I’ve blogged so many scenic/conservation easement dodges that crack up, and historic façade crumbles, artistic collapses, and sporting icon-vs-ambassador unravelings, that I’m halfway to the shootdown before the case even gets airborne.

But that Obliging Jurist, Judge David Gustafson, knocks IRS’ case for six (as the cricketers say) today. Here’s Peter C. Emanouil And Pascale Emanouil, 2020 T. C. Memo. 120, filed 8/17/20.

It’s Pete the developer’s case. He commenced to build an affordable housing development in the thriving, striving commune of Westford, MA (and no, I don’t know where that is, either; perhaps my colleague Peter Reilly, CPA, now or formerly a Bay Stater, can tell us). Pete got the usual schlecht (please pardon an arcane technical term) from the communards (those who governed the commune), so he chopped and changed his plans as required.

As Pete’s job was nearing completion, he got a couple appraisals (hi, Judge Holmes) and donated some of the land he had, but didn’t build on, to the municipality. IRS claimed the appraisals weren’t qualified, because they didn’t state they were intended for tax purposes, and didn’t state the anticipated date of donation. The other nine (count ’em, nine) Reg. Section 1.170A-13(c)(3)(ii) factors are all there. So Judge Gustafson plays the “substantial compliance” card. See my blogpost “Method, No Madness,” 9/21/16. Anyway, the 8283s that accompanied Pete’s and Pas’ return stated the date of contribution, and that was within 30 days of the appraisal, which said it was current.

Finally, Pete’s appraiser testifies the appraisal was a market value appraisal. “Market value is market value, and whether you are preparing this for an owner or a bank, or a public entity, or for any purpose, that market value premise governs, and the analysis must be true to that principle. The intended use and user is inconsequential.” 2020 T. C. Memo. 120, at p. 42.  Judge Gustafson agrees.

And since Pete donated the land and not the easement, he sheds the abusive shelter mantle.

Enter quid pro quo. Did Pete hand over the property to quell the communards?

The communards gave Pete a laundry list of requirements to get the development approved. They did ask for open space, but not for land; and the open space wasn’t on the donated land. Nobody testified there was a quid pro quo. And it is very unlikely the communards would have played “trust me, trust me,” and approved anything without a written agreement. Besides, eight years before, Pete had sued the communards over another deal, so while they were civil they were hardly buddies.

There’s the usual jumpball between appraisers, but Pete’s crew prevails, especially since IRS’ appraiser relied on the same plot plan as Pete’s appraiser, while claiming excessive discounts and absorption. Read the appraisal joust, as an example of how it should be done.

Since the deductions are sustained, no deficiencies, no chops.

A Taishoff “Good Job, First Class,” to Pete’s trusty attorneys at McLane Middleton, and his even trustier appraiser Ms. Pamela McKinney.

Ex-Ch J L Paige (“Iron Fist”) Marvel is wearied of the multitudinous wits, wags and wiseacres who petition decades (if not millennia) of years, seeking judicial confirmation that they received neither SNOD nor NOD for any thereof. Whether this is to clear their own decks, or a try to attack assessables like refund grabs for child support, or to harass IRS, is never clear.

Today, a recidivist, Bryan C. Waite, Docket No. 3490-19, filed 8/17/20, gets a warning from ex-Ch J Iron Fist. Bryan C. petitions from and including 2000 through and including 2018. IRS says they searched and found nada.

“Petitioner has filed a similar case before the Court at Docket No. 11245-18. In that case, petitioner disputed both notices of deficiency and notices of determination concerning collection actions for tax years 2000 through 2016. Petitioner did not attach to that petition any notice of deficiency or notice of determination. The petition at Docket No. 11254-18 was not properly executed, the petition did not bear an original signature of petitioner, and petitioner failed to pay the $60 filing fee. The Court issued several orders directing petitioner to ratify his petition, but he failed to do so. On October 4, 2018, the Court on its own motion dismissed petitioner’s case at Docket No. 11245-18 for lack of jurisdiction on the grounds that petitioner did not properly execute the petition or pay the filing fee.” Order, at p. 2.

I’ve been blogging this game for two (count ’em, two) years now, beginning with my blogpost “A New Gambit?,” 4/2/18, and shortly thereafter suggested laying a Section 6673 frivolity chop on the avid players thereof. See my blogpost “I’m Beginning to See the Light,” 4/9/18. Ex Ch J Iron Fist seems to have specialized in this stuff.

But today her patience is worn thin.

“Petitioner’s present case is similar to other cases recently filed in this Court where the taxpayer files a petition listing a large number of years and claims that he or she never received any notices of deficiency and/or notices of determination for any of the specified years. The taxpayer does not attach any notice of deficiency or notice of determination to the petition. This type of case forces the Commissioner to spend a considerable amount of time trying to verify the taxpayer’s allegations that the Commissioner has not issued either a notice of deficiency or a notice of determination for each of the years identified in the petition. The search foisted on the Commissioner, which takes a great deal of time and effort, often leads to the filing of a motion to dismiss for lack of jurisdiction, and may lead to the taxpayer pressing for the entry of an order that specifically states the taxpayer did not receive any notice for any of the years listed in the petition. Cases similar to this one have uniformly been dismissed for lack of jurisdiction and may in fact be frivolous and worthy of an award of damages under section 6673. Although petitioner has filed a previous case before the Court listing a large number of years and claiming that he never received any notice of deficiency and/or notice of determination, the Court in the exercise of its discretion will not impose a section 6673 penalty in this case. However, petitioner is warned that this Court will consider a section 6673 penalty in any future case commenced by petitioner seeking similar relief under similar circumstances.” Order, at pp. 2-3. (Emphasis by the Court).

Of course, imposing the Section 6673 chop raises the question how to collect. See my blogpost“Paper Tiger,” 8/3/20.

This is the first example I’ve seen of this dirty trick. I don’t want it to gain any traction. Here’s Tony Patrinicola & Barbara Patrinicola, Docket No. 498-19, filed 8/14/20. Note I’m not alleging or claiming that Tony or Barbara was in any way involved in this.

You’ll recall Judge David Gustafson was on this case, as recently as Monday. See my blogpost “Office For The Self-Represented?” 8/10/20.

Now Judge Gustafson isn’t.

“By our order of August 10, 2020, we directed the parties to make certain filings in this case. Later that day the undersigned judge received, from an individual not connected to this case, an unsolicited email discussing this case.” Order, at p. 1.

So Judge Gustafson recuses himself.

I am not second-guessing whether Judge Gustafson should or should not have done so. Not having seen the e-mail, I cannot tell.

But this e-mail maneuver is despicable. This unconnected person is trying to influence a judge.  The Federal Protective Service might wish to contact the unconnected individual and suggest (or perhaps more than suggest) that tampering with Federal judges is a very bad idea.

There are those recurring themes, of the kind gardeners used to call “hardy perennials,” that flourish at 400 Second Street, NW, in The State That Isn’t. That consists of invasive species CPA and their relative, the mis-called POA.

To refresh the recollection of those who need it but won’t read it, in the tax world Form 2848 Power of Attorney and Declaration of Representative is either a piece of paper or a concatenation of electrons. The person, which said document authorizes to act for the principal, is called the “Representative.” A human being cannot be a POA, unless he or she is literally a paper tiger.

Howbeit, no Representative, however credentialed s/he may be, may appear in Tax Court unless admitted to practice in USTC. See Section 7452 and Rule 200 for more.

Formerly some judges winked at these requirements in the early stages of a case, letting letters from CPAs serve as minor procedural motions. I’ve blogged a lot of these; I’ll spare you the list. There must be dozens that I haven’t blogged. But they recur constantly, like non-endangered knotweed.

Here’s Judge Joseph W. Nega taking a stand against an invasive species, in Wayne Lawton & Imogene Lawton, Docket No. 3660-19, filed 8/14/20.

“The Court notes that petitioners’ C.P.A. appears on the petition and has participated on the conference calls with the Court. The Court’s records indicate that ST is not admitted to practice before the Tax Court. Accordingly, she may not enter an appearance to represent taxpayers before the Court. Unlike the IRS and some other Courts, the Tax Court does not recognize powers of attorney.” Order, at p. 1. (Name omitted).

Burt Judge Nega is willing to give Wayne & Imogene a break. They don’t need to file Form 10.

“The Court will send all future correspondence directly to petitioners’ address which was informally provided to the Court.” Order, at p. 1.

But Wayne & Imogene had better do their teletrial prep and talk to IRS’ counsel in furtherance thereof.

Doesn’t Pay Off

Michael C. Iaco, Docket No. 19694-18L, filed 8/13/20 “…pled guilty to operating an illegal gambling business. Petitioner’s plea agreement specifically covered his activities from January 2012 thru June 2013.” Order, at p. 1.

MCI falls foul of the Section 4401 excise tax on wagers, and if you’ve never encountered this one, neither have I.

MCI had no books and records, nor did what RO B (name omitted) terms MCI’s “power of attorney” (should be “representative”; a power of attorney is either a piece of paper or a bunch of electrons) furnish any thereof. So RO B took a one-day run of the wiretap that brought MCI down, and extrapolated.

MCI is a sporting guy. He offers RO B “…he would concede to tax liability for one month with the remaining 17 months to be conceded by the Government.” Order, at p. 3. I give MCI a Taishoff “Good Try, third class.”

MCI went to Appeals, but claims “The Appeals Officer made no attempt at all to determine the correct amount of the excise tax. None at all. Instead, she simply ‘rubber stamped’ the Examiners [sic] crazy conclusion.” Order, at p. 5.

Judge James S (“Big Jim”) Halpern gives IRS summary J, and me a designated hitter. MCI had plenty of chances to put in documentation of what wagers he handled with RO B. Uncorroborated oral testimony doesn’t cut it.

Tax Court is a bad place to play longshots.

Judge Mark V Holmes waged an open war on the stealth subpoena. For those new to this my blog (and a hearty welcome to all, both old and new), see my blogpost “The Stealth Subpoena,” 7/16/15. See also Judge Chiechi’s counterattack “The Stealth Subpoena Is Alive and Well,” 12/2/16.

No Ch J has taken it upon her/himself to amend the Rules to bring Tax Court into the last decade of the last millennium, much less than into the second decade of the current one.

Though Judge Holmes has been unceremoniously relegated to seniordom, the lampada has been passed to Judge Emin (“Eminent”) Toro. And he bears it “like a torch in flame,” in Kenneth A. Hangartner and Catherine Frazier, Next Friend, Docket No. 2051-19, filed 8/13/20. Note there should be a comma, and not the word “and,” between Kenneth and Catherine. There is only one petitioner, Kenneth, acting through his next friend, Catherine.

IRS filed a status report, wherein they mentioned they would be serving some third-party subpoenas. Judge Eminent tells IRS to make these returnable at the teletrial date and time. He orders the Clerk to get the parties the teletrial stuff; might I suggest that IRS give the third-party subpoena’d types the teletrial stuff as well when they serve the subpoenas?

And Judge Eminent brandishes the torch: “ORDERED that both parties shall comply with Federal Rule of Civil Procedure 45(a)(4).” Order, at p. 1.

Is this the start of the Cold War on the Stealth Subpoena?

“To you from failing hands we throw/The torch, be yours to hold it high.”

Word to Ch J Maurice B (“Mighty Mo”) Foley. How ’bout we stop with wars, hot or cold, and fix Rule 147?

In Nineteenth Century England, it was the time when Parliament recessed, and what they called society headed for the grouse moors of Scotland for the Glorious Twelfth of August. So the newspapers, with nothing they thought worthy to print, fell back on ephemera and frivolity.

US Tax Court is a great place for upholding tradition. There’s one T. C. Memo., Alka Sham, 2020 T. C. Memo. 119, filed 8/12/20. I’ll spare you; the usual indocumentado, leavened with the unorthodox compensation arrangement between Alka and Dr. Kukreja. If your day was even duller than mine, you can read eighty-one (count ’em, eighty-one) of Judge David Gustafson’s deconstruction of Alka’s non-substantiation (plus twelve pages of appendix).

No designated hitters, of course. A bunch of “go try the case” orders, for petitioners slow to respond to court orders, and one where two attorneys try to bow out with one signature. See Jason M. Thompson, Docket No. 10258-19, filed 8/12/20. Judge Elizabeth A. (“Tex”) Copeland isn’t playing; both of you guys sign the motion.

If the IRS classifier (the Subject Matter Expert), who comes from an operating arm of IRS and not from the Ogden Sunseteers, eyeballs the tax returns of the target and finds them facially OK, are those returns part of the administrative record?

Not only I, but Judge James S (“Big Jim”) Halpern, would like to know. So would Eva Mitich, Docket No. 4489-19W, filed 8/11/20.

Eva whistled her landlord for unreported income and unpaid taxes. The ICEwoman (Initial Claims Evaluator) eyeballed Eva’s assertions, and shipped them to SME in SB/SE, whom scoped the returns of target, and found them facially OK. Sched E was there, showing property alleged and income therefrom.

So the ARM (Award Recommendation Memorandum) said the usual: speculative, no specific underpayments or violations. Eva is bounced and petitions.

The tale becomes cloudy when Eva seeks the relevant portions of target’s returns in discovery. IRS’ counsel answers that, per Reg. Section 301.7623-3(e), Eva already got the entire administrative record.

Except.

When counsel try to overlawyer, they often blow it. Counsel stated “Here, the administrative record demonstrates that the Commissioner did not proceed with any administrative or judicial action against the subject of your claim under section 7623. The administrative record further demonstrates that the Commissioner’s whistleblower office, in making its determination to reject your claim under section 7623, did not consider any of the contents of said taxpayer’s tax return. Accordingly, the contents of said taxpayer’s return are irrelevant in this case. [Emphasis added.].” Order, at p. 3.

Judge Big Jim suggested a phoneathon, and when he asked IRS’ counsel why the return Sched E wasn’t there when the SME said she’d scoped them out, counsel replied “those returns were not reviewed by Ms. B, who is employed in the WBO, but had been reviewed by Ms. P, who was an SBSE classifier, and SBSE is a unit in an operating division of the IRS and not a part of the WBO.” Order, at p. 4 (Names and footnote omitted, but the footnote says, citing IRM pt. 1.1.26.1.3.5 (January 1, 2018), that SB/SE has operational responsibility for ICE.).

I award IRS’ counsel a Taishoff “Oh, Please,” first class, and entry in the no-prize lame excuse stakes, at no extra charge.

So Judge Big Jim expatiates on the necessity for a full record whereupon to decide if discretion was abused. He cites the Supremes, various CCAs, a couple USDCs (hi, Judge Holmes) and Tax Court cases, ending up Humpty-Dumptywise with “all documents and materials that the agency directly or indirectly considered, no more and no less.” Order, at p. 5.

So let Eva and IRS’s counsel “…file with the Court a legal memorandum addressing whether the record rule allows respondent to exclude from the record properly to be considered by the Court in this case the taxpayer’s return information reviewed by Ms. P.” Order, at p. 6.

I make the morning line 4 to 5 Eva gets the return info.

And to IRS’ counsel, I repeat an abbreviation I ofttimes used when I supervised other attorneys: RTFF. That means “Read The File.” The “F” is for emphasis.

They say automation is sweeping the nation, but even IRS’ Automated Underreporting System, known to the cognoscenti as AUR, needs to throw in a good, old-fashioned SNOD to nail the underreporter. But IRS, and especially SO K (name omitted), come up short when challenged, albeit obliquely, by Mark C. Mirken & Sheryl L. Mirken, Docket No. 18972-17L, filed 8/11/20.

True, Mark & Sheryl did move around a lot, but SO K seemed to throw to the wrong base, and couldn’t come up with what she threw, when it came to the necessary SNOD off the AUR.

Judge Elizabeth A. (“Tex”) Copeland has this one. There are three (count ’em, three) assessments here for the same year. First was self-assessed tax and underpaid ES, but that Mark & Sheryl paid. Second was late filing and late payment add-ons, but Mark & Sheryl have an OIC on the table for those. Third was the one Judge Tex Copeland  finds problematic, the AUR.

IRS hits Mark & Sheryl with the CP90 NITL pay-up letter, which Mark & Sheryl petition, but inartfully. “Here, Petitioners simply pleaded that the ‘I.R.S. settlement agent abused her discretion in prematurely terminating CDP rights.’ However, we take note of Petitioners [sic; I think you meant “Petitioners’,” Judge] self-represented status and construe their pleading broadly. We note that in their opposition to the Motion for Summary Judgment, Petitioners assert that the IRS ‘has not followed its own procedures as outlined in the Internal Revenue Manual.’ and ‘[A]lthough requested, the Petitioners have not received statutory collection due process in this matter.'” Order, at p. 5.

Judge Tex Copeland, interested in justice per Rule 41(a), treats all this as an amendment to the petition, and, as this is a motion for summary J, she runs the checklist.

“Relevant here is whether SO K verified that the requirements of applicable law or administrative procedure have been met. Sec.6330(c)(1), (c)(3)(A). In determining whether the verification requirement is met, the SO must determine if the tax liability was properly assessed before the IRS commenced its collection procedures. Sec.6303(a) (assessment before notice and demand); sec. 6331(a) (notice and demand before levy); sec. 6330 (notice and opportunity for administrative review in form of CDP hearing before levy). This includes verifying that any statutory notice of deficiency (SNOD) was properly issued or that an exception to the restrictions on assessments apply, even if the additional tax assessed was determined by the IRS’ AUR program. See secs. 6212, 6213, 6214, and 6215; see also Internal Revenue Manual (IRM) pt. 4.19.3.l(11) (September 4, 2015); IRM pt. 4.19.3.1.1.1 (September 30, 2014). A SNOD must be sent by certified or registered mail to the taxpayers’ last known address. Sec.6212(a),(b). If a SNOD is so mailed, before assessment, taxpayers may petition the Court within 90 days (150 days for taxpayers living outside the United States) for redetermination of the deficiency or penalties. Secs.6212; 6213. If the time for filing a petition with respect to the SNOD expires, then the IRS may assess the additional tax and penalties. Sec.6213. Again, in a CDP case, it is the SO’s responsibility under section 6330(c)(3) to verify that this all occurred; and Petitioners’ responsibility to timely petition this Court if not. See sec. 6330(d)(1).” Order, at pp. 4-5.

The NOD stated Section 6201 was the basis for the AUR assessment and the add-ons, but it should have been Section 6213 for the AUR; and the add-ons should have been based on Section 6665.

“In particular, as to Assessment 3, the record is unclear as to how SO K verified that a SNOD was properly mailed to the Petitioners or if an exception applied. In support of the Motion for Summary Judgment, Respondent did not provide documentation, such as a properly issued SNOD nor a showing that such notice was mailed to the taxpayers last known address. In fact, SO K did not appear to know the appropriate address for verification purposes. Petitioners’ address changed several times…. Although Petitioners’ CDP request… included their current address, SO K sent her letter setting up their CDP hearing to an old, possibly invalid, address. She also cited to the wrong Internal Revenue Code section (6201 rather than 6213) in the Notice of Determination. Given these questionable facts, the Court finds that the SO did not adequately explain how, for Assessment 3, she verified that the deficiency procedures were followed prior to the assessment…. The deficiency procedures require, among other things, that SO Krueger know Petitioners’ last known address…to verify that the SNOD was properly sent; whether she did so is unclear from her notes and the Notice of Determination.

“Furthermore, if a SNOD was not so required, Respondent did not adequately explain the relevant exception to the deficiency procedures.” Order, at p. 6.

Summary J denied without prejudice.

Takeaway- Guys, this is the real deal. Run this checklist for any AUR SNOD or NOD. And tell ’em Judge Tex sent ya.

I have lamented the want of an Office for the Self Represented at the United States Tax Court. Often. As recently as four (count ’em, four) hours ago. On this very blog.

Even more often have I praised summary judgment. I denote this tool for discovery of disputed facts (and smoking out friend, foe, and judge) with the term summary J. I did not invent the phrase. I stole it from a classmate, a very fine man and brilliant lawyer, now deceased. The story he told was that, having won summary J in a big-ticket case as a junior partner in the firm where he spent more than forty years, he bought himself a fancy car and got a license plate that read “SUMMARYJ.”

I wonder what happened to the license plate.

But into the breach steps that Obliging Jurist, Judge David Gustafson. And conforming to current judicial fashions, he’s obliging even to corporations, treating them like people.

James G. Garcia, Inc., Docket No. 14222-19L, filed 8/10/20, is facing a summary J motion off a CDP.

Now maybe James G. Garcia, Inc., has counsel in the wings, waiting to file Entry of Appearance and send in a devastating cross-motion. Or maybe not. Anyway, James G. Garcia, Inc., managed to file an Ownership Disclosure, which has daunted many another self represented.

But Judge Gustafson is taking no chances. He gives James G. Garcia, Inc., the full treatment.

“The Commissioner’s motion asserts that no trial is necessary in this case, because (the Commissioner says) no relevant facts are in dispute. The motion contends that, on the basis of the undisputed facts, the case can be decided in the Commissioner’s favor. The Court will order petitioner James G. Garcia, Inc., to file a response to the Commissioner’s motion.

“If petitioner disagrees with the facts set out in paragraphs 1-23 of the ‘Facts’ section of Commissioner’s motion for summary judgment, then his response should point out the specific facts in dispute. Petitioner’s response should state, by number, any assertion with which he disagrees, should explain the reason for his disagreement, and should cite whatever evidence supports his position. If petitioner disagrees with the Commissioner’s argument as to the law (in paragraphs 24-36 of the Commissioner’s motion), then his response should also set out its position on the disputed legal issues. Q&As that the Court has prepared on the subject ‘What is a motion for summary judgment? How should I respond to one?’ are available at the Court’s website and are printed on the page attached to this order.” Order, at p. 1.

Standard, right? Language more or less like this is found in many an order. As is the follow-up, the usual caution that if James G. Garcia, Inc., does not respond, it will lose.

But Judge Gustafson goes the extra couple furlongs (hi, Judge Holmes).

“If petitioner is unsure how to proceed, he [sic] should promptly initiate a telephone conference with the Court and the Commissioner by placing a call to the Chambers Administrator of the undersigned judge (at 202-521-0850).” Order, at p. 1.

Pro ses, take down that number.