I’ve blogged about this before, but it’s been a while, so a refresher might could be in order. Restitution does not determine tax liability; what the defendant in the criminal case must pay the government (the nominal victim) is the government’s estimate. The actual liability might be more or less, and that needs a trial.

Plea bargains in tax cases invariably provide that nothing in it limits petitioner’s civil liability, “including but not limited to remedies regarding . . . taxation.” Likewise, plea bargains have no claim preclusive effect as to the exact amount of any deficiency, so Tax Court will not grant summary J on the amount of the deficiency.

You can find all this, and more, in Thomas S. Miller, T. C. Memo. 2025-41, filed 5/5/25. All IRS gets is partial summary J that petitioner owes Section 6651(f) fraudulent failure to file chops for two (count ’em, two) of the six years at issue, on whatever deficiencies are finally determined.

I won’t name the firm or the attorneys, but this is certainly a strange tale. It’s nothing to do with the clients, Yaroslav Kirik & Galina Kirik, Docket No. 5898-23L, filed 5/5/25, at least not initially.

Yar & Gal petition a CDP NOD. The petition is signed by trusty attorney, a principal of the firm, whom I’ll call Harry. Eight (count ’em, eight) months later, two attorneys from that firm enter appearances and stip to the CDP administrative record. Trial date was set, but a scant 26 days before the scheduled date the two attorneys move to withdraw.

The problem is that Harry, who signed the petition, died ten months before scheduled trial date. STJ Jennifer E. (“Publius”) Siegel takes up the tale.

“We granted the motion, believing that petitioners remained represented by counsel. As it turns out, they were not; unbeknownst to the Court, [Harry] had passed away….” Order, at p.1. (Footnote omitted, but see infra, as my expensive colleagues would say.).

“No one—not petitioners, not petitioners’ counsel, not the law firm…, not respondent’s counsel—had informed the Court that [Harry] passed away. DAWSON, the Court’s case management system, received no service errors when making electronic service to [Harry]’s e-mail address. [Harry] remained listed as petitioners’ counsel of record until he was withdrawn by the Court on April 1, 2025.” Order, at p. 1, footnote 1.

Note that Entry of Appearance, Form 7, requires the practitioner to give her/his office address, but nowhere to give her/his firm affiliation, if any. As far as DAWSON is concerned, every practitioner is a single-shingle, although s/he may be a partner or associate in a thousand-attorney multinational.

In the meantime, Yar & Gal go off-radar, IRS moves for summary J and to toss for nonappearance at trial. STJ Publius Siegel tosses Yar & Gal, but advises them to move to vacate and respond to IRS’ summary J.

I’ve argued for law firm EoAs for years. Had there been a single EoA for the firm, withdrawal of any individual attorney would not effect a change in representation, but a withdrawal of the firm would terminate all representation.

Lest I be misunderstood, I am not suggesting that the responsibility for informing the Court, and obtaining required Court approval, of practitioner personnel changes should be altered in any way. There was clearly law office failure here, and responsibility therefor should remain where it belongs.

Edited to add, 5/5/25: My indefatigable correspondent, Bob Kamman, Esq., noted Yar’s & Gal’s previous appearance in this my blog, which I missed. Guess I’m getting old. See my blogpost “Are You Surprised?” 10/17/19. Yar & Gal are quite a pair.

Overbroad and overly general discovery requests are styled “fishing expeditions” by lawyers and judges, but in Capitol Places II Owner, LLC, Historic Preservation Fund 2014 LLC, A Partner Other Than the Tax Matters Partner, Docket No. 16536-23, filed 5/2/25, Ch J-elect Patrick J. (“Scholar Pat”) Urda quashes a subpoena that’s a trawling expedition.

Petitioners want all documents relating to 2022 purchase of property unrelated to the case at issue; (2) any and all appraisals thereof; (3) any and all documents reflecting the development and construction costs thereof prior to its sale; (4) financial statements and operating documents for the property before the sale; and (5) all correspondence, emails, memoranda, and communications relating to the negotiation and purchase of the property, determination of sale price, and communications with brokers or agents regarding the sale.

Except.

Petitioners served a subpoena for these goodies on a nonparty, in a case involving different property, different parties, in a transaction that took place ” nearly 8 years (and one worldwide pandemic with considerable knock-on economic effects) after Cap Places II’s easement donation.” Order, at p. 4.

So Ch J-elect Scholar Pat quashes the trawl.

“We see little relevant information to be derived from the documents relating to the 2022 purchase, including appraisals. As to historic documents regarding the development and the operations before [third party] purchased the property, we see no indication why these documents should be requested (if at all) from [third [party], which did not own or operate the property, rather than the seller, which did.” Order, at p. 4.

The JL Minerals order (nonprecedential, btw) involved how a highly-restricted industry with very few players valued mining sites, and was restricted to helping the Court understand the process. Developing student housing, the issue here, has many players, and whose methodology is no secret.

But third party doesn’t get legals, despite Rule 147(d) allowing same if subpoena is unduly burdensome.

“In determining whether the financial burden is unreasonable, we consider, inter alia, whether the expenses incurred in producing the records are reasonably incident to the party’s normal business, and ‘whether the subpoena is vague or overbroad or impossible to perform.’

“After considering the facts in this case, we will deny [third party]’s request for attorney’s fees. Although we will quash 2014 Fund’s subpoena, 2014 Fund’s actions to date were not unreasonable and the compliance costs to [third party] are not excessive given the nature of its business.” Order, at p. 5. (Citation omitted).

Only yesterday I blogged a failed attempt at out of time participation in a Dixieland Boondockery (see my blogpost “The Perpetuity Punt – Part Deux,” 5/1/25). Of course, copycatting follows apace, as that Boondockery was one of 34 (count ’em, 34, and Judge Goeke has) consolidated Ornstein-Schuler mass productions.

Looks like a new cottage industry has arisen, representing disgruntled micro-minority participants looking to renegotiate the settlement IRS has offered. Here, Putatives own 2.24% of the deal, Canary Aggregates, LLC, Ornstein-Schuler, LLC, Tax Matters Partner, Docket No. 31765-21, filed 5/2/25, at p. 3. (Happy Palindrome Day). Same lead counsel for the two Putative Participants, same arguments, same result, virtually the same opinion.

I’m not inclined to rehash here, nor will I blog the sure-to-follow cases, here and in other blown-up Boondockeries. The only winners in these phony dodges look to be the lawyers.

Judge Goeke wisely tells any wannabe Putatives: “When a person owns a minority interest in an entity, there is often a chance that they will be forced to acquiesce to the will of the majority. Such is the case in this instance.” Order, at p. 6. TMPs have to deliver the greatest good for the greatest number.

Remember Beverly Bernice Bang? What no? How fleeting is fame. See my blogpost “Bang – A Warning to Tax Matters Partners and Their Advisors,” 1/5/11.

Yes, it’s another busted Dixieland Boondockery, and perpetuity is on the table, but it’s not about defeasance of the easement. A group of Putative Participants, indirect holders of a hair less than 6% interest in Chimney Rock Holdings, LLC, Ornstein-Schuler, LLC, Tax Matters Partner, T. C. Memo. 2025-39, filed 5/1/25, claim that now-extinct Section 6226(c)(2) lets them participate even as everyone else is ready to accept IRS’ final settlement offer.

Y’all will recall the Notice 2017-10 kerfuffle and IRS’ settlement letters to petitioning Boondockers. Turns out the TMP’s principals are allegedly under investigation, but they get an offer anyway on the road to trial. The Putatives claim that taints the settlement, but Judge Goeke doesn’t think so.

Judge Goeke sustains Rule 245, which did allow the Putatives to come in, but imposes a 90-day time limit and even allows a motion to come in “out of time” if good cause shown (poor man’s equitable tolling?). These dudes waited two years after petition filed, and can’t show good cause.

FRCP 24 (intervention) gets a good airing. And USCFC has set a 45-day limit in TEFRA cases.  There’s also a time limit for Rule 248 settlements for nonparticipants, who have to make a showing they can continue the litigation on their lonesomes if they choose to opt out.

“Putative Participants have stated that they are ‘ready, willing, and able to litigate this case’ if necessary. Beyond this general statement, there has been little showing that Putative Participants are actually prepared to do so, and they appear to be more interested in negotiating with respondent (who has clearly stated that the proposed settlement terms will not change and/or that the settlement offer will be revoked if not accepted). Furthermore, Putative Participants have made no showing that they alone could or would shoulder the potential costs of trying the case. Thus, the partners owning 94% of Chimney Rock would face the possibility of being dragged into a trial they apparently do not want, while also potentially paying additional legal fees as a result. Under the circumstances, we must consider the possible financial implications to the partners owning 94% of Chimney Rock.” T. C. Memo.  2025-39, at p. 13. (Footnote omitted).

And while all participants have to give up all tax breaks except for actual out-of-pockets, they only get a 10% chop, rather than the 40%. Given what’s happened in other cases (Judge Goeke lists them at p. 13, and I’ve blogged them all), the Putatives could do worse.

In short, no perpetual right to participate or intervene.

Or Maybe Not

As I pointed out a month ago, Judge Christian N. (“Speedy”) Weiler likes it live. See my blogpost “Live From Honolulu,” 4/2/25. Nothing out of court goes into evidence for the truth thereof except the cross-examined trial testimony of the dead and disabled and explicit FRE-sanctioned stuff. So the trusty attorneys for Bank Cove Capital, LLC, Gene Larson, Tax Matters Partner, Docket No. 12074-20, filed 5/1/25, get a Taishoff “Good Try, Second Class” but the expert opinion of the appraiser what brung them to the dance doesn’t get in, at least on a motion in limine.

Said appraiser, hereinafter designated as “Dubyuh” (name omitted to protect the innocent), beat the rap in USDCNDGA four years back, but goes in mortal dread that DOJ will seek an indictment in another jurisdiction. Hence if put on the stand for cross on the trial, he will take the Fifth. So let in his statement “for all purposes including the ‘Truth of the matter asserted.’” Order, at p. 1. It’s a FRE 803 business record, they claim.

That’s a thrashing bashing great negatory, good buddy, says Judge Speedy Weiler, although a lot more elegantly after a review of caselaw.

“While we accept petitioner’s contention that the appraisal in question was prepared as part of petitioner’s tax return and in compliance of its statutory tax reporting obligation; we do not accept petitioner’s contention that the appraisal becomes a component part of its tax return, and therefore is a business record itself.” Order, at p. 5.

 IRS moves to preclude, but that doesn’t fly, either. If Dubyuh chooses to testify, he’ll be treated as a percipient witness, not one retained specially to provide an expert opinion, and IRS can cross-examine him. Then Judge Speedy Weiler can see what his story is.

Once again, the immortal words of Colonel John Henry (“Wiggy”) Wigmore: “Cross-examination is beyond any doubt the greatest legal engine ever invented for the discovery of truth.”