I’d ordinarily ignore Noel Christopher Knight, T. C. Memo. 2022-76, filed 7/14/22. It’s the usual ya-should’a-raised it-at-the-CDP. Noel C had a couple CDPs, each covering a couple years of the seven (count ’em, seven, and hi, Judge Holmes) years for which he had gotten NFTLs and NITLs, Noel C raised the one year he hadn’t had a prior chance to contest, but he raised it in the second CDP, although he had had the chance to raise it in the first, but didn’t.

For the rest, it’s the offered IA that Noel C rejects but doesn’t counter or file Form 433-A, and the promised returns that never got filed. The supervening COVID lockdown is of no help, either.

So why do I mention this case, aside from the fact that today’s orders are mostly standing regular and small-claimer pretrials, 99% of which will never go to trial?

Judge Albert G (“Scholar Al”) Lauber provides the answer. “Petitioner is a lawyer who resided in California when he filed his Petition.” T. C. Memo. 2022-76, at p. 2.

Without having independently verified, I infer that Noel C is admitted to the CA Bar, or at least was so when the petition was filed in 2020. He thus could have been automatically admitted to practice in US Tax Court.

“In opposing summary judgment petitioner contends that there is a dispute of fact as to whether he authorized his representative during the CDP hearing to forgo an underlying liability challenge by relying exclusively on the filing of amended returns. Because the [second] CDP hearing barred petitioner from challenging his [earlier year] liability on any ground, this factual dispute (assuming it to exist) is immaterial. In any event petitioner’s representative did not submit to the SO—despite the SO’s request by letter…—either a copy of an amended [earlier year] return or any other evidence regarding petitioner’s [earlier year] liability. That issue therefore was not ‘properly raised in the taxpayer’s CDP hearing,’ Treas. Reg. § 301.6330-1(e)(3), Q&A–F3, and it could not properly be advanced in this Court, see Thompson v. Commissioner, 140 T.C. 173, 178 (2013).” T. C. Memo. 2022-76, at pp. 5-6, footnote 2.

For the George Thompson story, see my blogpost “Losing My Religion – Part Deux,” 3/4/13.

More troubling is this line: “He asserted that the IRS erroneously attributed to him ‘nearly $100,000+ of separation/divorce related income,’ funds that he alleged were not his income but were held in a client trust account.” T. C. Memo. 2022-76, at pp. 3-4. I’ve had a lot more than that in various client trust accounts (my own or the firms’ with which I was then affiliated), and every such account was clearly labeled as a trust account, precise records were kept of every transaction, and NY mandates that every such account bear an appropriate title and a TIN separate from one’s own. I’m not licensed in CA, so I can’t say what CA requires; I’d be surprised if it were any less stringent.

So it should be easy enough to show what funds are clients’, and what are one’s own, and never the twain shall meet.