In Uncategorized on 05/01/2023 at 15:30

This headline is almost longer than CSTJ Lewis (“The Magnificent Name”) Carluzzo’s opinion in Nick A. Kolev, T. C. Memo. 2023-53, filed 5/1/23. In fact, this three-pager is the shortest T. C. Memo. I’ve seen in many a long day.

Nick’s refund got nicked for $881.92 by the local child support crew, but Nick claims he and loved-once worked it out between themselves so the local supporters’ nick was “fraudulent.” Except Nick claimed a credit for the $881.92 on his year at issue return, which IRS first allowed, and then on the same day disallowed.

No one questions the total tax due shown on Nick’s return. IRS assessed that exact amount. “It appears that the assessment was made pursuant to section 6201(a)(3), which authorizes respondent to summarily assess erroneous federal income tax prepayment credits. Although no explanation for the reassessment has been provided, perhaps the credit was treated as a prepayment credit because the credit was claimed in the area of the return where income tax prepayment credits are claimed.” T. C. Memo. 2023-53, at p. 2.

Almost two (count ’em, two) years later, IRS gives Nick a SNOD at no extra charge. Except the amount of deficiency shown is “$0.00.”

“The Notice [SNOD] references the credit and includes the amount of the credit in the ‘balance due,’ but it identifies the credit as an “adjustment to prepayment credits not subject to deficiency’ procedures.” T. C. Memo. 2023-53, at p. 2.

Nick agrees (“more or less”) that he’s not entitled to a Federal tax credit, but he wants the money back from the local supporters. He doesn’t put in evidence whatever notices he got from the local supporters.

That’s the lesser of Nick’s problems. Has Tax Court jurisdiction at all?

IRS claims at trial there’s a deficiency for the claimed $881.92 credit. But that’s not what the SNOD says. “Respondent claims that although the Notice [SNOD] shows a zero deficiency, there is actually an $881.92 deficiency in petitioner’s [year at issue] federal income tax because petitioner subtracted the credit from his [year at issue] tax liability. Petitioner’s return, however, shows otherwise;  although the credit increased petitioner’s refund, it did not reduce his income tax liability as shown on the return. Respondent described the manner in which the Notice [SNOD] was drafted as some sort of mistake and argued that the Court should proceed as though the credit reduced the amount of tax shown on the return. Mathematically and in reality, however, it did not.” T. C. Memo. 2023-53, at p. 3. (Footnote omitted, but it says this isn’t a case of an ambiguous SNOD; the SNOD clearly says “Deficiency $0.00.”). And the SNOD says the overstated credit is not subject to deficiency procedures.

No deficiency, hence no jurisdiction.

Another vanishing act worthy of Penn and Teller.


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