Antawn Jamal Sanders, 160 T. C. 16, filed 6/20/23, finds that he cannot recreate the success of the late great Wilson Pickett, for though Antawn waited ’til the midnight hour to file his petition, he was eleven (count ’em, eleven) seconds too late.

The combined efforts of amended Section 7451(b) and the Fogg-bound Harvard Law School LITC cannot save Antawn. Though he strove through the afternoon of the last day, Antawn could not get his Android mobile phone to fill out the petition forms, 160 T.  C. 16, at p. 3.

He finally abandoned the smartphone (vintage unstated), and tried his Windows PC. At 2356, he tried to log in.

“However, within one second, another Windows user successfully logged into DAWSON. Likewise at 23:57:21.379 (11:57 p.m.), Mr. Sanders successfully logged in as well. After he logged in and started the filing process, Mr. Sanders was slowed down by having ‘to do 3 other steps’ before he could actually file his Petition. Additionally, he had to refer to the instructions several times. Throughout this process and at all relevant times, DAWSON remained fully operational.

“While residing in North Carolina, Mr. Sanders filed the Petition from his computer after midnight on [Day 91]. At 00:00:09.493, he began the upload of the Petition, and at 00:00:11.693 (i.e., 11 seconds after midnight), it was filed. At the time of filing, DAWSON automatically applied a cover sheet to the Petition that states that the Petition was electronically filed and received at ’12/13/22 12:00 am.'” 160 T. C.  16, at p. 3.

You probably have sussed out the rest. Hallmark Collective puts paid to equitable tolling. Section 7502 applies to mailed-is-filed, and anyway, relinquishment of control is out, based upon Bankruptcy Court learning, where apparently practitioners become unglued more frequently than Tax Court pro ses. And Antawn started the upload nine (count ’em, nine) seconds too late. Anyway, y’all will recall that the time you start the upload is nothing to do with completing the e-filing. See my blogpost “IRS Has the Nutts,” 5/2/23.

“The regulations would deem an electronically filed document to be filed when the electronic record shows it was received. The electronic record shows that Mr. Sanders’s Petition was received 11 seconds after midnight; thus it would be untimely under the regulations that apply in the case of an electronic return transmitter. And the Petition is untimely under the amicus’s relinquished control argument. Mr. Sanders did not relinquish control of his Petition until he initiated the upload 9 seconds after midnight. In short, the narrow exceptions that might deem a petition to be filed before the Court receives it are both legally and factually inapplicable to this case.” 160 T. C. 16, at p. 7.

Finally, however inept the Genius Baristas may be in other areas, they sure can keep records. Their electronic logs follow Wilson Pickett’s lead, and show DAWSON in fact did “all things I told you, in the midnight hour.” No outages.

Takeaway, and this is a classic “Those who need it won’t read it, and those who read it don’t need it.”: Don’t trust smartphones, despite the bright words on Page 2 of the Public User Guide, that state “You can access DAWSON from your mobile device.” Just ask Antawn.

And above all, despite what Wilson Pickett said so wonderfully, don’t wait ’til the midnight hour.

The APA-based attack on Notice 2007-19, 2007-1 C.B 689, goes on apace, but Judge Patrick J.(“Scholar Pat”) Urda has the canned order in hand, opens and serves it up cold to Herbert Hirsch & Bonita Hirsch, et al., Docket No. 28898-10, filed 6/20/23.

It’s a replay of my blogpost “Oodles of Cases,” 6/16/23. And, of course, Herb & Bonita are represented by the same attorney as in the aforementioned blogpost, whom I’ll call JDIII.

Judge Scholar Pat cannot resist referring again to the “oodles of cases” wherein IRS refused to grant free-fire status to well-heeled believers that they are Virgin (Islanders), Order, at p. 3. And he has somber reasoning to go along with the copious citation of precedent.

More to come, I do not doubt.

“The freedmen are advised to remain quietly at their present homes and work for wages. They are informed that they will not be allowed to collect at military posts and that they will not be supported in idleness either there or elsewhere.”

The forgoing was part of the June 19, 1865, message of Major General Gordon Granger, commanding the Union soldiers who landed at Galveston, Texas with news that the Civil War had ended and that the enslaved were now free, giving rise to today’s Juneteenth celebration, a public holiday in the District of Columbia.

In keeping therewith, I remain at home. I’m aware I shall not be supported in idleness, whether at a military post (Heaven forfend! Been there, done that) or elsewhere, but as US Tax Court is closed per Rules 1(d) and 25(a)(5), I’m taking the day off.

Judge Patrick J (“Scholar Pat”) Urda may unleash somber reasoning and copious citation of precedent on Harvey Birdman & Diane Birdman, et al., Docket No. 28897-10. filed 6/16/23, but he prefers “oodles of cases” (See infra, as my already on their three Grey Goose Gibson lunch colleagues would say ).

The Birdmans are trying to duck the $75K cap on pre-2006 VIBIR filings enunciated in Notice 2007-19. They’re playing the APA gambit. Contrary to my usual practice, I’ll include the years at issue because they are material.

“The Birdmans move to strike the $75,000 cap in Notice 2007-19 as arbitrary and capricious under the APA. They believe that this requirement can and should be severed from the remainder of the Notice, which would effectively mean that, for tax years ending prior to December 31, 2006, the three-year statute of limitations would start whenever a USVI Form 1040 was filed with VIBIR by any person who takes the position that he or she is a bona fide resident irrespective of their gross income. This result ostensibly would render untimely the notices of deficiency issued to the Birdmans for their 2003–05 tax years.” Order, at p. 2. (Footnote omitted, but it says that 2006 is not in play because they filed both with VIBIR and IRS for that year.).

No go, says Judge Scholar Pat.

Even if Notice 2007-19 violates APA, Tax Court can only sever part of it if IRS would have treated the unchallenged portion the same. No sign IRS was granting SOL cover to anyone merely claiming Virginity. “Oodles of cases and more than a decade of litigation in this Court belie any such conclusion.” Order, at p. 3.

“Moreover, we do not believe that the rule functions sensibly without the stricken provision. Eliminating the financial limitation transforms a benefit tailored for taxpayers who lacked the incentive or ability to exploit that benefit in a financially significant manner into a safe harbor perfectly suited for those taxpayers who sought to game the U.S. – USVI mirror tax system to shield substantial amounts of taxable income. Such a change would hobble the IRS’s long-standing enforcement efforts and significantly erode the scheme designed by Congress, which established different filing requirements depending on whether one was a bona fide USVI resident.” Order, at pp. 3-4.

Wherefore, assuming Tax Court has jurisdiction to sever (and see Order at p. 4, footnote 4, questioning whether review is possible per 5 USC §701(a)(2)), the Birdmans are no better off if all of Notice 2007-19 goes away.

I give the Birdmans’ trusty attorney (whom I’ll call JDIII) a Taishoff “Good Try, Second Class.”

Henry Muhlenburg, Docket No. 14316-22S, filed 6/16/23, stars in a bench opinion by STJ Eunkyong (“N’Yawk”) Choi. He learns therefrom that, while said enactment gives him no tax cuts, it certainly does a job on his Sched A.

Hank claimed travel expenses from NC to NY for post-2018 year at issue, because he lost his NC job and couldn’t find another nearer than Excelsiorland. STJ N’Yawk says Hank might have had at least some of these allowed, except TCJA amended Section 67 to suspend these until 2026 (and don’t hold your breath until they come back).

You can still take them if you’re a performing artist, an official who is an employee of a State, an elementary or secondary school teacher, or member of the reserve component of the Armed Forces. See Section 62(a)(2). Hank, of course, is none of the above.

IRS generously folds the Section 6662 chops, and helps Hank out by finding an extra $3K of charitables at Exam that never made it onto Hank’s return.

STJ N’Yawk: “The Court is very sympathetic to petitioner. The facts and circumstances show he may have been entitled to claim the employee business expense deduction for taxable year… but for the suspension of miscellaneous itemized deductions for taxable years December 31, 2017, through January 1, 2026. However, because miscellaneous itemized deductions were suspended for taxable year … and because petitioner did not fall within any of the classes of employees entitled to deduct employee business expenses for taxable year…, he was not entitled to claim the employee business expense deduction for taxable year….” Transcript, at pp. 6-7.

Technically, that’s “before January 1, 2026,” not “through January 1, 2026,” Judge.

Quibbles aside, I had expected a lot more of these from those self-preparers who use outdated software or none at all, out-of-date forms, and don’t bother to read the current Pub 17. We’ll be getting them shortly.

The words of Judge Mark V. (“Vittorio Emanuele”) Holmes, concurring in Oakbrook, are borne out as that Obliging Jurist David Gustafson renders a daily double of T. C. Memo.s, beginning with Murfam Enterprises LLC, Wendell Murphy, Jr., Tax Matters Partner, T. C. 2023-73, filed 6/15/23. Hard to believe that it’s two weeks shy of five (count ’em, five) years since I posted the first of the eventual six (count ’em, six) blogposts on this case.

Thanks, Junior and Wendy, Dell and Linda. Great blogfodder.

Spoiler alert. It’s all about the appraisals, as IRS folds almost all the Section 170 jive. But IRS was slow with the chops, which never featured in the FPAA, so IRS has “new matter” BoP.

“In this case, the FPAA included no penalty determination. Rather, the Commissioner first asserted penalties in an amended answer to the petition that pleaded liability for gross valuation misstatement penalties under section 6662(e) and (h), or in the alternative, accuracy-related penalties under section 6662(a). Because the penalties asserted by the Commissioner in his amended answer would increase the liability determined in the FPAA issued to Murfam, they are ‘new matter’ for which the Commissioner bears the overall burden of proof. That burden includes the burden to prove the absence of ‘reasonable cause’.” T. C. Memo. 2023-73, at pp. 12-13.

IRS comes cropper on Section 6664.

“The straightforward and unchallenged trial testimony of R  (the D CPA who prepared Murfam’s Form 1065) established that D was a well-known firm with a good reputation in North Carolina, that Murfam retained D to prepare all of its returns during a three-year period and relied on it to do so, that D requested all the information it thought necessary for preparing Murfam’s returns, that D received all the information that it had requested from Murfam, that D prepared the returns in accordance with that information, and that Murfam filed the returns as they had been prepared by D.” T. C. Memo. 2023-73, at pp. 21-22. (Names omitted).

Checked all the Neonatology boxes. But that’s not good enough. Reg. Section 1.6664-4(b)(1) requires no unreasonable assumptions, no reliance on invalidity of any Reg. Section, and the usual facts-and-circumstances.

IRS’ only argument is that Murfam willfully withheld the essential statement of donor’s basis. But IRS has only the Michael Corleone classical gambit for this.

“The cited evidence does not make this showing. There is simply no evidence as to whether the advisors asked for basis information. There is no evidence as to whether Murfam provided basis information. To the extent there was basis information not provided by Murfam, there is no evidence to show why it was not provided. The reason that there is no such evidence is that the Commissioner did not cross-examine the witnesses on the point.” T. C. Memo. 2023-73, at pp. 23-24.

The valuation issue goes off on swine breeding. If you care how your bacon and Black Forest-style got from NC to your plate, read pp. 26-31.

The impact of the undervaluation is taken up in Wendell H. Murphy, Jr. and Wendy F. Murphy, T. C. 2023-72, filed 6/15/23, at pp. 63-69. They’re up for the Section 6662 gross overvaluation chop.

The trusty attorneys for Seabrook Property, LLC, Seabrook Manager, LLC, Tax Matters Partner, Docket No. 5071-21, filed 6/15/23, are true believers in the “Win Your Case at Discovery” tactic, hawked far and wee by every CLEflogger. They’re trying it again, as Little Horse Creek Property’s conserved and easemented land, which twice heretofore appeared on this my blog before the Little Horses stiped out two (count ’em, two) years ago, was a mere thirty miles from the Seabrooks’ Dixieland Boondocks.

So the Seabrooks want the entire IRS file on the Little Horses.

Nuttin’ doin’, says Judge Emin (“Eminent”) Toro, although his language is much more elegant than mine and features somber reasoning and copious citation of precedent.

I’d be a lot more specific, with substantial swaths of Judge Eminent’s learned discussion embedded herein, but again the Genius Baristas have barred me (and everyone else) from cut-and-paste or drag-and-drop.

So I can only direct you to pages 1-2 for breadth of scope of discovery, page 3 thereof for a discussion of disparate treatment of taxpayers as irrelevant, and pages 3-4 for the role of Section 6103 in protecting taxpayer info, and the breadth of scope of such info.

As for this trend of blocking access to text, is it AI they’re worried about? Post-Avianca, a 2 Cir demolition of a 30-year NY State courtier, no attorney in his/her right mind would trust AI for legal research. As for fraudsters generating phony orders and opinions, there’s been cheap software that lets them deskew and tamper for more than twenty years, and to my knowledge, but without having made an independent investigation, no one has done so.

So c’mon, Genius Baristas, do as The Hombres did and let it all hang out

Claude Franklin Sanders, T. C. Memo. 2023-71, filed 6/14/23, “published monthly newsletters about the gold and silver market and provided brokerage services for clients.” T. C. Memo. 2023-71, at p. 2. He carried on his business under two names, one of which was “Moneychanger.”

Claude also never bothered to file or pay income tax for some ten (count ’em, ten) years, claiming he was neither a citizen nor an individual, and that Treasury violated APA by not publishing an organization chart. But he had managed to get run out of AR for sales tax evasion, and ran to TN, whose own sales taxers nailed him. So IRS hits Claude for about $1.6 million in tax, add-ons and chops, including without in any way limiting the generality of the foregoing (as my expensive colleagues would say), Section 6663 fraud chops, all of which Judge Travis A. (“Tag”) Greaves lays upon him.

“Moneychanger” is an unfortunate moniker. Perhaps Claude was unaware of John 2:13-16. But I daresay Judge Tag Greaves is fully familiar therewith, and acted accordingly.

Now I must remember publicly that the entire aim of a self-assessment tax system like ours is to bring taxpayers into compliance therewith. Publicly excoriating and berating noncompliants, however egregious their actions and nonactions, does not induce compliance; to the contrary, it rather perversely induces sympathy on the part of burdened compliants, even where those compliants’ burdens are increased by the malfeasance and nonfeasance of the noncompliant.

Still, if an Authority highly exalted above even Tax Court judges resorted to whipping moneychangers….

The Bipartisan Budget Act of 2015 will save Judge Joseph Robert Goeke from the toils and travails he encounters in Intelligent Transportation & Monitoring Wireless LLC, Warren C. Havens, Tax Matters Partner, Docket No. 19514-17, filed 6/13/23. TMP Warren C. didn’t show for the trial, so no testimony taken, but Judge Goeke has the filings the parties made, and from same constructs this off-the-bencher.

IT&MW is a DE LLC, but a CA judge put IT&MW into receivership. Warren C. was TMP on the 1065s throughout. No State court judge can oust the TMP. But Warren C. hasn’t been diligent in trial prep, and all that issues from the TMP are vague statements. So, notwithstanding Warren C. claims he’s ill, Judge Goeke gives him one last chance to amend the petition and deal with the FPAA.

The problem is TEFRA.

“Relative to the status of Mr. Havens as the Tax Matters Partner, we note that the receiver in the California State matter was not a partner of the petitioner and therefore, the receiver could not be selected, pursuant to the regulations, as the Tax Matters Partner in this case. See 1983 Western Reserve Oil & Gas Co. v. Commissioner, 95 T.C. 51 (1990). Accordingly, Mr. Havens remains the Tax Matters Partner for purposes of the present case.” Transcript, at p. 6.

But remember, the BBA of 2015, which tanked TEFRA, also brought in the Partnership Representative. And per current Section 6223, the Partnership Representative need not be a partner. So post-TEFRA, formerly ineligible receivers are now in play.

Nothing Else Matters

It doesn’t matter whether Ty turned over the information on his profit-sharing plan. It doesn’t matter if the SO was “hostile, irate, [and] yelling” and “not qualified to be impartial and honest in this case.” It certainly doesn’t matter that a thoroughly accurate Reasonable Collection Potential cannot be calculated.

For Judge Christian N. (“Speedy”) Weiler, all that matters for Tyrone Dietz and Toni Dietz, T. C. Memo. 2023-69, filed 6/13/23, is that the RCP exceeds the OIC.

Their equity in their residence was large enough, however calculated, to scupper the OIC.

“Our role is not to redetermine the RCP of the taxpayers and whether it is 100% accurate as determined by the COIC unit. See Gustashaw v. Commissioner, T.C. Memo. 2018-215, at *23 (finding that a ‘[d]etermination of [a taxpayer’s] exact RCP would be a meaningless exercise’ when the taxpayer’s RCP far exceeds the OIC (quoting Estate of Duncan v. Commissioner, T.C. Memo. 2016-204, at *22 n.5, aff’d, 890 F.3d 192 (5th Cir. 2018))). Rather our role is to review the actions of Appeals for abuse of discretion and determine whether the SO’s actions were arbitrary, capricious, or without sound basis in fact or law. On the basis of the record before us, we conclude that the SO did not abuse her discretion in rejecting petitioners’ OICs.” T. C. Memo. 2023-69, at p. 13. (Citations omitted).

It’s a many-times-told tale, but worth repeating. When making an OIC, do as the bridge players do…lead from your longest and strongest