generally precludes a deduction. See § 170(f)(11)(A) (providing that ‘no deduction shall be allowed’ unless a taxpayer meets the appraisal summary requirements of section 170(f)(11)(C)). Section B, Part I, Box 5(f) of Form 8283 requires the taxpayer to supply the ‘Donor’s cost or adjusted basis.’ High Rocks did not supply this information on Form 8283 or in its attached explanation.

“Respondent contends that the deduction was properly disallowed because High Rocks failed to report its cost or adjusted basis on Form 8283 and thus failed to submit a fully completed appraisal summary. Petitioner contends that High Rocks substantially complied with the applicable reporting requirements. Alternatively,  petitioner contends that High Rocks reasonably relied on its advisors in preparing and filing its Form 8283.” Order, at p. 4.

Good-faith reliance is a valid defense to failure to disclose. But summary J, which IRS seeks here (as usual), isn’t the place to decide that.

“Petitioner contends that High Rocks, when completing Form 8283, reasonably relied on advice from the attorneys and accountants who helped prepare its return. Petitioner asserts that these advisers concluded that the instructions to Form 8283 were ambiguous and that High Rocks was advised that it was acceptable to state on Form 8283 that the basis was not determinable. We conclude that resolution of this issue will require us to address several questions as to which genuine disputes of material fact appear to exist.  Accordingly, the question of whether the reasonable cause defense in section 170(f)(11)(A)(ii)(II) applies in this case is inappropriate for summary adjudication.” Order, at p. 5 (Citation omitted).

There’s argy-bargy about whether the High Rockers kept too much room to use, modify, improve, or otherwise muck about the property in the deed of easement, without the consent or knowledge of the 501(c)(3) protector, thus blowing off perpetuity.

Note IRS doesn’t suggest judicial extinguishment, as Hewitt put paid to that in 11 Cir.

“On the basis of the record that currently exists, we conclude that respondent’s motion must be denied as to the perpetuity requirement. It is a factual question whether the reserved rights High Rocks could exercise without giving notice to (501(c)(3)) would have had an adverse impact on easement’s conservation interests. Likewise,  the question of whether the exercise of a right to which consent is deemed given would impair any conservation purpose presents factual questions ill-suited to summary adjudication.” Order, at p. 7 (Citation omitted).

So Ch J TBS Kerrigan gives IRS summary J that the High Rockers didn’t include the basis or acquisition statement, but the good-faith reliance and perpetuity skirmishes are for trial.


In Uncategorized on 06/23/2022 at 08:53

Turns out there was an order worth noting on 6/22/22, Robert S. Polner, Docket No. 8620-22S, filed 6/22/22. Robert, pro se (as far as a docket search shows; can’t tell if he’s a lawyer himself) moves for entry of decision that he owes, and is owed, nothing to, or by, the fisc.

IRS doesn’t object, so Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan enters decision accordingly.

I award Robert a Taishoff “Good Job.”

It’s obviously not enough for IRS to concede the SNOD; what if IRS changes its mind? SOL on collection might not yet have run, and the SNOD gave Robert a chance to contest if he timely petitioned, which he did. No prosecution equals concession, and equitable estoppel is a mighty hard row to hoe. Entry of decision starts the Section 7481(b) 90-day finality clock, and claim preclusion is definitely thereupon on the menu.

I said it ten (count ’em, ten) years ago: “One sure way to drive a coach bananas is to fail to finish a play.”

Finish the play.


In Uncategorized on 06/22/2022 at 18:27

The necessity for posting each working day certainly serves as did Lennon/McCartney’s hole where the rain came in. There were no Tax Court opinions today, and the 266 orders are beyond humdrum.

So maybe it’s time to put posting aside, and set my mind a-wandering, where it will go.

Wonder what will become of ex-Ch J Maurice B (“Mighty Mo”) Foley’s proposed changes to the Rulers of Practice and Procedure. Wonder when we’ll get post-2018 statistics on how many took the non-attorney admission examination (s/a/k/a The Slaughter of the Innocents) and how many passed. Wonder how many of the 35,000+ petitions from 2021 will actually result in trials (this number and the number from the preceding may bear a close correlation). Wonder what will finally replace conservation boondockery as The Next Big Dodge.

Wonder why anyone in Mongolia or Bolivia would care what happens in United States Tax Court.


In Uncategorized on 06/21/2022 at 15:39

Since the event in the headline first set forth at the head hereof took place, That Obliging Jurist, Judge David Gustafson, once again obliges. He sets right today IRS’ manifold mathematical miscues in Wendell C. Robinson and May T. Jung-Robinson, Docket No. 6446-19L, filed 6/21/22 (Happy Solstice).

Wendell and May have been making appearances on this my blog for the last five (count ’em, five) years, ever since my blogpost “Wipe Out,” 10/19/17. Today Judge Gustafson finally enters decision, thereby depriving me of another good source of blogfodder.

You can read for yourselves, if you suffer from chronic insomnia, Judge Gustafson’s unraveling and reweaving of the numbers that IRS has managed to scramble, fumble, and obfuscate all these years.

I am sure Judge Gustafson decided not to remand this frittata back to the parties, lest this fandango dance on for another five years.

Like the old Excedrin ad, he’d rather do it himself.


In Uncategorized on 06/20/2022 at 10:35

Today being the commemoration of Juneteenth, US Tax Court is closed, and so am I.


In Uncategorized on 06/17/2022 at 15:28

Ifeoma Ezekwo, Docket 15454-21P, filed 6/17/22, is back, despite having lost in a T. C. Memo. I didn’t blog (T. C. Memo. 2022-54, filed 5/31/22). You can read that one, but it’s little more than a chronicle of Ifeoma’s unpaid self-reporteds and her blown deadlines for CDPs. I don’t remember seeing it, but it really wasn’t worth blogging if I had.

In any case, I’d said whatever was relevant in my blogpost “Pro Ses Say The Darndest Things,” 5/25/22.

Turns out IRS had gotten some of what Ifeoma owes by way of levy, but enough remains to keep her over the “seriously delinquent” mark for year at issue. Hence the Section 7345 passport grab.

But now that decision is entered, Ifeoma makes three motions objecting to IRS’ successful motions sealing some of Ifeoma’s filings, which “…contained unsupported allegations against a specific IRS employee, that these allegations were likely to cause harm and embarrassment, and these allegations were legally irrelevant to resolution of the issues before the Court in this passport case. Respondent also requested that we place under seal the original unredacted versions of petitioner’s two filings.” Order, at p. 1.

Ifeoma’s current bœuf is that Judge Albert G (“Scholar Al”) Lauber granted the IRS’ motions sealing her rant without giving her a chance to reply.

“This Court is free to decide a motion, without awaiting or asking for a response, as we believe the interests of justice require. Petitioner sought to inject into this case scurrilous material that is irrelevant to the factual and legal issues presented by the case. Nothing in petitioner’s current Motions would have affected the analysis in our [sealing] orders. This case is already closed, and the issues that petitioner seeks to raise are entirely outside the scope of this case.” Order, at p. 2.

I note in passing that Ifeoma lived in NJ when she petitioned the passport grab. A docket search shows no calendar calls, as T. C. Memo. 2022-54 above cited went off on summary J. I can’t help wondering how The Jersey Boys would have dealt with Ifeoma.


In Uncategorized on 06/16/2022 at 15:28

CSTJ Lewis (“Spell He Can”) Carluzzo is not setting up a binge-watch of the millennial medical saga. Rather, today he decides if Raul Romana and Maria Corazon Romana, T. C. Sum, Op. 2022-9, filed 6/16/22, can eke out any unreimbursed business expenses above what Exam allowed.

Raul’s tools and both of their cellphone and internet charges are indocumentados. There’s not even enough to Cohan them in.

But Maria’s scrubs and her lab coat make the cut.

First, the basics. “Clothing costs are deductible as ordinary and necessary business expenses under section 162 only if (1) the clothing is of a type specifically required as a condition of employment, (2) it is not adaptable to general use as ordinary clothing, and (3) it is not so worn.” T. C. Sum. Op. 2022-9, at pp. 5-6.

Maria worked as a surgical nurse for Kaiser Permanante, and was required to wear “scrub-like” clothing, when not actually in the operating room. And her employer wasn’t required by the union contract to reimburse nurses therefor.

“Mrs. Romana was required to dress professionally and comfortably for her job as a nurse. To do so, she purchased shirts and pants at department stores. Because the clothing resembled scrubs, we find that the clothing was not adaptable to general use as ordinary clothing outside of her employment. Consequently, the cost of the clothing and the cost to dry clean the clothing are deductible. Mrs.  Romana also purchased a white lab coat with ‘Kaiser Permanente’ and her name embroidered on it. This lab coat was not appropriate for general use.” T. C. Sum. Op. 2022-9, at pp. 6.

CSTJ Lew parses what evidence there is, and Cohans a number.

While unreimbursed employee business expenses are presently extinct, there are cases hanging over that will be around some while yet. So save those charge slips.


In Uncategorized on 06/15/2022 at 19:30

Gwen Kestin seems to have started a movement. I’m sure all y’all remember Gwen. What, no? Then see my blogpost “From The Serious to The Frivolous,” 8/29/19. Now you remember Gwen sent off photocopies of her frivolous return to various service centers, each of which got a Section 6702 $5K chop, but Judge David Gustafson let Gwen off the hook, as the copies were clearly copies of a previous submission, not a new frivolity.

Judge Nega does likewise for Chule Rain Walker, T. C. Memo. 2022-63, filed 6/15/22. Chule Rain played the old 4852 Amended W-2 wages aren’t taxable gambit. IRS hit Chule Rain with Letter 3176 straighten up and fly right or Section 6702 chop.

Chule Rain responded that IRS hadn’t stated specifically what was wrong with his return, and attached a photocopy thereof (so labeled) to his letter.

That earned him a Boss Hossed chop number 2 and a NITL. Chule Rain got a CDP and a NOD confirming the NITL, which he petitions.

Chule Rain never had a chance to contest liability until he got to Appeals. IRS claims he didn’t contest there, so no contest at Tax Court. Chule Rain claims he did, and Judge Nega agrees.

“Respondent asserts that petitioner failed to meaningfully challenge his underlying liability, because in the CDP proceeding he presented only frivolous arguments about his zero tax liability for receipt of compensation. Petitioner counters by pointing to his more procedural argument in the CDP proceeding that the frivolous penalties were inappropriate because his tax position had not been identified as frivolous by respondent for purposes of section 6702(c). We disagree with petitioner’s assertion that his tax position was nonfrivolous, see I.R.S. Notice 2010-33, § III(1)(e), 2010-17 I.R.B. 609, 609, but agree that raising such an argument was sufficient to preserve his underlying liability challenge….” T. C. Memo. 2022-63, at p. 6. (Citations omitted, but they canvass the de novo scope of review in Tax Court of a Section 6702 chop).

So at close of play, Chule Rain loses on chop number 1 (his original return), but wins chop number 2, as what he attached to his letter was clearly marked “reference copy.” No new claim.

Copycatting is the new growth industry.


In Uncategorized on 06/15/2022 at 19:01

Judge Albert G. (“Scholar Al”) Lauber authors a full-dress T. C. to break the captioned bad news to Angela M. Chavis, 158 T. C. 8, filed 6/15/22. Angela and spouse were secretary and president, respectively, of Oasys, a C Corp operating out of the family dwelling. Oasys had employees, and collected FICA/FUTA/ITW from same.

Only Angela and now-ex-spouse didn’t bother to remit to the Federales. Angela never responded to the Letter 1153 with a Forn 12153 or anything else.  So IRS assessed and gave Angela a NFTL at no extra charge.

Angela now says she’s divorced and broke, and an innocent spouse. Except Appeals says she can pay.

The ability to pay issue is fact-based, so I’ll leave it, but Section 6015 says explicitly that innocent spousery thereunder is only for spouses filing income tax returns MFJ.

“During the CDP hearing petitioner urged that she was entitled to ‘innocent spouse’ relief under section 6015. The SO advised petitioner that she was not eligible for such relief because her TFRP liabilities arose from Oasys’s unpaid payroll taxes, not from a joint Federal income tax return. The SO made this determination after reviewing petitioner’s Form 8857 and the correspondence from CCISO.

“Section 6015 is captioned ‘Relief from joint and several liability on joint return.’ Section 6015(a)(1) provides that ‘an individual who has made a joint return may elect to seek relief under the procedures prescribed under subsection (b),’ which sets forth procedures ‘applicable to all joint filers.’ Section 6015(a)(2) provides that an individual may ‘elect to limit [her] liability for any deficiency with respect to such joint return in the manner prescribed under subsection (c),’ which sets forth procedures applicable for spouses who are legally separated or no longer living together.

“Subsections (b) and (c) both specify rules for obtaining relief from liabilities that are shown on (or should have been shown on) a joint Federal income tax return. See § 6015(b)(1)(A) and (B) (presupposing that ‘a joint return has been made’ and that ‘on such return there is an understatement of tax’); § 6015(c)(1) (providing that a person ‘who has made a joint return’ may be partially relieved of “liability for any deficiency which is assessed with respect to the return’).” 158 T. C. 8, at p. 8. (Footnote omitted, but I’m coming to that.)

The footnote says that Angela can raise spousal defenses  in an innocent spousery CDP even if she never contested liability, but Judge Scholar Al says that doesn’t help, because there was no joint income tax return.

Summary J for IRS.