It’s tough to mail your Tax Court petition when you’re a guest of Uncle Samuel, even in a “low-security satellite prison adjacent to the Federal Correction Institution: Jesup (‘FCI Jesup’) in Jesup, Georgia.” That’s the venue for Harsh Sharma, Docket No. 5163-11 L, filed 4/11/14, from the Tax Court connoisseur of Stony Lonesomes, both State and Federal, Judge David Gustafson. See my blogpost “We’ll Come To You”, 9/18/12.

Among Harsh’s other problems, he has about five years’ worth of unpaid taxes, for which IRS hits him with a jeopardy assessment and levy, and a NFTL a few days later. Harsh gets off a couple of Forms 12153 timely, but Appeals issues a NOD rejecting Harsh’s claims.

The NOD correctly states that Harsh has thirty days to petition Tax Court. But Harsh asks for more time, and IRS rejects that in a letter that states, incorrectly, that Harsh has thirty days from the date of that letter to petition. Wrong; the thirty days run from the NOD, not any subsequent billets doux from IRS or anyone else.

We all know, and if we don’t Judge Gustafson is nothing loath to remind us, that erroneous advice from IRS cannot estop IRS. The statute and the regs rule.

And that’s all Judge Gustafson can consider. However, once again his obliging nature shines through.

“An error of this sort is most unfortunate. An agency charged with broad nation-wide responsibility and necessarily staffed by fallible humans can never avoid such errors entirely; but the discovery of such an error should incline the IRS to take action within its discretion to compensate for the error and to provide reasonable remedies for a taxpayer who has been disadvantaged by the agency error.” Order, at p. 5.

In addition, Harsh claims he sent his petition within the thirty days of the NOD by handing it to the Jesup turnkeys. Obviously, if you’re locked up, you can’t just stroll to the Post Office or FedEx. The envelope is marked by the Jesup personnel on a date well after the thirty days has expired. And there’s no other earlier postmark.

Now there is a “prison mailbox” rule. And I bet you were as unaware of it as I am, unless you either practice criminal law or have done time yourself.

The “prison mailbox” rule is codified in the Federal Rules of Appellate Procedure, namely, Rule 4(c)(1) and Rule 25(a)(2)(C). Handing the envelope to the guard, if you can prove you did it, is enough.

But this is poor l’il ole Tax Court, which has no such rule. Unhappily, the Eleventh Circuit, which defers to the decisions of the Fifth Circuit, does not recognize the “prison mailbox” rule in Tax Court cases. And appeal from Judge Gustafson’s opinion must go to Eleventh Circuit. Oh Golsen, what sins are committed in thy name!

And even if Eleventh Circuit did have a “prison mailbox” rule, Harsh has only his unsupported testimony. No affidavits from guards, fellow prisoners or anyone else; and the burden is on Harsh to show he did everything that a prisoner can do to get the petition in on time.

Now the Fifth Circuit decision, which binds the Eleventh Circuit, is more than 50 years old, and has never been examined since rendered. But that doesn’t mean it’s not valid, and anyway Tax Court has no jurisdiction to carve another path for Harsh or anyone else.

So although Judge Gustafson admits the result is inequitable and harsh, the statute bars Harsh’s petition.

Harsh, it might be worth a trip to Eleventh Circuit to see if they’ll have a change of heart. After all, what have you got to lose?

Edited to add, 9/14/21: Harsh did appeal (whether on my advice or not deponent knoweth not), but never perfected.

That’s STJ Dean’s word to Derek W. Somogyi, 2014 T. C. Sum Op. 43, filed 4/10/14, the only opinion out of Tax Court today. But Derek isn’t the physician in question; no, this doctor is the one to whom Derek’s “friends” (STJ Dean’s quotation marks) sent him. It’s The Tax Doctor Corporation, and the doctor is in; it’s Lawrence Murray.

Here’s Third Circuit’s take on the doctor.

“Murray advised high-income taxpayers how to fraudulently structure personal and business finances to maximize tax deductions and minimize tax burdens. Among other services, TDC would form shell corporations for its clients, and Murray would advise clients in deducting personal living expenses as business expenses of these corporations and in moving money between shell corporations in order to fabricate ‘expenses’ for ‘contracted services’ or ‘management fees.’ Murray also advised clients in the creation of false corporate board minutes for the shell corporations. Murray’s goal for his clients was to reduce their taxable income to zero by using these strategies, and he charged his clients between 20 and 35 percent of the tax savings they could expect to realize in the first year. He used the same techniques to reduce his own tax burden.” United States of America v. Murray, No. 11-1245, filed March 8, 2012, at p. 3. There’s more, but that will do for now.

Derek loves the doctor’s advice, notwithstanding his own CPA says the doc is way too aggressive for her. That caution doesn’t sway Derek, who jumps aboard the doc’s medicine wagon, even though he testifies on the trial that he has no idea what the doc was doing when he paid the doc based on his projected tax savings, and when he paid the doc to prepare his own (and his dummy corporations’) tax returns.

Derek stumps up the unpaid tax, but seeks to get out of the Section 6662(a) understatement penalties, claiming he was “tricked” by the doc into a defective strategy. You can guess how far Derek is going to get with that one.

First, a word from an old friend: ““Courts have repeatedly held that it is unreasonable for a taxpayer to rely on a tax adviser actively involved in planning the transaction and tainted by an inherent conflict of interest.” Canal Corp. v. Commissioner, 135 T.C. 199, 218 (2010).” 2014 T. C. Sum. Op. 43, at p. 11.

And now Derek’s loss of innocence. “The Court concludes that petitioner, a college graduate with some business experience, relied on the tax return advice of an adviser who had a financial interest in the return positions he recommended to zero out substantial income without a clear understanding of how that could be legally accomplished and ignored the cautionary advice of his C.P.A. in the process. Petitioner’s reliance on the Tax Doctor’s advice was not reasonable and in good faith….” 2014 T. C. Sum. Op. 43, at p. 13.

PS- The doc was convicted on all 19 counts, and conviction was affirmed.

But his name isn’t Paul Revere, unlike the horse in Frank Loesser’s 1950 musical. No, this horse is named Choosing Choice, and he was in the money nine times (six firsts and three seconds) out of 16 races, winning a grand total of $77K.

And no, I didn’t have a penny on him.

But Stefan A. Tolin sure did, and Judge Gale tells the whole horse tale in 2014 T. C. Memo. 65, filed 4/9/14.

Stef was a single-shingle lawyer in Minneapolis, MN, and like Peter J. (“Rip”) Van Wickler was interested in horses (but Stef was seriously involved); unlike fellow-lawyer Robin S. Trupp, Stef had his horsey losses allowed as active. For Rip’s sad story, see my blogpost “Horsing Around?”, 8/15/11, and for Robin’s unhorsing see my blogpost “Horsing Around Isn’t Enough”, 4/13/12.

A client introduced Stef to the joys of owning ponies, and he fell, big-time, although he was fascinated by horse racing from boyhood’s earliest hour. He bred Choosing Choice from a mare he had bought, and CC won the Houston Juvenile Stakes as a two-year old, and finished second in the Grade II $100K Rebel Stakes as a three-year old, but suffered a slab fracture in his right leg. And another leg injury ended CC’s racing career.

Stef had CC nicked (that is, had his pedigree checked, and it came up A++), but Stef couldn’t find a good stud farm until he got to Louisiana. Then Stef jumped in with both feet.

He got Tom Early, officer of the Louisiana Thoroughbred Breeders’ Association, on board as guide, philosopher and friend (and even got him to testify on the Tax Court trial). After canvassing the eligible stud farms in Sportsman’s Paradise, Stef settled (literally) on Butch Sebastien, and spent hours on the phone with Butch and Tom, and bloodstock agent Bud Thibodaux, when not jetting down from the Ten Thousand Lakes to the bayous aforesaid.

Stef reserved to himself the right to promote CC, and manifested his usual enthusiasm, cold-calling owners of eligible mares, donating a one-shot of CC’s DNA at a charity event, and making videos, pictures, descriptions and accounts of CC’s prowess.

Judge Gale canters through Stef’s unending quest through the years at issue, and finds his phone records, reconstructed logbooks, and credible testimony sufficient to show the magic 500 Section 469 hours of material participation in each such year.

Now before reciting the endless litany about post-event ballpark guesstimates (as IRS does), note Judge Gale’s comment: “Respondent’s disallowance is based solely on section 469. Accordingly, we deem respondent to have conceded that petitioner operated the thoroughbred activity with a profit motive, see sec. 183, that the expenses for which he claimed deductions were ordinary and necessary, see sec. 162, and that he maintained records adequate to substantiate the deductions.” 2014 T. C. Memo. 65, at p. 25. Heavy-duty concessions, these, so Stef had serious speed in this race.

Judge Gale: “At trial petitioner introduced a narrative summary in which he describes the work he performed in connection with the thoroughbred activity and estimates the time he spent performing such work for each of the years at issue. He prepared the summary with the assistance of his attorney in preparation for trial, using telephone records, credit card invoices, and other contemporaneous materials. For each year petitioner claims time for the following work done in connection with the thoroughbred activity: preparing and distributing promotional materials; telephone conversations with his associates, advisors, and potential customers; business trips to Louisiana; registering his horses for State and national awards; reviewing and placing mortality insurance on Choosing Choice; reviewing and paying bills; recordkeeping; and continuing education.” 2014 T. C. Memo. 65, at pp. 28-29.

Now, as Judge Holmes would say, pay attention, because here’s the kicker: “While the narrative summary is a postevent review of petitioner’s claimed participation in the thoroughbred activity, the parties stipulated his performance of many of the activities described therein, and a significant amount of credible third-party witness testimony and objective evidence indicates that it is an accurate depiction of his thoroughbred activity during the years at issue.” 2014 T. C. Memo. 65, at p. 29.

The phone records especially tip the balance in Stef’s favor, because Stef was in daily touch with his Louisiana chums and potential customers. Stef claims his telephone tales beat anything in the cases. And apparently he’s right.

IRS says Stef should have called his customers, actual and potential, as witnesses, but Judge Gale says that’s not necessary, and although Stef often flew down to Louisiana, it clearly was business and he was not there long enough for vacation.

And Stef wasn’t a passive investor; he was deeply involved in the day-to-day management and control of CC’s activities.

Most importantly, “(T)he nature and extent of the activities described in petitioner’s narrative summary are corroborated by phone records, third-party witness testimony, the parties’ comprehensive stipulations of fact, and other contemporaneous materials.” 2014 T. C. Memo. 65, at p. 48.

Looks like the IRS disregarded my advice. They stipulated and thereby capitulated.

IRS says that maybe one or more of the minor children of Douglas G. Carroll & Deirdre M. Smith might throw out their parental units’ conservation easement, so IRS wants summary judgment tossing Mom and Dad’s charitable deduction, in Docket No. 5445-13, filed 4/8/14.

Not so fast, says Judge Lauber.

Background: :”… petitioner Carroll deeded a parcel of land in Maryland to himself, his wife, and to himself as custodian, under the Maryland Uniform Transfers to Minors Act, for each of their three minor children. … petitioners and petitioner Carroll, as custodian for the minor children, conveyed a conservation easement on this property to the Maryland land trusts organized under I.R.C. § 501(c)(3). Petitioners claimed a charitable contribution deduction for this non-cash contribution on their Federal income tax return… and claimed carryover contributions….” Order, at p. 1.

Our old friend “in perpetuity” shows up. See my blogpost “A Joy Forever”, 4/4/11, and “‘A Joy Forever’? – Maybe Not”, 7/20/12.

IRS says the kids, or any one of them, as co-owners, can revoke the conservation easement within a reasonable time of reaching the age of majority. And Judge Lauber assumes that Maryland law would permit this.

But the savings clause “so remote as to be negligible” gives Doug and Deirdre a shot at saving their deductions.

Judge Lauber: “This Court has construed the phrase ‘so remote as to be negligible’ to refer to a possibility that ‘persons generally would disregard as so highly improbable that it might be ignored with reasonable safety in undertaking a serious business transaction,’ 885 Inv. Co. v. Commissioner, 95 T.C. 156, 161 (1990) (quoting United States v. Dean, 224 F.2d 26, 29 (1st Cir. 1955)), or ‘a chance which every dictate of reason would justify an intelligent person in disregarding as so highly improbable and remote as to be lacking in reason and substance,’ Graev v. Commissioner, 140 T.C. -,-, (slip op. at 27-28) (June 24, 2013) (quoting Briggs v. Commissioner, 72 T.C. 646, 657 (1979), aff’d without published opinion, 665 F.2d 1051 (9th Cir. 1981)). ‘[A] conservation easement fails to be “in Perpetuity” * * * if, on the date of the donation, the possibility that the charity may be divested of its interest in the easement is not so remote as to be negligible.’ Graev v. Commissioner (slip op. at 27); see Wachter v. Commissioner, 142 T.C. –,-(slip op. at 15-16) (March 11, 2014).” Order, at p. 2.

Of course I blogged the Graev case, above cited, in my blogpost “Money Back Guarantee”, 6/24/13, and the Wachter case, ditto, in my blogpost “They Alway Must Be With Us”, 3/11/14.

OK, so does IRS get judgment (that is, an opinion) as a matter of law that the kids’ right to void the easement is not so remote as to be negligible?

Doug and Deirdre claim it is, that the kids will do the right thing.

Remember, in summary judgment motions, the non-moving (opposing) party gets the benefit of the doubt.

Judge Lauber: “Viewing the facts and drawing inferences therefrom in the light most favorable to petitioners as the nonmoving parties, we conclude that there are genuine disputes of material fact as to whether the probability that the petitioners’ children will void their contribution is ‘so remote as to be negligible.’ Order, at p. 3.

So let’s find out at the trial what the chances are that the kids will revoke the easement when they put away childish things.

Because the hard-working crew at 400 Rue Deuxième, Nord-Ouest, in the City that L’Enfant de la Patrie designed, doesn’t post the day’s opinions or designated orders before 3:30 p.m., ET, I spend my idle luncheon hours leafing through the day’s orders, which are posted as they happen.

The supermajority of these are pure routine, soul-numbing exercises in correcting misspelled names, adding and subtracting petitioners, kicking out nonsigners and nonpayers, and nannying motion practice and trial preparation. It is only by the merest chance, and my overwhelming sense of obligation to my now-more-numerous readers (thanks, guys!), that I wade through the daily mud-wallow to unearth the odd gem.

But today’s trudge brought back fifteen year old memories as I read through Leone Pizzini & Sons, Inc. Profit Sharing Plan. Docket No. 2144-14R, filed 4/8/14.

Now I don’t know Leone Pizzini, and to my knowledge I never met his sons, either jointly or severally. And whatever tax issues they want sorted out I know not. But the name of their attorney jumped off the page: Jeff Schnepper, Esq.

Long ago, in a galaxy far away, there was a bulletin board run by Microsoft called MSN Money. A subgroup thereof was called “Your Money”, at the time run by author Ginger Applegarth. I was a frequent contributor, under a nom de guerre suggested by a close relative (now a Director at a Big Four accounting firm).

Another subgroup was called “Your Taxes”, run by Mr Schnepper. He encouraged me to go for the EA qualification, for which I thank him, belatedly.

Unfortunately, Ch J Michael S. (“Iron Mike”) Thornton uses Mr. Schnepper as an object lesson to attorneys that Tax Court practice isn’t State Court (or even Federal Court) practice.

Ch J Iron Mike: “The petition filed to commence this case… does not bear a legible original signature. Thus, no attorney was recognized as petitioner’s counsel at that time. Accordingly…the Court directed petitioner to file a ratification of petition, bearing an original signature. Mr. Jeff A. Schnepper entered his appearance for petitioner….[Subsequently}a Ratification of Petition was lodged. This ratification of petition is signed by Mr. Schnepper.

“A corporation may be represented in Tax Court proceedings by an authorized officer of the corporation. Rule 24(b), Tax Court Rules of Practice and Procedure. Although Mr. Schnepper has entered his appearance for petitioner, because it was subsequent to the filing of the petition, he may not ratify the petition unless he is indeed an authorized officer of the corporation.” Order, at p. 1.

So either Leone or one of his sons should say that my old pal Jeff is an officer of the petitioner, or else sign a ratification of the petition themselves (in blue ink, of course) and paper-file it.

Ch J Iron Mike: “Petitioner should not [sic] that the ratification of petition may not be electronically filed.” Order, at p. 2.

Now in State Court and the usual Federal courts, corporations usually appear by their attorneys. But not in the sacred Second Street North West precincts.

Mr Schnepper, glad to hear about you again after all these years.

Amad Zaker Eram is joining in Sister Sledge’s 1979 hit, in 2014 T. C. 60, filed 4/7/14, as his Section 911 foreign earned income exclusion gets the OK from Judge Vasquez.

Amad, Iraqi-born, moves to California and becomes a US citizen. He marries and starts a family. He divorces, marries again, has more children, gets divorced again and remarries again.

A busy fellow, Amad gets a job with the Defense Intelligence Agency. He goes first to Qatar, but instead of going home, spends six months in Mexicali, Mexico. Then he gets a job with defense contractor Torres Advanced Enterprise Solutions, LLC, translating Iraqi Arabic to English in his ancestral homeland.

Unlike James F. Daly (as to whose adventures and misadventures see my blogpost “At Home Abroad”, 6/6/13), Amad lives off-post, visits in-country relatives, but has an APO address for snail-mail and has a USA banking facility.

Amad had transportation furnished, so he never got an Iraqi driver’s license, and he helped one of his sons buy a house in Chula Vista, CA, where he resided when he came back home.

IRS concedes that Amad was out of the USA for the requisite 330 days, but claims his tax home was CA.

Judge Vasquez: “In prior section 911 cases, we have examined and contrasted a taxpayer’s domestic ties (i.e., his or her familial, economic, and personal ties to the United States) with his or her ties to the foreign country in which he or she claims a tax home in order to determine whether his or her abode was in the United States during a particular period.” 20-14 T. C. Memo. 60, at p. 14.

So the issue is whether Amad’s tour was “limited and transitory”, so that his tax home is California.

But Amad is a native Iraqi. “…when petitioner first left for Iraq, he had divorced his first two wives, rarely saw his children, and was separated from his third wife. During the relevant period, petitioner’s contact with his family in the United States was minimal, and he saw his family only during his two vacations. Moreover, petitioner’s ties to his family in the United States had weakened several years before the relevant period, in the light of petitioner’s decision in 2006 to follow up 14 months working in Qatar by spending 6 months in the Mexican border town of Mexicali, rather than returning to see his family in San Diego.” 2014 T. C. Memo. 60, at p. 18.

“Respondent has presented some evidence of petitioner’s other domestic ties, including petitioner’s U.S. bank account, driver’s license, vehicle, and purchase of the Chula Vista house for his son. However, in the light of petitioner’s testimony about his familial ties, his lack of a home in the United States during the relevant period, and the other evidence in the record, we find that these other ties are not enough to support a finding that petitioner’s ties to the United States were strong during the relevant period.” 2014 T. C. Memo. at pp. 18-19.

And even though Aram was in Iraq on a contract with an expiration date, the contract was extended and Aram got three (count ‘em, three) extensions on his Letter of Authorization from State. So he wasn’t just temporary, transitory or limited.

But the key is family.

It’s Friday, but the enterprising Tax Court blogger can hardly say “TGIF”, because there’s rarely if ever an opinion out of Tax Court on Fridays, so I’m digging through the orders. and it’s a barren lot today. But The Judge With a Heart, STJ Robert N. Armen, Jr., saves the blogger’s day with a designated hitter that paraphrases the directive blasted from the loudspeakers of the New York City subways: If you see something, say something.

Well, per STJ Armen, the word now is: If you want something, say something. And for Tax Court purposes, say it using the downloadable form of petition from the Tax Court website, number your alleged IRS errors, and letter your material facts. Then sign with blue ink and snail-file the same timely, with check for $60 or Application for Waiver.

Unhappily for her, Rocky Brock, Docket No. 21494-13, filed 4/4/14, didn’t. She “…submitted to the Court a copy of the notice of deficiency, which copy was filed as an imperfect petition. Concurrently therewith petitioner also submitted (and the Court filed) completed and executed Tax Court forms for (1) Application For Waiver Of Filing Fee and (2) Request For Place Of Trial, both of which forms were reproduced from the Court’s website. Although the Court’s form for a petition is also available on the Court’s website, petitioner did not submit the petition form nor did petitioner otherwise state her disagreement with respondent’s deficiency determination. Nevertheless, the Court treated the notice of deficiency as a timely-filed (albeit imperfect) petition for redetermination of the deficiency pursuant to section 6213(a). See sec. 7502(a).” Order, at pp. 2-3.

Unless I got the dates wrong (which see at order, p. 1), Rocky was five days late with her imperfect petition, but we’ll let that alone for now.

IRS responds to the imperfect petition with a perfect motion to dismiss for failure to state a claim, per Rule 34(b).

STJ Armen gives Rocky two thirty-day extensions and has the Clerk send Rocky the petition form to fill out, so she can tell her tale. But, like Hamlet, “the rest is silence.”

So STJ Armen tosses Rocky. “The imperfect petition in this case does not assign any error or allege any fact in support of any justiciable claim nor does it satisfy the requirements of Rule 34(b)(4) and (5). Any issue not addressed by a clear and concise assignment of error in the petition is deemed to be conceded. Rule 34(b)(4). Lacking any averments tending to show error in respondent’s basis for the deficiency, petitioner is deemed to have conceded the correctness of respondent’s determination. See Swain v. Commissioner, 118 T.C. 358, 362 (2002). Moreover, petitioner has not stated what relief she seeks from the Court; therefore, the petition also does not satisfy the requirement of Rule 34(b)(6).” Order, at p. 2.

So Rocky, the deficiency stands. And Rocky, if you want something, say something.

Today’s T. C. involves the lineman leasing game. Remember that dodge? No? See my blogpost “The Wichita Linewoman”, 5/23/12, for the story of Kathleen Murray and her sidekick, Ernie The Cable Guy.

But now it’s the ostensible lessor who’s on the line, in SECC Corporation, 142 T. C. 12, filed 4/3/14, with Judge Colvin writing for a galaxy of Tax Court jurists: Ch J. Thornton, and JJ. Halpern, Foley, Vasquez, Gale, Wherry, Kroupa, Holmes, Gustafson, Paris, Morrison, Buch, Lauber, and Nega.

SECC claims their linebackers are ICs, but IRS says no, they’re EEs, so SECC owes FICA, FUTA, penalties and interest. However, IRS didn’t say “no” by certified or registered mail.

Both SECC and IRS claim Tax Court has no jurisdiction, but come to very different conclusions therefrom. “Respondent [IRS] contends that dismissal would deprive this Court of jurisdiction over this case, leave the assessment in place, and allow the IRS to proceed with collection.

“In contrast, petitioner contends that the failure to issue an NDWC means the assessment is invalid and the IRS may not collect the disputed employment taxes unless and until an NDWC is sent. Under petitioner’s theory, issuance of an NDWC would trigger the right to file a petition and seek our determination under section 7436.” 142 T. C. 12, at p. 8.

The problem with this, of course, is that if either side is right about no jurisdiction, Tax Court has no jurisdiction to decide anything, but must toss the case altogether.

By the way, a NDWC is a Notice of Determination of Worker Classification, Letter 3523 to you. And IRS never issued one, but Appeals sent a letter to SECC telling them they owed the FICA, etc. And that was enough for the Tax Court majority to find there was a determination, but to start the 90-day clock it had to go registered or certified, and it didn’t. But we’re getting ahead of ourselves here.

Tax Court of course has jurisdiction to decide if they have jurisdiction. And guess what? They decide they do, although Judges Kerrigan and Goeke wish they hadn’t, and dissent accordingly.

Section 7436 gives Tax Court jurisdiction over worker status claims. The key is whether there is a determination by IRS after audit one way or the other. Judge Colvin parses Appeals’ letter at length and says it is; the dissent disagrees, of course, but reading the letter it looks like one to me. How about this? “Unfortunately, we were unable to reach an agreement on your case. The employment tax liability as determined by Appeals will be assessed and you will receive a Notice and Demand for payment of the tax, penalty, and interest owed.

“If you would like to challenge our determination in court, you may file a complaint in the United States District Court or the United States Court of Federal Claims. If you decide to do this, you must first pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. Once the claim for refund is denied or 6 months elapse without any action by the Service, you may initiate suit.” 2014 T. C. 12, at p. 7.

Well, notwithstanding no NDWC was ever sent, and the petition came months too late if the ninety-day bar for SNOD and NOD reviews applied, and that an IRS Notice says the NDWC is a jurisdictional prerequisite to a Tax Court proceeding, Judge Colvin goes for the jugular in a footnote.

“We disregard the Commissioner’s statement in Notice 2002-5, 2002-1 C.B. 320, 321, that ‘[b]ecause the Notice of Determination constitutes the Service’s determination described in §7436(a), * * * [it] is a jurisdictional prerequisite for seeking Tax Court review of * * * determinations regarding worker classification, §530 treatment, and the proper amount of employment tax under those determinations.’ We owe no deference to what an administrative agency says about our jurisdictional bounds. See Fox Television Stations, Inc. v. FCC, 280 F.3d 1027, 1038-1039 (D.C. Cir. 2002). This is so even if an agency directly or indirectly interprets the bounds of our jurisdiction through the implementation of regulations construing a statute which it administers. See also Adams Fruit Co. v. Barrett, 494 U.S. 638, 650 (1990) (the delegation of power to an agency to administer a statute does not empower that agency to ‘regulate the scope of the judicial power vested by the statute’). The dissenting opinion argues that we lack jurisdiction because the IRS did not intend for us to have jurisdiction. See dissenting op. pp. 35-36. The concurring opinion, which is joined by 11 of the Judges who voted yes, makes a similar point, see concurring op. pp. 27-28; and we note that it is the statute, not the IRS, that grants us jurisdiction.” 2014 T. C. 12, at p.16, footnote 5.

The dissent is upset about the two-track SNOD-NOD vs. classification procedures the majority seems to be adopting, but the statute is clear. If not sent registered or certified, the clock hasn’t started.

And Judge James S. (“Big Jim”) Halpern, concurring, is even more emphatic about IRS game-playing if IRS could hold off sending a NDWC and relegate a taxpayer to the USDC or USCFC (requiring them to pay first, ask for a refund and sue later).

“Moreover, respondent’s position, reflected both in this case and in Notice 2002-5, 2002-1 C.B. 320, 321, that only his issuance of a notice of determination as described in Notice 2002-5 may confer jurisdiction on this Court to resolve a worker classification or RA ’78 sec. 530 issue would improperly permit the Commissioner to determine, in his sole discretion, whether a taxpayer shall have access to this Court in order to resolve any such issue raised on audit. Were we to adopt respondent’s position, the Commissioner, by refusing to issue a notice of determination, would be able to deny the taxpayer access to this Court, which he may be tempted to do whenever he feels his chance of success on a worker classification or RA ’78 sec. 530 issue is better in either the District Court or the Court of Federal Claims than in this Court.” 2014 T. C. Memo. 12, at p. 27.

Or when a taxpayer can’t afford to pay a monumental assessment of FICA, FUTA, penalties and interest without going out of business altogether.

Or, in high-school French, beat it, Franco-American taxpayers, some of your French social security taxes ain’t deductible or creditable.

Remember James Cecil & Anne-Marie Swank? No? Then see my blogpost “Don’t Sweat the Small Stuff”, 8/7/13. Jim and Anne-Marie were scrapping with IRS in a small-claimer over the creditability of the French la contribution sociale généralisée (general social contribution or CSG) and la contribution pour le remboursement de la dette sociale (contribution for the repayment of social debt or CRDS). But STJ Armen, the Judge With a Heart, sent Jim and Anne-Marie to cool their heels while IRS fought out their battle in a fully-briefed full-dress Tax Court T. C., because small-claimers aren’t precedential and can’t be appealed.

Well, Jim and Anne-Marie get their questions answered, and I’ll wager they’re no happier with Judge Lauber’s answer than the stars of the T. C. STJ Armen was talking about, Ory Eshel and Linda Coryell Eshel, 142 T. C. 11, filed 4/2/14.

If CSG and CRDS are taxes that would exempt Ory and Jim and Anne-Marie and Linda from paying US FICA or SE, then they’re not creditable under Section 901 because “section 317(b)(4) of the Social Security Amendments of 1977 (SSA), Pub. L. No. 95-216, 91 Stat. at 1540, nevertheless precludes credits for these taxes.” 142 T. C. 11, at p. 3.

Taking a leaf from Richard Wagner’s Die Meistersinger von Nurnberg, Act III, Scene V, you may ask “Mein! Was ist das?”

It’s the totalization agreement. No, it’s got nothing to do with pari-mutuel betting. It’s a US-France treaty that prevents double taxation for social security-type purposes and credits people who work for a time in each country, so they get full benefits. For an example of how totalization works, see 142 T. C. 11, at p. 11, footnote 3.

But experts aren’t in agreement that CSG and CRDS are social security taxes (not creditable) and not income taxes (creditable).

Judge Lauber: “The parties agree on all questions of basic fact and have expressed that consensus by filing cross-motions for summary judgment. The parties disagree on one point that may be relevant in interpreting the international agreement at issue–namely, how the French Government, at various times, has characterized CSG and CRDS for purposes of EU law and internal French law….. We conclude that this disagreement does not give rise to a material factual dispute that would prevent the Court from deciding this case on summary judgment.

“Under Rule 146, this Court’s determination of foreign law ‘shall be treated as a ruling on a question of law.’ As a result, disputes about the proper interpretation or characterization of a foreign law are not disputes of material fact that preclude summary judgment.” 142 T. C. 11, at pp. 5-6 (Footnote omitted).

It doesn’t matter how the French interpreted the laws, the European Court of Justice bounced them on their interpretations. Since the statutes creating CSG and CRDS were enacted post-totalization, the question is whether they “amend or supplement” the French social security system. If they do, then the Social Security Act precludes a credit for them against US income tax, as FICA and SE aren’t excluded from US income tax.

And Judge Lauber finds that, notwithstanding French waffling on the terms of the totalization agreement post-ratification (by which the US isn’t bound), the revenue from the taxes go to pay for shortfalls in French social security.

And that’s enough. No credit.

A misquotation, both from B. Traven’s novel and from the Humphrey Bogart classic movie, but even so, rated as American Film Institute’s 36th all-time greatest movie quote.

But two attorneys, having left one firm, continue to represent that firm in trying to secure a piece of Fighting Joe Insinga’s not-yet-and-maybe-never whistleblower recovery per Section 7430, while also purporting to represent Fighting Joe as he fights on toward that goal. And go charging into Tax Court, with or without any basis.

Whether or not representing Fighting Joe and his former firm (which seeks money from Fighting Joe’s recovery) is a conflict of interest, and whether or not waivable, I leave for the ethicists.

Suffice it to say, that Obliging Jurist, Judge Gustafson, is way less obliging than usual in Joseph A. Insinga, Docket No. 9011-13W, filed 4/2/14, a designated hitter.

The boys start out with an Entry of Appearance on behalf of Fighting Joe’s former law firm. That’s interesting, says Judge Gustafson, because the only parties are Fighting Joe and the IRS, and said law firm hasn’t moved to intervene.

Of course, it can so move, if it has standing, but that’s another story. Intervention in Tax Court is an obstacle course in itself. See my blogposts “Statute of Limitations? Maybe Not”, 12/28/10 and “Missed It, But Better Late Than Never”, 8/24/11, where Tax Court and Third Circuit wrestle with Tax Court intervention in the celebrated Virgin islands Appleton case.

Likewise, Fighting Joe hasn’t won anything yet (and the odds on him don’t look too good so far).

Nevertheless and notwithstanding anything otherwise or to the contrary elsewhere herein set forth, as my yacht-owning colleagues like to say, the boys want to assert an attorneys’ lien for their former firm on any recovery they might pry from the National Fisc on behalf of Fighting Joe.

For the civilians amongst you, if an attorney works on a case and is relieved (otherwise than for misconduct), the attorney has a lien on any recovery by the erstwhile client for the fair value of services rendered to date of discharge. This is to keep deadbeats from tossing hard-laboring peasants like Your Humble Servant under the proverbial on the eve of victory and scampering with the boodle.

There’s a couple problems here (if I may use Judge Holmes’ favorite grammatical form without approving of it, but rather as a tip of the old Stetson to a loyal reader).

Judge Gustafson: “If Mr. Insinga prevails, this Court’s work will culminate in its entry of a decision. This Court does not cut checks to successful petitioners, and the undersigned judge is unaware of any grant to the Tax Court of jurisdiction to compel any agency to cut a check or to give it directions in doing so. The Tax Court does not oversee the execution of its decisions, and if the responsible agency were to fail to pay an award that the Tax Court had determined, or were to pay the award to the wrong person, we know of no statute authorizing us to entertain any request for enforcement of a judgment.” Order, at p. 2.

In short, boys, we ain’t got no stinkin’ jurisdiction, and you ain’t got no justification for filing anything here, so show cause why Judge Gustafson shouldn’t trash your papers, and bid you the best of luck.

Footnote to the foregoing:  By Order dated 5/2/14, Judge Gustafson tossed the boys and their Notice of Appearance.