Just ask Albertina Camaclang d.b.a. Europa Guest Home, Docket No. 15761-23L, filed 4/23/25, and her trusty attorney, whom I’ll call Chris. Albertina and Chris lose a Section 7340 admins and legals, after IRS folds a $602K Form 941 claim.

It all began when Albertina failed to check the “I’m Out O’ Here”  box on the last Form 941 she filed before unloading the Europa Guest Home. IRS thought she’d not bothered filing. Albertina claims she never got the 30-day Letter 1085 proposing the tax, and IRS can’t prove they sent it.

There’s the usual argy-bargy between trusty attorney and the SO at Appeals. And while IRS didn’t exactly cover itself with glory, I’m going to cut Appeals a wee bit slack this time (hi, Judge Holmes). The unchecked box on the Form 941 opened the Pandora’s Box here. I wasn’t there, so I can’t say who started the scrum at the CDP.  Judge Travis A. (“Tag”) Greaves, as always, a model of discretion, merely tells us that “there was a ‘breakdown’ in communication between petitioner’s counsel and the settlement officer. This resulted in the termination of the conference.” Order, at p. 3. The SO must deal with wits, wags, and wiseacres by the dozen, as well as good-faith deer in the headlights, and more than a few belligerent moose in the headlights also. Plus some lawyers who think that “My Cousin Vinny” is a role model. So maybe there was some excess tension here. The SO sustains the NFTLs here.

When Albertina petitions and shows she sold out before quarters at issue, IRS folds and wants to dismiss as moot. Trusty attorney holds out for a “dission.” Then she files for admins & legals.

“Reasonable administrative costs are limited to those costs incurred by the taxpayer on or after the earliest of: (1) the date of the receipt by the taxpayer of the notice of determination, (2) the date of the notice of deficiency, or (3) the date of the first letter of proposed deficiency that allows the taxpayer to appeal a decision to the IRS Office of Appeals. § 7430(c)(2). Petitioner did not receive a notice of deficiency, and petitioner does not point to any “first letter of proposed deficiency” allowing her an opportunity to go to the IRS Office of Appeals. Consequently, the administrative proceeding date with respect to petitioner’s claim was… the date the settlement officer issued the notice of determination.” Order, at p. 5. But Albertina doesn’t claim any admins thereafter, only prior.

As for legals, IRS was justified.

“Respondent’s litigation position was established on… the date he filed an answer and motion to dismiss. In the answer, respondent asked this Court to uphold the notice of determination. Respondent also denied many of petitioner’s claims based on lack of sufficient knowledge and information. While we think it was questionable that respondent denied some of these claims based on lack of information, it does not change our conclusion.

“Respondent’s motion to dismiss states that ‘subsequent to the filing of the petition, he was determined that Petitioner did not have a tax liability.’ It goes on to provide that for all periods at issue, the liens were released ‘while the interest charged and any penalties imposed were also removed’. By filing a motion to dismiss at the time respondent filed his answer, we find that these documents, when read together, established respondent’s litigation position. Ultimately, respondent took the position that the case was no longer justiciable and all disputes had been resolved. Petitioner did not object to the Court granting this motion. Thus, respondent was substantially justified in his litigation position, and thus, petitioner is not treated as a prevailing party in the litigation proceeding.” Order, at p. 6.

So failing to check a box on a return when she was winding up her business costs Albertina the $49K in admins and legals she claims. And IRS wastes a bunch resources it claims it doesn’t have, which costs all us taxpayers.

Nobody won this case.