My colleague Peter Reilly CPA just sent me a clip from Bloomberg about the alleged Lakepoint backdated Boss Hossery.

For some backstory on the alleged bogus Boss Hossery, see my blogposts “Always A New Gimmick,” 10/17/22, and “The High Bar,” 11/23/22.

Now before I go any further, I want to apologize to ex-Ch J Michael B (“Iron Mike”) Thornton. I waxed far too polemical in joining Judge David Gustafson’s dissenting views in Graev, 147 T. C. 16. Ex-Ch J Iron Mike read the law as written, whatever the result, and set it forth. I thought the result unfair and in no way an expression of Congress’ supposed intent. Two (count ’em, two) Circuit Courts of Appeal have agreed with ex-Ch J Iron Mike’s reading, and I am rebuked. I apologize for my intemperate remarks.

Now on to Lakepoint. Here is what I wrote to Mr. Reilly when he asked my views. We are rather colloquial in our exchanges.

This kerfuffle is about harmless error. Please hold my metaphorical beer.

Is Golsen still good law? Yes, AFAIK. To what Circuit is Lakepoint appealable? 11 Cir, right? No stip to the contrary, right? The issue in Lakepoint at this time is IRS’ Boss Hossery partial summary J, right? Amount of penalty, being a percentage of deficiency, cannot be determined unless deficiency, if any, is determined, right? And deficiency, if any, has not yet been determined, right? So neither deficiency, if any, nor penalty, has been assessed, right? Neither can be assessed unless current Tax Court proceedings have become final per Section 6213(a), and see also Section 7481, right?

So if all the above is true, what price Kroner v. Com’r, 48 F.4th 1272 (11th Cir. 2022), where Judge Brasher wrote:

“We disagree with Kroner and the Tax Court. We conclude that the IRS satisfies Section 6751(b) so long as a supervisor approves an initial determination of a penalty assessment before it assesses those penalties. See Laidlaw’s Harley Davidson Sales, Inc. v. Comm’r, 29 F.4th 1066, 1071 (9th Cir. 2022). Here, a supervisor approved Kroner’s penalties, and they have not yet been assessed. Accordingly, the IRS has not violated Section 6751(b).” Kroner, at p. 8.

To put it in plain English, in 11 Cir it doesn’t matter when first communication took place, or anything else. In 11 Cir, the past isn’t even prologue. The Boss Hoss could sign off today, and it would satisfy 11 Cir’s reading of Section 6751(b).

So whatever IRS did, good, bad, or ugly, may merit sanctions (like legals and admins) and a Section 6673 chop for baseless claims, and of course disciplinary action, both agency and in Bar disciplinary fora, against the individuals involved, but the case goes on, and chops are still on the table, at least until the Supremes deal with Section 6751(b).

Harmless error. Now keep the silt out of my (metaphorical) beer.