In a smoosh of which only the United States Congress could be capable, that august assemblage managed to combine celebration of the birthdays of our first and sixteenth Presidents into a single day and translate same unto a February Monday, the which is a public holiday in The City Without a State.

Wherefore, United States Tax Court being closed per Rules 10 and 25(a)(5), I have nothing to report.

I wonder what ex-STJ Eunkyoung (“N’Yawk”) Choi is doing today ?

The Frank Sinatra trademark is played again at The Glasshouse Up Dawson’s Creek, as Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan is elected to a second term as Ch J.

Let us all congratulate the Ch J.

I was oversoon indeed back in April, 2022, when I predicted a deluge of Tax Court petitions in the wake of Boechler, P. C. In my blogpost “Ya Can’t Make This Stuff Up – Part Deux,” 4/29/22, I foresaw Boechler inspiring “petitioners who got tossed two, three, or even ten years ago, come running back, claiming they were wrongfully tossed, and demanding return of property seized and sold a decade ago, and demanding trillions in damages.”

It didn’t happen. And Judge Tamara Ashford tells us why, in Mark Leonard & Dawn Leonard, Docket No. 26819-22L, filed 2/16/24.

Mark & Dawn were a couple weeks late (hi, Judge Holmes) with the petition from the NOD affirming IRS’ collection action. Although the envelope containing their petition was postmarked only a day past the 30-day deadline, it was addressed to Appeals, not Tax Court. Appeals forwarded the petition to The Glasshouse.

IRS made a Rule 37(c) deemed-admitted motion confirming those facts, to which Mark & Dawn did not respond. So IRS moved for a Rule 120(a) judgment-on the -pleadings. Again, no response.

But was an equitable tolling argument available?

“The section 6330(d)(1) 30-day filing deadline is not jurisdictional, which means this Court has authority to consider late-filed petitions, and the Court may accept a tardy filing by applying the doctrine of equitable tolling. Boechler, P.C. v. Commissioner, 142 S. Ct. 1493, 1496 (2022). A litigant is entitled to equitable tolling of a statute of limitations only if the litigant establishes that he or she has been pursuing his or her rights diligently and that some extraordinary circumstances prevented him or her from timely filing. Menominee Indian Tribe of Wisc. v. United States, 577 U.S. 250, 255–77 (2016). Petitioners have not asserted that they satisfy this test, so the Court may not accept their Petition by equitable tolling.” Order, at p. 2.

Time for a Rule 161 motion to reconsider?

Self-representeds like Mark & Dawn may not be aware of Boechler, hence the non-deluge.

The immortal words of B. Traven, spoken iconically and cinematographically by Alfonso Badoya, have created a whole department of my blogposts. Solely by way of illustration of the foregoing, as my high-priced colleagues would say, see my blogposts “We Don’t Need No Stinkin’ Factors, 5/15/12, “We Don’t Need No Stinkin’ Badges,” 4/2/14, “We Don’t Need No Value,” 11/19/20, “We Don’t Need No Authority,” 1/14/21, and “We Don’t Need No Form 433-A,” 8/7/23. There now.

Today Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan adds another, viz., namely, and to wit, “We Don’t Need No Office for the Self-Represented.”

I’d venture a wild guess that Walter D. Kowalok & Wei Li, Docket No. 18795-23S, filed 2/15/24, are self-represented. My sources for this assertion are (a) a docket search showing no EoA, and (b) Ch J TBS’ statement that “… petitioners electronically filed the following improperly titled documents: (1) Reply to Answer (Docket Index No.7); (2) five documents with the designation of Memorandum in Support of Reply to Answer (Docket Index Nos. 8, 9, 10, 11, and 12); (3) another Reply to Answer (Docket Index No. 13); and (4) three additional documents with the designation of Memorandum in Support of Reply to Answer (Docket Index Nos. 14, 15, and 16).” Order, at p. 1.

Clearly, Walt & Wei need some help getting organized. In the past, I’ve suggested an office for the self-represented, such as have been established in any number of State and Federal Courts, as a Guide for the Perplexed. Of course, as with most of my suggestions, this perfectly rational proposal has been ignored. I repeat it today, however, in almost the same way as I did a three-and-a-half years ago; see my blogpost “Office for the Self-Represented,,” 8/10/20.

But perhaps the omission is well-founded after all, as Ch J TBS (as has her predecessors, and I do not doubt her successors) has chosen yet again to fill that rôle in propria persona, as said high-priced colleagues would say; that means her own self, as those who never went to law school would say.

“Petitioners are advised that none of the just-referenced documents have been received into evidence by the Court at this time and that, unless otherwise directed by the Court, the appropriate time to present documentary evidence for inclusion in the Court’s record is at the trial of this matter.

“Petitioners are further advised that, unless otherwise directed, in the future if they seek to have the Commissioner (respondent) review and consider documents in an effort to reach a settlement before any trial in this case, petitioners should provide those documents directly to respondent’s counsel. The contact information for respondent’s counsel was included in respondent’s Answer, which was filed January 17, 2024. For more information, petitioners’ attention is invited to ‘Guidance for Petitioners’ under “Rules & Guidance” on the Court’s website, http://www.ustaxcourt.gov.” Order, at p. 1.

I am sure this department will see ever more growth in future.

Section 86(d)(3) is Congress’ attempt to “equalize the treatment of taxpayers in petitioners’ position with taxpayers residing in ‘reverse offset’ jurisdictions, i.e., States where the receipt of Social Security benefits reduces workers’ compensation benefits. See Charles T. Hall, Social Security Disability Practice § 5:19 (2023).” Section 86(d)(3) makes workers’ comp benefits reduce Social Security benefits in States which don’t cut Comp for Social Security. The bad news is that the cut to Social Security benefit is still taxable.

Juist ask Donald Ecret and Kristen Ecret, T. C. Memo. 2024-23, filed 2/14/24. Kris is a disabled nurse getting NY comp payments when she applied for Social Security. She got both for a couple years (hi, Judge Holmes), and IRS even conceded the year before the year at issue despite Kris’ late filed petition for that year. And IRS concedes the chops.

But IRS does go for the tax for year at issue, and gets it.

Judge Albert G. (“Scholar Al”) Lauber obviously isn’t happy with the result (Kris is obviously disabled, and did pay into Social Security).

“Section 86(d)(3) compels us to agree with respondent. Petitioner wife had $X in Social Security benefits attributable to[year at issue]. Of this amount the SSA disbursed $Y to her as a cash payment after withholding $Z of Federal income tax, which it paid to the IRS on her behalf. The SSA did not disburse the remaining $AA on account of the workers’ compensation offset. But under section 86(d) petitioners are nonetheless required to treat this sum as Social Security benefits for Federal income tax purposes.” T. C. Memo. 2024-22, at p. 7. (Amounts omitted).

The quotation at the head hereof is from T. C. Memo. 2024-22, at p. 6.

Hurts the people in generous States to make up for those in cheapskate States.

These are properly excluded from discovery and the administrative record; also excluded from analysis of what the Whistleblower Office did or did not do is what other branches of IRS did or did not do. So Whistleblower 14376-16W, T. C. Memo. 2024-22, filed 2/14/24, get neither summary J in his/her favor, nor discovery of the 36 (count ’em, 36) categories of documents demanded.  But ex-Ch J. Michael B (“Iron Mike”) Thornton does give IRS summary J tossing 14376-16W’s petition, at no extra charge.

14376-16W is back from remand. The backstory is in my blogpost “Voluntary Malgré Lui,” 9/16/17.  It doesn’t end well.

That IRS field (not the Ogden Sunseteers) improperly tipped off Target that the whistle had been blown doesn’t change the result, nor that SB/SE let Target into the OVDP despite the whistle having been blown (although ex-Ch J Iron Mike agrees with IRS that Target asked in long before IRS told them about 14376-16W). IRS claims the only changes they made, and cash they collected, came from the returns and amended returns Target filed, not from 14376-16W.

Not every piece of paper or concatenation of electrons agency staff mentions or had around was necessarily considered by them in reaching their result. Discovery geeks and record-rule fans will find plenty of somber reasoning and copious citation of precedent in T. C. Memo. 2024-22, at pp. 31-40.

Some key takeaways: what field operators did or didn’t do is irrelevant; what was relied on by the Ogden Sunseteers is the point. Post-Barenblatt, blower discovery is an uphill fight at best. Post-Lissack, the blow had better be right on small-T target; not merely who, but precisely what, were the delictions.

Most essentially, neither the Ogden Sunseteers, nor IRS field, nor Tax Court, nor DC Circuit, loves whistleblowers. The old Italian proverb remains true: “Who draws his sword upon the prince had better throw away the scabbard.”

Econfina Resources, LLC, Econfina Corporation, Tax Matters Partner, Docket No. 12980-22, filed 2/14/24, playing the Dixieland Boondockery gambit, Mining variation, escapes getting entangled in the hand-off from syndicator to syndicatees.

The usual deal is that syndicator sets up an LLC to buy the land, sells off membership interests in the LLC, records the conservation easement, and hands out the tax deductions to the members. The members claim a tack-on of the syndicator’s holding period. IRS counters with Situation 1 of Revenue Ruling 99-5, 1999-1 C.B. 427, 434–35, claiming the syndicator was a single-member LLC when the land was acquired, hence disregarded, so the transfer of membership interests was a sale of the real estate.

Judge Elizabeth Crewson Paris has this on a motion for partial summary J (what else?). So here the seller claims it laid off its  1% membership interest in a Section 351 to a controlled C Corp before it sold the remaining 99% to the syndicator. The  syndicator’s trusty attorneys carefully papered the deal. “At the least, these documents raise a factual dispute as to the order of the transactions.”  Order, at p. 5.

IRS’ fallback, substance over form, gets the usual “(T)he application of the substance over form doctrine is inherently factual and generally not appropriate for summary judgment.” Order, at p. 5.

The trusty attorneys, whose leader I’ll call The Birmingham Baron, get a Taishoff “Good Job.”

Edited to add: Step transaction, maybe so?

Longtime (and I mean longtime) readers of this my blog will remember my ten-year-old pilgrimage through the vagaries of Tax Court filing fee refunds. There are orders that say you can’t get the sixty Georges back no matter what, and others that send the money back without explanation. These have included orders from past Ch Js, and other Judges as well.

Here’s a sample: “You Pay, You’re Stuck,” 4/23/14; “Now I’m Really Confused,” 9/27/16; “Worth A Try,” 10/21/16; and “Out of Date Slang – Part Deux,” 10/2/18. I’m sure I’ve done more.

But perhaps enlightenment has finally arrived, via Section 7430 legals and admins.

Jeffrey I. Zuckerman & Miriam E. Zuckerman, Docket No. 3964-23, filed 2/14/24, get a Valentine’s Day present from IRS and Judge Albert G. (“Scholar Al”) Lauber.

“…respondent filed a Motion to Dismiss for Lack of Jurisdiction. Petitioners responded, opposing dismissal and requesting an award of $60 (corresponding to their Tax Court filing fee) as litigation costs. See § 7430. … we explained that we lack jurisdiction in this case because there was no valid notice of deficiency.” Order, at p. 1 (Footnote and citations omitted).

Now this won’t work for late-filed petitions, but it’s sure worth a try for invalid SNODs and NODs, or mailings other than to last-known address or otherwise defective.

Here’s why.

“…we also directed respondent to file a reply addressing whether petitioners are entitled to the $60 they seek in litigation costs. Respondent immediately filed a Reply, that same day, conceding that petitioners are entitled to this sum.” Order, at p. 1.

So Judge Scholar Al awards Jeff & Miri the sixty bucks.

Faithful readers of this my blog will not be surprised that Judge Alina I. (“AIM”) Marshall isn’t buying any of the Settlement Stock that Acqis Technology, Inc. and Consolidated Subsidiary, T. C. Memo. 2024-21, filed 2/13/24, foisted on Big Techies who allegedly infringed on Acqis’ patents. The Big Techies supposedly bought stock in Acqis and acquired perpetual no-fee licenses to use the IP to settle the infringement cases.

You can find the backstory in my blogpost “Haven’t A Clue – Part Deux,” 3/26/20. Interestingly, neither Judge AIM nor the parties cite Judge Ruwe’s earlier opinion. They really should read this my blog.

Anyway, the stock, purchase of which is supposedly a capital contribution and therefore tax-free, is worthless. It can’t be sold until fully SEC registered, which Acqis’ management, frugal with legal fees, had no intention of doing. Moreover, the stock was non-voting, last in line at liquidation (after the insiders got theirs), and holders thereof couldn’t force redemption. In fact, two of the settling Biggies promptly gave the stock to charity and didn’t take a deduction, expensing the settlement payout as a business expense. As I said in my blogpost abovequoted, “one could relieve oneself of a shortage of an extremely necessary domestic article” with the stock certificates.

Whatever reservations Judge Ruwe had back in 2020 about the applicability of 6SOL, the trial dispelled them. Acqis’ tax reporting didn’t disclose what really happened. Acqis had neither expert reliance (told CPA nothing) nor good faith. And Acqis flunks the five-and-ten text for substantial understatement.

I remember trying the cash-for-stock move in a sale years ago, when I was seeking a PLR. IRS told me to drop it quick. Glad I did.

Charles Dickens’ 1852-3 Bleak House serial gave us the celebrated Jarndyce case, but, as his preface shows, there were real cases that lasted as long and cost as much. “There is another well-known suit in Chancery, not yet decided, which was commenced before the close of the last century and in which more than double the amount of seventy thousand pounds has been swallowed up in costs.”

I’m a newcomer to Scott A. Blum & Audrey R. Blum, Docket No. 5313-16, filed 2/13/24. I did blog its predecessor 12 years ago. See my blogpost “OPIS Finis,” 1/18/12. But as Judge Goeke points out today, we’re talking about Scott’s & Audrey’s 1999 tax return. That’s before the close of the last millennium. How many pounds have been spent I cannot tell.

And Scott is fighting about whether the NBAP and FPAA were mailed to his last-known address (Scott’s disregarded was a notice partner) a mere twenty-two (count ’em, twenty-two) years ago.

IRS wants summary J, but doesn’t get it. The Certified Mailing List (CML) for the NBAP, which if complete raises a rebuttable presumption of proper mailing, here is a wee bit sketchy. “The USPS employee did not enter the number of pieces that the USPS received for mailing on the CML. Nor does the CML state the number of pieces of mail that is listed on the CML. Because the CML is missing this information, it is incomplete and does not create a presumption of mailing.” Order, at p. 4. (Footnote omitted; it’s argy-bargy about the postmark on the CML being square and not round; mox nix). But IRS can use the CML and try to cobble together enough other evidence to prove mailing.

The CML for Scott’s counterpart of the FPAA looks good, but since Scott claims he hasn’t completed discovery, no summary J for IRS on that score.

As for last-known address, despite Scott having given the RA another address (but not by means prescribed in Reg. Section 301.6223(c)-1(b)), which the RA used for correspondence but from which USPS returned mail as undeliverable, as long as the FPAA went to the address on Scott’s K-1, that’s OK.

Btw, Judge Goeke says there’s an issue of material fact on the mailing of the notice partner FPAA (Order, at p. 8). But the Order, at p. 5,  says the issue is proper mailing of notice partner NBAP.  I don’t fault Judge Goeke for being a bit confused. So was I.

 Taishoff says that though the whole TEFRA schemozzle that gave rise to this farce was repealed a mere eight (count ’em, eight) years ago, this dinosaur lumbers on. The word of Charlie Dickens is again justified: “The little plaintiff or defendant who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled has grown up, possessed himself of a real horse, and trotted away into the other world.”

In the presentt saga, the deficiencies were determined in June, 2012, at Docket No. 2679-06, at $9.5 million in the aggregate. Twelve years later, they haven’t been collected. Don’t ask about the interest.

I’ve said it before: Tax Court needs an administrative judge, as we have in State court, to crack the whip and move these cases. If Tax Court can’t or won’t do it, Congress should, or they should stop prating about deficits and national debts.