It won’t help you. That’s Judge Goeke’s lesson to Logan M. Chandler and Nanette Ambrose-Chandler, in 142 T. C. 16, filed 5/14/14.

Strike up the band, Sir Billy Walton, and shout it out, Dame Edie Sitwell, it’s time for more Façade.

Logan and Nanette owned two buildings in Boston’s now-ritzy South End. They sold one, but had put historic façade easements on both, and claimed heavy-duty Section 170 charitable deductions for both. They even followed the advice of the National Parks Service, who were advocating this sort of thing. IRS agreed they followed the rules, except that their appraisal didn’t prove either building lost any value.

Note that the vendor of these dodges, our old chums National Architectural Trust (NAT) provided surveillance (which Boston’s own municipal landmarks authority didn’t do, the Beantown landmarkniks relying on local whistleblowers), annual inspections to make sure the properties remained in their original state, and had an easement that covered the rear as well as the façade.

See my blogpost “Cover Your Rear”, 11/12/13.

No dice, says Judge Goeke. “We must determine the value diminution resulting from these additional restrictions. We recently performed this analysis under identical circumstances. In Kaufman v. Commissioner, T.C. Memo. 2014-52, we reviewed a NAT easement on a property in the South End Historic District. There we determined that the differences outlined above do not affect property values, because buyers do not perceive any difference between the competing sets of restrictions. Id. at *57. We see no reason to break with that result here. Mr. E’s report, which petitioners exclusively rely on to demonstrate their easements’ values, was not credible. Respondent has persuasively argued that a typical buyer would perceive no difference between the two sets of applicable restrictions here. We recognize technical differences between the easements and local law, but we agree with respondent’s conclusion that the restrictions were practically the same. Because petitioners have not proved that the easements they donated had value, we sustain respondent’s disallowance of the charitable contribution deductions they claimed.” 142 T. C. 16, at pp. 19-20 (name omitted).

Now since the deductions were greater than would be allowed to offset taxable income in any one year, Logan and Nanette spread them over three years. IRS wants the 40% chop for all, but Logan and Nanette argue they have reasonable cause, and the drop in overvaluation from 400% to 200% in 2006, and the elimination in that year of a good faith defense, cannot be applied retroactively.

Judge Goeke blows retroactivity away: “Under either version of section 6662(h) the valuation misstatements are ‘gross’ and trigger the 40% penalty. However, the facts raise a novel issue concerning petitioners’ right to raise a reasonable cause defense for their 2006 underpayment. Petitioners note that a portion of the underpayment resulted from the carryover of charitable contribution deductions they first claimed on their 2004 return, which they filed before the PPA’s effective date. Accordingly, they argue, denying their right to raise a reasonable cause defense would amount to retroactively applying the PPA [Pension Protection Act, which changed the rules].” 142 T. C. 16, at pp. 24-25. “When taxpayers file a return that includes carryforward information, they essentially reaffirm that information. The amended reasonable cause rules were in effect when petitioners filed their 2006 return, which reaffirmed the … easement’s grossly misstated value. Applying those rules does not amount to retroactive application. The plain language of the statute makes the rules applicable for all returns filed after July 25, 2006. Petitioners filed their 2006 return after that date and consequently may not raise a reasonable cause defense for their 2006  underpayment, which resulted exclusively from gross valuation misstatements.” 142 T. C. 16, at pp. 25-26.

Notwithstanding the foregoing, as my high-priced colleagues would say, Judge Goeke lets Logan and Nanette off the penalty for the two years when reasonable cause was a defense to the 40% chop. Logan is a lawyer and an MBA, and Nanette is a self-employed interior decorator. But that doesn’t mean they know about valuing easements.

Most people can form some hazy idea of the value of regular real estate, but even the experts come seriously unglued when it comes to historic façade easements (and how!). After all, Judge Goeke bounced both Logan’s and Nanette’s appraiser and IRS’ appraiser, finding fault with both. And Logan and Nanette followed the National Parks Service guidelines. Unlike the Kaufmans in the cited case (and in my blogpost “A Joy Forever? Not Hardly”, 3/31/14), neither Logan nor Nanette evinced the misgivings that sent Gordo Kaufman to ask Mory Bahar of NAT whether the easement would really depress the value of Lorna’s mansion, and get the reply that sinks the Kaufmans without trace.

So Logan and Nanette avoid two years’ worth of 40% chop, but get nailed for the last. Looks like covering your rear is insignificant when facades are in play. at least in Judge Goeke’s courtroom. Hit it, Edie and Sir Billy!

My sister is going to her 50th college reunion soon, and it seems like yesterday I was at her graduation.

So, since it’s getting toward college graduations and reunions, I see The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being and implacable foe of the partitive genitive, His Honor Mark V. Holmes, is hosting his own reunion of familiar faces from my past few years of blogging. It’s all about The Markell Company, Inc., 2014 T. C. Memo. 86, filed 5/13/14.

We have a family PHC, holding a ton of stock with built-in gain (remember the late Helen P. Richmond and her hapless executrix Amanda Zerbey? Well, see my blogpost “Win Your Case” , 2/11/14); we have The Skull Valley Band of the Goshute Indians and their one-time tribal chairman Leon Dale Bear (“Chair Bear” to Judge Holmes), innocent bystanders (but see my blogpost “Don’t Ambush The Indians”, 4/7/11); and starring in this drama is none other than the Great Immunologist, James (“Little Jim”) Haber, CPA, mixmaster of digital European-style options which produce monumental paper losses.

We get all of Little Jim’s prior appearances here, from Ironbridge to Humboldt Shelby, with glances at Getting Shifty and Immunology.

And there are cameo appearances by James Rogers of Superior Trading fame, and Refco, the options dealer that went belly-up amidst allegations of massive fraud.

Historic Boardwalk Hall has a walk-on role as a non-existent partnership (like the one masterminded by Little Jim), supported by Jimastowlo Oil, LLC.

Little Jim grapples the Fifth Amendment to his soul with hoops of steel, with Judge Holmes’ blessing, but adverse inferences can be used in civil proceedings, and much adversity follows Little Jim’s Constitutional stroll.

The partnerships and maneuverings (with three diagrams to show the wheeling-and-dealing) have but one aim–tax avoidance. No business was done, just a single in-and-out basis-builder, matching long and short to zero out economically, but using the old Section 752 dodge to build basis and cover the built-in gain on the sale of all that stock Grandpa had stashed all those years ago.

Judge Holmes does give retroactive application to Section 1.752-6T, the loophole plugger subsequently made permanent, relying on Section 7805(b)(6) and various court cases, although these don’t uniformly support retroactive application. Moreover, Judge Holmes finds Congress gave Treasury explicit authority to apply the loophole plugger retroactively. For one case not applying the loophole plugger retroactively, see my blogpost “Woodshedding Your Experts – Stobie Creek Part Deux”, 1/10/11

So no partnership, but plenty of tax, and a 40% substantial overvaluation chop.

Nothing exciting from Tax Court, Treasury or IRS today, and even if there had been, my mind is elsewhere. Arrived this morning 5/12/14, at 9:22 a.m., CDT, my granddaughter Natasha.

Well, in the words of the old Toyota commercial, “you asked for it, you got it”; I wanted some good designated hitters, and The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, Mark V. Holmes, delivers one.

And it’s a one-sentence course in standard of review out of a NOD from a CDP. See infra, as my two-yacht colleagues would say.

Mark Melfa, Docket No. 17536-11L, filed 5/9/14, sets the stage. And Mark the petitioner (hereinafter “MTP”, to distinguish him from Mark The Judge, hereinafter “MTJ”) sets the stage by doing nothing until he gets to Tax Court, whereat he claims (a) he never got the chance to contest the underlying liability, so he’s entitled to de novo review, and (b) he was entitled to a face-to-face at the CDP.

Well, MTP obviously never read my blogpost “Stipulate, Don’t Capitulate”, 9/23/11, or either of my two follow-ups, “Stipulate, Don’t Capitulate – Part Deux”, 5/24/13, and “Stipulate, Don’t Capitulate – Redivivus”, 9/19/13, because he and IRS stipulate that the administrative record is true and complete.

Of course, the admin record sinks MTP. Here’s MTJ: “Mr. Melfa now argues that he didn’t receive any notice of deficiency. His problem is that when his case was before the IRS, he not only didn’t put that argument on his Form 12153 (the official IRS CDP-hearing request form), which is an informal administrative pleading, but he never once in the administrative record as a whole asserts anything other than that “I do not recall ever receiving a statutory notice of deficiency . . . .” Letter from Mark Melfa to IRS Memphis Appeals Campus (June 10, 2011). We cannot fault the officer for not responding to an unmade argument.” Order, at p. 2 (Citation omitted).

Now we know that non-receipt of a SNOD doesn’t help for the 90-day limit on petitioning the deficiency, if same was properly and provably mailed to last-known address. But it does help on a CDP, as non-receipt is a basis for de novo review of the underlying liability. Except “(M)r. Melfa didn’t put his supposed nonreceipt into his request for a CDP hearing, didn’t attend that hearing, and didn’t even mention it in any of his correspondence with the officer who ran the hearing.” Order, at p. 3.

And he stipulated to the administrative record. Game over on that one.

That leaves face-to-face. But face-to-face isn’t required by law or regulation or the IRS Manual.

“The regulation [Sec. 301.6330-1(d)(2) A-D8, Proced. & Admin. Regs.] says that a taxpayer who challenges his underlying tax liability with irrelevant or frivolous issues doesn’t get a face-to-face hearing…; we see no error, and no abuse of discretion, in similarly denying a face-to-face hearing to someone who raises no issues about liability at all.” Order, at pp. 3-4.

The one-sentence gem in all this? Standard of review when abuse-of-discretion is in play: MTJ: “A handy shorthand for abuse-of-discretion review is that it looks for an error of law, a clearly erroneous finding of fact, or an irrational chain of reasoning.” Order, at p. 3.

How’s that for a gem? You can use it in all of your memoranda of law, free of charge.

Ol’ Tommy Gray, son of a scrivener, got it right in his 1751 masterpiece. There’s a lot of blushing flowers in Tax Court, legal and practical roses wasting their sweetness amidst the daily dross of orders.

Now there is a way a Judge can rescue these gems of purest ray serene from the dark unfathom’d caves of the Orders link on the Tax Court website.

They can elevate these to designated hitter status, by the simple act of tipping off the hard-laboring clerks at 400 Second Street, N. W., directing the said clerks to ennoble their coruscations above the common herd.

And some Judges do. STJ Lewis (“Love That Spelling”) Carluzzo is a great exponent of the designated hitter, sometimes overdoing it in his zeal to help his homonymical pal here at the blogger’s keyboard. And Judge Gustafson, whose off-the-benchers are often illuminating, will send up a smoke signal when he’s delivered something useful.

But too many Judges are wont to issue orders to fortune and to fame unknown. And I’ve blogged these.

By patient and unremunerated toil, I’ve waded through multitudinous seas, if not exactly incarnadine then murky with the silt stirred up by Judge Holmes’ colleagues, reading volumes of “the Court held a conference call with the parties to the above-docketed cases. During the call, the parties represented that they would be submitting a stipulation of settled issues shortly.” And “ORDERED that, on or before May 22, 2014, petitioner shall file a response to respondent’s motion to dismiss for lack of jurisdiction and to strike as to the taxable year 2006.” Soporific isn’t the word for it.

I’m rather like the pig who hunts out the truffles, rootling round in the underbrush until my snout picks up the sweetness in the desert air, unearths that gem of purest ray serene aforesaid, and deposits same on the Internet, to the delectation of the battle-weary, hard-bitten, in-the-trenches practitioner.

It’s a tough job, but somebody has to do it.

Thanks for reading. 

 Mostly Aren’t

We poor bloggers catch a lot of flak. See my blogpost “Modified Loving”, 2/4/13, wherein Judge Boasberg of USDCDC threw a flag on IRS reliance on a blogpost.

Well, Judge Buch,  nowise reluctant to flog the blogger,  lowers the boom on IRS, when the Service again tries the Internet expert to trump the expert on the scene.

You can read it for yourself in John M. Alterman Trust U/A/D May 9, 2000, Ronald Gordon and Donald Gavid, Trustees, Transferee, et al., filed 5/8/14, Docket No.6936-10. There are four orders involved here in four cases, but the story is the same.

Richard C. Alderman is involved in all four, and is the target of an IRS trial subpoena to testify (even though he did testify once already) and to produce documents.

But Richard C. has problems. “Richard C. Alterman has Parkinson’s disease and he underwent two brain surgeries earlier this year. Prior to his first surgery, the parties agreed to take, and took, Mr. Alterman’s deposition under Rule 81 in order to perpetuate his testimony. By letter…, Mr. Alterman’s neurologist informed the Court that Mr. Alterman has impaired cognitive function and memory loss after his surgeries, is fatigued, and has episodes of confusion exacerbated by stress.” Order, at p. 1.

Sounds like Richard C. might not be the best witness this time around, maybe so?

Nothing daunted, IRS claims  “(1) live testimony creates a superior record and (2) respondent expects to have questions for Richard C. Alterman that he was not able to pose at the deposition. Respondent explained that those questions might arise as a result of the testimony of trial witnesses or documents that are produced at trial.” Order, at p. 2.

Judge Buch blows away the second argument. What might happen at the trial or on further depositions is too speculative. If IRS knows what they need, they should speak up. If not, Judge Buch isn’t letting them haul Richard C. into a deposition on a “might be, could be”.

But as to the first, IRS claims Richard C.’s impairment isn’t all that serious. “…despite Mr. Alterman’s doctor’s very recent statement that Mr. Alterman has impaired cognitive function and memory loss, respondent [IRS] asserts that Mr. Alterman’s side effects from brain surgery are not permanent and provides a WebMd article stating that patients undergoing Mr. Alterman’s procedure can expect a full recovery and are usually able to return to work within 4-6 weeks.” Order, at p. 2.

If it’s on the Internet, it must be true, right? Well, my blogposts are, anyway.

But Judge Buch boots, and doesn’t reboot, IRS’ Internet discovery.

“Respondent’s [IRS’] inclusion of a WebMd article is not well taken. Certainly Mr. Alterman’s neurologist is in a better position to evaluate his cognitive impairment than a WebMD article. See Campbell ex rel. Campbell v. Secretary of Health and Human Services, 69 Fed. Cl. 775, 781 (2006) (finding that a special master’s inclusion of medical articles from websites including WebMd arbitrary and capricious because the articles were not reliable and websites, specifically including as WebMd, caution that reliance on the information contained in the articles should be used ‘solely at your risk’). Beyond the inherent unreliability of internet research, the WebMd article speaks in terms of generalities, whereas Mr. Alterman’s doctor speaks to his specific condition.” Order, at p. 2.

Well, IRS used the WebMD article at its own risk. And IRS loses.

IRS also loses the document portion, as they ask fewer than 45 days before trial date, and Rule 70(a)(2) says “no”. Trial subpoenas are not substitutes for ordinary discovery. For more about that one, see my blogpost “Ask Politely”, 8/22/12, where Judge Gustafson teaches IRS a lesson they apparently forgot this time around.

So Richard C. is left in peace, although IRS can use his previous deposition if they so wish.

Or, The Expanding Tax Universe

The numbers are rolling, and Judge Cohen decides that one year of Cherie L. Hickman’s multi-year tax troubles gave rise to a deficiency, and therefore Tax Court can consider the Section 6651(a) additions to tax for that year.

Read all about it in Docket 27695-12, filed 5/7/14.

Orders, even designated ones, aren’t precedent, so you can’t cite them, but you can use the reasoning and the citations; even lift language verbatim.

The additions are the Section 6651 (a) failure-to-file-timely and failure-to-pay-timely, and Cherie admits she didn’t and she didn’t, respectively.

And for four out of the five didn’t-and-didn’t years, IRS assessed tax and additions based on Cherie’s late-filed returns, and those are off the table. Self-reporteds are no ticket to Tax Court.

But for one year, IRS sent a SNOD (which Judge Cohen calls NOD I; I eschew confusing a Statutory Notice of Deficiency, the so-called “90-day letter”, which I call a SNOD, with the Notice of Determination from Appeals after a CDP, which I call a NOD). The number alleged in NOD I was wrong for the one year at issue, as it was higher than what Cherie reported on her delinquent return.

Eventually, IRS and Cherie agreed that the right number was less than NOD I claimed, but more than Cherie put on her delinquent return.

But is there a deficiency, and therefore can Cherie challenge the Section 6651 additions for that year?

Yes, says Judge Cohen. IRS claims that the NOD I additions are attributable to the unabated portion of the tax due, and those were spelled out in NOD I, so there is no new deficiency.

And IRS’ motion to dismiss all years just says Cherie had a chance to petition from NOD I, and concededly didn’t.

Cherie replies that nothing in NOD I shows that it was based on what Cherie filed in her delinquent return for the year at issue, and in fact IRS and she agreed on a totally different number afterwards.

Judge Cohen: “Section 6211(a) of the Code defines ‘deficiency’ as the amount by which the tax imposed exceeds the excess of the sum of the amount shown as the tax on the taxpayer’s return, plus the amounts previously assessed (or collected without assessment) as a deficiency, over the amount of any rebates. In following this deficiency definition, respondent asserted that the tax imposed (as agreed upon by the parties) is $172,309; the amount shown as the tax on the taxpayer’s return is $0 (because the Internal Revenue Service (IRS) did not process petitioner’s delinquent … return); the amount previously assessed as a deficiency is $255,807; and the amount of the previous abatement (which constitutes a ‘rebate’) is $83,768. Respondent’s position is that a calculation of these numbers pursuant to section 6211(a) results in no deficiency. ” Order, at p. 3.

But that assumes a steady-state tax universe. And that isn’t so.

Judge Cohen: “…the concept of a deficiency–for purposes of section 6665(b)(1) in tandem with section 6211–is dynamic. A deficiency over time is expected to change as various assessments, abatements, and other actions take place. Yet such change does not erode the deficiency’s underpinnings–that at some time a deficiency, subject to the deficiency procedures, occurred; and that is enough for section 6665(b)(1) to apply. Here, respondent [IRS] originally determined a deficiency of $255,807 for … and assessed that amount. By agreement of the parties, that deficiency was reduced to $172,309, causing respondent to abate $83,768. Because the IRS did not process petitioner’s return, zero tax was reported from the return. Thus all of the $172,309 tax liability that remains from the original $255,807 deficiency stemmed from that deficiency. Consequently, the additions to tax at issue were wholly derived from a deficiency.” Order, at p. 4.

Section 6665(b)(1)? That’s the “additions based on deficiencies are deficiencies” section, and must IRS follow the deficiency procedure, not assessment.

So Cherie gets to fight about the additions.

No, not a University of Minnesota sports team, but rather University of Minnesota Law School’s Ronald M. Mankoff Tax Clinic, who get a tip of the ol’ Stetson from The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, Mark V. Holmes.

The Golden Gopher Tax Clinicians win a small-claimer for Mohamed Kadir, 2014 T. C. Sum. Op. 43, filed 5/6/14.

Mo is a homeowner swindled during the Great Home Mortgage Fraud of the early 2000s. He refinanced, seeking lower payments, but got nailed with a neg am mortgage where the outstanding principal balance increased unless big paydowns were made. For an explanation of the neg am (negative amortization) mortgages, see 2014 T. C. Sum. Op. 43, at p. 4, Footnote 3. It’s like paying only the minimum on your credit card balance, except it’s worse.

Mo has another problem: he doesn’t speak English very well “(at trial the court used a translator who spoke Kadir’s native Oromo)”, 2014 T. C. Sum. Op. 43, at p. 3. No, I didn’t know where that language is spoken, either, until I looked it up. Oromo, I have learned, is an Afro-Asiatic language, of the Cushitic branch, and is the most widely spoken language in Ethiopia. Good job by the Minnesota clinicians in finding a speaker thereof equally proficient in English, although “…the Court directly observed the difficulty of translating ‘negative amortization’ into Oromo.” 2014 T. C. Sum. Op. 43, at p. 4, footnote 3.

Mo defaults, of course, but the Housing Preservation Project lawyers in St Paul stave off foreclosure, and sue the lenders for fraud. The Preservationists get Mo a cheaper rate, but as part of the settlement, Mo gets $10K from the lead lender, which he has to pay in two pieces to each of the former servicers of the fraudulent loan.

So at the direction of his Preservationist lawyer, Mo takes a $10K check to his bank, deposits it, and writes two checks to the servicers.

Of course, Mo gets a 1099-MISC for the $10K, and another for $35K, the written-down portion of the fraudulent mortgage. IRS didn’t mention the latter in the SNOD they sent Mo, but they argue cancellation-of-debt at the trial, and that’s too late, so Judge Holmes isn’t hearing it.

No mention made of the Section 108(h) bailout for underwater mortgagors in effect in 2009, when all this happened, but we’ll leave that for now. Maybe the mortgaged house wasn’t Mo’s principal residence.

Mo’s argument, via the Minnesota clinicians and his interpreter, is that he’s like a mailman who picks up a check and delivers it. No one would claim the mailman had income from that transaction.

And this is a step transaction. Mo got the $10K, but the settlement agreement obligated him to pay it immediately to the two servicers, to whom he had no prior obligation, and his lawyer told him he had to do it, so he did.

And Mo’s Preservationist lawyer convincingly testified that the fraudulent lender was concerned how to get money to the two servicers, who were going to be out some fee money under the new mortgage deal.

Thus, no debt of Mo’s was paid by means of the $10K, and he was just a mailman.

Good job, Minnesotans.

Judge Lauber has to decide if Tax Court can decide whether Panagiota Pam Sotiropoulos can get a hearing in Tax Court, in the eponymous opinion, filed 5/5/14, in 142 T. C. 15.

Pam got involved in some UK movie shelters whilst working in the UK and taking foreign tax credits for her UK withholdings. It turns out she got big UK tax write-offs and money back, but never bothered to tell IRS, because the UK refunds she got were “under investigation” by HMRC (Her Majesty’s Revenue and Customs).

IRS sent Pam a SNOD, but wants a mulligan, because Section 905(c)(3) ousts Tax Court of jurisdiction via a cross-reference from Section 6213(h)(2)(a), so Tax Court should forget the SNOD, bounce Pam’s petition and let IRS go assess and lien and levy.

Now the accuracy penalties IRS demanded are clearly subject to Tax Court jurisdiction, but IRS will concede them in order to grab Pam’s cash, untouched by Judge Lauber and his colleagues.

The only issue here is jurisdiction: can Tax Court even decide that it has jurisdiction?

You betcha it can, says Judge Lauber:

“This Court always has jurisdiction to determine whether it has jurisdiction. The Tax Court is a court of limited jurisdiction, and we must ascertain whether the case before us is one that Congress has authorized us to consider. In determining whether we have jurisdiction over a given matter, this Court and the Courts of Appeals have given our jurisdictional provisions a broad, practical construction rather than a narrow, technical one.” 142 T. C. 15, at p. 6 (Citations omitted, but read them; good stuff).

Remember, Tax Court is the sixty buck ticket to justice, where a taxpayer doesn’t have to pay to play, and gets an automatic stay while his/her case is pending at no extra charge.

Of course, there are exceptions, like a self-assessed tax (“you said it, so you owe it”), assessable penalties, jeopardy assessments, and obvious arithmetic errors. For a quick note on assessable penalties, see my blogpost “Jet Lag?”, 12/19/11.

Section 905 is an outlier. Because with foreign taxes one can’t always know ultimate liability, the taxpayer has to tell IRS when s/he finds out what the real tax bill is. And Section 905(c)(3) specifically lists refunds as a mandatory “show-and-tell”.

And if the taxpayer doesn’t, and hasn’t reasonable cause why s/he didn’t, there’s a 25% penalty.

Of course, IRS doesn’t give Tax Court jurisdiction by sending a SNOD; only the statute does.

True, says Judge Lauber, but that’s not the end of the story. IRS can go after the taxpayer once there has been a refund of the foreign tax for which taxpayer claimed credit.

But here the issue is “was there a refund?”

Now Judge Lauber makes it clear again that Tax Court isn’t passing on the merits or otherwise of Pam’s case. And Tax Court has adjudicated whether or not there was a refund of foreign creditable taxes, when no one raised the jurisdictional issue.

Tax Court exists to adjudicate contested taxes. The exceptions are the self-reporteds, the obvious math errors and the emergencies. “The common thread in these non-emergency situations is that the assessment is uncontroverted and does not need independent review, since the taxpayer does not dispute that the tax is owing.” 142 T. C. 15, at p. 16.

But careful as always, Judge Lauber limits the inquiry: “At this point, we need not decide whether we have subject matter jurisdiction over all aspects of this controversy. At the very least, we have jurisdiction to determine our jurisdiction. We thus have jurisdiction to decide whether the statutory provision alleged to divest us of jurisdiction applies, i.e., whether the U.K. taxes paid by petitioner have been ‘refunded in whole or in part’ within the meaning of section 905(c)(1)(C). This will afford petitioner a prepayment forum for resolving the central issue that she raises on the merits, namely, that the amounts she received from U.K. taxing authorities during 2003-05 were not ‘refunds’.” 142 T. C. 15, at p. 17.

Stay tuned; more to come.

Doesn’t help you if you spoke to Appeals but didn’t tell the the whole story. That’s Judge Buch’s riposte to the Miccosukee Tribe of Indians of Florida, Docket No. 20785-13L, filed 5/5/14.

The Tribe claims its four previous lawyers messed up, although three of them showed up at Appeals to contest the employment taxes assessed against the Tribe, and the last one presented documents regarding a class action against yet another lawyer, who apparently advised the Tribe they didn’t owe such taxes.

Howbeit, everyone agrees that though these lawyers showed up, they presented very few documents bearing on the point. So Appeals bounces the Tribe, and tells IRS to go collect.

The Tribe petitions Appeals’ NOD. The Tribe claims they never had a chance to contest the underlying employment tax liability. “Petitioner asserts that the review of the protests did not constitute a prior opportunity to dispute the underlying liability because the Tribe did not materially participate during the two years the protests were in the Office of Appeals and because none of their counsel provided substantive responses to the Appeals Officer’s requests. We do not evaluate how well petitioner availed itself of a prior opportunity for a conference with Appeals; our inquiry is simply whether petitioner had the opportunity for a conference with Appeals.” Order, at pp. 1-2.

So whatever the Tribe’s lawyers did or didn’t do, they had a chance to do right. Once they started talking to the AO, in the immortal words of the late great Herb Brooks: “Tonight is your night. Go out there and take it.” Or if you don’t, you won’t get another chance.

But IRS has other problems, so IRS gets partial summary judgment only to the extent that the Tribe has no further chance to contest its underlying liability.