I find it hard to believe that all y’all were hanging, breathless, on the fate of equitable tolling in a Section 7436 employee status case. True, I did blog the earlier iteration of Belagio Fine Jewelry Inc., 164 T. C. 7, filed 4/15/25, last June; see my blogpost “Is It or Isn’t It?” 6/25/24.

It’s the usual day-late, dollar-short non-blessed PDS getting the petition to the Glasshouse on Day 91.

Judge Tag Greaves said last year that  the 90-day rule was a non-jurisdictional claim-processing rule, but left equitable tolling for another day.

The headline is the answer. IRS loses.

“Specifically, as to the 90-day deadline, section 7436(b)(2) provides: If the Secretary sends by certified or registered mail notice to the petitioner of a determination by the Secretary described in subsection (a), no proceeding may be initiated under this section with respect to such determination unless the pleading is filed before the 91st day after the date of such mailing.” 164 T. C. 7, at p. 5.

Jurisdiction and equitable tolling are two different matters. A court may have jurisdiction as a matter of law, but equitable tolling, though presumed, doesn’t automatically follow. A statute is not a suggestion to be tinkered with.

“As for the deadline in section 7436(b)(2), we see nothing in the statute’s text to rebut the presumption that equitable tolling applies. Section 7436 does not expressly prohibit equitable tolling. Nor does the wording strike us as ‘unusually emphatic,’ ‘highly detailed,’ or ‘technical.’ Although section 7436 uses emphatic wording—’no proceeding may be initiated’—it does not strike us as unusually emphatic. It seems no more emphatic than the wording of the Federal Tort Claims Act, 28 U.S.C. § 2401(b), which provides that a claim ‘shall be forever barred’ for failure to comply with the 6-month deadline that the Supreme Court held did not preclude equitable tolling.” 164 T. C. 7, at p. 7 (Citations omitted). (Emphasis by the Court).

Finally, don’t sweat the small stuff. “The number of petitions under section 7436 is even dwarfed by the number of collection due process cases, representing 5.06% of the cases filed with the Court. The increased administrative burden related to these collection due process cases was insufficient to rebut the presumption in favor of equitable tolling in Boechler, P.C. v. Commissioner, 142 S. Ct. at 1501.” 164 T. C. 7, at p. 9. (Citation omitted).

Two full-dress T. C.s for a tiny silt-stir.

Four (count ’em, four) years ago last month Judge Travis A. (“Tag”) Greaves issued an order which tossed fraud chops on Brian D. Beland & Denae A. Beland, Docket No. 30241-15, filed 4/15/25 because IRS got the Section 6751(b) Boss Hossery after they showed the Form 4549 changeling to them. See my blogpost “Boss Hoss to the Rescue,” 3/1/21.

Well today, 9 Cir’s reversal of Laidlaw’s Harley Davidson Sales, Inc. causes Judge Tag Greaves to vacate the above referred to order resulting from the full dress T.C. For the Laidlaw reverseal, see my blogpost “Ya Feelin’ Lucky?” 4/2/22.

IRS is seeking to vacate the order granting partial summary J to Brian & Danae, tossing the fraud chop. Judge Tag Greaves says there’s no Tax Court Rule about vacacting an order; Rule 162 talks about decisions, and there isn’t one here, because the order only addresses fraud chops; the rest of the case is still up for grabs after a mere ten (count ’em, ten) years.

But FRCP  60(b)(6), brought in by Rule 1(b) provides an order can be vacated for “any other reason that justifies relief.”

Change in law (9 Cir) is good enough reason.

As for timeliness of IRS’ motion to vacate (only three years after Laidlaw reversal), “Golsen requires that we follow the Ninth Circuit’s Laidlaw’s Harley Davidson Sales, Inc., regardless of whether this Court would reach the same conclusion. It would be a waste of judicial resources to stand by a legal conclusion that would be reversed on appeal. This change in controlling law is an unusual circumstance that justifies granting leave to file a motion to vacate and vacating our prior order.” Order, at p. 6.

Taishoff says Laidlaw was wrongly decided. The use of “assessed” in Section 6751(b) is unskillful drafting. An embalmed mistake is still a mistake.

“Je Suis Charlie – Bis”

This is a non-political blog. Or at least, it set out to be so, fifteen (count ’em, fifteen) years ago. I hope I’ve kept true to my intention. It was my hope to continue, to report Tax Court day by day, with commentary aimed at improving the system only, leaving political considerations outside.

I am nearing the end of my career. My ability to deal with the daily strain of practice is wearing out.

But when I see this profession, which occupied the bulk of my life (and all of my working life), trashed and degraded by those with no greater aim than fattening already fat wallets by yielding whatever worth they have left, I am weary with forbearing and cannot stay.

No, I’m no paragon of virtue. I’ve got my share, and more than my share, of times when I’ve gone into the tank or fallen short.  And I know neither courage nor honesty, nor even allegiance to God and Country, can pay the rent or the mortgage.

But I must add my voice to those of my colleagues who are protesting this government’s attempt to subjugate the profession and bend it to their invidious will. Once again, we are all Charlie. Whether the terrorists wear shemaghs or MAGA hats is nothing to the point. They must be fought, and it is never cheap to fight.

Maybe Big Law is too big. Maybe Big Law has forgotten what law is about. Maybe EBITDA and ROI have replaced independent professional judgment and integrity.

Maybe law is just a sham. Maybe it’s really soap bubbles for the rich and chains of steel for the poor. Maybe those of us who believed in it are losers. But it’s better than what this government is offering.

So for me, there is no more neutrality. Elie Wiesel got it right: “Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. Sometimes we must interfere.”

If anyone is capable of effectuating the goal hereinabove set forth at the head hereof (as my expensive colleagues would say, if the government lets them), it is Judge Ronald L. (“Ingenuity”) Buch. But he must perforce forbear, as Daryl Cheatham, Docket No. 751-24, filed 4/15/25 (“It’s That Day Again”) gives him nothing but old-time protester jive wherewith to furnish forth this off-the-bencher.

“We have further explained in Wnuck v. Commissioner, ‘[I]t is doubtful whether tax jurisprudence will be much advanced by issuing yet another opinion affirming the obvious truisms about tax law’. 136 T.C. 498, 504 (2011). For example, we have previously spilled ink addressing the frivolous argument that income tax is an excise tax and it cannot be imposed as a non-apportioned direct tax under the 16th Amendment, an argument Mr. Cheatham repeats in this case.” Transcript, at p. 6. (Citation omitted).

For the backstory on oft-quoted Scott F. Wnuck, see my blogpost “One’ll Get You Five,” 5/31/11.

Perhaps the late Mr. Justice Antonin Scalia was partly right when he compared Tax Court to a village traffic court: the Glasshouse in the City of Governmental Efficiency may be a safety valve, a place where frustrated taxpayers get to blow off steam; where they get heard before a truly competent judge who cares but can do nothing to vary the law. Wherefore little harm is done either to the fisc or the public peace. And the advance of tax jurisprudence can wait for still another day.

STJ Diana L. (“Sidewalks of New York”) Leyden reaches back to Han Suyin’s 1952 novel in a broad-spectrum overview of privilege in its many-splendored forms. Marc Worrall & Sue J. Worrall, Docket No. 14734-23, filed 4/14/25, have ten (count ’em, ten) trusty attorneys, all burning and churning by day and night through every form of privilege (except only intraspousal, clergy-penitent, and patient-physician), but STJ Di stays with them and their ten (count ’em, ten) IRS adversaries for seventeen (count ’em, seventeen) pages.

STJ Di invokes a wide view of Section 7525 qualifying tax advice, so check out Order, at pp. 8-12. Mere filing instructions and statements of the law and regs unrelated to specifics don’t get it, likewise business advice isn’t enough.

A sculpted conflict waiver can earn work product privilege if tied in to reasonably anticipated litigation.

Attorney-client, of course, is the main course, so if you need apposite somber reasoning and copious citation of precedent for your next brief, STJ Di and the 20 trusty attorneys lay it all on you in the Order, at pp. 3-8.

This is a microcaptive case, featuring exotic coverages for Marc’s & Sue’s lobstering company. Should make for a fascinating opinion, when all the discovery is over.

The Branerton ideal, that “(T)he discovery procedures should be used only after the parties have made reasonable informal efforts to obtain needed information voluntarily,” has been so thoroughly ignored, and when not ignored abused, that it might as well be put to rest.

Judge Travis A. (“Tag”) Greaves finds himself refereeing yet another interrogatories-vs- documents jumpball in J.G. Boswell Company & Subsidiaries, Docket No. 2408-19, filed 4/11/25.

The Boswells want IRS’ legal research, which is a nonstarter, but they do get all the facts upon which IRS relies. Research notes are attorney work product. Judge Tag Greaves finds a lot of IRS’ responses are sufficient.

But IRS is offside in demanding documents, which the Boswells are hunting up and turning over as found. Judge Tag Greaves lets them hunt.

“Respondent’s motion is premature at this point. We expect the parties to work cooperatively in preparing this case for trial. Respondent’s requests call for the production of a voluminous set of documents. Petitioner has indicated its willingness to produce the requested documents and represents that it has produced the relevant documents that it has located. Rather than working collaboratively with petitioner\ to establish a schedule for a rolling production, respondent filed the motion to compel. Given petitioner’s representation and willingness to produce the documents, we will deny respondent’s motion and order the parties to work cooperatively on setting a production schedule for these documents.” Oder, at p. 5.

Play nice, kids; but Judge Tag Greaves won’t countenance stalling.

“We note that petitioner may not delay production of these documents until the production date set forth in the pretrial scheduling order for the exchange of exhibits. That deadline relates to the exchange of documents for trial and not the exchange of discovery. Petitioner need not however produce documents related to expert reports until the deadlines set forth in the pretrial scheduling order.” Order, at pp. 5-6.

This blogpost is, as all my blogposts are, an abbreviation. Those interested should read the whole order.

As I read the order, I marveled at this sentence in the “Background.” “The parties have been engaging in informal discovery for several years.” Order, at p.1. As I read what the parties are seeking now, after “several years” of informal discovery, I was reminded of the famous question Sherlock Holmes asked the young Police Inspector Stanley Hopkins: “What did you do, Hopkins, after you had made certain that you had made certain of nothing?”

Hopkins didn’t answer “Why, make a motion in Tax Court, of course.”

Neither Frigyes Karinthy nor John Guare could rescue Douglas E. Hampton, T. C. Memo, 2025-32, filed 4/10/25, when he tries to take an $855K passthrough deduction from his Sub S for the cash that the Feds seized as part of a criminal forfeiture when Doug himself pled to bribery, fraud, and money laundering in USDCWDOH.

True, Doug’s Sub S, of which he was sole shareholder, was never indicted or convicted of anything anywhere. Judge Elizabeth A. (“Tex”) Copeland won’t permit Doug to avoid the sting of the forfeiture by interposing his Sub S, finding that it wasn’t a person “other than the defendant” for purposes of 21 U.S.C. § 853(n)(2), which allows certain persons who assert a legal interest in property subject to forfeiture to petition the court for a hearing.” T. C. Memo. 2025-32, at p. 13. And the Sub S never petitioned in USDCWDOH.

“Even if we assume that [Sub S] was entitled to claim a deduction for the asset seizures (a question we need not decide here), Mr. Hampton is barred by the public policy doctrine from reporting his 100% passthrough share of [Sub S]’s resulting loss. To hold otherwise would be to frustrate the sharply defined policy against conspiring to commit offenses against the United States (including federal program bribery, honest services fraud, and money laundering), as reflected in 18 U.S.C. § 371 (conspiracy), 18 U.S.C. § 666 (federal program bribery), 18 U.S.C. §§ 1343 and 1346 (honest services fraud), and 18 U.S.C. § 1956 (money laundering). Mr. Hampton was the wrongdoer, and HCM’s assets were seized as part of the penalty for his wrongdoing. The seized and forfeited assets were clearly ‘property constituting, or derived from, proceeds obtained, directly or indirectly, as a result of the violations in Count One of the Information.’ Allowing him a deduction on account of [Sub S]’s loss would unquestionably reduce the ‘sting’ of the penalty for him.” T. C. Memo, 2025-32, at p. 13.

I must give Doug’s trusty attorneys a Taishoff “Good Try, Second Class.”

Joseph J. Zajac, III, T. C. Memo. 2025-33, filed 4/10/25, making his fourth appearance in this my blog, got his second trial (see my blogpost “Second Time Lucky,” 12/26/18). He did eke out a $17.5K Section 104 exclusion for physical injury and mental distress damages arising therefrom when some MA police allegedly roughed him up.  Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan could Cohan half the amount JJZIII got in settlement.

The rest of his deductions didn’t do so well. JJZIII was definitely in five-and-ten 20% territory going into the Rule 155 beancount.

But what about the online Section 6751(b) Boss Hossery?

“Petitioner argues that because the supervising agent did not sign the Civil Penalty Approval Form until September 3, 2014, section 6751(b) was not satisfied. We disagree. The record reflects that the revenue agent assigned to petitioner’s case obtained supervisory approval by email before sending petitioner Letter 5153 and the Examination Report. This was noted by the supervising agent on the Civil Penalty Approval Form, where he left a handwritten notation that the penalties had already been ‘approved by email to RA.’ Since the method of approving penalties need not take a particular form… the revenue agent timely obtained approval….” T. C. Memo. 2025-33, at p. 22. (Citations omitted).

Likewise the enhanced chops asserted in the amended answer, approval of which is shown by immediate supe’s initials on the motion to amend (filed) and amendment (lodged) prior to service thereof on JJZIII. So what remains of the bulwark supposedly erected by Congress in Section 6751(b) to shield the innocent taxpayer from RA bludgeoning?

I note the passing of His Honor Big Julie Judge Julian I. Jacobs on 4/5/25.

As Tax Court Public Affairs noted in its press release “He particularly enjoyed challenging cases, and even as a senior judge he authored important precedential opinions in the whistleblower context.”

He provided much blogfodder.

I’ve blogged Section 152 custodial parent cases for a decade, but the family law bar and the divorce courts either don’t care or don’t know. If any reader knows of a malpractice claim arising from a divorce dependency deduction split, I’d like to know about it. I can’t think there hasn’t been any.

STJ Jennifer E. (“Publius”) Siegel has Melissa Correll, T. C. Memo. 2025-31, filed 4/9/25, and it’s same old, same old.

“Petitioner and her ex-husband are the parents of petitioner’s older two children. Pursuant to their separation and divorce, petitioner and her ex-husband executed a settlement agreement that included arrangements for claiming their children as dependents. Under the original agreement, petitioner was entitled to claim Child No. 2 as her dependent for income tax purposes, and the father was entitled to claim Child No. 1. The agreement was updated in 2015 to reverse this arrangement: Petitioner was entitled to claim Child No. 1 as a dependent, and the father was entitled to claim Child No. 2.

“Despite the revised agreement and the fact that both children lived with their father full time, for many years the parents’ practice had been to follow the original agreement. For the year at issue, however, both parents claimed Child No. 2. Unbeknownst to petitioner, her ex-husband claimed Child No. 2 instead of Child No. 1 because Child No. 1 was no longer a minor.” Order, at p. 2.

My ultrasophisticated readers have doubtless tuned out long since, so I alone must cry out “Section 152(c)(1)(B); see also Section 152(c)(1)–(3).”

Takes STJ Publius Siegel four (count ’em, four) pages to dispose of Melissa’s deduction. But it takes four (count ’em, four) IRS attorneys to get there. With the Service reeling from budget cuts, Section 6103 violations, and senior resignations, is there no more efficient use to be made of remaining personnel?