Maybe it’s not a new tactic to my hyper-sophisticated readers, so I apologize for treating a well-worn move as a novelty, but I see that my high-powered white shoe colleagues put more stock in keeping privileged communications privileged above invoking the good-faith reliance defense (GFRD) to Section 6662 chops. See my blogpost “A Note of Sympathy,” 11/14/24*.

Here, the trusty attorneys for Harman Road Property, LLC, Capital Conservation Partners II, LLC, Tax Matters Partner, et al., Docket No. 12304-20, filed 12/6/24, Tax Court habitués, even concede IRS’ motion in limine to bar an entire expert’s report in support of the GFRD, in order to moot out IRS’ document demand, which it filed as a protective measure if they lost the motion in limine.

And said trusty attorneys even agree to striking part of the Petition (part not stated, but probably allegations in support of GFRD).

Clear? Thought not.

Judge Christian N. (“Speedy”) Weiler buys the GFRD concession, but wants to know if he needs to deal with the document demand, or can just treat that and anything else as moot.

Judge, Taishoff says it’s moot, the parties made a deal. Probably trusty attorneys are going for for a good outcome on the deficiency, whether at trial or settlement, so can go for a minimal (say 10% valuation) chop. More of this kind to come?

* https://taishofflaw.com/2024/11/14/a-note-of-sympathy/

I’d suggested years ago that Judge David Gustafson’s obliging ways might have been contagious, but now I’m sure of it. Judge Mark V. (“Vittorio Emanuele”) Holmes will win your case for you even when you haven’t a clue how to do it.

Check out Joseph Safdieh, Docket No. 11680-20L, filed 12/5/24. Joe is caught in the toils of Section 6038 offshoring chops. He petitions the NOD affirming the NFTL, IRS moves for summary J, but the jumpball between 2 Cir Farhy and 8 Cir Mukhi gets in the way. See my blogpost “È Pur Nonassessable,” 11/18/24*, for the backstory.

Joe is another deer-in-the-headlights pro se litigator. “… we infer from the fact that his filings are mostly handwritten that he is not the most sophisticated of litigants in Tax Court. In his response to the IRS’s summary-judgment motion in his case, he did not include his own motion for summary judgment, and he did not raise the argument that ultimately prevailed in Farhy and Mukhi.” Order, at p. 2.

Judge, I bet he doesn’t read my blog, either.

But Judge Holmes gives Joe summary J, notwithstanding Joe’s shortfalls and shortcomings, and in the face of 2 Cir wrath, as Joe is a NY resident.

“We have nevertheless held that we can grant summary judgment against the Commissioner even when he is the only party moving for summary judgment. See Rogers v. Commissioner, 157 T.C. 20, 49 (2021) (Court, in rejecting respondent’s lone summary judgment motion, held that respondent abused his discretion). We have also held that it is the obligation of the appeals officer conducting a CDP hearing to verify ‘that the requirements of any applicable law or administrative procedure have been met.’ I.R.C. §§ 6320(c), 6330(c)(1). See Freije v. Commissioner, 125 T.C. 14, 32–37 (2005) (finding an appeals officer’s verification was insufficient due to an error of law). In this case, verification is a legal impossibility now that we’ve twice held that the Code does not permit the assessment of section 6038 penalties. And because the Commissioner lacks the power to assess these penalties in the first place, Mr. Safdieh’s notice of determination cannot survive.” Order, at p. 2. (Emphasis by the Court).

Judge Holmes gives IRS a chance to distinguish Joe from Farhy and Mukhi, but no dice.

Certain IRS, breathing out threatenings and slaughter, will run to 2 Cir, Judge Holmes begs 2 Cir thus:  “The undersigned respectfully suggests, if this decision is appealed to the Second Circuit, that Court consider appointing pro bono counsel to represent Mr. Safdieh.” Order, at p. 3.

* https://taishofflaw.com/2024/11/18/e-pur-nonassessable/

Apparently someone at The Glasshouse read my blogpost “Two, Six, Ten, and Eleven,” 12/4/24*, because there appears today the “true, accurate and complete transcript prepared from the verbal recording” described in the Certification at page 12 thereof of Peter M. Budde, Docket No. 4911-22L, filed 12/5/24 (complete edition).

Unfortunately, it’s just the old Subtitle A income – Subtitle C FICA mismatch, with IRS folding two of four (count ’em, two of four) Section 6702(a) frivolous return chops. Budde folded the tax and the Boss Hossery, so Judge David Gustafson hasn’t much wherewith to exercise his considerable acumen.

I’d hoped for something better yesterday. Maybe that’s why I got a call from the Clerk’s office that I couldn’t take yesterday; can’t tell, because they haven’t responded to my three (count ’em, three) voicemails seeking clarification.

*https://taishofflaw.com/2024/12/04/two-six-ten-and-eleven/

No, not another set of Tax Court codes. These are the page numbers (presumably) of the missing pages of the Transcript of Judge David Gustafson’s off-the-bencher in Peter M. Budde, Docket No. 4911-22L, filed 12/4/24, which appears on the Tax Court website.

So I can’t tell you the bases for Judge David Gustafson’s decision “sustaining in part petitioner’s liability for the penalties at issue and sustaining the determination of the Independent Office of Appeals of the Internal Revenue Service to collect the penalties by levy.” Order, at p. 1.

And that despite the Certification of Transcriber and Proofreader, which appears at page 12 of the Transcript, that “the foregoing pages, numbers 1 through 12 inclusive, are the true, accurate and complete transcript” of the oral decision of Judge Gustafson.

Maybe the paper Transcript is true, complete and accurate, but the website version sure isn’t.

No, not the IRC nor the CFR. These are the “event codes” on the docket sheets, both printable and unprintable, to be found on the Tax Court website. While these are most of them self-explanatory (e.g., “P” for Petition, “A” for Answer, “NOTR” for Notice of Receipt of Petition), today I found one that was puzzling.

I couldn’t get an explanation by telephone, as docket section thought petitions were the ones that employed it, but neither they nor petitioner’s counsel was available by telephone. The event code is MIND, and the case is Cylie G. Fields, Docket No. 5819-23S, filed 12/3/24.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan’s order is brief: “the caption of this case is amended by adding the letter ‘S’ to the docket number.” Order, at p. 1. Unusual, as there’s no motion to restore the case to small-claimer treatment, nor any statement that the preceding regular case treatment was inadvertent.

A docket check shows that in April a year ago, when the petition was filed as a small-claimer, the initial docket number was amended the next day to omit the letter “S” suffix, with no explanation save the event code “MIND.” “My bad”?

Edited to add, 12/5/24: I heard today from Sarah Silfies Finken, Esq., Administrative and Case Services Counsel at Tax Court, that “MIN” signifies minute entry, that is, docket clerk’s entry to correct or supplement a docket entry, which may or may not be directed by an order of the Court; the letter “D” means Docket. While in this case there may have been an error, Ms. Finken notes that, with the huge volume of cases, there are very few errors. And indeed, in my experience, this is so.

And When and How

The above-set-forth is not a question, but an essential guideline for establishing client-attorney privilege, as STJ Zachary S. (“Highrise”) Fried judge-‘splains in Amgen Inc. & Subsidiaries, et al., Docket No. 16017-21, filed 12/1/24.

Y’all will recollect that back on 11/14/24 STJ Fried tossed Amgen’s claim that a PowerPoint slideshow from some attorney to a bunch unnamed Amgens (hi, Judge Holmes) was privileged. What, no? See my blogpost “A Note of Sympathy,” 11/14/24*.

Amgen tries a Rule 161 reconsideration motion, with declaration attached from Jacqueline (a/k/a Jackie) Samuels, wherein is asserted “‘the audience for such documents was limited to individuals within Amgen,’ and references the Declaration of Jacqueline Samuels which ‘provides additional context for these documents[,] . . . including an explanation of how these documents . . . were kept confidential within Amgen.’” Order, at p. 3.

OK, but what is missing from this picture? STJ Highrise Fried will tell us.

“…we conclude that the PowerPoint presentations and spreadsheets do not specify their audience or the individuals who had access to the documents. Neither the documents themselves nor petitioner’s privilege logs sufficiently identify the recipients of the legal advice or demonstrate that the communications were made in confidence between an attorney and a client. This omission is critical, as the attorney-client privilege is only applicable to communications made for the purpose of providing legal advice to specific, identifiable clients or their representatives.

“We note that petitioner’s motion for reconsideration, along with the Declaration of Jacqueline Samuels, provides additional information regarding certain withheld documents. This new information offers further details about the subject matter of the documents, explains the legal purpose they serve, and addresses their confidential nature. Had the additional information been included in petitioner’s privilege logs we expect that the scope of respondent’s motion might have been narrowed. The failure to identify the audience in the privilege logs or within the documents themselves waives the claim of attorney-client privilege as to the documents.” (Emphases added).

Not only is the importance of who, but also the importance of when and how, front-and-center when client-attorney is on the cards. Who sought advice, who provided the advice, when and how was the privilege asserted.

I suggest that Section 7525 FATPs (and maybe so USTCPs) should assure these particulars be explicitly set forth in the document itself, stating authorized recipients, with warnings to inadvertent readers or recipients to return or destroy on every page or slide. Moreover, the privilege log should reiterate the identities of the authorized addressees-recipients and recite warnings given as to each document.

* https://taishofflaw.com/2024/11/14/a-note-of-sympathy/

“Unless otherwise permitted by the Court, motions shall be separately stated and not joined together….” Rule 54(b), in pertinent part. OK, so the motion beloved by both IRS and yours truly gives rise to the partial summary J barrage in Desoto Holdings LLC, Desoto Investors LLC, Tax Matters Partner, Docket No. 13013-20, filed 12/1/24.

For backstory, see my blogpost “Stir Silt Till You Wilt,” 6/24/24*.

IRS has four (count ’em, four) motions seeking partial summary relief, but two are conjoined, so Judge Elizabeth Crewson Paris only allows three separate summary J types, but lets IRS file the conjoined motion in limine later on per the Pretrial Scheduling Order.

Not to be left out, the Desotos have their own partial summary J motion.

I’ve expressed doubts about Rule 54(b)’s exclusion of omnibus motions before now, but here even Judge Paris got confused. She had to set aside an earlier order where she or a Court clerk mistook one of the Desotos’ motions for partial summary J as a declaration in support. Order, at p. 1.

No wonder waitstaff hate separate checks.

* https://taishofflaw.com/2024/06/24/stir-silt-till-you-wilt/

“We May Not Look Behind”

As the Man From Mumbai put it. The doors of The Glasshouse being shut today, I cannot look behind.

Today being the “Day of Publick Thanksgivin” proclaimed in 1789 by George Washington, and incidentally now a public holiday in the City of the Grateful UnSuffs, US Tax Court has shut its doors.

Hence I shut mine.

Best holiday wishes to all.

Judge Christian N. (“Speedy”) Weiler finds the Section 6663 fraud chops do not subject Albert S. N. Hee to double jeopardy, notwithstanding Albert already went down for seven (count ’em, seven) counts of tax fraud in USDCDHI.

It seems Albert used his wholly-owned C Corp to write off “the college tuition of his eldest child, the purchase of a home for approximately $1.3 million that was primarily used by his children while attending college, and $92,000 of personal massage payments.” Order, at p. 3, footnote 2. Must’ve been quite a massage.

Btw, the case is Albert S.N. Hee & Wendy R. Hee, et al, Docket No. 24068-22, filed 11/27/28.

Judge Speedy Weiler, true to his cognomen, disposes of the double jeopardy argument quickly. “The double jeopardy clause protects ‘only against the imposition of multiple criminal punishments for the same offense.’ Hudson v. United States, 522 U.S. 93, 99 (1997). The clause does not prevent the imposition of both a criminal punishment and a civil sanction for the same act or omission. Helvering v. Mitchell, 303 U.S. 391, 398–99 (1938). Section 6663 is a civil sanction for tax fraud and is therefore not barred by the double jeopardy clause even when a prior criminal conviction for the same act or omission has occurred and restitution has been paid. Morse v. Commissioner, T.C. Memo. 2003-332, 86 T.C.M. (CCH) 673, 677, aff’d, 419 F.3d 829 (8th Cir. 2005). Accordingly, we conclude petitioners cannot rely on the double jeopardy clause to shield them from the section 6663 fraud penalties in these cases.” Order, at p. 7.

Criminal tax defense counsel should note the impact of Marinello v. United States, 584 U.S. 1 (2018). Albert went down for a Section 7212(a) obstruct-and-impede count for a series of phony returns between 2002 and 2015. IRS wants to bootstrap this into a noncooperation-with-IRS badge of fraud. But Marinello put paid to this catch-all, by requiring that defendant knew of a specific audit or investigation which s/he obstructed or impeded. Hence change-in-law knocks out issue preclusion on this point. As for whether obstructing or impeding is the same as not cooperating even in post-Marinello cases, Judge Speedy Weiler leaves that for another day. No summary J on that issue to IRS.

A docket search shows Albert was pro se. He gets a Taishoff “Good Job, Third Class.”