In Uncategorized on 04/05/2023 at 16:14

I’m more than a little chary of handing out a Taishoff “Good Job” for anything less than a shootdown. Not merely a victory, but a demonstration of skill and thinking outside-the-cliché, is the standard here.

So I’m more than a little puzzled at Judge Alina I. (“AIM”) Marshall’s send-off to Ruby Tang, Docket No. 6020-21S, filed 4/5/23 and IRS’ counsel. Ruby claimed $96K in medicals and $25K on her 1040 for year at issue, for none of which did she adduce any proofs on the trial. IRS counsel did produce Boss Hossery for the $5K Section 6662(b)(1) substantial understatement chop that IRS included in Ruby’s $25K SNOD at no extra charge.

“At trial, Petitioner presented evidence regarding events in the administrative record that took place prior to the issuance of the notice of deficiency, asserting that the lack of audit on a particular date invalidated the notice.  Petitioner did not present evidence or testimony regarding her medical and dental expenses or her charitable contributions.” Transcript, at p. 2.

Needless to say (but I’ll say it anyway), Greenberg’s Express hauls away the past; SNODs get tried de novo. “Although Petitioner seeks to identify missing signatures and irregularities in Respondent’s documents, we generally do not look behind a notice of deficiency to review what occurred during the course of an examination. See Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324 327 (1974).” Transcript, at pp. 5-6.

Ruby does have an attempted save in the goalmouth.

“Section 7605(B), however, opens a narrow exception to that rule. Section 7605(B) provides that no taxpayer shall be subjected to unnecessary examination or investigations, and only one inspection of a taxpayer’s books of account shall be made for each taxable year unless the taxpayer requests otherwise, or unless the secretary after investigation notifies the taxpayer inviting [sic; “indicating”?] that additional inspection is necessary.

“Petitioner argues that the Internal Revenue Service account transcript for her [year at issue] tax year shows two audits, but it does not. Petitioner identifies the … date on the Form 4549-A report of income tax examination changes, sent with her notice of deficiency and notes that this date differs from the one on the civil penalty approval form that was also sent with Petitioner’s notice of deficiency. These different dates do not indicate that a second audit occurred.” Transcript, at p. 6.

But the transcript here is somewhat less than clear. “We have held that the Commissioner does not conduct a second examination and he does not obtain any new information. Estate of Sower v. Commissioner, 149 T.C. 279 289 (2017). We have also held that there was no second examination when a taxpayer failed to meet his burden, to show that there was a second examination of his books of account when the Commissioner issued a notice from the returns already in his possession. Id.” Transcript, at pp. 6-7.

Judge, I think you meant “We have held that the Commissioner does not conduct a second examination when (not “and”) he does not obtain any new information.” For the Sower story, see my blogpost “A Lot Less Portable,” 9/11/17.

Ruby filed before the April 17 due date for the year-at-issue return, and claims IRS blew the SOL, but SOL doesn’t start running until due date, so SNOD is timely.

Judge AIM’s send-off to the parties is the strangest I’ve yet encountered.

“Ms. Tang, thank you for your work on this case.  And thank you to Mr. [IRS counsel], who is not here. I hope you have a wonderful weekend.” Transcript, at p. 10.

Yeah, I’ll bet Ruby had a fine weekend, having gotten a $30K gazumph off the bench.


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