I just got this from a 501(c)(3) to which I have contributed for years. No guarantees, warrantees, or representations, but practitioners, beware.

The USPS recently changed the definition of when a piece of mail is considered postmarked or “mailed.”  In the past, it was sufficient to drop your letter in any mailbox, and it was considered “mailed” based on a postmark applied at pick-up. However, under the new USPS rule, only certain processing centers can apply postmarks. In some regions, this may mean a mailed item won’t receive a postmark for several days after being dropped off at the post office or placed in a mailbox.

In a deficiency case or any non-Boechler you’d better check where you can mail.

Kimberly Fulton, Docket No., 18582-21L, filed 12/18/25, is on her way back to Appeals on remand number three.

Remand number one came when IRS conceded the CDP hearing was defective. Number two followed when IRS’ motion for summary J to sustain supplemental NOD cratered on disputed facts.

Already in the admin record was a letter from Kimberly’s Mom stating she gave Kimberly a monthly allowance, and anything over that was a loan. The first SO on the case didn’t treat these as income because they weren’t guaranteed.

Kimberly did have interests in a couple LLC’s (hi, Judge Holmes) that she didn’t disclose, but claimed these had no activity or assets and so didn’t file 1065s.  Nor did Kimberly have enough income to file, she says.

Appeals affirmed the second supplemental NOD which treated the money from Mom as income and nondisclosure of the LLCs as grounds for bouncing Kimberly’s OIC.

Judge Cary Douglas (“C-Doug”) Pugh sends the case back to Appeals.

‘ The administrative record contains no explanation for SO H’s determination that the deposits were income. At the hearing, respondent argued that it could be reasonably discerned that SO H viewed the deposits as income from the undisclosed LLCs. However, that is inconsistent with the record; SO H asked no follow-up questions about the LLCs once petitioner’s representative explained that they were not active, and petitioner’s representative alleges SO H attributed these deposits to offshore assets. Additionally, SO O, the previous settlement officer assigned to petitioner’s case, considered the deposits to be gifts. We do not rely on post hoc explanations of SO Harvey’s silence and her unexplained departure from SO O’s position is not merely of ‘less-than-ideal’ clarity—it prevents our review of her decision.

“Moreover, SO Harvey rejected petitioner’s amended offer-in-compromise immediately after reviewing petitioner’s bank statements and without providing petitioner an opportunity to explain the deposits. Even though petitioner’s representative requested an opportunity to address the reasons for rejection, SO H informed petitioner’s representative that she intended to issue a Supplemental Notice of Determination. Failing to consider petitioner’s argument was an abuse of discretion.” Order, at pp. 5-6. (Names and citation omitted).

True, Kimberly was chary with info about the LLCs.

“Respondent is right that petitioner did not disclose her interest in certain LLCs. But petitioner explained why she did not disclose these interests (none of the LLCs were active or generated income), and SO H did not ask any follow-up\ questions. Petitioner’s omission does not justify SO H’s failure to explain her decision to reject petitioner’s offer-in-compromise, especially where SO H chose not to press the LLC matter further.” (Name omitted).

So Judge C-Doug Pugh sends Kimberly back to Appeals again. She’ll keep trying for the SO who will get it right.

Looks like Judge C-Doug Pugh is another disciple of the late great Gene (“Big Daddy”) Lipscomb, twice MVP lineman of the Super Bowl, in the glory days of the old Baltimore Colts. As Big Daddy used to say: “I just wrap my arms around the whole backfield and peel ’em one by one until I get to the ball carrier. Him I keep.”

Mark L. Fussell, T. C. Memo. 2025-131, filed 12/18/25, filed 1040X for three (count ’em, three) tax years, for which IRS gave him a CP21, allowing him a refund for Year One only. Mark alleged that his $420K loss was due to bad loans to his “tightly held” C Corp.

Mark says he thought the CP21 encompassed all three years, but IRS audited Years Two and Three, and Mark and IRS stiped them out as no-tax-no-refund before his tax was due for Year at Issue. Mark didn’t file Year at Issue, claiming audit, but thst’s a nonstarter.

Judge Rose E. (“Cracklin'”) Jenkins finds the claimed loans are unsubstantiated: no documents, no showing of payments made, no showing of Section 165(g)(2) securities compliance. Even if substantiated, any NOL carryback or carryforward is long used up, as no Section 172(b)(3) carryforward election was made.

And of course, the add-ons for nonfiling, nonpaying, and nonpayment of 1040-es are sustained.

Takeaway: You can stip out a year, but each year stands on its own. Be prepared to fight every succeeding year as if the year of the stip never happened.

E. W. Henley’s view of life may or may not accord with contemporary literary criticism, but it certainly describes judicial review under Section 7345. Judge Benjamin A. (“Trey”) Guider III, lists the six (count em, six) arguments made by Michelle Ricci & James Follett, Docket No. 3950-25P, filed 12/17/25, only considers one, and that fails to make the cut.

“Mr. Follett and Ms. Ricci have set forth six arguments: (1) ‘[t]he amounts presented [on the Certification Notices] are incorrect,’ (2) “[t]his is the first communication I have received regarding any delinquent taxes,’ (3) ‘[t]his is the first notice my accountant has seen only through me,’ (4) ‘I have filed my state income taxes for all the years referred to in this document,’ (5) petitioners ‘file [their] taxes jointly but have received this [Certification Notice] separately,’ and (6) petitioners ‘file [their] taxes jointly but have’ different tax liability balances. Doc. 1 at 2. Petitioners based these arguments ‘on the Income taxes filed for the years noted on the notice.’ Id. at 3.” Order, at p. 3. (Citations are to the record).

While Tax Court can’t deal with underlying liability, it can see if the delinquencies underlying the Notices are in fact “serious,” that is, the liabilities meet the Section 7345(b)(1), (f) criteria. Also delinquencies subject to pending CDPs, pending OICs, compliant IAs, and innocent spousery are not reportable to State.

Nic & Jim don’t put in any evidence to rebut IRS’ account statements.

The gate is strait indeed.

A classic move of Judge Mark V. (“Vittorio Emanuele”) Holmes is found in Mission Organic Center, Inc., T. C. Memo. 2025-130, filed 12/16/25, a minor coda to the full-dress T. C. of even date herewith.

The fulldress “,,,analyzes the notices of determination that sustain enforced collection of the 2016–20 tax debts of Mission Organic Center, Inc. The Commissioner also determined to collect Mission’s tax debt for 2021. Our analysis of that last determination is different from that for its earlier tax years, and much easier.” T. C. Memo. 2025-130, at p. 1. (footnote omitted).

There were three (count ’em, three) NODs, the last covering only 2021. Mission never disputed liability, only hardship and wanted a collection alternative. But the AO really blew it.

“There are blatant mistakes in it, as she incorrectly stated that Mission’s attorney had asked for an installment agreement, and not just an OIC or currently-not-collectible status. But it’s the reasoning used that separates this notice from the others. She first determined that Mission could not challenge its tax liability for 2021 because section 280E ‘disallows all expenses related to the operation of a medical marijuana dispensary deemed legal under State but not Federal law.’ She then added that Mission didn’t qualify for any collection alternative because it hadn’t submitted ‘the requisite financial information necessary to facilitate a determination of your ability to pay.’ She also ‘noted’ that Mission was not current with its estimated-tax payments.” Order, at p. 2.

The NODs in the fulldress were better, of course.

The AO claimed Mission was contesting liability, but it didn’t check that box. The case activity record (part of the admin record) shows what Mission wanted, and Mission’s trusty attorney always claimed RCP for hardship was the issue.

The AO claimed Mission hadn’t provided financial info, although Mission had provided compliant records to COIC, and those were in the admin record and still timely.

As for noncompliance with estimateds, we have a Holmesian footnote worthy of repetition.

“Our skepticism extends to the Appeals officer’s assertion that Mission was not current in its estimated-tax payments for 2022. If true, that would make denying Mission’s OIC a matter of routine—we have repeatedly held that there is no abuse of discretion in rejecting a collection alternative for a taxpayer who fails to be current in its estimated-tax payments.  But the Commissioner himself included a proposed finding of fact that Mission had paid its 2022 estimated tax. And as the CDP process went into 2023, the settlement officer’s case-activity record asserted both that Mission was deemed ‘not in compliance with ES requirements” for that year, and that Mission was in compliance—both on the same page.” T. C. Memo. 2025-130, at p. 4, footnote 2. (Citation omitted).

Remanded.

No, not Newcomb College or Meissen, Mission Organic Center, Inc., 165 T.C. 13, filed 12/16/25, is a State-legal vegetation trafficker with a lot of expenses that Section 280E bars from Section 162 et seq. This KOs Mission’s OIC, while birthing five (count ’em, five) separate opinions in this full-dress TC, namely, viz., and to wit, a majority (Judge Buch, joined by Ch J.  Urda, and JJ. Kerrigan, Nega, Pugh, Ashford, Copeland, Jones, Toro, Greaves, Marshall, Weiler, Way, Arbeit, Guider, and Fung; concurring, J. Cland, joined by JJ Jones, Guider, and Fung; Judge Toro has his own concurring opinion, in which Ch J Urda,  and JJ Pugh, Ashford, Copeland, Jones, Greaves, Guider, and Fung join; Judge Landy dissents, joined by JJ Jenkins and (of course) Holmes; Judge Jenkins wants her own dissent in which JJ Landy and Holmes join; and last, but definitely not least, Judge Holmes has his own dissent, which Judge Landy joins.

Clear? Thought not.

This is a 9 Cir record-ruler off a CDP involving an OIC collectability (RCP) only, so abuse-of-discretion. And Section 7122(d)(1) gives IRS almost a free-fire zone.

“Mission argues that the Commissioner abused his discretion by disallowing business expenses when calculating Mission’s reasonable collection potential. Mission argues that IRM 5.8.5.25.2 (Sept. 24, 2021), Calculation of Future Income – Cultivation and Sale of Marijuana in Accordance with State Laws, is in conflict with the Code, Treasury regulations, and other IRM provisions. The Commissioner argues that the settlement officer did not abuse her discretion in rejecting the proposed offer-in-compromise and sustaining the proposed collection action. The Commissioner argues that the policy to exclude expenses that are disallowed by section 280E when computing reasonable collection potential is consistent with the congressional intent underlying section 280E and is consistent with the discretion granted by Congress to set guidelines for offers-in-compromise.” 165 T. C. 13, at p. 6.

IRS does not err in following an IRM policy that expresses what Congress has enacted: no deduction for herbal traffickers, hence no offset to gross income.

Judge Copeland says Mission filed and followed 280E for years, yet never paid the tax shown, essentially nullifying Section 280E. “..;.a taxpayer who files an income tax return consistent with section 280E, reports a tax liability, and then files an OIC stating the ‘actual money’ it earned was much less based on doubt as to collectibility, is arguing that it should pay a lesser amount in satisfaction of its tax liability than section 280E mandates. Such a taxpayer would be circumventing the underlying purpose of section 280E. I additionally note that such a taxpayer could likewise just default on the OIC the following year by filing consistent with section 280E, but not paying the amount due––continuing the pattern. Denying an OIC in these circumstances makes perfect sense, and the public policy outlined in the Internal Revenue Manual (IRM) is thus consistent with statutory intent of section 280E and would not wreak havoc on the OIC process.” 165 T. C. 13, at p. 14.

Judge Toro finds support for adherence to general policy in INS v. Yueh-Shaio Yang, 519 U.S. 26 (1996). Where an agency has a settled policy uniformly applied, even if invented, following it is not an abuse of discretion.

Judge Landy claims the wording of the NOD doesn’t reflect what the majority says it says, hence Chenery. And the special IRM rule for potteries falls foul of the general regulations for OICs based on collectability.

Judge Jenkins says the special rule in the IRM violates the regs as to calculating RCP, so relying thereon is error.

Judge Holmes says RCP is about what income (not taxable income) the taxpayer has after allowable expenses, deductible or not. The special rule for potteries flies in the face of this regulatory scheme.

Sorry, no ooga-chaka goes with this one, but Blue Swede’s 1974 one-hit wonder gives the keynote for Mark Chernomordikov, T. C. Memo. 2025-128, filed 12/15/25.

It’s a story we’ve often heard. Son takes over immigrant Dad’s business. Dad dealt with compatriots in green, no invoices among friends (“That’s how we did it in the Old Country”), and nobody keeps books. Son falls in among some bad actors (an EA who was investigated for tax fraud and was paid a piece of the tax savings, a Circular 230 no-no first class), gets involved in a number of businesses, and you know the rest. His Dad’s business was a C Corp. but father and son felt it was all their own.

Son ran the business like a Sched C. Bank deposit reconstruction followed.

“Petitioners argue that the bank accounts were [C Corp]’s, not petitioners’, and [C Corp] was not owned by Mr. Chernomordikov. But we have found above that Mr. Chernomordikov ran the business, had control over the business bank accounts, and considered them no different from his personal accounts. At trial he testified that in [Years at Issue] he ‘didn’t really feel like there was a difference’ between [C Corp]’s bank accounts and his personal bank accounts. When questioned how ONY Sales paid him for his work in [Out Year], because he received no paycheck, he testified that he ‘used the money from [C Corp] for personal expenses.’ Mr. Chernomordikov’s admission directly contradicts petitioners’ argument that cash withdrawn from [C Corp] accounts should be considered cost of goods sold. It instead supports RA H’s characterization of Mr. Chernomordikov’s cash withdrawals from [C Corp] accounts as taxable income to the extent not otherwise explained.” T. C. Memo. 2025-128, at p. 13.

And then there’s COGS.

“Mr. Chernomordikov claimed that cost of goods sold reduced [C Corp]’s gross receipts for [Years at Issue] and therefore should reduce any income we attribute to him from his use of [C Corp]’s funds. He produced no documents to support his claim. His explanation that he\ was simply following the practice of his late stepfather and complying with suppliers’ requests to deal in cash cannot substitute for actual evidence. Nor can he hide behind purported reliance on an absent professional to maintain records of costs of goods sold any more than he can rely upon the absent professional’s advice to avoid tax on income in [C Corp]’s accounts that he used as his own. While he may have used some of the cash withdrawn for business expenses, he offered no proof beyond the amount that respondent already conceded. Our latitude to estimate amounts on the basis of testimony requires more support than petitioners have offered, especially when Mr. Chernomordikov admitted at trial that he used funds in [C Corp]’s accounts for his personal expenses.” T. C. Memo. 2025-128, at pp. 14-15 (footnote omitted, but see infra).

The omitted footnote says you can Cohanize COGS even though they aren’t deductions, but the petitioners didn’t argue that nor provide a basis to Cohanize.

IRS stiped away filing status. Neither Mark nor spouse filed anything for one Year at Issue, so they can’t claim MFJ. Except the Stip of Settled Issues says they can. Except IRS now says no in Post-Trial Brief. Judge Cary Douglas (“C-Doug”) Pugh says “you stiped, you’re bound.” Mark and spouse married during that Year at Issue in CA. That’s a community property State, but counsel failed to raise any community property election issues, so they’re both on the hook.

As to chops, petitioners try Jarkesy, but on the same day that Riddle Aggregates is published that doesn’t go anywhere. Fraudulent failure to file fails when the EA who supposedly advised Mark is available but not called by either side. Judge C-Doug Pugh advises wiseguys not to try that tactic; see T. C. 2025-128, at p. 19, footnote 19. Mark gets hit with most of the rest.

One personal note: I was called to consult with a CPA in an ethnic enclave on this Minor Outlying Island. The prospective client (whom I elected not to represent) also dealt in cash with suppliers of like ethnicity. The prospective client needed to find a quarter-million dollars in COGS, and none of his compatriots was willing to write down his (it was definitely “his” in this community) telephone number. I walked downstairs from the CPA’s office and resisted the temptation to stop for lunch.

The latest iteration of the Supremes’ ongoing expedition to bring discipline to the wayward acts of Congress and the boardinghouse reach of the Executive founders on sovereign immunity in Riddle Aggregates, LLC, Ornstein-Schuler, LLC, Tax Matters Partner, 165 T.C. 12, filed 12/15/25. This time it’s the “accuracy-related penalty under section 6662(a), (b)(1)–(3), (c), (d), (e), and (h) for an underpayment due to negligence, substantial understatement of income tax, substantial valuation misstatement, and gross valuation misstatement” that, for want of a jury trial, should be held Constitutionally invalid. 1`65 T. C.12, at p. 4.

Jarkesy, you’ll recall, was the shootdown of SEC’s fraud penalties. But those were like an ordinary citizen suing for fraud and seeking punitives, not an exercise of collecting the revenue, a uniquely sovereign function. See my blogpost “Full House,” 8/21/25.

Same story here, says ex-Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan.

“Recently in Silver Moss Properties, LLC v. Commissioner, No. 10646-21, 165 T.C. (Aug. 21, 2025), this Court held that the Seventh Amendment does not apply to suits against the sovereign and that Congress has not otherwise consented to trial by jury in TEFRA partnership-level actions. That holding fully resolves petitioner’s claim here. We see no reason to revisit that holding.” 165 T. C. 12, at p. 4. (Footnote omitted, but see infra.)

“It is well settled that there is no right or mechanism to a trial by jury in either this Court or the Court of Federal Claims.” Silver Moss Props., LLC, 165 T.C., slip. op. at 4–5 (first citing Mathes v. Commissioner, 576 F.2d 70, 71–72 (5th Cir. 1978)(“[A] taxpayer who elects to bring his suit in the Tax Court has no right, statutory or constitutional, to a trial by jury.”), aff’g per curiam T.C. Memo. 1977-220; then citing Swanson v. Commissioner, 65 T.C. 1180, 1181–82 (1976); and then citing Rohland v. United States, 135 Fed. Cl. 36, 38 (2017)). Additionally, a jury trial is not available in. district court for TEFRA partnership-level actions. Id. at 5.” 1645 T. C. 12, at p. 5, footnote 5.

“Petitioner’s Motion [partial summary J] suggests that petitioner itself fundamentally misapprehends the nature of its own suit. Petitioner largely focuses on circumstances in which the government brought judicial actions seeking monetary awards from taxpayers. But here petitioner sued the government, not the other way around. And it is petitioner who seeks to prevent the government from taking the next step in assessing and collecting administratively the tax the government believes is due from Riddle Aggregates’ partners. In this context the analytical framework reflected in petitioner’s Motion papers is inapplicable, and the authorities on which petitioner relies are inapposite.” 165 T. C.12, at p. 5.

Ex-Ch J TBS launches into a historical disquisition anent the history of Section 6662 penalties, their ancestors and progeny. The FUBAR penalty, dissed on Eighth Amendment grounds (“excessive fines”) by 11 Cir in Schwarzbaum, 127 F. 4th 259 (11 Cir, 2025), doesn’t apply here; these chops are remedial, not punitive.

Taishoff says roger that, most affirmative, tell that to the dudes who have to pay.

I see my reader, whom I’ll call Mr. Mac, and my colleague whom I’ll name, Lyle B. (“Full-Court”) Press, Esq., were on the losing side. For now. Maybe this one gets to the Supremes.

I have often praised the volunteers who show up to render assistance to hapless pro ses at trial session calendar calls. But their aid is unavailable when motion practice is on the menu, when their aid can be even more necessary.

A many-times-told tale, Christopher W.E. Jones & Sarah Jones, Docket No. 7514-25, filed 12/12/25, gets tossed when IRS Notice CP71C turns out not the be a SND.

And that, even though “Section 6212(a) authorizes the issuance of a notice of deficiency, and while that section does not prescribe any particular form, at a minimum the notice must ‘(1) advise the taxpayer that the IRS has determined that a deficiency exists for a particular year, and (2) specify the amount of the deficiency or provide the information necessary to compute the deficiency.’ The notice must fulfill the purpose of providing formal notification to the taxpayer that a deficiency in tax against that taxpayer has been determined. The purpose of a notice of deficiency is to advise the taxpayer that ‘the Commissioner means to assess him; anything that does this unequivocally is good enough.'” Order, at p. 2. (Citations omitted).

Ch J Patrick J. Urda says Notice CP71C falls short. “…the Notice CP71C does not state that it is a notice of deficiency, nor that the IRS has determined a deficiency or intends to assess a tax. Rather, the Notice CP71C merely informs petitioners that they still owe a balance in their federal income tax for taxable year 2019.” Order, at p. 3.

If the shortfall arises from incomplete payment of self-reported tax that IRS concedes is correct, then there is no deficiency. The tax shown on the return is the tax due.

But is that the case here? Faced with IRS’ motion to dismiss for want of jurisdiction (no SND), Petitioners “filed a one-page document, characterizing it as a ‘Motion to Withdraw,’ in which they ‘ask [the] Court to Withdraw return 2019.’ Petitioners’ Motion to Withdraw provides no additional information describing the relief it seeks (or addressing the jurisdictional question pending before the Court).” Order, at p. 3.

This is a case for the calendar call commandos. But this case never got to calendar call. The “motion to withdraw” should have prompted direction to a LITC.

I ask a lot of questions in this my blog. Proceedings in Tax Court cover so wide a range of human activity that nothing (seemingly) is too remote. I just now saw that Kevin J. Mirch and Marie C. Mirch, T. C. Memo. 2025-128, filed 12/11/25, had answered a question I has asked back in June, 2023.  See my blogpost “Bar Exam?” 6/28/23.

The Mirchs had asked then-Judge Patrick J. (“Scholar Pat”) Urda to stay proceedings in their CDP while Kev, an attorney, got advice from the CA Bar; but the nature of the request was never stated.

Now comes the answer.

“Petitioners requested a stay because of concerns with an ethical issue regarding self-representation. We granted the stay over respondent’s objection.” T. C. Memo. 2025-128, at p. 9.

The opinion itself is the usual mix of Section 469 real estate nonprofessionalism and sloppy bookkeeping by Exam, Appeals, and petitioners.

What is unusual is what Judge Goeke says petitioners did on the trial. “Petitioners spent a substantial amount of time during the trial and in their Posttrial Briefs trying to relitigate not only issues the Court previously decided but also issues respondent has conceded. They misquoted and mischaracterized evidence in the record and made allegations of wrongdoing not supported by evidence.” T. C. Memo. 2025-128, at p. 32.