I said back in May that the Supreme silt-stir stirred up by Boechler was hardly surprising. Here’s an example: Andrew Wickham & Keisha Wickham, Docket No. 2439-17, filed 8/23/22. After five (count ’em, five) years, including a trip to Bankruptcy Court and a bushelbasketful of status reports, Andy & Keisha have settled with IRS, and just want their case concluded. They move to dismiss.

But their proposed stipulated decision has been on hold since February. IRS can’t tell if the petition was timely filed. Andy & Keisha can’t find the certified mail receipt showing the date they mailed the petition (trusty attorney didn’t come aboard until four months thereafter). The envelope which contained same bears no USPS postmark. So Judge Morrison is reserving decision not only on the stipulated decision, but also on his own motion to toss for want of jurisdiction.

So why not just dismiss?

Well, this case petitions a SNOD, so if there’s jurisdiction, Section 7459(d) says “generally” (love that word!), Tax Court must enter decision for IRS in the amount stated in the SNOD. Except Andy & Keisha, and IRS, agree that Andy & Keisha don’t owe that amount.

So Judge Morrison apparently decides Tax Court has jurisdiction (although he doesn’t say why), at least to the point of saying he won’t toss the petition on jurisdictional grounds.

What to do? Hallmark and Boechler to the rescue!

“Pending before the Court in Hallmark Research Collective v. Commissioner (Docket No. 21284-21) (Hallmark) is a motion asking the Court to vacate its previous order granting dismissal of Hallmark’s deficiency case for lack of jurisdiction. The Hallmark motion to vacate asks the Court to address whether I.R.C. § 6213(a)’s 90-day limit for filing a petition in this Court (after the issuance of a notice of deficiency) is jurisdictional or may be equitably tolled in light of the recent United States Supreme Court decision Boechler, P.C. v. Commissioner, 142 U.S. 1493 (2022).” Order, at p. 2.

 So hold everything (except voluntary dismissal, which Judge Morrison tosses) until Judge David Gustafson unscrambles Hallmark. See my blogpost “Ya Can’t Make This Stuff Up?” 5/10/22.

Taishoff says this is the ultimate can-kick. If Hallmark upholds equitable tolling for SNOD petitions (and I’ve covered that extensively ever since Myers), do we need an evidentiary hearing whether or not Andy & Keisha are entitled to same?

If no equitable tolling, or if there is but Andy & Keisha don’t make the cut, then, as BoP for jurisdiction is on petitioners, and Andy & Keisha can play only the Michael Corleone classical gambit, their petition gets tossed, and the stipulated decision can metamorphose into a Section 7122 settlement agreement.

If there is equitable tolling, and Andy & Keisha make the cut, then I presume the stipulated decision gets entered.

Whatever happens, maybe this ends in another year from now. So why not just toss the petition for want of jurisdiction today?

Judge Ronald L. (“Ingenuity”) Buch need expend little of his ingenuity in Warner Enterprises, Inc., T. C. Memo. 2022-85, filed 8/22/22. Warner is fighting a CDP over Boss Hossery. Warner was a partner in the ill-fated James (“Little Jim”) Haber dodge AD Investment 2000 Fund, and when the partner-level fallout from the TEFRA FPAA blow-up rained down on Warner, they sought a CDP. IRS claimed issue preclusion, because the chops at issue had been decided back in 2015 at partnership level per TEFRA; see my blogpost “Haber-Dashery,” 11/19/15, and  “The Tossed Witness,” 12/14/16.

Warner’s trusty attorneys could not find a case where a Court had decided the penalties final beyond appeal, where the Section 6751(b) Boss Hoss sign-off was revisited.

Judge Buch: “…Warner overlooks section 6330(c)(2)(B), which, like section 6330(c)(4), limits the issues taxpayers may raise at a collection hearing. Section 6330(c)(2)(B) precludes a taxpayer from challenging the underlying liability if the person received a notice of deficiency for, or otherwise had a prior opportunity to dispute, such liability. Warner had just such an opportunity in AD Investment Fund’s partnership-level TEFRA proceeding to which it was a party and in which it had a right to participate. See §6226(c).” T. C. Memo. 2022-85, at p. 6.

And Tax Court has no authority to review its previous final decision. If unhappy, timely appeal.

OK, but this is history, and has been since the Bipartisan Budget Act of 2015. That said, I doubt the result would be different were the facts of this case to arise under the new régime. The takeaway for any partner is to monitor all communications from the representative, and be prepared to defend yourself, by yourself.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan may speak softly, but definitely carries a big stick. Now she’s cut down by half her former temporal largesse; it’s thirty (count ’em, thirty) days to pony up the Sixty George big blind, or get tossed.

Here’s Dotun O. Aiyegbusi & Adeyinka O. Aiyegbusi, Docket No. 18526-22S, filed 8/22/21. The order is simplicity itself. Dotun & Adeyinka must either pay up or file for a waiver of the filing fee by 9/21/22.

Formerly, it was “Sixty Days For Sixty Georges,” 6/9/22. See my blogpost thus entitled.

The honeymoon for nonpayers is definitely shorter.

I’m using the English version of the famous Irish organization to highlight an order from STJ Adam B. (“Sport”) Landy, Lil Orbits, Inc., Docket No. 12654-20SL, filed 8/19/22. IRS wants summary J, of course.

A colleague was interested in STJ Sport Landy’s bow-out in a Rule 52 motion to strike in Garden Lakes Estates, LLC, Garden Lakes Estates Holdings, LLC, Tax Matters Partner, Docket No. 3052-21, filed 8/17/22. I passed, in that the order from Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan merely handed the strike motion over to STJ Peter (“HB”) Panuthos, without explanation. And while I’m admittedly cheap not to spend the three bucks for the motion papers, I’m also not sufficiently insomniac to read the 448 (count ’em, 448, because I won’t) pages seeking recusal. The colleague aforesaid, much more free-handed and patient than I, told me he ordered the motion papers from the Glasshouse Copycats; probably a fascinating read.

Back to business.

In Lil Orbiters, STJ Sport Landy reiterates the longstanding rule: the taxpayer, and only the taxpayer, bears ultimate responsibility for timely filing returns. The Lil Orbiters, apparently a Sub S, were late four (count ’em, four) times, because their trusty accountant had cancer and a stroke. They seek good-faith exemption from the Section 6699 $195 per shareholder chop.

No go.

“Whether the return preparer is healthy or ill does not change the taxpayer’s responsibility. See Enis v. Commissioner, T.C. Memo. 2017-222 (holding that a return preparer’s illness and petitioner’s transition to a different return preparer did not constitute reasonable cause for the return’s late filing), see also Estate of Scull v. Commissioner, T.C. Memo. 1994-211. It was petitioner’s responsibility alone to ensure that the tax returns were timely filed, which it failed to do. As a result, the returns for [Years B and C] were filed late. It can hardly be said that petitioner exercised ordinary business care and prudence in these circumstances. Thus, as a matter of law, petitioner is liable for the penalty assessed under section 6699(a). Respondent prevails on this issue for taxable years [B and C].” Order, at p. 6.

For the Enis case, see my blogpost “The Frozen Spouse,” 11/16/17.

The Lil Orbiters conceded Year A, so all that’s left is Year D. And it’s an interesting question. The return for Year D was due September 15 (on extension); it was mailed October 15, but was received by IRS October 19 (which both sides agree). Now the chop is $195 per shareholder per month or fraction. So if mailed-is-filed applies (Section 7502), there’s a one month chop. But if received-is-filed, then two months. Which is it?

“Under section 7502(a), the date of mailing will only be considered the date of filing if the return is mailed on or before the date it is due, if it is mailed at any subsequent date, the return will be deemed filed when it is received by the IRS. Petitioner mailed its return for [Year D] on October 15… well after the September 15…. As a result, section 7502(a) does not apply, and the general rule that the date of filing is the date the return was received by the IRS controls.” Order, at pp. 6-7. (Citation omitted).

So summary J for IRS? Yes, except.

The Lil Orbiters are entitled to a CDP hearing before an SO who has had no prior involvement.

“In her Case Activity Record, SO J indicated that she had prior involvement with petitioner for the tax type and tax years associated with the CDP case and would obtain an appropriate waiver. However, no waiver exists in the record. Respondent asserts that SO J’s statement of prior involvement was an error made in entering information into its internal database. Petitioner maintains that whether SO J had prior involvement remains a question of material fact. Taxpayers have a right to a hearing conducted by an employee or officer of IRS Appeals who was not involved with respect to the tax for the tax periods to be covered in the hearing unless the taxpayer waives the requirement. Treas. Reg. §§301.6330-1(d)(1), (d)(2), Q&A-D4, Q&A-D5. Construing the facts in the light most favorable to petitioner and constrained to the administrative record…, there remains a question of material fact as to SO J’s prior involvement, and summary judgment cannot be granted with respect to whether SO J did not abuse her discretion during the CDP hearing.” Order, at p. 7. (Name omitted).

IRS gets summary J that the Lil Orbiters can’t contest liability for tax or chops. But STJ Sport Landy sends them back to Appeals for a supplementary hearing on whether SO J abused her authority by hearing a matter when she had prior involvement.

Just as I was about to lament the dearth of Tax Court opinions this week, Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan unloads a seventy-five (count ’em, seventy-five) page dissertation to 8 Cir, wherein she has created a new unspecified reallocation of income and expenses method (ostensibly a tweak on CUT vs CPM, but we know better) for unscrambling the doings of Medtronic, Inc. and Consolidated Subsidiaries, T. C. Memo. 2022-84, filed 8/18/22. True, it’s fewer pages than the 144-page avalanche from 2016; see my blogpost “This Is A Memo?” 6/10/16.

But 8 Cir confessed themselves short-stacked therewith, so bucked the Medtronics and their Puerto Rican and Swiss buddies back for a retrial on the numbers; see my blogpost “CUT-UNCUT,” 8/17/18. And Ch J TBS, almost as obliging as Judge David Gustafson, lets ’em have it.

The Siemens/Pacesetter deal really isn’t a CUT. Neither does CPM work, as there really isn’t any comparable profiteer. The Medtronics make only human implantables, and if those go bad the plaintiffs’ PI Bar is quids in, as my UK clients used to say.

So, at close of play, Ch J TBS sums up. “Respondent contends that petitioner’s proposed unspecified method ‘bridges no gaps’ between respondent’s CPM and petitioner’s CUT method. Petitioner provides a method which enables the Court to move in the right direction. Respondent provides no suggestion for realistically bridging the gap. Even though we are rejecting petitioner’s unspecified method as proposed, we will rely upon petitioner’s methodology as setting forth a framework for determining the royalty rate for devices and leads.

“As we have discussed, petitioner’s proposed unspecified method is not perfect. Adjustments need to be made to account for the inadequacy of the CUT method. The major concerns with the CUT method are that there (1) is only one comparable, (2) are too many adjustments, and (3) are inadequate adjustments for profit potential.  Petitioner makes an attempt to address these concerns, but its proposed unspecified method falls short, and the results do not bridge the gap adequately.” T. C. Memo. 2022-84, at p. 60.

Whereupon Ch J TBS massages the numbers, sets them down in tabular form, and leaves it all for the transfer pricing Section 482 crowd to mull over. And maybe use.

I’m betting 8 Cir will be down with the whole deal.

As Charlie Sheen, Docket No. 14774-18L, filed 8/18/22,  has attracted much attention (see my blogpost “Orwellian,” 1/26/22, especially the responses thereto), I note for the record that Judge Holmes has denied IRS’ motion for summary J as moot.

A quick docket search shows entry of stipulated decision, although the text of the stipulated decision is not online (thanks a lot, Genius Baristas).

Congratulations, Mr. Jager. Here’s a Taishoff “Good Job.”

I trust my readers will pardon a garrulous (and perhaps grumpy) old man for telling yet again a twice-told tale. In my young day, and perhaps even now, judges would invite obdurate clients and their counsel into robing rooms or chambers, and extract settlements by a negotiating process we called “banging heads together.”

I’ve chronicled STJ Peter (“HB”) Panuthos’ efforts along those lines. Judge Mark V. Holmes showed some inclination that way. And today Judge David Gustafson reprises his genteel role (see my blogpost “Phone-Banging,” 2/22/22) in Mark D. Stockhausen & Kelly E. Stockhausen, Docket No. 29716-21, filed 8/17/22.

Mark wants summary J, but doesn’t get it. The SNOD he’s petitioning says $909 short, but Mark sent in $906. Mark may have made a mistake on the return. Judge Gustafson gently man-‘splains.

“Stated simply, a ‘deficiency’ is an amount of tax that a taxpayer owes which is greater than the amount he reported on his tax return. (See sec. 6211.) The taxpayer is allowed to challenge the IRS’s determination by filing a petition in the Tax Court (as the Stockhausens have done); and when the taxpayer does so, the IRS is barred by section 6213(a) from assessing the deficiency until the Tax Court has made a ‘decision’ as to that liability. In a Tax Court deficiency case like one, the issue is not whether the tax has been paid but rather whether the IRS will be permitted to assess the tax. Unless the IRS can assess the tax, it cannot keep the money.” Order, at p. 1.

Mark says he sent the $906, and IRS says they’ve credited it as an advance payment against tax. Thus Mark’s $906 is in limbo unless he or IRS gets a “dission” on the SNOD.

“…the question of how much tax has been paid is not really the issue here. Rather, the issue is how much tax was reported on a return,  compared to the tax actually owed. In their petition, the Stockhausens seem to admit that there was an error on their return, which they have undertaken to remedy by paying the tax. We commend such behavior. However, if the Stockhausens did under-report their liability by $906, then there was a deficiency in that amount, and that deficiency now needs to be assessed; and if that is true, then the Tax Court needs to enter a decision sustaining the deficiency. (Thereafter, any payment that the Stockhausens have made would be credited against that liability.).” Order, at pp. 1-2. (Emphasis by the Court).

But Judge Gustafson has neither seen the return nor done the math, so no summary J.

Maybe the parties can agree on a stipulated decision. If not, do a show-and-tell, and try the case.

Meanwhile, “…the motion for summary judgment is denied, and that this case will proceed to trial unless the parties are able to agree on a basis of settlement (which we hope that they will be able to do).” Order, at p. 2.

That’s Judge Gustafson…,gentility personified.

This is still a nonpolitical blog, so I won’t comment on the recent appearance of a Former Person before a NY investigative body, where the Fifth Amendment was the plat du jour. Today the appraisers who invoked the sacred privilege against self-incrimination when IRS grilled them in Oconee Landing Property, LLC, Oconee Landing Investors, LLC, Tax Matters Partner, Docket No. 11814-19, filed 8/16/22, get to answer 45 (count ’em, 45) interrogatories, after having taken the Fifth whenever IRS breathed a word about  syndicated conservation easements.

Y’all will recall that IRS got Judge Albert G (“Scholar Al”) Lauber to get the appraisers into a deposition; see my blogpost “Why He Canceled Tuesday,” 10/12/21. But the appraisers took the Fifth thereat as aforesaid, and their crafty counsel also coined the “Section 6103  privilege.” But Judge Scholar Al says Section 6103 only criminalizes activities of IRS employees, which the appraisers certainly aren’t.

Immunologists. take note. “… respondent filed four Motions seeking to compel Messrs. W and V to answer the questions as to which these claims of privilege had been made. … the Court held an informal conference call with the parties and deponents’ counsel to discuss the Motions. We informed deponents’ counsel that we would have overruled all of his objections referring to section 6103 because that section imposes an obligation on IRS officers, not a privilege that appraisers may claim. Furthermore, we indicated that we would have overruled most (if not all) of his objections based on the Fifth Amendment because the questions asked were anodyne and appeared to create no ‘real danger’ of self-incrimination. Rogers v. United States, 340 U.S. 367, 374 (1951).

“In lieu of the Court’s ordering a second round of depositions, deponents’ counsel agreed that each deponent will respond to a maximum of 45 written questions posed by respondent. These questions should relate to matters as to which privilege was claimed during the depositions, including reasonable follow-up questions. All questions shall be answered under penalties of perjury, as was the case during the depositions. Deponents’ counsel was reminded that any objection to a written question premised on a supposed ‘section 6103 privilege’ will likely be overruled. If the Fifth Amendment privilege is claimed as to any question, deponents’ counsel shall supply a detailed explanation concerning the basis for that claim, cognizant that the Fifth Amendment protects against real dangers, not against remote and speculative possibilities. Zicarelli v. N.J. State Comm’n, 406 U.S. 472, 478 (1972).” Order, at pp. 1-2. (Names omitted).

Preparers and your coadjutors, beware! Are attorneys next? Watch this space.

It seems like years have passed since I first suggested that Tax Court needs a proofreader for its orders. I’ve even volunteered for the job more than once.

Now, however, the position is filled. And the successful candidate filed neither the uniform application for Federal employment, a college transcript, a letter of recommendation, or anything else.

It’s Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan. On a day with 503 (count ’em, 503) orders and no opinions, nothing eludes Ch J TBS’ unblinking eye.

Estate of Robert E. Nero, Deceased, William C. Nero, Jr., Personal Representative, Docket No. 27374-21, filed 8/15/22, had chilled their beef with IRS, and memorialized same in the form of a stipulated decision.

This the parties tendered for entry of decision.

Not past Ch J TBS.

“…upon review of the proposed decision document, the Court notes that the caption listed thereon includes a typographical error.  Consequently, the Court is unable to process the parties’ Proposed Stipulated Decision.” Order, at p. 1.

But Ch J TBS will enter decision, embodying the terms of settlement hashed out by the parties,  in her own order. With the correct caption, of course.

Neatness counts.

I’m sure it’s just a scrivener’s error, but Hervey Lemeli, Docket No. 21054-21S, filed 8/12/22, gives me a chance to fire another broadside into Mandy Mobley Li, 22 F. 4th 1014 (DC Cir, 2022). That was the case where DC Cir called upon two (count ’em, two) attorneys, whose affiliations and qualifications, and whose stake in the outcome, were not immediately apparent, to explain Section 7623.

I thought Federal Circuit Court of Appeals Judges were adept at unscrambling Federal law without the assistance of passersby.

But I must print a correction. Unless there are two or more persons named Mandy Mobley Li, I mischaracterized Mandy Mobley as “obviously hapless” in my blogpost “Repeal Section 7623,” 7/8/22. A source informs me that Mandy Mobley has a J.D. from Syracuse University College of Law, an M.B.A. from the MIT Sloan School of Management, and an S.B. from the Massachusetts Institute of Technology. Mandy Mobley is also a 2022 Presidential Management Fellows Finalist. This makes the entire case even more perplexing.

Clearly credentialed counsel on both sides, so why go to the bullpen, much less to the bleachers? Surely DC Circuit can deal with Section 7623 their own selves.

Howbeit, today IRS has a motion to swap out an attorney. But it’s labelled as a motion to withdraw as counsel, as if OCC were bailing on the whole case. Maybe that’s what happened in Li.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan put it right.

“…respondent filed a document designated as a Motion to Withdraw as Counsel. However, the filing is more akin to a motion to withdraw counsel, insofar as respondent requests that MYC, who…filed respondent’s Motion to Dismiss for Lack of Jurisdiction, be withdrawn as counsel for respondent in this case. There is no objection to the granting of the Motion.” Order, at p. 1. (Name omitted).

So Ch J TBS recharacterizes appropriately, and MYC is auf’d. OCC stays in.