Summary judgment motions are a favorite tactic of mine. They give discovery of your case, your adversary’s case, and, most importantly, what the judge thinks of both cases. But you have to make your case. IRS omits too many steps in The Harbinder S Brar FLP II, n.k.a. Bosh LP, Brar Property Management Inc., Tax Matters Partner, Docket No. 17763-19, filed 1/3/23. IRS hit la famille Brar with 24 FPAAs and 3 SNODS, to which la famille Brar filed 27 (count ’em, 27) petitions. IRS seeks summary J in all, and loses.

“Important here is what occurred during the examinations. The revenue agent summoned Mr. Brar for an interview. At that interview Mr. Brar invoked his Fifth Amendment right against self-incrimination to virtually every question the revenue agent asked. The revenue agent also summoned Mrs. Brar for an interview, but she declined to attend and offered to respond to written questions instead. The revenue agent sent Mrs. Brar written questions and she responded by invoking her Fifth Amendment right against self-incrimination in her written answer to every question.” Order, at pp. 2-3.

IRS wants Judge Elizabeth A (“Tex”) Copeland to draw a negative inference as to all matters and bar the Brars from putting in any evidence. Trouble is, Judge Tex Copeland isn’t having it.

There’s no showing that the Brars will take the Fifth on the trial. IRS’ motion papers don’t include tax returns or transcripts for entities and years at issue to establish what are the deficiencies, and don’t put in all the bank account reconstructions to show unreported income. And since IRS wants fraud chops, they need clear and convincing evidence, whatever the Brars put in. So the Brars need not even respond to this motion.

No summary J, but no prejudice either.

Taishoff says, wow! Judge Tex Copeland really rapped IRS’ metaphorical knuckles. And yet, it was worth a try.

Although John Phillips opined back in 1966 that one “can’t trust that day,” whenever a public holiday in the Distritto Columbiano shows up on a Sunday, observation, or celebration, or commemoration is shunted off to the next ensuing Monday.

New Year’s Day is no exception.

I stand mute.

I’m not feeling particularly Auld Lang Syney today, as the Tax Court website is letting 2022 fade away in a flurry of routine orders. But this year was momentous.

The scholarly articles are starting to blossom as the blogosphere and the trade press slice, dice, and digest the Supremes’ effort to bring “discipline” to Tax Court jurisdiction via Boechler, P.C. My sources tell me that I, even I, am mentioned in one dispatch in an academic law review, a sacred grove hitherto unpolluted by my nonwhite shoes. Even though only a footnote, it’s something.

My specific comments need no further airing. I expect the silt stirred by Washington Nine will provide me with blogfodder throughout my declining years, even more prolific than the Great Graev tsunami kicked off by The Jersey Boys.

The supernal intermeddling by jurists afar remote from the actual practice of law and the operational difficulties of the trench warriors who must take what Congress has given them, no matter how far inadequate, and “stoop and build ’em up with wornout tools” is a wonderful aid to the blogger.

While the year just past brought me sorrow at a personal level, it has certainly provided journalistic joy.

Happy New Year to all!

The Incompetence Epidemic

We have just seen a world-class shambolic schemozzle at Southwest Airlines that put the DAWSON debacle in the shade.

I myself, though not a passenger on SWA, have seen a similar. For more than forty years, I have dealt with National Life of Vermont, formerly one of the best-run, old-line, mutual insurance companies, whose ancestry goes back to 1848.

I initiated a transaction on December 1, 2022, which had to be completed by close of business tomorrow.  It will not be completed. The crew at National Life Group (its current iteration, which bears no resemblance to its ancestor) is incapable of issuing a check and getting it to me in New York. I had three times emphasized the importance of the transaction, each time was assured to would be dealt with. I was told National Life Group only mailed checks; they were incapable of sending one by PDS, even after I offered to give them my account to which to bill.

They were twice incapable of issuing a check and mailing it.

My relationship with them will terminate. I strongly suggest anyone who reads this to consider carefully whether they wish to commence or maintain a relationship with an organization that makes the Genius Baristas and 18F look like Einstein meets Hawking.

For once, a whistleblower did get an award, but the Ogden Sunseteers gave with the left hand (information IRS unlikely to find on their own, and provided enough substantiation to nail the targets),so 15% sequestered rewards, but took with the right (held off telling IRS until his fellow fraudsters fired him from the business and shortchanged him with the spoils, so the bad guys got away with some skullduggery).

Felix Luu, 2022 T. C. Memo. 2022-126, filed 12/28/22, was engaged with family in poultry farming and running a supermarket. They were also skimming cash receipts. Felix first filed a Form 211 with Ogden, and later sued in State court when he discovered he was being shortchanged, whereupon the family came clean with IRS, except they were a wee bit parsimonious with the truth. IRS agrees that Felix’s blow netted better than $2 million, and gave him 15% (less sequester).

Felix wants more.

Judge Christian N (“Speedy”) Weiler has this one, and he goes through the entire Whistleblower story, statute and regs. Of course, Van Bemmelen gets heavy play: though both sides move for summary J, there’s no fact-finding as these cases go off on administrative record – abuse of discretion. And Judge Speedy Weiler can’t find any.

First, the good news. ” The record reflects the WBO’s process in determining that two positive factors existed, with the first positive factor being how the information petitioner furnished was previously unknown to the IRS, and second, that the information petitioner furnished identified behavior that the IRS was unlikely to identify or was difficult to detect by reasonable diligence. See Treas. Reg. § 301.7623-4(b)(1)(ii) and (iii).” T. C. Memo. 2022-126, at p. 20.

And though IRS is parsimonious with detail how they gave Felix another 7% for this, Felix didn’t ask for more, and Judge Speedy Weiler can’t find that arbitrary or capricious.

Next, the bad news. Felix delayed blowing for a couple years (hi, Judge Holmes) until the family fired him, and Felix also took some OTB (off the books) cash his own self. So Felix is knocked back down to the base 15%, and Judge Speedy Weiler doesn’t find that arbitrary or capricious either.

Now we all remember the Swiss banker who blew on his old bosses while in the slammer, netting around $46,000 per day while he was in durance vile, on a 26% award.

Maybe what poor ol’ Felix gave IRS was chickenfeed.

Susan P. Kechijian, T. C. Memo. 2022-127, filed 12/28/22, watched from the gallery as both the trial of her late husband’s and her deficiency case was tried and then affirmed on appeal to 4 Cir. But she was represented by the same trusty attorney who represented her late husband in life and thereafter his estate (of which she was co-ex’r). And that’s enough for Judge David Gustafson to find claim preclusion (res judicata) barring Section 6015(g)(2) innocent spousery.

For the backstory, see my blogpost “Unvested Stock, Vested,” 4/24/17.

Susan never raised innocent spousery during the previous litigation. Representation by counsel does show participation, but that’s not enough. There are cases when the non-requesting spouse ran the show and shut out the requesting spouse, despite requesting spouse having the same attorney.

“…here Mr. Kechijian had died a year and a half before the trial in this case. He was not able thereafter to restrict Ms. Kechijian’s pursuit of her interests and, in particular, her pursuit of a claim under section 6015. She was no longer under the shadow of Mr. Kechijian but rather was in a position to control the litigation however she wished—both as a petitioner in her own right and as the co-executor of Mr. Kechijian’s estate.

“As to her co-executor, Mr. H, we assume it is true, as Ms. Kechijian alleges, that only he and not she gave instructions to counsel for the handling of the deficiency case after Mr. Kechijian’s death. However, that was by Ms. Kechijian’s choice.” T. C. Memo. 2022-127, at p. 14. (Name omitted).

Judge Gustafson says this may have been a wise tactical move, but Ms. Kechijian never claimed conflict of interest on her attorney’s part, nor that she was left out of the loop. Besides, says Judge Gustafson, once the late Mr Kechijian was the late Mr Kechijian, her attorney’s loyalty was to her; but Taishoff says, what about the estate? Were there heirs, legatees, or beneficaries whose interests might have been adverse to Ms. Kechijian’s?

Howbeit, Ms. Kechijian could have taken the helm, and chose not to.

No innocent spousery for her.

Takeaway- Attorneys, watch out for conflicts. Interspousals can be dangerous to your professional health.

I take my text from a Christmastide classic: Jeanne S. Leyvraz was dead, to begin with. There is no doubt whatever about that. The docket entries are clear and in due form, attested to by the Ch Clk, Ms Servoss, and the Ch J, the Hon. Kathleen (“TBS = The Big Shillelagh”) Kerrigan. The case is officially stricken from the trial session and officially restored to the general docket.

So it must be understood that Jeanne S. Leyvraz was dead, or there would be nothing remarkable about the case captioned “Estate of Estate of Jeanne S. Leyvraz, Deceased, Patricia Perlman, Executor” Docket No. 32009-21, filed 12/28/22.

It is a law school trusts and estates 101 maxim that a living person has neither estate nor heirs. To have two (count ’em, two) estates is double proof.

Charlie Dickens would definitely approve.

Judge Patrick J. (“Scholar Pat”) Urda needs little of his formidable intellect to deal with this discovery jumpball in Rock Bottom BBS, LLC, Barnett Properties, Tax Matters Partner,  Docket No. 9145-21, filed 12/27/22. The schema intended to accelerate the dispute resolution process by avoiding ambushes and bringing to light essential facts in advance of trial has turned into a prolonged and expensive quarrel. Rarely does it advance a case to trial and resolution. It does weaken and exhaust one’s adversary, assuming, that is, that it doesn’t do the same to one’s client.

It’s yet another GA boondockery, with a $12 million deduction on the line. So the Rock Bottoms send in five (count ’em, five) high-priced attorneys from a well-known tax litigation shop, who moved to compel IRS to respond to the following interrogs.

“…identify the provisions of I.R.C. § 170 and the accompanying regulations that Rock Bottom purportedly failed to satisfy, as well as the legal and factual basis underlying his position.” Order, at p. 2. IRS says that’s a BoP shift, but Judge Scholar Pat says it isn’t, and there’s precedent that says it’s OK, so answer, IRS. “We see no indication that these interrogatories are an impermissible attempt to shift the burden of proof (which, of course, would require a motion and this Court’s agreement that the requirements of Rule 142 or I.R.C. § 7491 have been met). To the contrary, they appear to be run-of-the-mill discovery requests to understand the Commissioner’s current factual and legal positions and, as such, should be answered in the normal course.” Order, at p. 2.

Next, the Rock Bottoms want to know why IRS denies they’re a partnership in the answer. IRS says they lack knowledge, but they’ll consider it as the case goes along, and that’s good enough for Scholar Pat.

“Rock Bottom finally seeks information about the witnesses that the Commissioner plans to call at trial, including the substance of their expected testimony and, for fact witnesses, their knowledge relating to the matters at issue. The Commissioner responds that the request is premature and that he ‘will identify potential witnesses in accordance with the Court’s Rules and Orders in this case.’” Order, at p. 3.

There’s a pre-trial scheduling order in place with deadlines for exchanging these particulars, so this is a nonstarter.

Taishoff says all this stuff should have been dealt with in a Branerton play-nice, rather than wasting time and running the meter. Rule 70(a) says it all: “…the Court expects the parties to attempt to attain the objectives of discovery through informal consultation or communication before utilizing the discovery procedures provided in these Rules.”

Today is a public holiday in the District of Columbia.

No Tax Court opinions or orders.

Generally (love that word!), anonymous petitioners filed redacted versions of their petitions and ancillary documents for public viewing. Rare indeed is the petitioner who is exempted from this requirement. Today, however, Whistleblower 35912-21W, filed 12/23/22, seeks and is granted exemption. Not even a single line will be seen except upon an explicit order of the Court.

Why? As usual, Ch J. Kathleen (“TBS = The Big Shillelagh”) ordered 35912-21W to file the redacted documents at the outset.

“… petitioner filed a Letter Regarding Redacted Documents, in which he indicates that because the unredacted Petition and Motion to Proceed Anonymously were handwritten, even redacted versions of those documents would be a means to identify petitioner.” Order, at p. 1.

Ch J TBS Kerrigan treats the letter as a motion, IRS doesn’t object, so 35912-21W stays hidden.

Once again, whistleblowing can be hazardous to your health. See my blogpost “The Whistleblower Blown Up,” 5/20/14.