Susan A. Spizzirri, Docket No. 13508-22, filed 5/26/23 (a special day for one of my nearest and dearest), has duck-dived. The SPTO was returned by USPS, as was the notice of motion to toss for want of prosecution. Sue never filed Form 10, was off-grid, off-radar, and unresponsive, even when Court personnel reached out at the return date of the motion to toss.

Judge Emin (“Eminent”) Toro, choice in his language as always, gently observes “In the absence of any contact from petitioner, it appears that she no longer intends to prosecute this case.” Order, at pp. 1-2.

OK, so why am I writing this as we approach a three-day weekend, as the barbecue and swimming pool beckon, and a few of us note that this is a time to remember and honor those who died for this country, rather than to hit the Mall or the beach?

Because Judge Eminent holds up the toss.

“In his Motion to Dismiss for Failure to Properly Prosecute, respondent moves that the Court dismiss the case and find in its order that there is a deficiency in income tax due from petitioner in the amount of $7,599.00 for the [year at issue] and a ‘penalty’ due from petitioner in the amount of $3,438.00 for the [year at issue]. The Motion does not specify the basis for the ‘penalty.’ Based on the Court’s review of the record, it appears that the amount that respondent identifies as penalty in his Motion is in fact the sum of the additions to tax under sections 6651(a)(1), 6651(a)(2), and 6654, determined in the notice of deficiency…. Respondent, however, does not address the additions to tax in his Motion, and he has not presented any evidence in support of the additions to tax.” Order, at p. 2.

As this is resolutely a nonpartisan blog, I will not advert to the recent reports that the President was going to give up the increased funding for IRS to make a deal on the debt ceiling. But I can think very loudly, especially when I read something like this.

That said, Judge Eminent digs deep, and, like an infinitely Higher Authority,  gives Sue the Psalm 40:2 treatment.

“Because petitioner is not represented in this case, we construe her pleadings liberally. Reading the Petition with this standard in mind, we conclude that petitioner disputes her liability for the additions to tax under sections 6651(a)(1),  6651(a)(2), and 6654, proposed in the notice of deficiency….. And respondent’s pleadings do not allege specific facts sufficient to sustain the additions to tax he has determined, nor do the allegations in the petition appear to be frivolous so as to relieve respondent of the obligation imposed by section 7491(c). Respondent has the burden of production to come forward with evidence in support of the proposed additions to tax.” Order, at p. 2. (Citations omitted, but get them for your canned briefs cupboard).

So motion denied without prejudice, and let’s have a trial.

Which means that IRS now gets a chance to remedy the shortcomings in their pleadings, with a roadmap how to do so.

And if Sue gets wind thereof, she can get back in the game.

Joseph Michael Ledbetter and Ashley Jones Ledbetter, T. C. Sum. Op. 19, filed 5/25/23, kept excellent records “detailing Mr. Ledbetter’s daily travel, including times, locations, and business purpose.” T. C. Sum. Op. 19, at p. 5.  Mr. Ledbetter was a lead foreman on sheet metal jobs, which he got from his union, and worked at a Tennessee Valley Authority nuclear power station, on and off, for the same employer.

He would get furloughed (short time) or laid off (indefinite time) when contracts ended or funds ran short, but no break was more than four (count ’em, four) months, and during the two years at issue, no break was more than nine days. His daily round trip to work was 184.2 carefully documented miles. He claims unreimbursed employee business expense, claiming work was temporary, hence not commuting.

Judge Elizabeth Crewson Paris has this one.

“Petitioners rely primarily on the fact that work assignments from the union were indefinite in duration, contingent on the availability of funding, and prone to work stoppages. In support of their position, petitioners provided a copy of Mr. Ledbetter’s Temporary Employment Agreement with [employer], as well as a letter from [employer], stating that ‘[a]ll contract work is considered temporary assignments.’” T. C. Sum. Op. 19, at p. 7.

The employer and the union may think so, but not Judge Paris.

“While it is true that Mr. Ledbetter’s work assignments were indefinite in length, it cannot be said that his employment at the … Nuclear Plant was ‘temporary’ as that term is defined by the caselaw. Mr. Ledbetter was continuously employed at the … Nuclear Plant from 2012 until 2019, albeit with different contractors. From 2012 through 2019 he faced no period of layoff exceeding four months. During the years at issue specifically, Mr. Ledbetter worked 235 days in 2015 and 252 days during 2016. The longest break between workdays during either of those years was 9 days. Mr. Ledbetter’s employment at the … Nuclear Plant was consistent throughout the years at issue, and at no point during 2014 through 2016 was Mr. Ledbetter not employed at the plant.” T. C. Sum. Op. 19, at p. 7.

Construction work is by nature impermanent, and workers often have to travel substantial distances from home as the worksite changes. But the law and Tax Court make no distinction between construction workers and all others.

Taishoff says, everybody is equal until 2026: nobody gets to deduct unreimbursed employee expenses.

Judge Mark V. (“Vittorio Emanuele”) Holmes, whatever his expertise in English grammar, certainly has spent much of his illustrious Tax Court career assessing the worth of expert testimony and those who propound it. So as trial approaches, the parties in Kimberly Road Fulton 25, LLC,  Kimberly Road Manager, LLC, Tax Matters Partner, Docket No. 17852-21, filed 5/25/23, gird their loins and give Judge Holmes the usual boatload of motions in limine, trying to KO each other’s experts before they enter the ring.

Dixieland Boondockery is the blogger’s delight.

First up, the Kimberly’s landscape architect and planner, who wants to regale Judge Holmes with what might be built on the syndicated marked-up site, notwithstanding “its steep terrain and meandering water course.” Order, at p. 1. IRS says she isn’t qualified as to economics, her notions were unknown to the Kimberlys when they did the deal, and her opinion didn’t touch any matter at issue. Judge Holmes will let her in, as highest and best use at granting of easement is material, and the expert is knowledgeable about the locality.

Next, IRS’ valuation expert, who relies on an engineering report concerning the terrain, but the engineers aren’t testifying, hence the Kimberlys call hearsay. “It is not unusual for an expert to rely on hearsay from others with different expertise in the course of formulating their own opinions. Federal Rule of Evidence 703 allows experts to do so if they have been made aware of them and experts in the field would reasonably rely on them. The advisory committee notes cite as an example a physician who relies on the observations and opinions of nurses, technicians, and other doctors.” Order, at p. 2.

That said, IRS’ expert can expect “a vigorous cross-examination.” Dude best bring body armor, Kevlar helmet, and a couple extra mags (this is Judge Holmes, after all).

Last but hardly least, IRS has an expert appraiser to testify about standards of appraisal. The Kimberlys say he’s testifying about the legal issue of whether the appraisals submitted with the Form 8283 are qualified per Section 170, and that’s an ultimate issue in the case. If Kimberlys’ appraisals are bogus, an overvaluation chop, or no deduction at all. “We disagree. Mr. K (himself an appraiser) will be testifying as an appraiser about the standards of appraising. We understand that this is a very important issue in these cases, and that the failure of a taxpayer to attach a qualified appraisal to its return may trigger the disallowance of its deduction. If so, that might well make Mr. K’s opinion an opinion about ‘an ultimate issue’ in these cases. But with the exception of expert testimony in a criminal case about a defendant’s mental state, Federal Rule of Evidence 704 allows such opinion testimony about ‘ultimate issues.’” Order, at p. 2. (Name omitted).

Takeaway- Good stuff for the next USTCP admission exam.

For those who tuned in late, a Bialystok is a deal, named after the hero of The Producers, wherein the participants cannot possibly make money, but only suffer monumental unrealized but recognized losses, wherewith to offset realized economic gains.

Judge Elizabeth A. (“Tex”) Copeland leads us on a stroll down memory lane as she permits a wee bit of admin record enlargement to Jeremy Berenblatt, 160 T. C. 14, filed 5/24/23. JB’s trusty attorney moved for production of tons of documents and to compel responses to interrogatories, and trusty attorney does get one, but the rest founder for want of proof of bad faith, namely, the Ogden Sunseteers hiding stuff, or incomplete admin record.

JB claims he’s the dude who tipped IRS off how to unhorse the European digital options phony partnership dodge. He says he was a day trader approached by dodgefloggers selling these unrecognized gains but recognized losses phony partnerships, à la James (“Little Jim”) Haber; see, e.g., my blogpost “Haber-Dashery,” 11/19/15. He blew off the floggers, and blew the whistle to IRS. But JB was one of a hundred people IRS interviewed. JB claims IRS lost on step transaction, but once he showed the Federales to play want of economic substance, they clobbered the dodgers.

The Ogden Sunseteers claim whatever JB told them, they already knew.

Apparently Tax Court was too busy blowing off wannabe blowers like Mandy Mobley Li in no-money cases to elucidate the standards for discovery in cases where they actually had jurisdiction. And Section 7482 Golsens ’em to USDCDC and DC Cir.

First, every whistleblower case post-Li requires the jurisdictional drilldown. Here, for once, there is jurisdiction. “If the question of whether the IRS prevailed in the various … shelter collection actions ‘based on’ Mr. Berenblatt’s information were jurisdictional, then we could not determine whether we have jurisdiction until deciding virtually the entire case on its merits. Moreover, it would be unclear what scope and standard of review to apply in making that jurisdictional determination. Here, with an ‘action’ commenced and  ‘collection’ of proceeds, we conclude that we have jurisdiction to review Mr. Berenblatt’s appeal of the denial of his claim for an award.” 160 T. C. 14, at p. 13. (Citation omitted).

Next, standard and scope of review. This requires somber reasoning and copious citation of precedent, at which task Judge Tex Copeland is no slouch. See 160 T. C. 14, at pp. 13-14. And she concludes that Tax Court must review the administrative record only, so as, like Humpty Dumpty, to have before it “neither more nor less information than the agency (here, the WBO) had when it made its determination.” 160 T. C. 14, at p. 14.

Now in most record rule cases, there is no discovery. The admin record, like Johnny Keates’ Greek pot, is “all ye know on earth and all ye need to know.” But DC Cir has hewn out an exception or two. If petitioner can show what DC Cir “variously described as a strong, substantial, or prima facie showing” that the agency sandbagged by hiding stuff, or that the admin record proffered is incomplete, then the Ogden Sunseteers must pony up. But there’s a strong presumption that the admin record as presented is the real deal. Reg. Section 301.7623-3(e) sets forth what has to be there.

So distilling the foregoing and a lot more, here’s the skinny.

“…we hold that whistleblower discovery requests are appropriate upon a significant showing that (1) there is material in the IRS’s possession indicative of bad faith on the IRS’s part in connection with the case or (2) there is material in the IRS’s possession indicating that the designated record omits material the WBO actually considered (directly or indirectly) or that otherwise falls under a category listed in Treasury Regulation § 301.7623-3(e).” 160 T. C. 14, at p. 18.

JB’s trusty attorney folds bad faith. Only incompleteness is on the table. Anything related to what happened before JB came on the scene is excluded, so no previous interviews. And JB’s claim he was the first to show want of economic substance is belied by IRS’ expert’s report in Stobie Creek, which was dated before JB’s interview. But that doesn’t sink JB’s award claim, only his claim that IRS was negligent in ignoring economic substance. For the Stobie Creek story, see my blogpost “A Piece of the Action,” 1/9/11.

But before sinking all the rest of JB’s trusty attorney’s discovery requests, Judge Tex Copeland does allow one. JB claims that RA M took notes at his interview, and he wants to see them.

“…Respondent leaves unclear whether RA M took notes, stating that “Special Agent C does not believe RA M took notes at the interview.” (Emphasis added.) By contrast, Mr. Berenblatt has conveyed his recollection that RA M took notes throughout the interview. We have no reason to doubt the sincerity or accuracy of Mr. Berenblatt’s memory. And because Treasury Regulation §301.7623-3(e)(2)(ii) refers to ‘[c]opies of all debriefing notes and recorded interviews held with the whistleblower,” any notes that RA M took at the interview are part of the complete record. Therefore,  we will compel Respondent to clarify whether RA M took notes during Mr. Berenblatt’s interview and, if so, whether such notes still exist, were lost, or were destroyed.” 160 T. C. 14, at p. 24. (Names omitted; SA C ran the interview.).

At close of play, generally (love that word!) only the blower’s direct dealings with IRS and the Sunseteers are targets for discovery, unless bad faith can be strongly shown.

So Judge Patrick J (“Scholar Pat”) Urda’s upcoming discovery Zoom extravaganza will have very little to say about discovery in Section 7623 whistleblower cases.

Edited to add, 5/26/23: The Zoom discovery special will be moderated  by Judge Ronald L. (“Ingenuity”) Buch, not Judge Scholar Pat. But I can’t think there’ll be much about discovery in Section 7623 blower cases.

Frank Warren Bibeau, T. C. Memo. 2023-66, filed 5/24/23, identifies himself as an “Indian” and as a member of the “Chippewa tribe,” T. C. Memo. 2023-66, at p. 2, footnote 4. While these terms are “fraught,” says Judge Mark V. (“Vittorio Emanuele”) Holmes, id. Since historically the law refers to “Indians,” Judge Holmes opts for consistency over correctness.

Bibeau, a lawyer (natch), claims his income is tax-exempt per treaty, because the right to hunt, fish, and gather the wild rice, which said treaty secures, really means “food, clothing and shelter and travel, whereby the new canoe is the automobile.” T. C. Memo. 2023-66, aft p. 1.

My kind of guy, a true wag.

While tax exemptions are strictly construed, “Indian treaties ‘are to be construed, so far as possible, in the sense in which the Indians understood them,’ Choctaw Nation of Indians v. United States, 318 U.S. 423, 432 (1943). This means that ‘[t]he construction, instead of being strict, is liberal; doubtful expressions, instead of being resolved in favor of the United States, are to be resolved in favor of [the Indians].’ Choate v. Trapp, 224 U.S. 665,  675 (1912).” T. C. Memo. 2023-66, at pp. 2-3.

Still, tax exemptions have to be clearly expressed.

Bibeau claims the 1837 Treaty allows him to make a “modest living,” which his law practice does. My practice is even more modest, maybe because I have no treaty. Judge Holmes says OK, make a modest living, but that doesn’t mean a tax-free modest living. The 1837 Treaty says the Chippewa have the right to fish and gather wild rice, and no Federal law can keep them from doing so. But if they sell the fish or the wild rice, that doesn’t mean they don’t owe tax on the proceeds.

8 Cir has held that the Treaty must be construed as the Indians understand it, but they throw in original intent: “The Eighth Circuit was even careful to reserve the question of whether the Treaty entitled the Chippewa to use modern technology in the exercise of their Treaty rights—’This case presents no issue of whether the treaty protection includes the use of new technologies since the Chippewa used nets to catch fish at the time the treaty was made.’ This suggests that the right to fish, and in turn sell fish, may be limited to the understanding of what it meant to fish at the time the 1837 Treaty was executed.” T. C. Memo. 2023-66, at p. 4, footnote 7. (Citation omitted).

And fishing does not include practicing law.

Bibeau claims the Chippawa never granted the right to the USA to tax the tribe members. But absence of tax terms from the Treaty doesn’t mean exemption: it means there is no exemption.

The 1924 Indian Citizenship Act doesn’t help, because 8 Cir said that while the Act didn’t disturb pre-existing Chippewa rights, it didn’t grant a tax exemption.

So though NOLs cover Bibeau’s income tax liabilities for years at issue, he still owes SE.

But all is not lost, because Bibeau gets a Taishoff “Good Try, First Class.”

In most circles, failing to report is a severe failing. But maybe not for Judge Mark V. (“Vittorio Emanuele”) Holmes, when Dixieland Boondockery is in play. Here’s Kimberly Road Fulton 25, LLC, Kimberly Road Manager, LLC, Tax Matters Partner, Docket No. 17852-21, filed 5/23/23.

IRS wants five (count ’em, five) experts to testify without first submitting written reports. Rule 143(g) bars this, of course, but IRS claims it hasn’t retained or employed any. The Kimberlys claim there are limits to what freelance experts can testify, which Judge Holmes recognizes, and there are questions concerning the qualifications of the witnesses per FRE 701 and 702 to opine at all. FRCP §26(a)(2), though not briefed by the parties, also has a role, so Judge Holmes lets it all in, subject to objection by  the Kimberlys on the trial to exclude.

IRS wants to call at least one witness from Georgia DCH, which a source tells me is the Georgia Department of Community Health, but the whole panoply will be subject to voir dire as to technical qualifications, if any.

“The Court will exercise its discretion and postpone ruling on any of these other grounds for exclusion until and unless respondent calls for these witnesses and petitioners renew their objections and state their grounds for doing so with the greater precision that cross-examination will allow.” Order, at p. 4.

Taishoff says FRCP §26(a)(2) and Rule 143(g) may be limited to hired guns by their terms, but allowing this move by walk-ons is trial by ambush.

Judge Patrick J. (“Scholar Pat”) Urda has USDCDC and DC Cir to block for him, as he blows through Prince Amun-Ra Hotep Ankh Meduty, 160 T. C. 13, filed 5/23/23. Prince Amun-Ra Hotep Ankh Meduty, hereinafter “Steve,” is an old-time merchant of “run-of-the-mill tax-protester arguments,” 160 T. C. 13, at p. 5.

Steve ran up $100K of taxes and Section 6702 chops, so IRS told State to grab Steve’s passport. Judge Scholar Pat goes through the Action Code 640s in the Form 4340s (160 T. C. 13, at p. 6) showing levies made.

Now SOL has run on some, but not all, of Steve’s open delinquencies, and have been written off.

“The total amount of Mr. Meduty’s tax liabilities thus dipped below the [year at issue] threshold amount after the date of the certifications. This change in circumstances does not suggest that the certification should be reversed. Once a valid certification is made, section 7345(c)(1) and (2) provides that a debt ‘ceases to be a seriously delinquent debt’ only if the debt ‘has been fully satisfied or has become legally unenforceable.” (Emphasis added.) Since at least some of the debt remains outstanding and legally enforceable, this requirement has not been satisfied. See Belton, T.C. Memo. 2023-13, at *16 n.17.” 160 T.C.13, at p. 5, footnote 4. For the Belton story, see my blogpost “Section 7345 – Backdoor CDP?” 1/24/23.

Steve has one valid claim, hence this full-dress T. C. He claims he never got the Section 7345(d) contemporaneous notice of certification. But USDCDC and DC Cir got there first.

“As the U.S. District Court for the District of Columbia recently noted, ‘§ 7345 does not say that a flawed or failed notice renders a certification erroneous.’ McNeil v. United States, No. CV 20-329 (JDB),  2021 WL 1061221, at *5 (D.D.C. Mar. 18, 2021), aff’d per curiam sub nom. McNeil v. U.S. Dep’t of State, No. 21-5161, 2022 WL 4349598 (D.C.  Cir. Sept. 20, 2022). And the structure of section 7345 belies such a conclusion. Subsections (a) and (b) describe when the Secretary of the Treasury must transmit certification to the Secretary of State and identify which debts qualify as “seriously delinquent tax debt.” Neither suggests that notice is a prerequisite to a proper certification by the IRS of a ‘seriously delinquent tax debt.’ See McNeil, 2021 WL 1061221, at *5. To the contrary, ‘subsection (d) says that notice to the taxpayer should be ‘contemporaneous[]’ with certification to State, so it logically cannot be a prerequisite to that certification.’ Id.” 160 T. C. 13, at p. 8.

And since Section 7345(e) doesn’t set any SOL on a grabee going into USDC to challenge the grab, Steve isn’t prejudiced if he didn’t get the notice.

Tax Court only has Section 7345 jurisdiction to review if there was a substantial tax liability at time of certification to State. “In short, we do not believe that our jurisdiction to determine whether a certification is erroneous encompasses patrolling compliance with the requirement to provide notice to a taxpayer ‘in simple and nontechnical terms of the right to bring a civil action under subsection  (e).’ See I.R.C. § 7345(d).” 160 T. C. 13, at p. 8.

Judge Ronald L (“Ingenuity”) Buch exercises his ingenuity, finding Reg. Section 301. 6501(c)-1(f)(2) disclosures are adequate to satisfy OVDP, and such disclosures need only substantially comply. Ronald Schlapfer, T. C. Memo. 2023-65, filed 5/22/23, is a Swiss-born naturalized US citizen who made money in banking and finance. Before naturalization but while a green carder, he gifted a universal variable life insurance policy on his nearest and dearest to said nearest and dearest (although he didn’t name them all in his OVDP disclosure that doesn’t matter). He paid the premium for the policy with a small amount of cash and all the stock in his Panamanian Corp (wherein he stashed his securities portfolio).

Ron fessed up with OVDP, but IRS claimed he disclosed the gift in the wrong year because it was incomplete, so 3SOL never ran. Doesn’t matter, says Judge Buch; Reg. Section 301. 6501(c)-1(f)(5) says a gift reported as complete triggers 3SOL even if later incompleted by Reg. Section 25.2511-2.

IRS says even if disclosed in correct year, Ron didn’t strictly comply. Now this is a question of fact, and both sides want summary J.

Ron attached an Offshore Entity Statement, which IRS says Judge Buch should ignore. No, he won’t. Using Section 6501(e) unreported income disclosure, he applies same rules to gift tax. Attachments to returns, if they tell the tale so that IRS knows what return to pull for exam, are enough. IRS looks at 1065s, 1099s, 1120s, and all kinds of other documents to determine taxable transactions.

Now when IRS adopted Reg. Section 301.6501(c)-1(f), they refused to write in substantial compliance, because they couldn’t define it. But they went on to say that omission of any one item wouldn’t necessarily invalidate the disclosure. Give Judge Buch a hole like that, and the late great Jim Brown had nothing on him.

Ron strictly disclosed all the info about the stock. But what he gave was the life insurance policy. So what, says Judge Buch. “Mr. Schlapfer provided enough information to satisfy this requirement through substantial compliance. While he may have failed to describe the gift in the correct way (assuming the gift is the UVL Policy), he did provide information to describe the underlying property that was transferred. Mr. Schlapfer asserts that he chose to disclose the assets held in the insurance policy instead of the actual policy because the OVDP required him to disregard entities holding foreign assets. The UVL Policy’s value comes primarily from EMG stock, so Mr. Schlapfer’s describing the transferred property as EMG stock goes to the nature of the gift. Because this description was sufficient to alert the Commissioner to the nature of the gift, Mr. Schlapfer substantially complied with this requirement.” T. C. Memo. 2023-65, at p. 17. IRS needs enough info to know whether to pull a return for audit, and here they did.

True, Ron left out aunt and uncle from list of donees, noting only Mom. But since the gift was only to family members, all of whom were offshore, doesn’t matter: substantial compliance. Taishoff says note requirement for onshores to disclose gifts from offshores (Form 3520). Different result if any donee was onshore? If onshore donee was not disclosed, how could IRS backcheck for a 3520 from the onshore to see if the 709 numbers were good?

“Mr. Schlapfer provided all the documents identified in the instructions. His Forms 5471… enclosed balancesheets, statements of net earnings, dividends paid, and operating results. Furthermore, his Offshore Entity Statement stated that ‘[t]axpayer is taking into account all of the income earned by the accounts underlying [Corp] in the enclosed Amended U.S. Individual Tax Returns during the years he controlled and beneficially owned [Corp].’Although Mr. Schlapfer did not provide all the financial documentation listed in the regulation, he provided the information identified in the [year at issue] Form 709 instructions, which was enough to show the IRS how he determined the fair market value of the [Corp] stock. Therefore, he substantially complied with this requirement.” T. C. Memo. 2023-65, at p. 18.

And since the variable life insurance policy was largely funded by the Corp stock, and its value will vary as the Corp’s portfolio fluctuates, that’s good enough.

Ron wins on SOL.

Takeaway- For OVDP and FBAR practitioners, take a look at Judge Buch’s reasoning. Then compare and contrast with Judge Christian N. (“Speedy”) Weiler’s deconstruction of Barbara Fairbank’s situation; see my blogpost “FBAR SOL? FUBAR,” 2/23/23.

Schwenk Gilbert’s ode to the London Fire Brigade echoes through Judge David Gustafson’s exhaustive trudge through the tangled credit elect cascade of Scott Alan Webber, Docket No. 14307-18L, filed 5/22/23. Judge Gustafson has to go through 10 (count ’em, 10) years of confusing and nonexistent correspondence to find that, If Scott ever had a credit to cascade, it was long since quenched by refund thereof.

This is a liability issue, and since there was no SNOD, it gets tried de novo, with Scott getting BoP at no extra charge.

“… Mr. Webber’s burden is not simply to show that he is entitled to an overpayment that we should then direct the IRS to credit against his liability; rather, he must show that the IRS did allow a credit. If this seems like an unfairly difficult project, we must bear in mind the alternative—i.e., that a taxpayer might halt IRS collection of his liability in one year merely by claiming that he overpaid his liability in a different year. If that were so, then any CDP case could be expanded to become a comprehensive audit of a taxpayer’s plenary situation with the IRS. Tax could not be collected in any year until all claims had been resolved for all years. This is not the nature of a CDP case. Rather, in a CDP case we are generally restricted to the determination year but may take note of a credit that has been allowed by the IRS and that therefore ‘indisputably exists’ (not a mere claim of a credit by the taxpayer).” Transcript, at p. 23.

Scott can’t carry the burden. He claims a ten-year cascade, but that should be beyond a CDP, as if there’s no credit elect in year previous to year at issue, game over. But, as usual, Judge Gustafson goes the extra. Even then, there’s no indisputable evidence of an allowed credit for the base year. At best, there are “mixed signals”, Transcript, at p. 28. An ambiguity, maybe?

Anyway, Scott loses.

CSTJ Lewis (“The Name”) Carluzzo has good advice for frivolites of the Section 6702 all-zeros persuasion. If you’re sending in more than one all-zeros returns, get down to the local stationer’s boutique and buy a rubber stamp that says “COPY.” And lay about you with a will.

Clearly a lot of people remember Gwen Kestin and her 1040X barrage; my blogpost “From the Serious to the Frivolous,” 8/29/19, has accumulated 808 (count ’em, 808) views to date, fourth on the all-time individual blogpost list. And Christian Silver, Docket No. 3372-20L, filed 5/22/23, must have gotten the word, as he sends two (unlabeled) copies of his late-filed return to IRS headquarters and to Treasury. The original return was late-filed seven months earlier.

IRS hits Chris with three (count ’em, three) Section 6702 $5K chops, and follows with a NITL, but the SO at Appeals drops one of the three.

In today’s off-the-bencher, CSTJ Lew finds that since Chris asked for refunds from withholdings from his wages, he got wages, so his all-zeros means game over on liability. And CSTJ Lew is not to be trifled with by frivolites playing the Kestin gambit.

“The only matter that deserves attention is petitioner’s claim made in the petition that a sec. 6702 penalty has been imposed on a copy of his original return as we have held that the imposition of a section 6702 penalty on the copy of a frivolous return is not appropriate. See Kestin v. Commissioner, 153 T.C. 14, 19 (2019). On the forms themselves, however, neither document is expressly identified as a ‘copy’ of the other,  and both are considered purported returns as each claims a refund. See Callahan v. Commissioner, 130 T.C. 44, 53 (2008). It follows, and we hold, that respondent has met his burden of proof in this case with respect to the imposition of both penalties, and petitioner is liable for both section 6702 penalties here in dispute.” Transcript, at p. 8.

Word to the stationers: Lay in a big stock of “COPY” stamps. And tell ’em Lew and Lew sent ya.