Trust Judge Mark V. (“Vittorio Emanuele”) Holmes, however casual his grammar, to make complex matters simple. I’ve blogged my way through many a Section 6404(h) abate-debate, but none that I can remember cuts to the chase as fast as Shehzad A. Latif, Docket No. 6271-22S, filed 11/9/23, an off-the-bencher.

Simple facts. Shehzad had a 401(k) he tried to roll custodian-to-custodian when he changed jobs, but the roll missed stays and ran aground. Shehzad had to take the distribution, tried to work with IRS, but got hit for the tax and interest despite his admittedly good-faith efforts.

IRS doesn’t seek chops, apparently because of said good-faith, but tax and interest must be paid. Shehzad is fighting interest.

“These cases are a relatively small part of the Tax Court’s docket, and we still haven’t quite figured out some of the underlying ways that we should analyze these. The standard of review in these cases is clearly abuse of discretion. It says so in the statute.” Transcript, at p. 4.

Judge Holmes actually tried this one, rather than do the usual administrative record page-flip, but in the end, mox nix.

The two delay-of-the-game moves, invoking interest abatement by IRS, are managerial acts and ministerial acts. Managerials are losing the file or making personnel assignments (too many cooks or too few, or swapping personnel around). Ministerials are the mechanicals after all discretionary steps have been taken.

“A decision concerning the proper application of Federal tax law , or other Federal or state law is not a ministerial act.” This last sentence of Reg. Section 301.6404-2(b)(2), says Judge Holmes, “…applies to both definitions of managerial and ministerial acts.” Transcript, at p. 6.

Shehzad doesn’t claim IRS lost the file, bobbled the personnel assignments, or didn’t push the completed papers fast enough. He argues the blown rollover.

“…this would be a great argument for defending himself against the penalty, and evidently the IRS thought so because it didn’t determine any penalty in the end. But interest is all about the time value of the money owed. That’s why the IRS has to routinely pay interest on refunds, but also why taxpayers, why Mr. Latif, who delayed a bit in paying the extra tax they owed, have to pay interest on what they owe.” Transcript, at pp. 6-7.