If You Can’t Prove You Mailed It

Thus Judge Travis A. (“Tag”) Greaves admonishes three I(count ’em, three) IRS attorneys, who can allege only a NAMES transcript provided the last known address of Mark F. Coble, T. C. Sum. Op. 2024-16, filed 8/12/24. Except that address is in Seattle, WA, and Mark says he lived in Santa Fe, NM.

Alas, “…respondent did not include a copy of the NAMES transcript. The CEAS transcript lists petitioner’s address as the [Santa Fe] address.” T. C. Sum. Op. 2024-16, at p. 2.

Judge Tag Greaves judge-‘splains. “The IRS CEAS system is a web-based application. See Internal Revenue Manual (IRM) 4.10.15.1 (Sept. 21, 2018). IRS employees use the CEAS system to assist in examining individual returns, among other purposes.” T. C. Sum. Op. 2024-16, at p.4, footnote 5.

NAMES is a command code in the Integrated Data Retrieval System, which ties into the Name Search Facility, which is updated daily; unhappily, the NSF lists multiple addresses, and this time IRS guessed wrong.

However, mox nix.

“Respondent has failed to carry his burden of establishing that the notice of deficiency was properly mailed. Respondent has not presented any testimony regarding the mailing procedures used with respect to this notice of deficiency—such as through submitting an affidavit. Respondent must therefore establish proper mailing through presenting documentary evidence. To that point, respondent has not produced Form 3877 and cannot rely on the presumption of official regularity to establish proper mailing. As a result, respondent must present sufficient other evidence to establish proper mailing. To meet this threshold, respondent merely directs the Court to the tracking number stamped at the top of the notice of deficiency and an entry on the CEAS transcript. This type of documentary evidence falls short of what we have accepted in the past to show proper mailing in situations where the Commissioner does not present a Form 3877.” T. C. Sum. Op. 2024-16, at p. 6. (Citations omitted, but get them for your memo of law file.)

I’m sure Mark’s trusty attorney from NM Legal Aid’s LITC, whom I’ll call GA, has the citations; and now, as the petition is tossed for want of a valid SNOD and  3SOL has run on the year at issue, she also has a Taishoff “Good Job.”

It’s a year to the day since ex-STJ Eunkyong Choi departed US Tax Court with neither bang nor whimper. The chirp of the crickets is deafening as ever; the silence is as the roaring of mighty waters.

Why, oh why, is not a simple answer forthcoming? Tax Notes, a trade press stalwart, had a piece from no less than Keith Fogg, Esq., professor emeritus and retired honcho of the Harvard LITC, chronicling the event but not the why and wherefore. My request to Prof. Fogg for explication brought a cordial reply, but he could furnish no more than “what I have written, I have written.”

So I must join Inspector Lestrade, and ask “But what is the object of this deep deception, Mr. Holmes?” That’s Sherlock, not Judge Mark V.

Yes, I’m thinking about lunch, but more to the point, the victory of my long-ago client Michael Lissack, Docket No. 399-18W, filed 8/9/24. He picked up a quick $300 in costs from the Supremes back on 7/2/24, as they tossed DC Cir and IRS on Loper Bright grounds, kicking Chevron to the curb and taking Mayo Foundation with it sub silentio.

And his arguments about the Ogden Sunseteers’ selective reading of Section 7623 get a fresh look from DC Cir.

As I asked back on 7/2/24, in my blogpost “Taking the Fifth – Part Deux,” of even date therewith, “post-Loper Bright and post-Boechler, P. C,  exactly what is any Rev. Proc. worth? Is Mayo Foundation still good law? What is any IRS Reg. worth? The Supremes are bringing ‘discipline’ to tax law, all right all right. Yeah, roger that.”

A Taishoff “Good Job,” goes to Mike’s three (count ’em, three) trusty attorneys.

Reading Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan’s latest order in “James Lindor,” Docket No. 217-23P, filed 8/8/24, wherein she ships “James” back to CSTJ Lewis (“His Real Name”) Carluzzo to dispose of IRS’ motion to toss  “James'” petition as moot, brought back memories.

I recall a younger, slimmer me, clad in olive-green in a distant suburb of Columbia, SC, crawling under barbed wire, trying to keep the sand out of my M-14, while an M-60 threw 7.62 ball a yard over my head. Forsan et hæc olim meminisse iuvabit? Seated as I am in my comfy livingroom on this Minor Outlying Island off the Coast of North America, I can employ the local argot: Fuggedaboutit!

“James Lindor” has retained his assumed name. Though CSTJ Lew said he’d unmask “James” if he didn’t make a Rule 27 motion to seal, a brief docket search doesn’t reveal such a motion, and today’s order from Ch J TBS doesn’t mention seals.

So, one might conclude that, notwithstanding CSTJ Lew’s Order, more particularly bounded and described in my blogpost “Call Me By My Rightful Name,” 7/1/24, “James Lindor” has managed to crawl under the wire, unknown, unmarked.

Is this the new tactic for those seeking to crawl under the wire of Section 7461, Willie Nelson Music, and Rule 23(a) to anonymity?

YA Global Investments, LP f.k.a. Cornell Capital Partners, LP, Yorkville Advisors, GP LLC, Tax Matters Partner and YA Global Investments, LP f.k.a. Cornell Capital Partners, LP, Yorkville Advisors, LLC, Tax Matters Partner, T. C. Memo. 2024-78, filed 8/8/24, get hit with Section 1446 withholding for their foreign partners (who are partners whatever they or YA thought they were), and find that the interest they accrued on debentures from their various investments was income, despite the dodgy nature of said investments.

This is an old case, going back nearly fifteen (count ’em, fifteen) years, so Judge James S. (“Big Jim”) Halpern has to resurrect some long-gone law. I’m going to leave the explications thereof to the legal necromancers, such as still have these antiques hanging around.

Suffice it to say that effective connectivity and partnership identity remain very much facts- and-circumstances, whatever the statutes of the time say. And defeating the “all events” test requires more than casual doubt as to collectability; hard contemporary evidence is needed.

In medieval England, knights bachelor (doesn’t mean they weren’t married; they were just ordinary knights) served under a superior knight and couldn’t have subordinate knights serving under them. They were entitled, however, to fly an identifying pennon, a triangular flag. If they were promoted, they could cut the tail off the pennon to create a square or rectangle, known as a banner, and thus become a knight banneret (later transposed to the meaningless term “knight baronet”), able to serve on his own account and to have knights bachelor serve under him.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan announces the swearing-in of former STJ Adam B. (“Sport”) Landy as Judge of the United States Tax Court, the first such promotion in more than twenty-five (count  ’em, twenty-five) years. So pass Judge Sport Landy the shears to cut the tails off the pennon.

Judge Kashi Way comes to US Tax Court bench from the Joint Congressional Committee on Taxation, that august body whose Miltonian function is to “justifye the wayes” of Congress to man. I haven’t yet found an appropriate cognomen for Judge Way, but I’m accepting suggestions.

And while we’re about it, don’t forget to let me know if Judge Landy should continue to bear the jazzy, Great Gatsby nickname of “Sport,” or transition to the old Navy moniker for an enlisted sailor who gets an officer’s commission, “Mustang,” with its rough-and-ready, hard-riding allusions.

Finally, of course, congratulations and best wishes to the new Judges. I’m sure we all look forward to great opinions.

Bowing to the Supremes’ Protean metaphysical efforts to “bring some discipline” to tax law and practice, with a couple USCCAs joining in (hi, Judge Holmes), Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan promulgates some “final” amendments to US Tax Court Rules of Practice and Procedure, effective today, 8/8/24.

I use inverted commas, because I fully expect the Supremes to launch other and further bouleversées at us practitioners, who never did them any harm.

Hence, I deem that which is “final” to be at best provisional.

Even If You Wuz Robbed

Despite his claims that his former fellow shareholders LL and WJ (Court’s nomenclature) looted the S Corp he cofounded, and ripped him off by stealing his share of corporate passthroughs, James J. Maggard, star of James J. Maggard and Szu-Yi Chang, T. C. Memo.  2024-77, filed 8/7/24, is still taxable on his share of the corporate income, deductions, and credits.

JJ claims, when he blew the whistle on the looters,  the Ogden Sunseteers suggested the unequal division of goodies might’ve forfeited the corporation’s S status, relegating it to C Corp and negating any poassthrough. The disproportionate grabs might violate the one-class-of-stock requirement in Section 1361(b)(1)(D), in the absence of which a corporation cannot elect or maintain Sub S status.

However, the caselaw and Reg. Section Reg.§ 1.1361-1(l)(1) tell us that unless the organic corporate documents (certificate of incorporation and bylaws) provide for unequal rights to distributions and liquidation proceeds, anything goes. JJ and his fellow shareholders, past and present, never changed those documents to provide otherwise than for a single class of stock with identical rights.

“The IRS has said it won’t treat any disproportionate distributions made by a corporation as violating the one-class-of-stock requirement if the governing provisions provide for identical rights. Rev. Proc. 2022-19, § 3.02, 2022-41 I.R.B. 282, 286.” T. C. Memo. 2024-77, at pp. 8-9. The idea is that, if the shareholders aren’t trying to duck the one-class rule (on which IRS will not opine), they can make what deals they like.

Judge Mark V. (“Vittorio Emanuele”) Holmes is sympathetic to JJ, who was well and truly plundered, but the law is the law.

“The regulation plainly states that uneven distributions don’t mean that the corporation has more than one class of stock. Treas. Reg. § 1.1361-1(l)(2) (‘[A] corporation is not treated as having more than one class of stock so long as the governing provisions provide for identical distribution and liquidation rights . . . .’). We recognize that this can create a serious problem for a taxpayer who winds up on the hook for taxes owed on an S corporation’s income without actually receiving his just share of its distributions. This is especially problematic when the taxpayer relies on the S corporation distributions to pay these taxes. Worse yet is when a shareholder fails to receive information from the corporation that he needs to accurately report his income.” T. C. Memo. 2024-77, at p. 9.

And of course the looters gave JJ bogus information, based upon which he filed his taxes, and made sure he couldn’t see the real books.

Hard though it is, the “law is ironclad” on this issue. JJ must pay tax on cash he never got, because it was stolen by his fellow shareholders.

Sliding under the Section 6103 tag requires more than a handshake, but maybe James M. Meyer, Transferee, Docket No. 1072-22, filed 8/6/24, and his trusty attorneys  (whom I”ll call “The LIttle Foxes”) can craft narrow enough demands for IRS’ materials relating to its criminal investigation of James (“Little Jim”) Haber sufficient to cast shade on Little Jim’s Form 872 SOL extenders, which rope James M. in via TEFRA as transferee in a MidCo-type roundy-round, where assets are stripped, leaving a C Corp with massive taxes and no assets.

I’ve blogged these by the bushelbasketful. Little Jim and Grant Thornton were running a bunch these (hi, Judge Holmes). So there is a transactional relationship between James M and Little Jim to scale the Section 6103(h)(4)(C) barrier.

The key here is whether the TMP (Little Jim) signed the extenders, thereby binding the partners thereto, to try to buy his way out of the slammer, while kicking said partners to the cliché. In such event, 2 Cir has held that’s a nonwaivable conflict of interest, and the partners aren’t bound.

Judge Ronald L. (“Ingenuity”) Buch, like a good first-baseman, is holding The Little Foxes close to the bag. Trying to show Little Jim’s and some of Grant Thornton’s people had a propensity to engage in miching malicho, hence give shady advice to partners, fails because such propensity evidence is inadmissible. See, e.g., FRE §404(b).

But I’ll give The Little Foxes a Taishoff “Good Job, Second Class” for the conflict-of-interest move.

Y’all will recall that CSTJ Lewis (“Wotta Name!”) Carluzzo gave “James Lindor,” Docket No. 217-23, filed 8/5/24, thirty (count ’em, thirty) days to submit “1) a motion to proceed anonymously, supported by sufficient grounds for such relief, or (2) a motion to voluntarily dismiss the case,.” Or else, ” the Court will amend the caption of this case to show petitioner’s proper name.”

This was back on 7/1/24; see my blogpost “Call Me By My Rightful Name,” of even date therewith, as my power-breakfast-eating colleagues would say.

“Jim” filed pseudonymously, a Tax Court no-no.

But a brief docket search shows “Jim” didn’t move before 7/31/24, and either CSTJ Lew’s amendment didn’t go through or the Genius Baristas muffed the ball, because Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan still thinks “Jim” is really Jim.

See the above-referenced order.

Will we be seeing more phony names on Tax Court filings, as a sidestep around the requirements of Rule 27?