An abbreviated version of Mark Twain’s famous geological putdown gives me the title for this sermonette. IRS counsel are as big fans of summary J as I am. The motion is almost SOP, and stuns most self-representeds into silence. Since Monique E. Franco, Docket No. 33045-21S, filed 2/21/23, never replied to the answer, didn’t contest the Rule 37(c) deemed admissions motion, and didn’t reply to the motion for summary J, it looks like a slam dunk.

Except.

STJ Adam B. (“Sport”) Landy finds IRS’ claim of a Section 6663 fraud chop blocks the shot, as Monique’s petition is sufficient to call for a trial.

“Ms. Franco’s contentions that an amended return was filed without her knowledge, that her signature was forged on this amended return, and that she is entitled to innocent spouse relief are material issues of fact that are in dispute. Consequently, the Commissioner’s motion cannot be granted.” Order, at p. 2.

Where intent is at issue, as it must be in tax fraud cases, a trial is necessary to assess demeanor and credibility. Even a trifling investment of disputed fact is enough.

It’s that day again, the one when George Washington and some or all of his successors-in-office are honored by public holidays, Federal or State as the case may be.

In the Stateless City, it is a public holiday, however denominated, so United States Tax Court sports its oak.

That means nothing for me to report.

Enjoy the day off.

Assessable chops (those that do not require a prerequisite SNOD) entitle the recipient to contest liability in a CDP when IRS attempts to collect the tax underlying the chop. This arises most often in the context of Section 6702 frivolous returns.

Araya AnRa, Docket No. 6805-22SL, filed 2/17/23, gives Judge Nega the opportunity to declare “no contest,” in an off-the-bencher.

Araya gets a bunch Section 6702 chops for three (count ’em, three) years of zero-returns and Section 4852 restatements. At the trial, she claims the usual protester “hodgepodge of unsupported assertions, irrelevant platitudes, and legalistic gibberish.” Transcript, at p. 15.

No contest of liability unless a legitimate issue of fact or law is raised. Araya only raises the employment taxes mishmash about “wages” that has been denounced as frivolous for yeasrs. And Judge Nega spares us most of the somber reasoning and copious citation of precedent.

The Ogden Sunseteers are gifted with a level of immunity and impunity unique within our Federal tax system. The operatives at The City of the Golden Spike, already the beneficiaries of DC Cir’s unguarded largesse via Mandy Mobley Li, 20-1245, decided 1/11/22, receive fresh shelter from Judge Morrison in Whistleblower 26635-15W, filed 2/16/23.

Whistleblower 26635-15W wants the Section 103 order for 2017 lifted a scosh, to allow said Whistleblower to complain to TIGTA, the Treasury Inspector General for Tax Administration, the supposed guardian of the guardians.

Oh most negatory, says Judge Morrison. Sacred Section 6103 info is involved, and may only be used by blowers to challenge the Ogden Sunseteers’ determinations.

“The Court’s protective order is intended to facilitate petitioner’s ability to challenge in our Court the determination of the IRS Whistleblower Office while protecting the interests of the targets in the confidentiality of their returns and return information. It is not intended to facilitate petitioner’s ability to file a complaint with the Treasury Inspector General for Tax Administration.” Order, at p. 2.

As an old brand of blended Scotch used to say “Some things never change.” Here’s some quotes from my blogpost from ten (count ’em, ten) years ago.

“Down at National Harbor yesterday, one of the TIGTA Deputy IG’s, R. David Holmgren, gave us an overview of what TIGTA does. I asked him after the lecture why TIGTA didn’t deal with the unending stonewalling by the Whistleblower Office, which seems to spend its waking hours denying claims when they’re not claiming that they haven’t determined anything. I cannot disclose his reply, here or elsewhere, as I asked informally.

*                      *                      *                      *

“Now lest I be misunderstood, I agree that the Courts’ role in reviewing administrative determinations by the Executive branch should be limited. We still have some vestige of a Constitutional separation of powers. There are places where courts cannot, and should not, go.

“But the administrative agency here has its own check and balances, provided by the Legislative branch. There’s TIGTA, whose mission is “(T)o provide integrated audit, investigative, and inspection and evaluation services that promote economy, efficiency, and integrity in the administration of the internal revenue laws.”

“Might could be y’all should take a look at how the Whistleblower Office is doing.” From my blogpost “Another Whistleblower Gets Blown,” 8/30/13.

Ain’t only the Scotch that doesn’t change.

In my young day, the term “tombstone” was applied to an advertisement in the financial sections of newspapers (remember them?) placed by securities underwriters to inform the public that they had undertaken to sell a public offering of securities. These advertisements were severe, set in heavy type, and resembled grave markers, hence the popular term.

Generally (love that word!), at the foot of the advertisement there appeared the legend “This notice appears as a matter of record.” Remember, offering by prospectus only.

Judge Goeke has five (count ’em, five) off-the-benchers in Dean G. Steele, et al., Docket No. 27409-21, filed 2/15/23. I only note the lead docket, but there are four more, the whole bunch consolidated.

There’s a stip of facts, taxes, add-ons and Boss Hossed chops covering all the years at issue, save one, for which a Rule 155 beancount is necessary as Dean or the als may be getting credit for an overpayment. Judge Goeke doesn’t recite any thereof in the opinion, letting the SNODs and IRS’ pre-trial brief deal with that.

Btw, Judge, it’s “de minimis,” not “de minimus.” Transcript, at p. 4, line 7.

But why an opinion? A motion for entry of decision wouldn’t suffice? Dean tried one last month, which was denied, but Judge Goeke gave no explanation why it was denied. And IRS never moved for entry of decision.

“This opinion is unusual because the parties have agreed on the result and simply wanted the result reflected in a bench opinion of the Court.” Order, at p. 4.

Unusual indeed. I guess this Order appears as a matter of record.

IRS has six (count ’em, six) attorneys trying to defend a beyond-highly-contestable-reading of what it means for an easement to be perpetual. If I were counsel for Cattail Holdings, LLC, Cattail Holdings Investments, LLC, Tax Matters Partner, T. C. Memo. 2023-17, filed 2/14/23, I know I probably wouldn’t substantially prevail with an obviously phony valuation for this conservation easement on VA boondockery (Cattail says $40 mil, IRS’ appraiser says $3 mil), but I’d love to move for Section 7430 legals.

IRS says maybe there’s mining on the property, even though Judge Albert G (“Scholar Al”) Lauber overhauls the deed fore-and-aft and blows this off in a fashion so genteel as to bring a grimace to my battered visage.

“…respondent’s notion that the deed permits surface mining with [501(c(3)]’s approval strikes us as fanciful. Section 170(h)(5)(B) is captioned, ‘No surface mining permitted.’ It makes clear that allowing surface mining would be wholly inconsistent with the easement’s conservation purpose. Paragraph 3 of the deed explicitly prohibits ‘[a]ny activity or use of the Property inconsistent with the purpose of this Easement.’ In assuming ‘a contingent right to engage in surface mining,’ respondent thus posits that [501(c)(3)] might be faithless to its charitable mission by permitting Cattail to engage in activity explicitly barred by the statute. That is not a proposition that can plausibly be advanced in a motion for summary judgment.” T. C. Memo. 2023-17, at p. 7. (Footnote omitted, but my next sentence says it all).

Anyway, if the deed is ambiguous, then VA law says parol evidence can be introduced to show intent, and that’s a fact question. IRS wants summary J, so they’re not getting it.

Speaking of highly-contestable-readings, Cattail’s trusty attorneys are trying the Notice 2017-10 gambit. That was the general shot-across-the-bows warning the floggers of phony syndicated conservation easements that the bell tolls for thee. Section 6751(b) Boss Hossery requires the immediate supervisor of the RA to sign off before chops are breathed at the taxpayer. CCA learning says that must happen while supervisor still has authority, and no specific level of supervisor review is required. General notices not addressed to anyone specifically isn’t a determination of a penalty.

IRS gets summary J on Boss Hossery.

As I said two years ago, “(T)he punchline from a horrific but hilarious example of schadenfreude (the full text of which is manifestly unfit for a blog like mine, intended for family reading), tells the story.” And it unhappily fits the plight of Tony Patrinicola and Barbara Patrinicola, T. C. Memo. 2023-16, filed 2/14/23.

This is Tony’s & Pat’s fourth appearance on this my blog. None of the previous three (count ’em, three) sheds any light on the gravamen of Tony’s bœuf with IRS, so I’ll leave out references to any thereof.

It’s one word, and Judge Goeke, vice Judge David Gustafson, gets right to the point.

“… petitioners argue that the pension distributions are not subject to income tax because monthly pension payments are not taxable under a law that they refer to as the ‘Congressional Annual Notice of Monthly Pension Payments,’ which they understand to provide that ‘[m]onthly pension payments will be subject to Federal income tax withholding if the taxable portion of the sum equals to or exceeds are less than $1,990.00 per month. Your pension is not taxable if it is in the allowable range.’” T. C. Memo. 2023-16, at p. 3.

Judge Goeke says there ain’t no such statute or reg, but Tony focused on the wrong word.

“It appears that Mr. Patrinicola received information about withholding obligations from a payer of one of his pensions that resulted in a misunderstanding of his tax obligations. Federal income tax withholding is not the same thing as the federal income tax that is owed on the pension distributions. Withholding is the amount that the payer deducts from the pension payments and sends to the IRS on the taxpayer’s behalf. In general, pensions are subject to federal income tax withholding, but taxpayers can choose not to have federal income tax withheld. Taxpayers use Form W–4P, Withholding Certificate for Periodic Pension or Annuity Payments, to elect the amount of withholding from periodic pension payments to ensure the correct amount is withheld to satisfy their individual tax obligations. Alternatively, taxpayers may use Form W–4P to choose not to have federal income tax withheld from pension payments at the risk that they will not have paid sufficient estimated tax throughout the year to cover their tax liability on the pension and other income. Pension distributions are included in the taxable income regardless of the taxpayer’s decision regarding withholding.” T. C. Memo. 2023-16, at p. 3.

Taishoff says it’s ridiculous that it took four (count ’em, four) years since Tony & Pat petitioned, and 124 (count ’em, 124) docket entries, to get here. Yes, IRS conceded a whole bunch (hi, Judge Holmes) income items, plus chops. But all this for one word?

Or, How Much is a Brazilian?

Reg. Section 1.482-1(h)(2) is on the menu, in the crosshairs, and generally tearing up the peapatch at the Glasshouse on Second Street just now. Judge Albert G (“Scholar Al”) Lauber has a helping thereof with his order in Coca-Cola Company & Subsidiaries, Docket No. 31183-15, filed 2/14/23. The things-go-better types claim either the Reg is invalid (Chevron, y’know), or else their Brazilian sub, wherewith they parked their IP, qualifies so they can’t get royalties therefrom. Brazil conveniently blocks royalties.

My astute readers will doubtless exclaim, “Holy Post-It Notes, Batman! Didn’t we just have this with 3M?” Of course, they’re right. See my blogpost “Block That Income,” 2/9/23.

So Judge Scholar Al wants the Cokes and IRS to brief supplementarily the impact of 3M; and what would happen if certain dividends from Brazilian sub were deemed to be royalties despite 6 Cir shooting IRS down before Reg. Section 1.482-1(h)(2) was adopted on a like argument in Proctor & Gamble; and, if Reg. Section 1.482-1(h)(2) were held to be invalid,  how 11 Cir, whence Coca Cola is Golsenized, would play with this. Reply briefs are also OK.

Conundrums, conundrums. Btw, how much is a Brazilian?

Tanisha Trice, T. C. Memo. 2023-15, filed 2/13/23, got some SSDI, and a SSA-1099. The 1099-SSA showed some “deductions.” But whether those “deductions” were included in the (unreported) income IRS claims Tanisha got, and to what extent these “deductions” impacted the Section 25A(a)(2) Lifetime Learning Credit Tanisha claimed, is for Judge David Gustafson to decide.

And Judge Gustafson obliges me yet again, by proving that a lawyer can always find an ambiguity. Any lawyer that can’t, should find another way to make a living.

Tanisha admits to getting $13K of unreported SSDI, of which $11K (85%) is taxable,  but wants the whole $2K of Lifetime Learning Credit she claims. IRS says she got $15K, and the taxable number is $13K, not $11K. But the 1099-SSA says $3298 was “deductions for work or other adjustments.” No other explanation proffered. IRS wants summary J, but Section 6201(d) puts BoP on IRS, as Tanisha claims she only got $13K, and she doesn’t know what those “deductions” are. Third-party forms like 1099s can be disputed by recipients thereof, and if disputed in good faith, which Tanisha does, then BoP shifts.

IRS treats those “deductions” like FICA/FUTA/ITW on a W-2. Yes, the taxpayer didn’t get the money, but they are still included in taxable income. Form 1099-SSA does lend credence to that approach. And withholding $487 for Medicare tax is clearly income, so that adds to what Tanisha got.

Judge Gustafson: “However, neither the Commissioner’s motion nor the Form SSA–1099 shows what the other $2,811 of ‘deductions’ was nor whether the Commissioner’s approach achieves the correct tax treatment. The other ‘deductions’ that SSA supposedly ‘withheld’ here were not income or employment taxes. Rather, the form is explicit that zero taxes were withheld; and the amounts are described as ‘deductions for work or other adjustments’, which is not a sufficient explanation.” T. C. Memo. 2023-15, at pp. 10-11.

Tanisha has correspondence from SSA concerning wages she may have received that reduced the amount SSA paid her, so maybe she shouldn’t be taxed on the $2811. But Judge Gustafson doesn’t so hold. That’s a fact question for trial, as is the exact amount of reduction of Lifetime Learning Credit.

Takeaway- Watch those 1099s. Sometimes they show less than meets the eye.

Edited to add, 5/23/22: Judge Gustafson hands down an off-the-bencher, Docket No. 202398-19, filed 5/22/23, stitching up Tanisha. IRS occupied its idle hours between 2/13 and now by getting Tanisha’s bank statements, which show she got the $13K net. At issue is $1282 of the $2811 above stated. That, it turns out, is overpaid Medicare benefits. Tanisha skipped the trial, but her appearance really wasn’t necessary. The accounts tell the whole story.

Yeah, Roger That

Judge Emin (“Eminent”) Toro lets IRS put in a bunch blogposts (hi, Judge Holmes) as “newly discovered” evidence in Sidney Ann Cheney Thomas, 160 T. C. 4, filed 2/11/23, a post-7/1/19 Taxpayer First innocent spousery. Sidney Ann objects, and her trusty pro bono attorney from a NYC powerhouse firm suggests IRS could have found the stuff with a simple Google, so how come Section 6015(e)(7) “newly discovered” is in play?

Judge Eminent says IRS didn’t know about the blogposts until the de novo trial, and the due diligence standard of FRE 60(b)(2) is for motions to set aside trials and orders, hence too restrictive.

There’s the usual dictionary chaw, but “newly discovered” apparently means something in plain sight that IRS never bothered to look for.

Piling on, the Center for Taxpayer Rights, the Community Tax Law Project, the UC Hastings Low-Income Taxpayer Clinic, and the Villanova Federal Tax Clinic, file amici and say let it in. Most innocent spouses are pro se, know nothing of law and procedure, and can be sandbagged by nonrequestors. The CCISO isn’t a trial, no subpoenas, no document demands, no administrative law judges.

IRS says Appeals isn’t a litigant, but an arbiter; burden on requesting spouse. If requesting spouse hasn’t got the goods, why should Appeals hunt for evidence? IRS can start looking for evidence only when denied requesting spouse petitions, because that’s when we get a trial.

Judge Eminent lets it all in. Ch J Kerrigan, JJ. Foley, Gale, Paris, Morrison, Buch, Nega, Pugh, Ashford, Urda, Copeland, Jones, Greaves, Marshall, and Weiler are all down with this.

So is Judge Buch, but he points out with vivid illustrations how an innocent blogger-spouse can be sandbagged. If she blogs about how the nonrequestor beat her up, but doesn’t put in the blogposts, they can’t be “newly discovered” on the Tax Court trial de novo. On the other hand, an abused spouse, terrified by the abuser, may post all kinds of wonderful stuff that IRS can use to sink him or her. JJ. Ashford and Copeland join in.

Judge Ronald L (“Ingenuity”) Buch puts his finger on the ridiculous 6015(e)(7) mishmash, another example of Congress making a knife that does everything but cut.

“This provision was meant to resolve conflicting decisions amongst courts in innocent spouse cases, with some courts holding that an abuse of discretion standard applied while other courts held that the more taxpayer favorable de novo standard of review applied. Staff of J. Comm. on Tax’n, 116th Cong., General Explanation of Tax Legislation Enacted in the 116th Congress, JCS-1-22, at 11–13 (J. Comm. Print 2022). With the addition of section 6015(e)(7), Congress expressly adopted the more taxpayer favorable de novo standard of review. But it limited the scope of the review to the administrative record, except for newly discovered or previously unavailable evidence. In doing so,  Congress may have greatly reduced the putative innocent spouse’s ability to bolster his or her case as part of that de novo review. See Steve Milgrom, Innocent Spouse Relief and the Administrative Record, Procedurally Taxing (July 9, 2019), https://procedurallytaxing.com/innocent-spouse-relief-and-the-administrative-record/. As a result, Congress may have made it harder for a putative innocent spouse to challenge determinations denying relief. This would seem to run contrary to the stated purpose of the Act, to put taxpayers first.” 160 T. C. 4, at p. 18.

But word to my fellow bloggers: Everything you post will be used as evidence against you. Whenever, wherever, and by whomever, discovered.