“Until Lawyers Get Involved”

How often did we hear that old jibe thrown at us! And it’s true for Green Cove Rock, LLC, GH Manager, LLC, Tax Matters Partner, Docket No. 30791-21, filed 2/22/23.

The Green Cover Rockers got an FPAA with Section 6663(a) fraud chops thrown in at no extra charge. IRS, using a precision-bombing partial summary J motion, wants Judge Goeke to sign off on the procedures and timetable for the sustaining Section 6751(b) Boss Hossery.

Note the RA at Exam didn’t propose fraud chops when preparing the FPAA, deeming it premature. But OCC gets involved when FPAAs hit the radar, so Judge Goeke goes over the IRM and Tax Court precedent.

That’s when lawyers get involved.

“Senior Counsel AAG, a Chief Counsel attorney, reviewed the proposed FPAA in accordance with IRS procedures set forth in the Internal Revenue Manual (IRM). See I.R.M. pt. 2.7.2.5.1(d) (May 10, 2019) (Chief Counsel is required to review all FPAAs before issuance). Her immediate supervisor was Associate Area Counsel MM. Ms. G concluded that the fraud penalty applied and recommended it be assessed. Mr. M agreed with Ms. G’s recommendation in a signed document. Thereafter, by a signed memorandum to Ms. G… RA K and his immediate supervisor, LM, stated that ‘we accept/concur with Senior Counsel’s recommendation’ to assess the fraud penalty.” Order, at p. 2. (Names omitted).

All this happened before the FPAA was issued, and the Green Cove Rockers got word of fraud chops.

IRS says either the RA at Exam and his Boss Hoss, or Ms. G at OCC and her Boss Hoss, is sufficient Boss Hossery. The Green Cove Rockers say no.

Judge Goeke quotes Graev. “…nothing in the text or legislative history of section 6751(b) suggests that the identification of the person who made the initial determination should turn upon the penalty’s inclusion or non-inclusion in a notice of deficiency.” For the backstory, see my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17.

Anyway, OCC reviews FPAAs, and if by some chance OCC hadn’t authority to impose Section 6663(a) chops, the RA at Exam and his Boss Hoss certainly did, and everybody went by the book and signed off.

Note the sequencing and timing. This is the latest IRS maneuver to nail down fraud chops Boss Hossery pretrial.