Long ago I suggested that this is less than a brilliant approach, but it would seem that Sang Hun Lee, T. C. Memo. 2026-43, filed 5/27/26, was too busy to read my blog as well as too busy to file a return for the year at issue.

Sang worked three (count ’em, three) jobs during year at issue, although IRS only nailed him for one. Sang claims the SFR he got didn’t allow him his business deductions, but STJ Jennifer E. (“Publius”) Siegel finds these undocumented. Sang’s tale of stolen records doesn’t help.

“Mr. Lee readily admits that he failed to file an income tax return for [year at issue]. He claims he had reasonable cause: Between commuting and working multiple jobs, he just did not have time. His argument is unpersuasive. We have repeatedly held that work demands—even extreme ones—do not constitute reasonable cause for purposes of section 6651(a)(1).” T. C. Memo. 2026-43, at p. 7. (Citations omitted).

Fuhai Li (that’s Doc Li) was a pill pusher, selling prescriptions for controlled substances for unreported cash. In consequence whereof, Doc Li went down for 30 of 32 counts in an indictment in USDCMDPA, including but not limited to Section 7201 fraudulent tax evasion. Hence Doc Li is collaterally estopped from contesting Section 6663 chops on whatever the actual deficiency turns out to be for the three (count ’em, three) years at issue, and Doc Li is likewise collaterally estopped from claiming SOL, as Section 6501(c)(1) keeps SOL open for fraudulent returns.

But this case is Fuhai Li and Hong Hu, T. C. Memo 2026-42, filed 5/27/26, so what about Hong Hu, spouse of Doc Li?

Hong Hu wasn’t a party to the USDCMDPA case, and nobody claims she was part of Doc Li’s fraudulent activities.

Judge Alina M. (“AIM”) Marshall has a bunch somber reasoning and copious citation of precedent, both pre-and-post amendment to Section 6653 (hi, Judge Holmes). While Hong Hu signed the fraudulent returns, she isn’t liable for the fraud chops because she didn’t commit fraud.

What she can contest is whether Doc Li committed fraud, such that SOL is open as to her.

“We read this long line of cases to hold that the unconvicted spouse who was not a party to the convicted spouse’s section 7201 criminal proceedings is allowed her ‘day’ in Court for purposes of litigating the application of the fraud exception to the general three-year period of limitations regardless of whether she herself is subject to a fraud penalty.” T. C. Memo. 2026-42, at p. 20.

And this, even though IRS conceded fraud chops as to Hong Hu; the issue is whether Hong Hu is on the hook for the deficiency.

Doc Li and Hong Hu claim IRS presented no evidence of fraud in Tax Court, but Judge AIM Marshall finds IRS did offer enough to raise a material fact question for trial. 

Taishoff says if IRS can prove what this press release says, Hong Hu has a tough job.

Edited to add, 9/1/26: IRS’ motion for reconsideration denied, Docket No. 12133-23.

Ch J Patrick J. (“Scholar Pat”) Urda has proposed updates, upgrades, and tweaks to the admissions process and modifications to governance of the admitted.

The biennial Slaughter of the Innocents can now occur whenever, there are forms for recommending nonattorneys and reinstating disbarred practitioners, and firms are formally barred from admission. 

Check it out, and comment. Comments must be received by Friday, July 24, 2026, and may be emailed to\ Rules@ustaxcourt.gov or addressed to the Clerk of the Court at United States Tax Court, 400 Second Street, N.W., Room 116, Washington, D.C. 20217. Comments received will be made available on the Comments and Suggestions page on the Tax Court website.

I’ve often posted about the need for a clear warning to frivolites at an early stage that Section 6673(a) chops are the price of frivolity. Yes, I’ve also said often that judges must be free to run their own divisions (trial parts) without constant second-guessing or undue restriction.

STJ Jennifer E. (“Publius”) Siegel gets it right in Stacy Hutchings, Docket No. 466-26, filed 5/26/26.

Stacy filed a petition, frivoling; when told to amend, she did, frivoling again. IRS moved to toss for failure to state a claim and to give Stacy a Section 6673(a) chop at no extra charge. Stacy responded to said motion and amended, frivoling again.

Motion to toss granted.

“Although we will not impose a penalty at this time, Ms. Hutchings is invited to review I.R.C. section 6673(a): If it appears to the Court that a petitioner’s position in a proceeding before the Court is frivolous or groundless, then the Court can impose a penalty (not to exceed $25,000) on that petitioner. Ms. Hutchings is advised that it appears to the Court that the position she has taken in her submissions are frivolous or groundless. See, e.g., Wnuck v. Commissioner, 136 T.C. 498 (2011). Future submissions to the Court advancing a frivolous or groundless position may well result in the imposition of a penalty.” Order, at p. 1.

For the Wnuck story, see my blogpost “One’ll Get You Five,” 5/31/11.

When you go home, tell them of us and say,
For your tomorrow, we gave our today.

I’ve been following the track of that Dixieland Boondockery quartette Habitat Green Investments, LLC, MM Bulldawg Manager, LLC, Tax Matters Partner, et al., Docket No. 14433-17, filed 5/22/26, these last six (count ’em, six) years. 

Finally, the trial is over. Now IRS wants to seal chunks of the docket. Taishoff is at a loss to understand why anyone not a trial or appellate lawyer or judge, who is presumably getting paid to do so, would want to plow through 222 (count ’em, 222) pages of discovery jousting to uncover the identity of the whistleblower who tipped IRS off, when the identity of said blower was revealed in open court, seemingly to the only parties who would have cared.

Nevertheless, Judge Christian N. (“Speedy”) Weiler has to waste his valuable time I(and my much less valuable time) in coming up with somber reasoning and copious citation of precedent to conclude that when the party’s counsel seeking to protect said blower, who neither asked to be protected nor is represented by said counsel, can only come up with conclusory allegations of potential harm to said blower, the public’s right to know outweighs whatever right the blower may have to anonymity. 

As at 8:58 a.m., EDT, 5/22/26, the highest Tax Court docket no. assigned is 4015-26. I am almost nostalgic for the tsunami year 2021. So few cases, so much time.

Or as the old-time litigators, contemplating the courthouse summer doldrums, said in my young day, “File in May and go away.”

But if summer doldrums are truly upon us at The Glasshouse in the City of the Blue Lagoon, the frivolites are still hard at work.

Craig Walcott, Docket No. 21820-22, filed 5/22/26, is back, trying to stall his trial with his seven-question salvo, but Judge Elizabeth A. (“Tex”) Copeland gives him the Wnuck send-off.

Judge Tex Copeland does go through the four (count ’em, four) factors relevant to a stay of  trial when that rarity, an interlocutory appeal, is actually ongoing, but Craig fails that one too.

“As to Mr. Walcott’s third reason/assertion regarding that a ‘four-factor stay standard is satisfied,’ he applies the four-factor test set forth in Nken v. Holder, 556 U.S. 418, 434 (2009) which determines whether an appeals court will stay the enforcement of a judgment by a lower court pending the outcome of an appeal. The four factors are: ‘(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.’ Id. (citing Hilton v. Braunskill, 481 U.S. 770, 776, (1987)). Here, Mr. Walcott has not made a strong showing of likelihood that the Supreme Court will grant certiorari in his case; he has not shown he will suffer irreparable injury; and public interest will not be furthered by such a stay. While the Commissioner will probably not be  substantially’ injured, the delay does cause some injury to him and it burdens the Court with the last-minute rescheduling of a case that has long been calendared for trial. Overall, even if the four-factor standard were to apply in this matter, it has not been met.” Order, at p. 7.

For Craig’s previous sortie, see my blogpost “Irrepressible,” 5/11/26.

That out-of-date slang phrase meaning certainty certainly doesn’t apply to Walker Clay and Timber, LLC, Walker Investments, LLC, Tax Matters Partner, Docket No. 23404-21, filed 5/21/26. So says Judge Benjamin A. (“Trey”) Guider, III, denying IRS summary J in yet another of their desperation attempts to stave off a valuation trial.

The Walkers claim their carefully-sculpted deed to 501(c)(3) Oconee River Land Trust, Inc., a perennial guardian of Dixieland Boondockery, precluded the previously permissible use of those 819.75 acres of swamp as a wetland mitigation bank. 

And no, I didn’t know what that was either; the National Environmental Policy Act of 1970 postdates my time in the Army Engineers. So when IRS claims the HBU of said swamp remains the same after the easement, hence any diminution said easement caused is worth zero, there is a fact question.

I’ll let Judge Trey Guider Judge-‘splain. 

“A wetland mitigation bank is defined as a site (or sites) where wetlands are ‘restored, established, enhanced, and/or preserved for the purpose of providing compensatory mitigation for impacts authorized by [Department of the Army] permits.’ 33 C.F.R § 332.2. Mirroring the regulation’s language, the [expert’s] report in this case stated that ‘[t]he proposed wetland mitigation bank on the subject property would include wetland restoration and enhancement, and wetland preservation.’ Ex. 1-J, at 81.” Order, at pp. 3-4.

The language of the deed, construed most favorably to the nonmovant Walkers, prohibits restoring, enhancing, and preserving to offset what the Engineers allowed somebody else to muck up. Presumably if you have a wetland mitigation bank, you can let somebody use your swamp to offset the swamp somebody else drained. But if you’ve given away that right, your swamp is worth less. 

So what exactly did the Walkers give away?

The bedrock of Tax Court discovery is informality. Now in its 52nd year, Branerton remains the touchstone, the standard: first comes the informal.

River Moss Property, LLC, River Moss Management, LLC, Partnership Representative, Docket No. 7324-24, filed 5/20/26 and IRS certainly followed where Branerton led. For an entire year they kept extending the Mosses’ deadline to review certain documents obtained from third parties by way of informal requests for privilege. When the Mosses wanted more time, IRS called the clock. The Mosses then moved for a Rule 103 protective order.

Ex-Ch J L. Paige (“Iron Fist”) Marvel doesn’t give the Mosses the cover.

First, the Mosses haven’t made out that IRS took sneak peeks at the confidential material (if indeed it is confidential). The Mosses had a year to figure out and haven’t gotten there yet. Let them do so now. And don’t say that IRS was dishonest without strong proof. “…we seriously caution petitioner against accusing another party of untruthfulness without strong evidence.” Order, at p. 3.

Secondly, and here’s the important point: “…the documents at issue were obtained pursuant to our informal discovery procedures. Rule 147 does not apply to informal discovery procedures. Moreover, we are skeptical that even Rule 103 applies to informal discovery procedures. See Fu Inv. Co., Ltd. v. Commissioner, 104 T.C. 408, 410 (1995) (‘Arguably, [informal discovery requests] do not fall within our discovery procedures, and, thus, are not subject to restriction under Rule 103.’)”. Order, at p. 3.

IRS’ discovery requests to the third parties stated at least twice that they were not subpoenas and that the third parties had no mandatory obligation to respond. Order, at p. 1, footnote 3.

“Just a friendly chat?” Beware!

Ex-Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan sustains the NITL that was left hanging at the last Tax Court visit of Bryan Edward Menge, T. C. Memo. 2026-41, filed 5/19/26, which I chronicled under the heading “Substantially Prevailed,” 12/16/22. Further background is discussed in T. C. Memo. 2026-41, at p. 3, footnote 2.

Here the NITL is sustained as to the four (count ’em, four) years that weren’t before 1 Cir, where Bryan Edward was battling a contractor holdback, a common source of controversy between contractor and owner. Bryan Edward didn’t contest his self-reported numbers; he claimed he was due a credit from the adjudicated outyear, but ex-Ch J TBS said that was decided at 1 Cir and so off the table.