Gregory Bernard Colbert II and Simone P. Colbert, T. C. Memo. 2022-74, filed 7/13/22, are trying to fight about interest on their two years’ worth of conceded deficiencies, but that a non-starter.

Judge Wells man-‘splains.

“Finally, we agree with respondent that interest is not at issue in this case, and we otherwise conclude that we lack jurisdiction to consider the issue. The Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress. In deficiency proceedings such as this case, our jurisdiction does not extend to interest imposed by section 6601. In limited circumstances that are not present here, this Court does have jurisdiction to redetermine interest. Pursuant to section 7481(c)(1) and (2) we have jurisdiction to redetermine an overpayment of interest when certain requirements are met, including an assessment made by the Commissioner under section 6215 which includes interest. Interest has not yet been assessed in this case. Consequently, we do not have jurisdiction to redetermine interest pursuant to section 7481(c).” T. C. Memo. 2022-74, at p. 4.

OK, so the deficiencies themselves are conceded, and interest is off the menu, so why are we here?

Well, there are the Section 6662(a) chops for substantial understatement. And all GB and Simone (who gets some innocent spousery) have is “…they were unaware that an individual who assisted them in preparing their taxes ‘[was] submitting and declaring certain  ‘write-offs.’” T. C. Memo. 2022-74, at p. 2.

Judge Wells is about to sink that one. “We note here that there was no tax return preparer signature on either the [Year One] or the [Year Two] income tax return.” Idem, as my expensive colleagues would say.

I wonder what they paid the aforesaid individual, and whether it was a piece of the refund action.

But to the rescue comes The Graev Illegibility.

“The record in this case includes copies of Civil Penalty Approval Forms, signed by the immediate supervisor of the examiner who examined petitioners’ returns, approving imposition of section 6662(a) penalties against petitioners for [Year One] and {Year Two]. However, the date provided on each Civil Penalty Approval Form is illegible, and we are unable to discern whether the initial determination of the assessment was made before the mailing of the notice of deficiency upon which this case is based. Thus, we cannot reliably conclude on the basis of the penalty approval forms that respondent satisfied the requirements of section 6751(b)(1) before issuing the notice of deficiency determining the penalties at issue. Consequently, we find that respondent has not satisfied his burden of production to show compliance with section 6751(b)(1), and we therefore hold that petitioners are not liable for accuracy-related penalties for underpayments due to substantial understatements of income tax for [Year One] and {Year Two].” T. C. Memo. 2022-74, at p. 4.

Great silt stir, eh, Judge Holmes?