Judge Emin (“Eminent”) Toro unpacks all the conundra he raised back two (count ’em, two) years ago, and lets in the whole admin record in Sydney Ann Chaney Thomas,  162 T. C. 2, filed 1/30/24.

For the backstory, see my. blogpost “Eminently Evidentiary,” 4/26/22. But the short answer is that, even though the two letters from Sydney Ann’s friends are hearsay, they’re part of the admin record, and Section 6015(e)(7) mandates that Tax Court consider the entire admin record in their de novo review of innocent spousery.

Sydney Ann loses equitable innocent spousery based on lavish lifestyle, but the importance of this case to practitioners is FRE 802 allowing otherwise inadmissible hearsay into evidence when Congress says OK. And Congress did say OK in Section 6015(e)(7). To allow IRS to nitpick and cherrypick the admin record would defeat Congress’ plain intent.

“… the Commissioner’s assertion that the Federal Rules of Evidence should be applied to limit our review of the administrative record in innocent spouse cases would seem to swallow our scope of review in such cases, potentially rendering much of the administrative record subject to challenge. It would make little sense for proceedings in which Congress has instructed us to review the administrative record to devolve into lengthy disputes over which aspects of the record may actually be considered. And section 6015 does not permit such an outcome.” 162 T. C. 2, at p. 8.

But that doesn’t mean everything in the admin record must be accorded equal weight.

“Of course, as in a case we review for abuse of discretion, here (where we review de novo) there may be questions as to whether evidence in the administrative record is probative and reliable. And, in determining whether evidence in the administrative record is probative and reliable, we may consider indicia of reliability such as whether a document is or contains hearsay. We necessarily consider such questions as part of our de novo review of the claims Ms. Thomas advances. The Commissioner, however, is not entitled to strike portions of the administrative record on hearsay grounds. Rather, based on the congressional command in section 6015(e)(7), Ms. Thomas is allowed to rely on the administrative record for whatever it can bear.” 162 T. C. 2, at p. 10 (Citations and footnote omitted).  The omitted footnote says IRS could have called the authors of the disputed letters to test their credibility as witnesses on the trial, but didn’t.

Nevertheless, I repeat my warning from my blogpost above-cited: “The Cincinnati (that’s the reviewers of innocent spousery, not Washington’s officers) will start vigorously pruning the admin record, to keep out anything that helps the innocent. So keep copies of everything you send to the Cincinnati, and get itemized receipts for what you sent. Be prepared for a top-fuel challenge to the admin record proffered at petition time if what you sent, like love for the late great John Lennon, ‘has a nasty habit of disappearing overnight.’”