Judge Rose E. (“Cracklin'”) Jenkins leads off with a full-dress T. C. in Students And Academics For Free Expression, Speech, And Political Action In Campus Education, Inc., 163 T. C. 9, filed 11/26/24. For collectors of cutesy acronyms, this mouthful boils down to SAFE SPACE.

Howbeit, the SAFESPACERs petitioned when, after 270 days since their Section 501(c)(3) was filed, IRS had done nothing. After a brief confab during which IRS claimed their paperwork needs more stuff, the SAFESPACERs move to dismiss without prejudice, and IRS joins in.

Everyone agrees that the petition was timely filed, and Tax Court has Section 7428(a)(1) DJ jurisdiction. But can a Section 7428(a)(1) petition be dismissed without prejudice?

Yes, says Judge Jenkins. Leave aside Sections 6213 and 7459(d), where dismissal otherwise than for jurisdictional defects is not available, because in such cases decision must be entered for IRS in the full amount of the SND.

“However, the Court considers other types of cases to which sections 6213 and 7459(d) do not apply, including under provisions of the Code providing for declaratory judgment by the Court. See, e.g., I.R.C. §§ 7428, 7476, 7477, 7478, 7479. See generally Rule 210. In such cases, the Court has previously granted motions to voluntarily dismiss or withdraw petitions. See Pugh v. Commissioner, 161 T.C. 4, 8–9 (2023) (collecting cases in which voluntary dismissal was permitted and concluding that voluntary dismissal was appropriate for a petition under section 7345); Joseph E. Abe, DDS, Inc. v. Commissioner, 161 T.C. 1, 4 (2023) (concluding that voluntary dismissal was appropriate for a petition for declaratory judgment under section 7476).” 163 T. C. 9, at p. 3.

For the story on Zola Jane Pugh, 160 T. C. 2, filed 8/14/23, see my blogpost “Abroad at Home – Part Deux,” 8/14/23*; for the story on Joseph E. Abe, DDS, see my blogpost “A Hotly Burning Question What Has Swept the Continent – Redux,” 8/3/23**.

And FRCP 41(a) gets a good workout. The key here is prejudice to the nonmovant, but IRS has gone along with this motion, so clearly no prejudice. Anyway, the prospect of further litigation is not considered prejudice. There’s no SOL issue here, as the 270-day threshold in Section 7428 is a minimum, not a maximum. While Judge Jenkins thinks that an incomplete application might mean a failure to exhaust administrative remedies, the SAFESPACERs claim they did and IRS doesn’t claim they didn’t. And IRS has neither answered the petition nor moved for summary J, so FRCP 41(a)(1)(A)(i) is OK.

Petition dismissed without prejudice.

* https://taishofflaw.com/2023/08/14/abroad-at-home-part-deux/

** https://taishofflaw.com/2023/08/03/a-hotly-burning-question-what-has-swept-the-continent-redux/

“It is well established that no particular form is required for a notice of deficiency; rather, to be valid a notice must state that the Commissioner has determined the amount of deficiency for a particular year and specify the amount or provide information necessary to compute it.” Nitschke, T. C. Memo. 2016-78, 4/26/16, at p. 6. Cary Douglas Pugh, J.

OK, so when Shona Pendse, Docket No. 7601-24, filed 11/25/24, proffers “… a February 12, 2024, email from the office of the United States Attorney for the District of Massachusetts, and specifically, an attachment thereto which provided a ‘Summary of Tax Due and Owing’ for Shona Pendse for tax years 2011, 2012, 2019, 2020, and 2021,” (Order, at p. 2), and argues same was the equivalent of a notice of deficiency, why does Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan kick the e-mail, attachment, and Shona to the curb?

Ch J TBS says “the petition here was not based upon or instigated by a specific IRS notice expressly providing petitioner with the right to contest a particular IRS determination in this Court.” Order, at p. 3. But there is no “specific notice,” unless Nitschke, its predecessors, and descendants have been overruled. For Nitschke, see my blogpost “Long-Term Rounder,” 4/26/16.*

No doubt one of my ultra-sophisticated readers will invoke Section 6212(a), which mandates the SND “shall include a notice to the taxpayer of the taxpayer’s right to contact a local office of the taxpayer advocate and the location and phone number of the appropriate office.” Does want of the TAS notice invalidate the SND, or is it a mere procedural irregularity? No caselaw on that one, and anyway, IRS didn’t argue it or Judge Pugh didn’t pick up on it. I would point out that any court holding that any IRS communication that didn’t include the TAS notice was not a valid SND would paid to all this argy-bargy about miscellaneous billets doux.

And that the e-mailed attachment (the text of which we never see) was not mailed to Shona’s last known address means nothing, if she was able timely to petition it. All Section 6212(a) says is the Commissioner is authorized to mail it. Per Section 6213(a), mailing starts the 90-day (or offshore 150-day) clock running and stops collection; in any case, apparently Shona beat the clock.

But absent such a holding as hereinabove set forth, or a Loper-Bright-proof regulation mandating a form SND, how is Shona or anybody else supposed to know what is a SND?

* https://taishofflaw.com/2016/04/26/long-term-rounder/

While the Glasshouse Gang is off to the sales, DAWSON will soldier on. So if you’ve got a delivery due for November 29, 2024 (Friday), log on and send it in.

Or, more officially, “In addition to observing the Thanksgiving holiday on Thursday, November 28, 2024, the Court will be closed on Friday, November 29, 2024. DAWSON will remain available for electronic access and electronic filing.”

Those fortunate enough to be at liberty yesterday noontime heard from six (count ’em, six) Chief Judges, past and present, of United States Tax Court. They spoke of early trailblazing (race, gender), of seemingly wild predictions of future technology that came true, of fleeing from the collapse of the Twin Towers and later piloting the Court through the COVID lockdown, and the launch of DAWSON…a remarkable anabasis to match any account, ancient or modern, of an expedition into a new country.

I am sure that the now-complete 19-member bench, not to mention the extraordinary lineup of Senior Judges and STJs, could tell of events of like tenor.

But that was yesterday. Today, Judge Adam B. (“Sport”) Landy, the only STJ in modern times to advance from thence to the Big Bench in the “Small Court”, returns to utterly mundane duties, of the sort usually encountered by kindergarten teachers.

It ought not to require one who has earned a Bachelor of Science in Chemistry and a Master of Science in Sport and Entertainment Management from the University of South Carolina, a Juris Doctor from the University of South Carolina School of Law, and a Master of Laws in Taxation from the Northwestern University Pritzker School of Law, to instruct IRS’ counsel thus.

“(T)he Commissioner filed a Notice of Filing of the Administrative Record, Certificate as to the Genuineness of the Administrative Record, and the Administrative Record. The Administrative Record fails to provide page numbers or be identified by Bates numbering for each exhibit. Therefore, we will order the Commissioner to refile the Administrative Record specifically marking each exhibit with the proper exhibit designation (i.e., 1-J, 2-J, etc.) and page number (i.e., Page 1 of the total number of pages, Page 2, etc.) or by Bates number.” Order, at p. 1.

The case is William H. Wooten and Shannon J. Wooten, Docket No. 1719-24L, filed 112/22/24. I note that a quick docket peek shows four (count ’em, four) attorneys appearing for IRS. One would think that perhaps one of them…but enough.

No not the 1966 Beatles album with the controversial cover. Today, the United States Tax Court celebrated its centennial year, Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan hosting five (count ’em, five) of her illustrious predecessors to reflect on past achievements and highlight current successes on a lunchtime webinar.

Unhappily, this presentation was not recorded, nor will any future ones. So those unable to attend, or were forced to miss some portion, cannot benefit. If the aim of keeping these webinars unrecorded is to prevent the ill-disposed from extracting out-of-context remarks to mislead others, I am sure such types have ways of recording what appears on their computer screens even if they themselves aren’t present.

There’s always an element of self-congratulatory testimony in such webinars, but I found the majority to be merited. The slow rollout of DAWSON and the belated acceptance of electronic filing, decades after other courts had successfully stormed the interwebs, weren’t mentioned.

Of course, the impact of the blogosphere and the scrutiny it brought weren’t mentioned. But that will nowise deter us.

Public relations gestures often backfire. Save the Besame Cosmetics Mickey Mouse Red Lipstick Rare and Discontinued and don’t put it on Empress of Blandings or her real-life counterparts. Pulled pork is better with Kansas City-style barbecue sauce.

So let it be with TBOR.

Michelle Y. Coe, Docket No. 14643-24, filed 11/20/24, didn’t get the word. With neither SND nor NOD, when IRS moves to toss her petition, she responds thus.

“The Tax Court is subject to the Taxpayer’s Bill of Rights and has jurisdiction to provide limited financial relief or awards in specific scenarios. The respondent has provided no defense for failure to pay refunds or respond to the Petitioner’s Administrative Claim for Damage. However, they have identified that the Petitioner has no deficiencies. For that reason, the Plaintiff should be granted 10 million dollars for her Administrative Claim for Damage and the respondent’s violations of the Taxpayer Bill of Rights or an amount this court deems appropriate.” Order, at p. 3.

Please, before you yell that I’m piling on a hapless pro se, let me point out that IRS brought this upon themselves. The “Bill of Rights” is no more than a compilation of existing rights, adding nothing new. Even if IRS tried to expand the law, only Congress can make laws. And nothing Michelle has opens the doors at The Glasshouse on Second Street, NW, in the City in the Undrained Swamp.

The Taxpayer Bill of Goods marches on.

Coming soon to a computer screen near you is a Noonday retrospective on the United States Tax Court, hosted by none other than the redoubtable Chief Judge Kathleen (“TBS = The Big Shillelagh”) Kerrigan. With her are no fewer than five (count ’em, five) former Chief Judges, bringing decades of experience as witnesses to the Tax Court’s career.

Doubtless they will explicate those events that illuminate today’s Tax Court saga.

Here’s the skinny: https://www.ustaxcourt.gov/resources/outreach/Nov-21-2024_Historical_Perspectives_of_CJs_Webinar_Flyer.pdf

So grab your brown bag lunch and tune in.

For the lead-in to this story, see my blogpost “Not Assessable,” 4/3/23*. Alon Farhy won that one, but IRS appealed. DC Cir found Section 6038(b) did give IRS authority to assess the nonreporting chops; Alon’s non-prosecution deal with DOJ, wherein he folded the taxes, didn’t preclude him from fighting the chops, which he did, and won.**

Now Judge Travis A. (“Tag”) Greaves has Raju J. Mukhi, 163 T. C. 8, filed 11/18/24. Raj was here back in April (see my blogpost “FBAR = FUBAR,” 4/8/24***), where Raj slid under the tag just like Alon. But IRS moved for Rule 161 reconsideration based on DC Cir’s repudiation of Farhy.

Raj was a MO resident at time of petition, hence is Golsenized to 8 Cir, which has said nothing about Farhy. Now when a non-Golsen-linked USCCA rules on a point, Tax Court will follow for uniformity’s sake, unless on serious review Tax Court thinks the USCCA got it wrong. And Tax Court thinks DC Cir got it wrong.

First, IRS wants Section 6201 to include every exaction in the IRC, not just taxes and the items in the illustrative list of extras in Section 6201(a). But Congress didn’t say that.

Next, the IRS did have power to assess everything in 1939, but the 1954 Code limited that. And we’re back with the language in Section 6671(a) and Section 6665(a), plus the other examples Judge Tag Greaves uses to show that when Congress wanted a penalty assessed and collected like a tax, Congress said so.

And the US of A is not without a remedy. 28 USC§2461 says whenever a method of collection is not provided for a penalty of whatever kind, DOJ can bring a civil action. And the need to do so does not render Section 6038(b) without force: there’s a penalty for every year the taxpayer doesn’t file. So IRS can’t lien or levy.

That this may be inconvenient for IRS is tough, but that’s life. Statutes mean what they say.

Ch J Kerrigan, and Judges Foley, Buch, Pugh, Ashford, Urda, Copeland, Jones, Toro, Marshall, Weiler, Way, Landy, Arbeit, and Guider agree.

Judge Nega dissents, but his dissent doesn’t get published today.

Edited to add, 11/19/24: I am informed by Public Affairs that Judge Nega has elected not to put his dissent in writing, but merely wants a “no” vote recorded. That’s his prerogative, of course, but I would have liked something like “‘Sometimes it’s more important that a matter be settled than that it be settled right,’ as Justice Brandeis said.” Or maybe, “DC Cir got it right, so let Raj appeal to 8 Cir. Why are we getting involved?” Makes better blogfodder, anyway, than a Stealth Dissent.

Judge Rose E. (“Cracklin'”) Jenkins joined too late to participate.

* https://taishofflaw.com/2023/04/03/not-assessable/

** https://caselaw.findlaw.com/court/us-dc-circuit/116134192.html

*** https://taishofflaw.com/2024/04/08/fbar-fubar/

I reprint, in its entirety, Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan’s order in Riester Insurance, Inc., Docket No. 22752-22, filed 11/15/24, and ask my readers to help me understand this.

Does Judge Pugh have jurisdiction in this case?

“For cause, it is

“ORDERED that jurisdiction of this case is no longer retained by Judge Cary

Douglas Pugh. It is further

“ORDERED that this case is assigned to Judge Cary Douglas Pugh for trial or

other disposition.”

I must express my sympathy for STJ Zachary S. (“Hi-Rise”) Fried. Detailed for in camera of a monumental docu-dump in Amgen Inc. & Subsidiaries, et al., Docket No. 16017-21, filed 11/14/24, he does a phoneathon to get permission to do a random sampling, Order, at p. 1.

Breaking down the documents into “families,” he scans them for privilege, specifically client-attorney and FATP (Section 7525 federally-authorized tax practitioners, as defined by 30 USC §330; more about that later.). FATP communications are privileged like client-attorney communications.

Non-attorney candidates for admission to United States Tax Court should note carefully several of Judge Fried’s points. They might could just maybe so show up on the exam.

First, the difference between in-house counsel and external counsel; the presumption in favor of privilege for external counsel communications does not extend to in-housers. Apparently, given current hourly billing rates, nobody talks to nonsalaried lawyers unless they have to.

Second, the general waiver of privilege when petitioner will raise good-faith reliance on expert opinion as an affirmative defense to chops. Amgen avoids this in their pleadings. Whether this is a good tactic remains to be seen.

Third, specificity. Among whom or to whom and related to what was the communication directed or circulated? A PowerPoint presentation, which might have been viewed by anyone, is discoverable, as are items claimed to be privileged, to which no communication relates. Finally, e-mails sent to unidentified recipients: were these directed to persons seeking legal advice? Need-to-know is the guidepost.

Now about FATPs, as seen by Taishoff.

30 USC §330 speaks of “representatives of persons before the Department of the Treasury.” Y’all will recall how Dave Williams and Doug Shulman tried to stretch this to include return preparers, and came unglued in Loving. If you don’t recall, see my blogpost “Loving Conquers All,” 2/12/14.*

But non-attorneys who are admitted to US Tax Court  (USTCP = United States Tax Court Practitioner) represent persons before the Tax Court, a creation of Congress, and is separate from the Department of the Treasury. Tax Court loudly proclaims its independence from Treasury and all its works.

A USTCP, armed with Form 2848, can of course represent parties before Treasury.  But it’s the Form 2848 that gives him/her standing to do so, not admission to US Tax Court.

5 USC §500, to which 30 USC §330 is subject, doesn’t mention USTCPs, only representation before agencies.

So is a USTCP a FATP? If not, how are communications with such an one privileged?

* https://taishofflaw.com/2014/02/12/loving-conquers-all/