We practitioners must make sure that our contracts are severable; that is, if one part is found unenforceable, the rest can be enforced, unless that leads to an absurd result. Legislators must assure that the statutes they enact are severable in like manner. And we all must so state.

But a SNOD need not. Judge Patrick J. (“Scholar Pat”) Urda provides much “somber reasoning and copious citation of precedent” in support thereof in Craig J. Schieder, T. C. Memo. 2022-104, filed 10/11/22, at p. 6, footnote 7. If IRS concedes any item in the SNOD, the rest survives.

CJ is an IC salesperson, selling RVs and campers. He’s also a protester, the Section 3104 SE variety, conflating income taxable for FICA/FUTA with all income, Section 61 type.

The SNOD failed to include some SE income, which failure wound up in the original answer to CJ’s petition. IRS amended, but fell short at the SE fence.

“…we note that the Commissioner’s post-trial brief assumes that the amount of self-employment income at issue includes the unreported income amounts identified in the notice of deficiency as well as the increased amounts set forth in his answer to the amended petition. The Commissioner’s answer failed, however, to allege that those additional amounts constituted self-employment income, as the notice of deficiency had done with respect to the T payment. We thus will analyze only the self-employment income determined in the notice of deficiency. See Rule 36(b).” T. C. Memo. 2022-104, at p. 6. (Name omitted).

Remember, “…the answer shall contain a clear and concise statement of every ground, together with the facts in support thereof on which the Commissioner relies and has the burden of proof.” Rule 36(b). When IRS amends and thereby acquires BoP, check the amended answer carefully for clear and concise statements of grounds and facts.

Note CJ avoids the Section 6673 frivolity yellow card. IRS allowed him only the standard deduction, whereas the record shows CJ paid more in State income tax, so he gets the benefit of the extra 73 bucks, even though he put in no evidence on the trial.

A finger-fehler by IRS can save a frivolite big bucks.