I’ve noted before that one of IRS’ favorite moves from its cubby of happy tricks, feints and ruses is to slip an argument, fact, or admission past a petitioner. I call it submarining.

Here, it’s a Rule 90 Request for Admissions. I am a fan of these. They save time, eliminate factual issues. Of course, one can try to submarine dubious facts and conclusions of law on one’s own account, but beware. Too much gameplaying destroys credibility.

Goldmark Manufacturing, Inc., Docket No. 17866-22, filed 4/30/24, isn’t necessarily an injured innocent, neither it nor its principal having bothered to file income tax returns for the four (count ’em, four) years at issue. Said principal was uncooperative at exam, thus provoking IRS to assert Section 6651(f)(1) fraudulent failure to file chops.

The obligatory discovery joust leaves Goldmark short-stacked for failure to Branerton and make Rule 72 prior requests, before asking for copies of checks that neither IRS nor Goldmark’s bank has, due to passage of time. Judge Courtney D (“CD”) Jones adverts to Section 6001 recordkeeping obligations, but never squarely places the burden on Goldmark. She gives IRS summary J on the deficiencies and one chop (more about that infra, as my expensive colleagues would say) because Goldmark has no facts.

But the submarine comes in when IRS pulls a Rule 90(f)(1) deemed-admitted. Now deemed admissions can support penalties. And for fraudulent failure, a Section 6020 SFR doesn’t count as a return. However, the badges-of-fraud are required, as is clear and convincing proof that failure was willful and fraudulent. Deemed admissions don’t cut it.

“Respondent’s Motion for Summary Judgment relies on the deemed admission that ‘[f]or [the taxable years at issue], petitioner is liable for the penalty for fraudulent failure to file under I.R.C. §[ ]6651(f) in the amounts determined in the statutory notice of deficiency . . . .’ Under Rule 90(a), a request for admission must ‘relate to statements or opinions of fact or of the application of law to fact.’ Respondent’s request for admission impermissibly seeks to admit a legal conclusion.” Order, at p. 10. (Citations omitted).

And without the deemed admission, IRS has only the Michael Corleone gambit, classical variation, to play on the fraudulent failure to file.

IRS does eke out a Section 6655 failure-to-pay-estimateds chop.

Please excuse execrable pun (sorry, guys, the devil made me do it), but the trusty attorneys for I-20 Oconee, LLC, I-20 Oconee Limited, LLC, Tax Matters Partner, Docket No. 12663-21, filed 4/30/24, get a Taishoff “Good Try, First Class,” even as Judge Elizabeth Crewson Paris gives IRS summary J on the Boss Hossery in their Dixieland Boondockery.

It’s all the usual suspects, Belair, Raifman, Palmolive, and a bunch others (hi, Judge Holmes), all (or almost all) of which I’ve blogged, so I won’t waste time citing to them. “Personally approved” means what?

According to well-settled Tax Court precedent, just “OK.”

Said trusty attorneys aren’t buying, and apparently they have clients willing to call. As usual, the story is in a footnote.

“Petitioner’s Response to Respondent’s Motion for Summary Judgment… states that ‘Petitioner understands the Tax Court’s applicable precedent does not require Respondent establish a certain level of review to satisfy [section 6751(b)(1)].’ Therefore, petitioner ‘opposes Respondent’s Motion solely to preserve its position on appeal that a mere rubber-stamping of a penalty determination is not sufficient to constitute a “personal” review.’” Order, at pp. 3-4, footnote 4.

Of course, the I-20s are Golsenized to 11 Cir, the Circuit that gave us Hewitt. Cain’t hardly wait for the appeal. Maybe a Section 7482(a)(2(A) interlocutory?

Edited to add, 4/30/24: A word with one of I-20’s trusty attorneys reminded me that they had tried the Section 7482(a)(2)(A) route four (count ’em, four) years ago, and Judge Albert G. (“Scholar Al”) Lauber slammed the door on them. The trusty attorney was too well-bred to ask if I bothered to read my own blog, but I have, and here’s the story. See my blogpost “Chops Aren’t Ultimate,” 3/20/20.

We’ve seen plenty of cascade cases, where credit elects roll down and down. But Elizabeth White, T. C. Memo. 2024-53, filed 4/29/24 (The End of Palindrome Week), has a cascade of unpaid years, to which were applied the entire payment she now seeks to apply to the year for which she petitions the NITL.

The NITL arises from a Section 6213(b)(1) “math error” notice. So Elizabeth had no opportunity to contest her miscalculation of taxable Social Security (no easy task for a pro se) and overstated withholding for the one year at issue. IRS had told her the $7K she’d previously paid was applied to wipe out one past year and partially-pay another, but left year-at-issue unpaid.

Her petition says she wants to contest all three (count ’em, three) years, but only the last of these is at issue, as IRS has taken no collection action for the others.

Judge Albert G. (“Scholar Al”) Lauber has this one.

There’s no deficiency jurisdiction for a math-error, but a petitioner can backdoor this in a CDP. For more, see my blogpost “Searchin’, Searchin’,” 6/19/17.

However, Elizabeth said at first she didn’t want a collection alternative, but wanted to fight about what payments were applied to all years.

“In sum, petitioner did not properly raise an underlying liability challenge to her [year at issue] tax liability during the CDP hearing. Rather, she contended that her tax for [year at issue] had been paid. That contention did not constitute a challenge to her underlying liability, and the contention in any event was incorrect.” T. C. Memo. 2024-53, at p. 6.

Elizabeth finally said at the CDP she wanted an OIC, but put in no offer.

No abuse of discretion.

That’s Judge Morrison’s advice to IRS counsel, and all parties who want to preclude testimony but find they must avail themselves thereof on the trial.

Here’s Eric Maurice Pinckney, Docket No. 5050-19, filed 4/26/24. Setting the scene, “…respondent filed a Motion in Limine asking the Court to ‘preclude petitioner from examining Revenue Agent . . . M regarding his manner and motives in examining petitioner’s income tax liabilities for the years at issue.’ In the motion, respondent relied on Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327 (1974). The Court did not rule on the Motion in Limine.” Order, at p. 1. (Name and citation omitted).

Ol’ Greenberg has been throwing out tales of woe at Exam for fifty (count ’em, fifty) years, with no end in sight.

Most pro ses never got the word that, when a SNOD is on the menu, the past is off the table. De novo means tabula rasa.

But IRS counsel calls M as a rebuttal witness, and saves Judge Morrison the trouble of deciding the motion. “Some of the testimony adduced by respondent from M involved ‘his manner and motives in examining petitioner’s income tax liabilities.’ Putting this testimony into the record suggests that respondent was no longer standing by its broad position in its Motion in Limine that all testimony by M as to his manner and motives in examining petitioner’s income tax liabilities is inadmissible. Later petitioner also examined M. During this examination, respondent made several oral objections to portions of M’s testimony. At least one objection was based on Greenberg’s Express, Inc. v. Commissioner. Making these specific oral objections suggests that respondent was no longer standing by its broad Motion in Limine position that all testimony by M as to his manner and motives in examining petitioner’s income tax liability is inadmissible.” Order, at p. 1. (Name and citations omitted).

Motions in Limine are the usual thing in Tax Court litigation. Might be a good idea to put one in up front, and ask the judge to reserve ruling until trial. But remember, if you decide (or are forced by the other side or the judge) to cross the threshold, the motion won’t save you if you miss an objection to testimony or documents.

“We conclude that the Motion in Limine did not preserve any objections that were not made by respondent orally during the testimony of M. All such oral objections were considered and resolved during the trial. Therefore the Motion in Limine is moot.” Order, at p. 1. (Name omitted).

So, if you need to object, say it loud.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan announces the appointment of Charles Jeane, Esq., as Chief Clerk of the United States Tax Court, said appointment to date from 19 April. Mr. Jeane had been acting Chief Clerk since January.

Now as we welcome Chief Clerk Jeane, we can hope for the appointment of a Public Affairs Officer to serve under him.

STJ Jennifer E. (“Publius”) Siegel’s three-page Sum. Op., Caren Kohl, a.k.a., Caren Rein, T. C. Sum. Op. 2024-4, filed 4/25/24, tells a story that’s all too familiar to those of us who served our apprenticeships in what was then called “the snakepit,” or “the zoo,” the calendar call in New York City Housing Part; mine was at 111 Centre Street, long ago.

Of course, STJ Publius’ exalted career path took her far from the sordid purlieus wherein this story takes place. To summarize, “… when she was in her early 50s, petitioner received a taxable retirement plan distribution of $10,342. She withdrew the money to pay past-due rent and to avoid being evicted by her landlord. Petitioner did not include the distribution in income on her 2018 Form 1040, U.S. Individual Income Tax Return.” T. C. Sum. Op. 2024-4, at p. 2.

Easy enough to recall lawyers with bushels of files, pro ses with haunted eyes, crying babies and muttering old folks, Court officers alternately harried or bored, a scene looking for a Daumier. Finally, a bank check handed over, a stip scrawled and handed to a clerk, and we head for the office and a dozen telephone messages.

“Petitioner’s position remains, however, that she should not be liable for the additional tax imposed by section 72(t) because she withdrew the funds due to economic hardship.” T. C. Sum. Op. 2024-4, at p. 2.

The ending is simple enough.

“Petitioner’s only argument in opposition to the imposition of the additional tax is that withdrawals made for economic hardship are exempt from it. To support her claim, petitioner points to section 72(t)(2)(I), enacted by the Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, div. T, 136 Stat. 4459, 5296 (2022). That provision exempts certain withdrawals made for emergency expenses from the additional tax. However, section 72(t)(2)(I) applies only ‘to distributions made after December 31, 2023.” Consolidated Appropriations Act § 115(c), 136 Stat. at 5297. It is not applicable to the distribution petitioner received in 2018. And because it is not, petitioner is liable for the additional tax on her early retirement plan distribution.” T. C. Sum. Op. 2024-4, at p. 3.

The law, of course, is the law, and STJ Publius may not vary it.

Taishoff, laboring under no such restraint, may point out that being homeless in Fun City is no fun. Especially for a woman in her fifties, early or late.

And, while I’m about it, why has OCC, underfunded, understrength, overworked and underpaid, as Danny Werfel would have us believe, allocated and deployed three (count ’em, three) of their hard-pressed attorneys to this case? Is Caren, broke and facing homelessness, a threat to the fisc equal to the clients of some of my two-Grey-Goose-martini luncheon colleagues?

That’s Judge Christian N. (“Speedy”) Weiler’s advice to buyers of Dixieland Boondocks. If you can find land cheaper than the high-priced Boondockery the dodgefloggers are pushing, in the same neighborhood, go to it.

That’s the truism that sinks the $47.5 million raid on the fisc, and ends the story of Buckelew Farm, LLC f.k.a. Big K Farms LLC, Big K LLC, Tax Matters Partner, T. C. Memo. 2024-52, filed 4/25/24. This is the fourth appearance of the Big Bucks in this my blog, but as their previous appearances were mere prologue, you needn’t note them, so neither will I.

Judge Speedy Weiler gives a vivid anatomy of a dodgeflog, showing how parties stuck with dubious Dixie Boondocks retain paperhangers (writers of appraisals, evaluations, tax-opinions-that-aren’t, and return preparers), engage whalers (hunters of highrollers needing big write-offs), and finally market the stuff. See T. C. Memo. 2024-52, at pp. 2-23.

The Big Bucks dodge the Section 6663 civil fraud chop, because they told the whole story in the 1065 and attachments.

“Although respondent has proffered some evidence of conduct that might give rise to a suspicion of fraud, most of the evidence concerns conduct unrelated to the Partnership’s tax return. Respondent must prove by clear and convincing evidence that the Partnership intended to evade tax in filing the return. On the basis of our review of the record, we find that respondent has failed to prove by clear and convincing evidence that the Partnership had the specific intent to evade tax when it filed its …return.” T. C. Memo. 2024-52, at p. 60. (Citation and footnote omitted).

The key here is that there’s lots of Dixieland Boondocks (ask any Third Army alum, or graduate of Fort Jackson, Fort Gordon, et hoc genus omne), so to show yours is worth telephone numbers, it had better be different from all others. And Judge Speedy Weiler finds the Big Bucks’ ain’t.

“…Mr. R selected these vacant parcels on the basis of the principle of substitution, which stands for the proposition that a hypothetical buyer will not pay more for a given property when an alternative property is available for less. This simple proposition undermines petitioner’s ‘before’ value conclusion since a willing buyer would not have paid roughly $32,600 ($50,480,000 / 1,545.79 acres) per acre for nonunique vacant land in Jones County when the price per acre for substitute properties identified by respondent’s expert was between $1,602 and $4,971. Mr. R likewise made qualitative adjustments to the selected properties and arrived at a per-acre value of $4,750 as appropriate for the Subject Property. T. C. Memo. 2024-52, at p. 55. (Name omitted).

Of course, the 40% overvaluation chop is thoroughly Boss Hossed.

Estate of Randy Glassman, Deceased, Steven Glassman, Personal Representative, and Steven Glassman, T. C. Memo. 2024-51, filed 4/24/24, is another off-the-shelf IRS partial summary J motion, where the RA’s supe was on leave and an acting supe (with a Form 10247 designation in the file covering material dates) signed off on the Section 6662 chop.

And Judge Albert G. (“Scholar Al”) Lauber brushes off the petitioners’ contention that the Acting Boss Hoss didn’t even look at what he was signing.

“Section 6751(b)(1) does not inquire into the time or effort the examiner and the supervisor devote to their respective tasks. Rather, ‘[t]he written supervisory approval requirement . . . requires just that: written supervisory approval.’  We do not second-guess the extent of the RA’s or the supervisor’s deliberations about whether penalties should be imposed. We reiterate that the signature of a group manager on a penalty approval form—or the signature of the acting group manager, as here—is sufficient, without more, to satisfy the statutory requirements.” T. C. Memo. 2024-51, at pp. 5-6. (Citations omitted, but they’re the usual).

Judge Scholar Al has briefly summarized the complete evisceration of Section 6751(b). Rather than providing the slightest, flimsiest protection to taxpayers from RAs who use the threat of penalties to extort settlements from the unsophisticated, the slipshod drafting that should embarrass a first-hour law student has made supervisory approval the equivalent of the robosigned foreclosure pleadings in the days of the Great Subprime Mortgage Meltdown.

Lest any readers misinterpret what I am saying, I am not laying a blast on the Court or on the judges. It’s the wretched drafting of Section 6751(b) that’s at fault here. The judges are interpreting the law as written. That the writer(s) hadn’t a clue what the word “assessed” means in taxspeak, or that they did not make clear that the sign-off was more than a hasty scrawl routinely given, isn’t the judges’ fault.

As Redd Evans and David Mann said in their 1941 hit, Taishoff says today.

The parties to William E. Frazier & Mary A. Frazier, et al., Docket No. 8427-14, filed 4/24/24, apparently did some Rule 155 beancounting, and ended the count with a whole bunch new numbers (hi, Judge Holmes), while leaving the guts of T. C. Memo. 2024-3, originally filed 1/8/24, corrected version filed 4/24/24, intact. For the 1/8/24 version, see my blogpost “LaLa Land,”1/8/24.

I suggest you check out Judge Morrison’s order, rather than try to slog through the 173 (count ’em, 173) pages of corrected T. C. Memo. 2024-3, while preparing a concordance (or discordance) between corrected and uncorrected versions.

Judge Morrison finds that the higher deficiency was the result of a Rule 41 tried-by-consent, after the parties stipulated.

“,,, we believe that by stipulating to amounts greater than the amounts determined in the notices of deficiency, the parties have tried these issues by consent. Section 6214(a) provides that the Tax Court has jurisdiction to redetermine the correct amount of deficiency even if the redetermined amount is greater than the amount originally determined in the notice of deficiency, as long as the greater amount was asserted by the IRS before or during trial. The IRS is considered to have asserted a claim for a greater deficiency if the parties try the issue by consent under Rule 41(b)(1), even if the IRS does not raise the issue in the notice of deficiency or in pleadings.” Order, at p. 2. (Citation omitted).

Ah, the Taishoff mantra: Stipulate, don’t capitulate. There! I’ve said it again.

Judge Mark V. (“Vittorio Emanuele”) Holmes brushes off Anika D. Larkin, a.k.a. Anika D. Duprey-Larkin, Docket No. 19061-21S, filed 4/23/24, rather summarily.

“This is tax protester gibberish. Very, very briefly, there is no legal basis to send a letter to the IRS imposing a deadline of your own choosing to get the IRS to do something and then claim the IRS can’t do anything to you, much less exempt yourself from taxes for 202 years because the IRS doesn’t adhere to the deadline you tried to impose on it.

“I also have no jurisdiction whatsoever to enjoin IRS from collection of taxes.” Transcript, at p. 8.

I’d like to impose something on the Tax Court Genius Baristas for printing Judge Holmes’ off-the-bencher in a PDF that doesn’t allow me to drag-and-drop enough of Anika’s prose to show y’all what caused Judge Holmes to toss her petition. I have neither time nor inclination to type same, after having had to type Judge Holmes’ rebuke. So you’ll have to read the same for yourself, if you wish, on Tax Court website.

But before I pile on in this scrimmage, I won’t wait for some of my readers with long memories to remind me of what I said ten (count ’em ten) years ago: “When it comes to legalistic gibberish I’d be careful about throwing stones.” See my blogpost “Legalistic Gibberish,” 3/13/14.