Clair R. Couturier, Jr., T. C. Memo. 2022-69, filed 7/6/22, is back, but the ten (count ’em, ten) years’ worth of 1040s he failed to hide from the motley viewers at 400 Second Street, NW (for which see my blogpost “The Place Where There Is No Darkness,” 4/1/19) avail him nothing. IRS never examined any of them before they hit Clair with the Section 4973 6% per year chop on the $25 million excess contributions.

So Clair’s estoppel arguments go down. And I was right three years ago: it was an IRA retroactively rejected.

Clair was disqualified as to two pieces of his IRA package, so when he cashed out and rolled, he didn’t have a taxable event until he made good the excess by taking it in as income in whatever year he chose, or until IRS called him on it, but the 6% chop kept right on going.

Now before my ultra-hip readers go all Hellweg on me, remember that IRS had actually examined the 1040 for year at issue in Hellweg, took one position, and then reversed field. See my blogpost “Foolish Consistency,”  5/5/11.

Here’s Judge Albert G (“Scholar Al”) Lauber with the story.

“Petitioner’s reliance on Hellweg is misplaced for the same reason the taxpayers’ reliance was misplaced in Mazzei I. In Hellweg the IRS examined the taxpayers’ income tax returns, issued them ‘no change’ letters, conceded the transaction’s validity for income tax purposes, and sought to take the opposite position when asserting an excise tax deficiency. The IRS in the instant case did not examine petitioner’s … income tax return and took no position regarding the tax liability reported on that return. Petitioner seeks to equate the IRS’s inaction on the income tax front with its explicit concession in Hellweg. But as explained previously, the IRS’s failure to examine a return, or to challenge a particular position taken on a return, does not constitute a concession or admission that the taxpayer’s position is correct. * * * * The IRS did not take ‘inconsistent positions’ here, as we found that it had done in Hellweg. And while the IRS may be ‘legally precluded’ by an explicit concession, it cannot be precluded by inaction, inattention, or silence.” T. C. Memo. 2022-69, at p. 10. (Footnote omitted, but it discusses Ohsman, which I discussed in my “Foolish Consistency” blogpost, above cited).

For Mazzei I, see my blogpost “Foolish Consistency – Redivivus,” 4/1/14.