Back in the day, I would query then Ch J L Paige (“Iron Fist”) Marvel when letters and other communications were proffered on behalf of nominally pro se petitioners by Certified Public Accountants, and accepted by Ch J Iron Fist. See, e.g., my blogpost “CPA = USTCP?” 6/6/16.

I thought one either had to be an attorney or a United States Tax Court Practitioner (USTCP) to appear on behalf of a petitioner, with certain specifically enumerated exceptions (officer for a corporation, tax representative for an entity taxed as a partnership, trustee for a trust, personal representative for a deceased person). Even where an attorney or USTCP appears, that person must file an Entry of Appearance (Form 7). And attorneys admitted in any US jurisdiction must still obtain admission to US Tax Court, again with specifically enumerated exceptions.

But Ch J Maurice B (“Mighty Mo”) Foley, though so far as I can tell barring the door at The Glasshouse to Certified Public Accountants, seems to be developing a soft spot for Enrolled Agents.

For the skinny on this happy crew, to which I am proud to belong, see 31CFR§10.4. Notwithstanding the foregoing, my Tax Court admission is based solely on my admission to the Bar of the Empire State fifty-three (count ‘em, fifty-three) years ago three weeks from tomorrow.

So how come Vinicio Rovere, Docket No. 18305-19, filed 3/5/20?

IRS says Vini owes neither deficiency nor chop, and stips to the same with Vini. But when petition, answer, and stip all fail to consider jurisdiction, you know Ch J Mighty Mo will want some ‘splainin’ or else lock the Glasshouse door.

IRS shoots in the PS3877 that shows Vini is too late.

“…a Letter… by Sabita Balloo, E.A. on behalf of petitioner was filed in this case. Therein Ms. Balloo states, among other things, that petitioner acknowledges that the petition was not timely filed. No other response was received from petitioner.” Order, at p. 2.

So did Ch J Mighty Mo bounce the case for want of response by petitioner, on whom falls burden of proof that the Court has jurisdiction? Or did he take Ms. Balloo’s letter as an admission? If the former, why not state that the letter from Ms. Balloo is rejected, as she is neither a USTCP nor an attorney admitted to Tax Court, and therefore petitioner has made no response? If the latter, how does Ms. Balloo get to represent Vini or anyone else unless she is an attorney admitted in Tax Court or a USTCP, in which event her qualification as an EA (like mine) is irrelevant?

A quick docket search shows Vini is pro se.

Looks like EAs have taken over from CPAs. I hasten to add that some of my best friends are CPAs.

Judge Courtney D. Jones gets a Taishoff “Good Job” in her whistleblowing debut. Michael J. Keane, Docket Nos. 22897-18W and 23240-18W, both filed 3/4/20, claims a REMIC (Real Estate Mortgage Investment Conduit, a subspecies of REIT) fraudulently stole his home.

Unhappily, the classifiers, and then the Ogden Sunseteers, tossed Mike’s claim. In each case the Ogden Sunseteers listened to Lacey and handed off to SBSE, or maybe LBI, so their classifiers could lay a blast on Mike’s Form 211. And it doesn’t matter to Judge Courtney D. (cognomen to follow: nominations accepted, but no prize for winning entry; watch this space) Jones whether the classifier worked for LBI or SBSE. In any case, “…the information provided was speculative and/or did not provide specific or credible information regarding tax underpayments or violations of internal revenue laws.” Order 897, at p. 5.

The pages aren’t numbered in the original, so you’ll have to do your own counting.

OK, so Judge Courtney D. (NCY = No Cognomen Yet) Jones got it right. But why a “good job”?

Because she picks up on Judge Gustafson’s pickup of my pet peeve.

“The WBO’s form letter contained the same ‘and/or’ conjunction that led to a lack of clarity in Lacey v. Commissioner, 153 T.C. __,__ (slip op. at 39-40) (Nov. 25, 2019). Here the record establishes that two of the three reasons stated in the letter are justified. As a result, this case will not turn on the general lack of clarity attendant to the ‘and/or’ conjunction. But the Court continues to be concerned that, in a closer case, this form text may create confusion when we review a summary rejection of a whistleblower claim. See Alber v. Commissioner, T.C. Memo. 2020-20, at *8-9 n. 5.” Order 897, at p. 3, footnote 5.

“And/or” is the sloppy writer’s expression of sloppy thinking. Or perhaps timidity at being unable to make a decision.

But Judge Courtney D. (NCY) Jones can make a decision: summary J for IRS in both cases. No abuse of discretion, as they listened to Lacey.

I can understand and appreciate travel restrictions, what with this latest concern about COVID-19, or whatever the latest ailment is called, that’s going viral.

But I cannot believe that the disease can be transmitted via the internet.

And yet, since February 29, I have not had a single hit on this my blog from outside the USA.

Are foreign nations banning this my blog for fear of viral transmission?

Has Corona shut down the international internet?

Whatever the ferment on the political front, US Tax Court remains cool, calm and collected. Neither opinion nor designated hitter features in today’s releases from The Glasshouse at 400 Second Street, NW, in The City of Taxation Without Representation.

So your blogger is cast back upon minor practice tips and free advice (which is worth what you pay for it).

As always, “those who need it won’t read it, and those who read it don’t need it.” But try I must.

Here, then, are Barton A. Biche & Laura Biche, Docket No. 13344-19, filed 3/3/20. It isn’t Bart & Laura’s story, but that of their trusty attorney, whom I’ll call Dan’l.

Newly-re-elected Ch J Maurice B (“Mighty Mo”) Foley, fresh from his electoral triumph, is in no mood to deflect, even by a hair’s-breadth, strict compliance with the Rules.

Back in January, Ch J Mighty Mo told Bart & Laura to ratify their petition.

Thereafter, “…a joint proposed stipulated decision was electronically filed with the Court. Petitioners’ counsel signed the proposed decision on behalf of petitioners. Petitioners’ counsel’s entry of appearance does not serve to ratify the petition. Thus, the petition has not yet been ratified.” Order, at p. 1.

Either sign and file the petition yourself, counselor, with entry of appearance included, or have the client sign the petition, and then (or even simultaneously) submit the entry of appearance.

So, Dan’l, call the Clerk at 202-521-0700, ask the Clerk to fax or e-mail you the Ratification of Petition form (and ask why it isn’t a PDF-fillable form on the “Forms” page on Tax Court website; tell ‘em Taishoff sent you), have your clients wet-ink it, and send it certified to The Glasshouse at 400 Second Street, Washington, DC 20217. Make sure it is received on or before March 24. Check the USPS.com tracking and save the screenshot.

“Incoherent” is in quotes, because that’s what Judge Kerrigan said about Marsha Gaye Lambert A.K.A. Marsha Lambert Maines d.b.a. Marsha Maines Alvarado, Docket No. 22395-18W, filed 3/2/20.

Specifically, Judge Kerrigan characterizes Marsha’s response to IRS’ motion for summary J sustaining the Ogden Sunseteers’ toss of Marsha’s Form 211 thus: “Petitioner’s response did not raise any coherent argument or contest the administrative record or respondent’s assertions.” Order, at p. 1.

Before anyone gets their cliché in a sheepshank, I stress I have not read either IRS’ summary J motion and any supporting papers, or Marsha’s reply and any papers in support of her reply. All these are locked in the impenetrable bosom of The Glasshouse at 400 Second Street, NW, where PACER cannot penetrate, much less bloggers, and where (presumably) neither rust nor moth can consume. So I cannot opine concerning any thereof, nor Judge Kerrigan’s conclusions in respect thereof.

But I can again lament that none of the papers are available online. Why pore l‘il ole Tax Court is the orphan child of the Federal internet eludes me.

Howbeit, Marsha seems to allege “…that an individual, Taxpayer 1, and a corporate entity, Taxpayer 2, had committed bankruptcy fraud related to stolen identity and theft of funds.” Order, at p. 1.

The Ogden Sunseteers, having apparently listened to Lacey (see my blogpost “The Whistleblower Office – Blown,” 11/25/19 for the skinny), bucked Marsha’s story on to an LBI classifier (a classifier is an operations type whose task it is to winnow the cliché from the chaff). The classifier gave thumbs down, stating “…that petitioner did not identify any tax issues and that petitioner’s allegations were ‘not specific, credible, or [are] speculative.’ He recommended that petitioner’s claims be rejected and not pursued by the LBI unit so the claims were referred back to the WBO ICE unit.” Order, at p. 2.

Wherefore the toss, the petition, and summary J for IRS. Judge Kerrigan finds proper review, no admin action and no recovery.

Edited to add,4/16/22: Ms. Lambert Maines sent me a comment, which I choose not to publish. It merely reinforces ChJiW Kathleen (“TBS = The Big Shillelagh”) Kerrigan’s conclusions. Whatever Ms. Lambert Maines’ complaint, it does not belong in Ogden or in Tax Court.

Once again a whistleblower hits the statutory wall that constricts Tax Court. Charles Stuart Pulcine, 2020 T. C. Memo. 29, filed 3/2/20, wants Tax Court to tell IRS “…that the IRS is ‘legally obligated to not show leniency’ and requests the ‘IRS demonstrate an equal level of unrelenting diligence to collect from the taxpayer and follow-up with me as to wiring 20% as my reward.’” 2020 T. C. Memo. 29, at p. 7.

Judge Wells: “We interpret petitioner’s contention to be that respondent erred in failing to assess or collect any additional tax, penalties, interest, or other amounts.  While we have jurisdiction to review the Commissioner’s award determination, we do not have authority to ‘review the Commissioner’s determinations of the alleged tax liability to which the claim pertains.’ Nor do we have authority ‘to direct the Secretary to proceed with an administrative or judicial action.’” In other words we cannot order respondent to reexamine the taxpayer’s returns for additional deficiencies or conduct our own examination.” 2020 T. C. Memo. 29, at pp. 7-8 (Citations omitted).

It happens that, on the same day Charles Stuart dropped the Form 211, the target filed the delinquent returns Charles Stuart was blowing about, IRS checked everything out, and gave the target a clean bill.

Once again, the review covers a lot less than first appears.

Once again we have a valuation jump-ball, and Judge Kerrigan lets in IRS’ expert’s report, only to toss him and it, in Pierson M. Grieve, 2020 T. C. Memo. 28, filed 3/2/20.

The issue is the valuation of the gift Pierson made when he handed over his stock portfolio to a couple LLCs (hi, Judge Holmes) at the behest of his tax lawyer daughter after his wife passed away in the middle of their estate planning.

Pierson’s expert valuer applies some discounts to lack of control and lack of marketability, but IRS’ expert says those only applies if the willing buyer doesn’t also buy out the minority member’s 0.2% interest, and works up a premium to entice the minuscule minority to sell.

Except the minuscule minority is the same tax lawyer daughter who manages the portfolio for no fee, but says she’d charge any incoming buyer through the left nostril for her valuable services, and anyway swears she wouldn’t sell nothing never nohow.

Judge Kerrigan bounces IRS’ expert for what the basketball referees call traveling: an extra step.

“Respondent’s expert relies upon an additional action, the purchase of the [minority] class A units.  Mr. M contends that the economic realities have to be taken into consideration and that the economic stake of the holder of a 99.8% interest of the [majority] class B units ‘dwarfs’ that of the holder of the class A units.  However, Margaret, the sole owner of the class A units, testified that she had no intention of selling the units.  She further testified that if she ever sold the units she would demand a premium much higher than what was estimated in the M reports. If the class B units were ever sold outside the family, Margaret explained that she would require that she be paid a management fee.” 2020 T. C. Memo. 28, at p. 30. (Name omitted).

Any additional action beyond the date of valuation (the FMV as at the date of the gift), though possible, is not reasonably probable.

“Mr. M’s valuations relied on an additional action.  He concluded that to determine the value of what a willing buyer would pay and what a willing seller would seek for the class B units, a premium to purchase the class A units has to be taken into account.  Elements affecting the value that depend upon events within the realm of possibility should not be considered if the events are not shown to be reasonably probable. The facts do not show that it is reasonably probable that a willing seller or a willing buyer of the class B units would also buy the class A units and that the class A units would be available to purchase.  To determine the fair market values of the class B units we look at the willing buyer and willing seller of the class B units, and not the willing buyer and willing seller of the class A units.: 2020 T. C. Memo. 28, at p. 34. (Name and citation omitted).

Anyway, IRS’s expert produced no evidence to support his valuation of the premium for the minority interests.

So Judge Kerrigan does a mix-and-match for the valuations of each of the LLCs, and allowing the discounts Pierson’s expert adduced.

There has to be a trial for Vincent Fumo, Docket No. 17603-13, filed 2/28/20, says Judge Albert G. (“Scholar Al”) Lauber.

Vince was a guest on this my blog back in 2016, as recipient of the serpent’s tooth from his offspring. See my blogpost “Good Job, Judge Lauber,” 10/14/16.

Y’all will recall that Vince took a major fall in USDCEDPA a dozen years ago, going down on 137 of 139 counts “including mail fraud, wire fraud, conspiracy to commit mail and wire fraud, conspiracy to defraud the United States, obstruction of justice, conspiracy to obstruct justice, and violation of I.R.C. § 7206(2).” Order, at p. 1.

But USDCEDPA didn’t decide how much Vince actually got from his multitudinous skullduggeries, and he did split at least some of it with a codefendant.

So the issue is how much of the loot was income to Vince. IRS wanted forfeiture, but fell down on proving what went into Vince’s coffers from his delictions. Then 3 Cir was appealed to, and bounced the case back and forth a while, in the end coming up with some numbers, which IRS massaged into a SNOD.

IRS wants summary J that Vince is “…collaterally estopped from relitigating whether petitioner received proceeds, income, or benefits as a result of the crimes for which he was convicted.” Order, at p. 3. Not to be outdone, Vince wants summary J that, because USDCEDPA awarded no restitution, IRS is likewise collaterally estopped from relitigating whether Vince did get anything, and btw, SOL.

Judge Scholar Al agrees that Vince can’t “fight old battles o’er” about the 137 counts for which he went down. But because they are many and heavy, Judge Scholar Al doesn’t schedule them here. That said, this case is about unreported income.

“The facts established in the criminal case did not determine the amount of gross income that petitioner received for Federal income tax purposes. The District Court found that petitioner reaped improper benefits and that the [State] Senate and Citizens Alliance were the victims of misappropriation. But it did not find that petitioner derived taxable benefits in a one-to-one ratio with his victims’ losses.” Order, at p. 4.

An embezzler may get dollar-for-dollar taxable income from his/her theft. Embezzlement is efficient thievery, but Vince’s operations may not have been so efficient. “And whereas an embezzler may be held to have received gross income in the dollar amount of funds embezzled, the result may be less obvious for certain of the benefits that petitioner received. For example, there may be disputes of material fact as to whether petitioner derived a dollar-for-dollar benefit from additional salary received by employees for whom he secured promotions to higher positions.” Order, at p. 5.

It’s the same old story. IRS must show some minimal evidentiary connection to income-producing activity, or that Vince actually got something. And while USDCEDPA and 3 Cir decomposed a lot of brain tissue toting up what the PA State Senate and the allied citizens lost via Vince and codefendant, they didn’t find what Vince himself actually got in hand.

So on the trial IRS can connect Vince to income-producing activity or show that Vince actually got something. Then Vince can prove IRS’ numbers are wrong.

But Vince doesn’t get summary J either.

“The District Court declined to enter a verdict of forfeiture because of its finding that the Government had not proven that petitioner derived ‘proceeds traceable to the mail or wire fraud counts on which he was convicted.’ The term ‘proceeds,’ for purposes of 18 U.S.C. § 981, is not equivalent to ‘income’ within the meaning of I.R.C.§61. ‘Proceeds’ is defined to mean property obtained ‘as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto.’ 18 U.S.C. §981(a)(2)(A). ‘Proceeds’ are forfeitable only if obtained as a result of violating certain enumerated statutes. See id. para.(1). ‘Income’ under the Internal Revenue Code is not subject to such limitations. See I.R.C. § 61(a) (‘[G]ross income means all income from whatever source derived.’); (‘Congress applied no limitation as to the source of taxable receipts, nor restrictive labels as to their nature.’).” Order, at pp. 6-7. (Citation omitted).

Vince claims proceeds equal income, but has no caselaw for that proposition, and Judge Scholar Al isn’t buying.

As for SOL, Vince went down for all kinds of fraud, including filing false tax returns. So no summary J for Vince on that one. Maybe IRS can prove a clear and convincing case of tax fraud.

It is hardly a secret that I like to spend an occasional evening having a drink or two with colleagues. We brain-pick, theorize, and swap anecdotes. As I re-read today’s Sum. Op. from STJ Daniel A. (“Yuda”) Guy, I recollected a remark from a colleague about his former client X. “The judge told me that X was ‘a thoroughpaced scoundrel.’ I replied, ‘Your Honor, that might be; but he is still entitled to due process of law.’”

For that reason, I am glad that STJ Yuda took the trouble to defuse the two arguments of Friday O. James, 2020 T. C. Sum. Op. 11, filed 2/27/20.

STJ Yuda simply could have defaulted Friday, as he didn’t show up for trial on August 9, 2019. Friday certainly didn’t show, nor did he give proper notice of change of address. But Friday had been deported to his native Liberia in July, 2018, after doing 36 months in the Federal slammer for Section 7206 aiding and abetting.

Friday ran a tax prep operation that churned out around 2K returns for the two years at issue. IRS found 150 of them were, to put it politely, counterfactual. “…IRS opened a criminal investigation and interviewed several of petitioner’s clients.  Some of those clients informed the IRS that petitioner had ignored or altered tax information that they had provided to him and improperly claimed the FTH credit and various deductions.” 2020 T. C. Sum. Op. 11, at p. 3. “FTH” is first-time homebuyer credit/deduction/loan, a now-extinct species of unguided largesse that afforded Friday a golden opportunity for fictionalizing.

OK, clearly Friday is not without sin.

However, the Section 6701 chops he’s fighting are assessables, so Friday gets no SNOD, but can fight the penalties in a CDP.

First, he got the chops while he was appealing his criminal conviction. But that’s OK, because the civil chops are independent of the criminal penalties. Y’all will remember Martin Kapp, the scourge of the seas, who went down to the tune of $3 million Section 6701s, no? No? Then see my blogpost “The Rogues’ March – Part Deux,” 7/9/19. Martin also hit into a double play.

Second, Friday claims that there’s only a single $1000 Section 6701 per year. No, Friday, it’s one per return per year, but only one per client.

Of course, Appeals did all the right stuff. The RA put in an 8278 and got it Boss Hossed.

Perhaps Friday left some cash and other goodies behind, and that’s what IRS is chasing.

But His Spouse Walks

Dung T. Le ran a couple nail salons (hi, Judge Holmes) in Lincoln, NE. Dung T. was properly nailed for the 75% fraud chop. Handing the RA auditing his returns doctored copies of checks, and getting a Suspicious Activities Report from his bank for his string of under-radar cash deposits, is enough for Judge Paris. And Dung T. also went down for Section 7201 tax evasion in USDCDNE.

There’s more, but spouse Nghia T. Tran, though a woman of many names, “also known by or referred to as Nancy T. Tran, Nghia Hui Thitran, and Nancy Nghia Tran”, 2020 T. C. Memo. 27, filed 2/26/20, at p. 3, walks away chopless.

The whole story is to be found in Dung T. Le and Nghia T. Tran, 2020 T. C. Memo. 27.

Dung T. is toast long before Nghia appears on the scene. It’s the usual criminal conviction plus restitution doesn’t determine tax liability, so no collateral estoppel as to a post-conviction SNOD. Judges have wide discretion to fix restitution. Anyway, “…it is well settled that a sentencing court’s ordering of (or decision not to order) restitution has no effect on the IRS’ authority to determine the taxpayer’s correct civil tax liability and to assess and collect that liability.” 2020 T. C. Memo. 27, at p. 22 (Citations omitted).

But when it comes to the 20% accuracy chops, Dung T. is out because of the fraud chop.

“The accuracy-related penalty cannot be imposed on one spouse where the other spouse is liable for the fraud penalty, as this would lead to impermissible stacking of penalties.  Respondent has not asserted fraud penalties against petitioner Tran but alleges that she is liable for the section 6662(a) accuracy-related penalty for each year in issue.

“Petitioner Le bears principal responsibility for the false statements made to, and the lack of cooperation with, the IRS revenue agent.  Unlike her husband, petitioner Tran did not present testimony lacking credibility at trial.  Also unlike her husband, she did not actively participate in the deposits and manipulation of the business accounts or interaction with the preparation of the tax returns. Because petitioner Le is liable for the section 6663 fraud penalty for each year in issue, petitioner Tran is not liable for the accuracy-related penalties.” 2020 T. C. Memo. 27, at pp. 38-39. (Citations omitted).

Section 6663 is a path to Section 6015 innocent spousery. If you’re an innocent spouse.