IRS’ salami-slice tactic, going for partial Boss Hossery summary J, goes on apace. The discovery counter-gambit, alleging the real Boss Hosses are OCC attorneys who masterminded the Notice 2017-10 shot-across-the-bows of the Dixieland Boondockers, isn’t faring so well.

Judge Patrick J. (“Scholar Pat”) Urda gives the right-about-face to Lake Jordan Holdings, LLC, Lake Jordan Partners, LLC, Tax Matters Partner, Docket No. 16532-21, filed 4/28/23, when they try this on. IRS makes the usual move for partial Boss Hossery, with affidavits from RA and immediate supe. The Lakers want discovery; wasn’t the real decider of overvaluation chops the overbosses at OCC?

“Lake Jordan questions whether RA C actually made the initial determination to assert penalties. In raising this issue, it points to the IRS’s enforcement push in the conservation easement context and evidence that RA C was working hand-in-glove with lawyers from the IRS Office of Chief Counsel with respect to this case. Following Lake Jordan’s line of thinking, if one of these lawyers (or higher-level officials) made the initial determination to assert penalties, that person’s supervisor, not SRA B, would have been the right person to consider penalty approval. Lake Jordan seeks additional discovery to prove its theories.” Order, at pp. 3-4. (Names omitted).

Now Judge Scholar Pat is hip that summary J shouldn’t be granted if there’s outstanding discovery; summary J finds factual issues, doesn’t dispose of them.

Except the key is that there was proper supervisory approval before first communication to taxpayer that chops were on the menu.

“Whether RA C or SRA B received direction or advice from IRS higher-ups or lawyers before the formal communication of penalties to Lake Jordan is of no moment. ‘We do not second-guess the extent of the RA’s or the supervisor’s deliberations about whether penalties should be imposed,’ but instead ‘confine our search to seeking evidence of written supervisory approval.’ Cattail Holdings, T.C. Memo. 2023-17, at *11; accord Raifman v. Commissioner, T.C. Memo. 2018-101, at *61; Belair Woods, 154 T.C. at 17. There is no dispute that RA C recommended the penalties asserted in the FPAA and that her immediate supervisor SRA B approved them in writing. The Commissioner has established compliance with section 6751, and any further discovery on this general topic is unnecessary and irrelevant.” Order, at p. 4. (Names omitted).

For the backstory on Cattail, see my blogpost “Highly Contestable – Redivivus,” 2/14/23. I blogged both Raifman and Belair, but I’m on deadline with no time to look them up.

Howbeit, I expect to see the counter-gambit played in 11 Cir, if the case gets there.