Voltaire’s famous deathbed riposte to the Abbe gives me my headline. But today it’s Alfred Q. Campbell, III, Docket No. 3597-17L, filed 7/5/19, who’s posed the question, and Judge Albert G (“Scholar Al”) Lauber wants to know what IRS thinks about it all.

Alf Q. petitioned a NOD, got remanded for a supplemental CDP when he claimed he never got the NITL, but at the supp IRS produced the certified mail list showing mailing to last known address, so sustentation of NOD and back to Tax Court.

Alf Q claims signer of NITL, Bill B, wasn’t appropriately delegated by the then-Sec’y, so NITL invalid.

“Petitioner did not contend in the original hearing, the supplemental hearing, or his petition that Mr. B was not duly authorized to issue the notice of deficiency [sic]. Rather, he raised this argument for the first time when responding to the summary judgment.” Order, at pp. 1-2. (Name omitted).

Judge, this was a Section 6330 CDP, so wasn’t the Letter 3219 a Notice of Intent to Levy, and not a Notice of Deficiency?

Howbeit, the question is whether the SO must check the IRM delegation list before issuing the NOD, or whether IRS can come up with it later, even on the Glasshouse steps on the day of trial.

“In two recent CDP cases the Court has considered whether notices of deficiency were signed by duly authorized individuals. See Gregory v. Commissioner, T.C. Memo. 2018-192 at *8-*9; Williams v. Commissioner, T.C. Memo. 2018-50 at *5. In each case the Court held that the notices were valid because the person signing each notice was authorized by IRS Delegation Order 4-8, as set forth in the Internal Revenue Manual pt. 1.2.43.9 (Sept. 4, 2012). Because the signatory was duly authorized, we had no need to decide whether an SO would abuse his discretion if he did not investigate that question sua sponte.” Order, at p. 2.

For whatever reason, I didn’t blog either Gregory or Williams.

“The Court would benefit from knowing respondent’s position on two questions: (1) whether a taxpayer may challenge in this Court an SO’s verification of an assessment on the ground that the person signing the notice of deficiency lacked delegated authority to do so, where the taxpayer did not advance that argument at any point during the CDP hearing or (as here) the supplemental hearing; and (2) whether Mr. B was duly authorized to issue the notice of deficiency in this case.” Order, at p. 2. (Name omitted)(See my earlier comment: NITL, not SNOD).

Whatever IRS says about (1), I’m betting this case comes off over (2).

Edited to add, 8/6/19: I may have been mistaken, although it isn’t clear from Judge Scholar Al’s order. Alf Q. may have been challenging Bill B’s signature on the SNOD which led to the NITL, which SNOD Alf Q. may not have petitioned, and not the signature on the NITL.

I’d appreciate enlightenment.

Memory takes me back today to story-time with my two little princesses, so long ago. The book was R. J. Unstead’s “Princes and Rebels”; I would interpolate into Mr. Unstead’s prose certain remarks of mine own. The heroine of this story, Margaret Paston, 15th Century fighting woman and epistolarian, was again besieged, and desperate to find money to fund the family’s numerous lawsuits.

I interpolated “The lawyers would not be paid!” On cue, my babies responded “Wooo!” Young as they were, they well understood much depended upon a certain lawyer being paid.

Well, today Judge J. R. Goeke has the gladsome news for the lawyers for Blue Lake Rancheria Economic Development Corporation, Docket No. 16150-17L, filed 7/5/19.

“ORDERED and DECIDED that petitioner is entitled to reasonable litigation costs in the amount of $483,331.93.” Order, at p. 1.

For the whole story, see my blogpost “Indians Divided and Not Taxed,” 3/6/19.

As written by Ms. Gretchen Peters and sung by Ms. Martina McBride; and very definitely off-topic.

“Let freedom ring, let the white dove sing/ Let the whole world know that today is a day of reckoning/ Let the weak be strong, let the right be wrong/ Roll the stone away, let the guilty pay/ it’s Independence Day.”

Although the hard-laboring clerks, flailing datestampers, STJs, judges, and auxiliaries of every type have taken themselves off to the beach and barbecue from The Glasshouse at 400 Second Street, NW, there are some dozens of orders today.

And before this blogger “homeward plods his weary way,” as a much finer writer put it, I note the appearance of the successor to the Ownership Disclosure Statement (Form 6), that has baffled corporatists and even their advisers, even to the degree of getting their petitions tossed for failure to write “NONE” twice.

Its successor has Ch J Maurice B (“Mighty Mo”) playing geography, sending self-representeds off to trial at a venue of his choice,, because these petitioners failed to include Request for Place of Trial (Form 2), even though a nice clean copy thereof was included with the petition form.

I wonder what’s next?

As If He Needed More

I’ve often referred here to my late grandmother’s salty, ironic view of the world. It might just be hereditary.

Today I belatedly lament the passing of David F. Burbach, Docket No. 12021-12, filed 7/3/19. Judge Holmes tells me (and anyone else on the Tax Court website) that Dave died last month.

You’ll remember Dave’s entanglement with GTE, the dodge-monger alleged EA, who landed Dave in heavy-duty troubles with IRS. If not, see my blogpost “A Bad Influence,” 3/7/19.

Dave’s troubles continue even after he departs this vale of tears.

Judge Holmes notes probate proceedings may be necessary, unless Dave’s team have their Rule 155 beans ready to hand in. And even then maybe so parties need to be substituted and the caption amended.

A sorrowful story.

As it was in the beginning, this shall remain a non-political blog. But Shapat Nabaya, Docket No. 7207-19, filed 7/2/19, seeking to remove from public view his SSAN, which he thriftlessly strewed all over his petition from an alleged NOD, has gifted Ch J Maurice B (“Mighty Mo”) Foley with a motion thus entitled.

Ch J Mighty Mo, wasting no time, doesn’t bother recharacterising Shap’s motion, but tells him to send in an amended petition in idem verba (as my already-on-their-second Grey-Goose-V&T colleagues would say), erasing only TINs.

Of course, there remains the question whether there was in fact a NOD from a CDP, from which Shap timely petitioned.

So let IRS and Shap send in copies of every document upon which each relies to establish (or disestablish) jurisdiction.

Though pleadings may be liberal, jurisdiction is another story.

End the Stealth Subpoena

And spare Judge Holmes the need to remind litigants to play nice. Here’ s EZ Lube, LLC, EZL-1 Investments, Inc., A Partner Other Than the Tax Matters Partner, Docket No. 18021-13.

Judge Mark V Holmes sent the parties off to work out whatever salvation they could back in April. For that, see my blogpost “No EZ Telephone ‘Determinations,’” 4/21/19.

Now IRS, the incomers, and the outgoers, all think they can do a Rule 122 on-the-papers, if only they can get some third-party testimony. But they’ll need a judicial subpoena to do it.

Judge Holmes, in his usual expansive style, lets them go to it.

“Our Rules generally make subpoenas returnable only at trial sessions, which can be inconvenient when the division handling the case isn’t scheduled for a trial session in the city involved. The parties have suggested that this case be set for a hearing at the October 7, 2019 trial session to enable a subpoena to be served and returned by that date. The trial judge involved is amenable to this solution.” Order, at p. 1.

Apparently ex-Ch J Michael B (“Iron Mike”) Thornton will be on the bench at that session.

But Judge Holmes wants to make sure there’s no stealthy dealings.

He orders “…that the both parties comply with Federal Rule of Civil Procedure 45(a)(4).” Order, at p. 2.

See my blogpost “The Stealth Subpoena,” 7/16/15. It’s really time that Rule 147 was brought into line with FRCP 45(a)(4)

May or may not be half-done, as the old saw has it, but Steven Austin Smith, 2019 T. C. Sum. Op. 12, filed 7/1/19 (that’s Prof. Steve to you, as he’s tenure-track at the U of Southern Connecticut) had certainly begun his vegan food exporting business. At least well enough to convince Judge Vasquez that Prof. Steve could write off his start-up expenses per Section 195, thereby thwarting IRS’ attempt to wild-card in the Section 195 argument post-SNOD.

Prof. Steve was hawking various non-animal alimentary products as a private label reseller around Jamaica, the Dominican Republic, Brazil, Argentina and Colombia. Although there was some interest, retailers were unwilling to give shelf space to specialized exotica.

Prof. Steve showed his travels to attend food fairs and his use of the associates he met while working for Procter & Gamble and Pepsico to market his stuff, but in the year at issue he ran up expenses and lost big.

Judge Vasquez: “In the matter before us, respondent’s notice of deficiency makes no mention of section 195, the text of section 195, or the principles upon which section 195 rests.  The record does not establish that respondent raised section 195 during the examination of petitioner’s income tax return or otherwise notified petitioner that section 195 was relevant to his determination.  In fact, respondent’s allowance of petitioner’s Schedule C deductions for advertising, legal and professional services, office expenses, supplies, and utilities in the notice of deficiency contradicts respondent’s section 195 argument.  Accordingly, respondent’s section 195 argument is a new matter, and respondent bears the burden of proof with respect to that argument.” 2019 T. C. Sum. Op. 12, at p. 8.

IRS fails to show Prof. Steve wasn’t actively running a business.

“The record in this case establishes that petitioner, through Worldwide, was actively engaged in the trade or business of selling vegan products in Colombia, Brazil, Jamaica, and the Dominican Republic during [year at issue].  In [previous year] petitioner completed his business plan for [his corp.], according to which he would purchase vegan products from domestic manufacturers and sell them for a profit in certain foreign countries.  During [year at issue] petitioner had an agreement with B, which permitted [his corp.] to sell and market B’s Soy Curls product in foreign countries.  [His corp.] also received an exclusive license from T to sell Seitan products in Brazil, Argentina, Colombia, Jamaica, and the Dominican Republic in the beginning of [year at issue].

“Having secured products to sell, petitioner actively marketed those products in several foreign countries through his own efforts and those of business associates.  Petitioner credibly testified that he attended food shows and other meetings in Colombia, Brazil, Jamaica, and the Dominican Republic, where he provided samples of [his corp.]’s products to local distributors and retailers.  Petitioner also credibly testified that he used a network of foreign business associates to market [his corp.]’s products and find potential customers.  The record in this case includes emails that corroborate petitioner’s extensive efforts to sell [his corp.]’s products.” 2019 T. C. Sum. Op. 12, at pp. 12-13. (Names and footnote omitted).

IRS couldn’t prove Prof. Steve wasn’t able to sell the veggies overseas.

So Prof. Steve wins, right?

Wrong.

Because substantiation. Judge Vasquez can only come up with a couple bucks (hi Judge Holmes) deductions beyond whatever IRS allowed. Prof. Steve might have been a good business operator, but a wretched bookkeeper.

And no evidence that Prof. Steve utilized a competent tax adviser, plus the five-and-ten chops at issue here were calculated untouched by human hands, thus neither Graev nor Clay.

Speaking of Graev and Clay, Judge James S (“Big Jim”) Halpern has a couple designated hitters, wherein he pelts IRS with Clay, as IRS maybe breathed chops before the Boss Hoss Section 6751(b) sign-off. See Nathaniel A. Carter & Stella C. Carter, et al., Docket No. 23621-15, filed 7/1/19.

Go get your refund claims filed. The diplomats have won the day. This from the IRS’ e-news for tax pros:

“This year the United States and the French Republic memorialized through diplomatic communications an understanding that the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS) taxes are not social taxes covered by the Agreement on Social Security between the two countries. Accordingly, the IRS will not challenge foreign tax credits for CSG and CRDS payments on the basis that the Agreement on Social Security applies to those taxes.

“Taxpayers have 10 years to file a claim for refund of U.S. tax with respect to a foreign tax credit. The 10-year period begins the day after the regular due date for filing the return (without extensions) for the year to which the foreign taxes relate. The IRS will update information on claiming these taxes as foreign tax credits soon.”

STJ Diana L (“The Taxpayer’s Friend”) Leyden examines the factification underlying the title of this blogpost in an off-the-bench designated hitter, Forrest Wade Gillespie, Docket No. 6174-18S, filed 6/28/19.

Forrest drives long-haul from CA to UT, and spends 339 (count ‘em, 339) days of the year at issue on the road, mostly sleeping in the compartment of the truck, occasionally sleeping in a rented room in Sandy, UT, paying out-of-pocket for minor repairs so the trucking company doesn’t dock his bonus which they pay, and renting a car to “see the sites” (I guess he meant “see the sights”) when his truck was in for major repairs or when he didn’t have a load to haul.

USDOT requires rest periods.

“Petitioner testified that regulations required that truck drivers not drive for more than 11 hours without resting and then had to rest, without driving, for 10 hours. Further, once a truck driver drove for 70 hours, he had to rest for 34 hours. [His company] accounted for its truck driver’s driving and off duty time in a daily log.” Order, transcript, at pp. 5-6.

Forrest’s unreimbursed employee expenses go down. The minor repairs could have been reimbursed. His meals and room rentals weren’t for travel. Because he had no home.

“The purpose of the deduction for expenses incurred away from home is to alleviate the burden on the taxpayer whose business requires him to maintain two homes and therefore incur duplicate living expenses. Kroll v. 25 Commissioner, 49 T.C. 557, 562 (1968).” Order, transcript, at p. 13.

“…petitioner did not have a principal place of business. He was a long-distance truck driver and was on the road 339 days out of the year. Petitioner was not required to return to [his boss’] principal location and receive his driving assignments at the end point of a previous assignment. Thus, because of the nature of his employment petitioner did not have a principal place of business in [year at issue]. See Howard v. Commissioner, T.C. Memo. 2015-38.” Order, transcript, at p. 14.

So Forrest’s deductions, mostly unsubstantiated, fail.

But IRS has feet of Clay, so they lose the Section 6751(b) Boss Hossery.

“Respondent has presented evidence that the section 6662(a) penalty was ‘personally approved (in writing) by the immediate supervisor of the individual making such determination’ on November 6, 2017. Respondent also provided evidence that the 30-day letter, the first time the IRS proposed the accuracy-related penalty, was dated October 2, 2017, before the date of the managerial approval. Respondent has failed to meet his burden of production.” Order, transcript, at p. 15.

For the story of Clay, see my blogpost “Indians Not Taxed – Not!” 4/24/19.

For the title of this blogpost, see Dave Dudley’s 1981 classic about various over-the-counter medications that speed to your side the food you eat, the clothes you wear and the flickering screens whereon appear these words of wisdom.