Maybe the fact that the Federal indictment for mail fraud, wire fraud, and money laundering was tossed, and his allegations that his boss conspired with “former disgraced FBI agents to seize substantial funds from [petitioner] and to convict him of non-existent crimes” to steal $642K from his wholly-owned LLC might have suggested to Appeals to do a better job building an NEH-ETA record, rather than relying upon a doubt-as-to-collectability shootdown in John Joseph Bauche, T. C.  Memo. 2025-48, filed 5/20/25. The quoted matter is from p. 15.

Ex-Ch J L. Paige (“Iron Fist”) Marvel stresses she isn’t buying JJ’s story, but Appeals should have built a better record, especially after a remand to Appeals and a Supplemental NOD.

While JJ’s representatives filed the OIC asserting economic hardship (hence raising doubt-as-to-collectability), and since taxpayer can raise only one reason for each OIC, was Appeals right not to consider NEH-ETA?

“We will make our point plainly: An alleged corrupt public-private conspiracy to loot [JJ’s LLC]’s bank account, which allegedly resulted in petitioner’s inability to pay his tax liabilities, is a public policy or equity issue that needed to receive due consideration. We take no position on the merits of those allegations, but they needed to be appropriately considered in accordance with the IRM. The current administrative record is insufficient to permit us to review this matter adequately, necessitating a remand. We do not hold that an immediate referral [to  NEH-ETA Austin] was required but only that a referral (or at least consideration of how petitioner’s ETA OIC might receive appropriate review on NEH grounds) should have taken place once Appeals exhausted its consideration of petitioner’s ETA OIC on economic hardship grounds. Cf. IRM 5.8.11.5.1(3) (providing that generally ‘all cases must have been completely developed under all other bases before transfer will be accepted by the Austin [Office]’). This case is akin to Bogart, T.C. Memo. 2014-46, at *11, in which we concluded that the Commissioner ‘did not adequately consider’ NEH grounds where the taxpayers ‘requested relief on public policy and equity grounds’ but the Appeals officer ‘merely concluded that the ETA OIC did not merit consideration under public policy or equity grounds.’” T. C. Memo. 2025-48, at p. 37.

For the Bogart story, see my blogpost “Leftovers,” 3/19/14.

Remember, Appeals goes to Austin only with a fully-completed record. So Back to Appeals.

“We will specifically direct Appeals to consider (1) whether petitioner should be allowed the standard local housing expense because of special circumstances, (2) whether petitioner’s use of line of credit proceeds for legal fees meets the necessary expense test, (3) petitioner’s recent claim… that part of his time is now occupied assisting with caregiving for his elderly father, who has significant health problems, and (4) how to classify petitioner’s current employment or unemployment status for purposes of calculating his future income value (e.g., whether petitioner is still properly classified as temporarily or recently unemployed).” T. C. Memo. 2025-48, at p. 34.

Now I don’t buy, or reject, JJ’s story either. From what I know of asset forfeiture cases, there’s a great temptation for law enforcement to grab first and let the owner sue to get it back; they needn’t convict, or indict, or even get a warrant.

So while the toss of JJ’s indictment is just circumstantial evidence of the need for NEH-ETA public policy consideration, as Hank Thoreau said, circumstantial evidence can be strong when you find a trout in the milk.