“(d) Business Hours: The office of the Clerk at Washington, D.C., shall be open during business hours on all days, except Saturdays, Sundays, and Federal holidays, for the purpose of receiving petitions, pleadings, motions, and other papers.”
Today, September 6, 2021, being a Federal holiday, this blog is not open.
Honor to the workers.
Very rarely do I go back to a blogpost to rant about how unfair an opinion was. Rants rarely accomplish much; the target assumes the role of one unjustly attacked, the ranter’s hyperbole undermines credibility; those who listen stop listening fast, as they’ve had enough of such stuff nowadays. And the whole thing sinks into oblivion.
Today I’m going to ignore my own good advice. So, readers, govern yourselves accordingly.
My blogpost “Go Nova,” 8/31/21, got seventeen (count ’em) seventeen views that day, and none thereafter. I’m not complaining about that. Most of my posts concerning small-claimer innocent-spouseries rarely get even that much.
But I went back to edit that blogpost on 9/1/21, because the opinion galled me. At the risk of chewin’ my cabbage twicet, I’ll repost that edit here, with a few extras.
“As best I, a mere old-time, beaten-up, beaten-down, single-shingle dirt lawyer ‘of limited experience and mediocre qualifications’ can discern, Denise blew through $1 million net from the settlement: she owes another $100K credit card debt, $160K to a cousin who lent her money (use of proceeds unknown), $16K to her divorce lawyer, and an undisclosed amount in real estate taxes and home equity line of credit on her MacMansion. Plus put $70K into a business, the fate of which is unknown. This is low income? This is not dissipation of assets? I won’t mention that a high-low settlement agreement got into the record of a trial, to the prejudice of a pro se. It’s been almost five (count ’em, five) years since I said this (and turns out I was right back then): If ever an opinion needed reargument, it’s 2021 T. C. Sum. Op. 31.”
The problem is that Kenneth, the intervenor, was pro se. His argument was probably so poorly articulated that STJ Yuda Guy brushed it off. I’m not faulting STJ Yuda; it probably came out as could’a would’a should’a, not dissipation of assets. Yes, I didn’t see the witnesses or hear the testimony. I know everybody’s testimony looks the same as everybody else’s on paper, but nobody’s testimony looks looks the same as anybody else’s on the stand.
I bet the Villanova Widger School of Law Wildcats must have chewed Kenneth up. There was the prof in charge and two (count ’em, two) students from a highly-selective law school, “hungry as locusts,” as a former US Supreme Court Chief Justice put it. Note I don’t blame either prof or students. They aren’t prosecutors, they’re advocates. Their job is not to make the other side’s case for them, especially when they got the IRS to fold; their job is to win for their client, within the bounds of the law and the ABA Model Rules, and they did.
But what if Kenneth had properly raised dissipation? What if he asked for the credit card statements that supposedly amounted to $100K? What do Denise’s bank statements show? And the $160K she owed to her cousin; don’t interfamily loans and deals get special scrutiny? So where is a copy of the note or other evidence of indebtedness, showing sum certain, dates for payment and maturity, stated rates of interest, events of default, and evidence showing that a commercial or institutional lender would have lent on substantially similar terms? And schedule of payments made thereon, and proofs of each such payment? How much is that real estate tax lien? How old is it, what rate of interest accrues, when does the municipality foreclose? Is this lien not an event of default under the home equity line of credit? And what are the terms of the home equity line of credit, and what drawdowns were taken therefrom, and where did the money go? And what about the business? Is it still operating? Did it ever operate? Was it a sole prop? Were there partners or investors? Let’s see the business’ books, records, tax returns, bank and brokerage statements, and public filings.
Any of my readers, admitted in USTC, would ask these questions, and no doubt a couple others (hi, Judge Holmes) even more pointed that I haven’t thought of. Or gotten the stuff in a Branerton show-and-tell.
Kenneth hadn’t a clue. No reason he should have. But a calendar call commando, or another LITC, would have made a big difference.
This needs reargument; in the interests of justice.
If, busy as he is, demanding the sixty-George-blinds from recalcitrant or unaware petitioners, Ch J Maurice B (“Mighty Mo”) Foley missed this IRS hot flash on Wednesday, I offer it now. IRS is singing the signature electronic.
Might be time to reconsider the blue-ink lockout, such as was visited upon Rhiannon Palmisano, Docket No. 20611-21, filed 9/3/21*.
It’s past time. I’ve been blogging this since 2013 (see my blogpost “Song Sung Blue,” 11/15/13) sub regni three (count ’em, three) Ch Js. Time to give the blue-ink snail mail petition a pension, and let it enjoy its golden years away from The Glasshouse on Second Street.
I’ve not gone in for science fiction. Rather, I want to set forth Judge Patrick J. (Scholar Pat”) Urda’s discussion of the parallel courses of a CDP and an audit reconsideration.
Michele Lee Pazden, 2021 T. C. Memo. 107, filed 9/2/21*, sent in a letter after she got a SNOD for a year for which she hadn’t filed timely. Apparently that was good enough to constitute a petition, which got tossed for Michele Lee’s failure to ante up the sixty Georges. This, of course, sinks Michele Lee’s future attempts to fight about liability.
But before the toss Appeals offered Michele Lee an informal hearing, whereat Michelle Lee was asked for a return, and tendered a 1040 three months late stating she would seek audit reconsideration. IRS gave Michelle Lee a NITL, for which she sought CDP. Appeals deemed the audit reconsideration to be a claim adjustment, and sent it to an RA. The RA heard out Michelle Lee, and bounced her claim adjustment.
Meanwhile, back at Appeals, Michelle Lee’s CDP founders when she wants to fight liability. Appeals said she had her chance, but they’d take a second look at audit reconsideration. The SO at Appeals checked with the RO at AR, and tossed Michelle Lee again. Michelle Lee petitions the CDP, and claims she should have had a second SNOD as a result, so she could contest liability.
Clear? Thought not.
Judge Scholar Pat: “Ms. Pazden nonetheless argues that her audit reconsideration request and the subsequent examination should have triggered a second notice of deficiency for [year at issue], giving her another opportunity to challenge the underlying liability. The IRS’ authority to issue a notice of deficiency, however, is predicated on the Secretary’s determining a deficiency in the taxpayer’s income tax. See sec. 6212(a). The IRS here did not determine any additional tax deficiency in the wake of the audit reconsideration examination, and a second notice was not required.” 2021 T. C. Memo. 107, at p. 8.
Michelle Lee wants Judge Scholar Pat to review the audit reconsideration. No; audit reconsideration runs parallel with a CDP, but Tax Court has no jurisdiction over an AR, an AR is purely discretionary, and the caselaw says Appeals need not wait on an AR to issue a NOD.
Michelle Lee plays the Taxpayer Bill of Goods, but that’s a loser. No new rights. And her demand for remand craters also; nothing new here.
See my blogpost “EFTPS,” 10/10/18, for the story on how to set up the Electronic Federal Tax Payment System to pay all your Federal tax payments.
It sure would have helped Chad Cassiday & Kelly Cassiday, Docket No. 11643-20L, filed 9/2/21.* While Judge Buch is remanding Chad & Kelly back to Appeals, the remand he orders is broader than what IRS is asking for.
“On April 16, 2018, Mr. Cassiday went to his bank and withdrew approximately $2.8 million to pay the Cassidays’ 2017 taxes. The money was withdrawn from their account on that day to create three separate cashier’s checks: two made payable to the Internal Revenue Service (one for $2,500,000 and the other for $326,316) and one made payable to the State of Michigan. (There were two separate checks to the IRS because the branch manager at the bank could not approve a single check in excess of $2.5 million.) Because the money was withdrawn from the Cassidays’ accounts for the bank to prepare the cashier’s checks, the Cassidays received no further benefit (such as interest) from those funds. Mr. Cassiday put the two checks that were payable to the IRS in a single envelope and mailed it to the IRS. The IRS cashed the smaller check, but the IRS never cashed the check for $2,500,000. Instead, the IRS imposed interest and penalties because of the apparent shortfall.” Order, at p. 1
IRS then began its collection efforts. IRS hit Chad & Kelly with NFTL and NITL for “deficiency,” interest and chops. Except Chad & Kelly loudly protested at their CDP that they had paid.
Appeals blew it by not addressing Chad’s & Kelly’s underlying liability issue. IRS admits that, but their request for remand only speaks to interest abatement.
Judge Buch: “…before getting to the issue of whether interest should be abated, the Commissioner must address whether interest should have accrued at all. The Cassiday’s claim, at least according to their petition, is that interest was improper in the first instance. Their position, simply stated, is that they timely mailed their tax payment to the IRS. While we are not deciding the facts or law in this order, the Cassidays’ argument is that the liability was timely paid. Section 6601 imposes underpayment interest beginning on the last date prescribed for payment until the ‘date paid.’ Section 7502(a)(1) provides that ‘if any * * * payment required to be made * * *on or before a prescribed date * * * is, after such * * * date, delivered by United States mail to the agency, * * * the date of the United States postmark stamped on the cover in which such * * * payment * * * is mailed shall be deemed to be the * * * date of payment.’ We understand the Cassidays’ position to be that, because they timely mailed their payment, they do not owe any interest. Before considering whether the interest can or should be abated under section 6404(e) because of an unreasonable error or delay, the Commissioner must first consider whether the interest was properly imposed in the first instance.” Order, at pp. 2-3.
I hope Chad & Kelly get a total win. But win or lose, they had to engage counsel (a distinguished practitioner of many years’ tax experience in a prominent MI firm; I can’t think his fees are cheap), and go through meetings, document compilations, one and now a second CDP, waste time, effort, and endure emotional stress.
Remember how Judge Buch suggested paying taxes by means of a “certified check” in the Malasky case, discussed in my blogpost hereinabove cited?
Of course, no bank has issued “certified checks” in years, as they’re so easily forged or fraudulently altered. The banks now issue official bank tellers’ checks, for which you have to jump through hoops, and they’re also fraud bait.
I urge my readers and their clients to consider EFTPS. I’ve used it for years with never a problem. If you’re worried about having your bank account hacked (although it probably has been already, and so has the US gov’t), create a dedicated account at your bank to use only for EFTPS payments.
And tell ’em Chad, Kelly and Taishoff sent ya.
That’s Judge David Gustafson’s direction to IRS in Estate of Lois Horvitz, Deceased, Michael Horvitz, Executor, Docket No. 20409-19, filed 9/2/21.* The 706 was filed five years ago, and the SNOD issued three (count ’em, three) years ago. But IRS forgot the chops both in the SNOD and their answer to the petition. So IRS now wants to assert Section 6662(a) and (c) negligence and understatement chops by way of an amendment to the answer.
And they want to do it after trial has been set.
Turns out that the understatement IRS alleges isn’t the only understatement in this case. I’ll let that Obliging Jurist tell his own plain tale.
“…the sole fact on which the assertion of negligence is based seems to be: ‘If the adjustments set forth in the notice of deficiency are sustained, then petitioner will have been determined to have underreported the value of its taxable estate by $19,521,052. Thus, the underpayment in estate tax determined by respondent will be attributable to petitioner’s negligence or disregard of rule or regulations in underreporting the value of its taxable estate.’” Order, at p. 1, quoting par. 7(e) of proposed amended answer.
Judge Gustafson rightly notes that this is new matter, not mentioned in SNOD, so let IRS tell Judge Gustafson if IRS has BoP and BProd. Note that petitioner is not an individual, so check out Section 7491(c).
The ex’r claims that IRS is using the chops to bully him into waiving client-attorney privilege. Though Judge Gustafson says the Estate so claims, there is no such thing as a talking or writing Estate; there is an ex’r or adm’r. Here it’s a human being, but even where it’s a corporate ex’r or adm’r, they’re the ones who do the talking or writing.
Judge Gustafson: “Rule 36(b) requires that ‘the answer shall contain a clear and concise statement of every ground, together with the facts in support thereof on which the Commissioner relies and has the burden of proof.” (Emphasis added.) The facts in paragraph 7(e) of the proposed amendment seem spare.” Order, at pp. 1-2.
“Spare,” Judge? I’d say malnourished. And Judge Gustafson notices that IRS trots out no Section 6751(b) Boss Hoss for the chops they seek, so he asks them to dish thereupon.
There also argy-bargy about a subpoena to a nonparty, the trustee of mutual QTIPs between decedent and even-earlier-deceased spouse. Since such depositions are extraordinary measures under Rule 74, IRS’ excuse that this is a big-ticket case doesn’t convince Judge Gustafson, so IRS had better bukh with more particulars about that, too.
IRS wants the subpoena to get testimony about Decanting [sic] said trusts under OH law.
The ex’r claims such testimony would violate client-attorney privilege, but I’m sure my astute, battle-hardened readers have already twigged to what Judge Gustafson saw.
“We do not see how testimony on that subject would be proper. It would seem that instead we should examine the documents for their objective import and that subjective testimony about the settlor’s intentions would be irrelevant.” Order, at p. 2.
Taishoff says that Tax Court Judges don’t need expert testimony on points of law. They are experts on interpreting the law. Judge Gustafson says if this testimony is to do with the chops, they haven’t yet been allowed to plead chops. Taishoff’s morning line on whether IRS gets to plead chops has IRS as a wee bit of a longshot.
Howbeit, if what IRS wants is documents the trustee holds as a fiduciary for the Estate, IRS can serve a document request on the ex’r to tell the trustee to hand ’em over.
So let the ex’r object to whatever IRS says, and get on with it.
It’s almost eight (count ’em, eight) years to the day since I reported on a truncated interview with a TIGTA Deputy IG. I know it’s been a while, so see my blogpost “Another Whistleblower Gets Blown,” 8/30/13. And I’ll save you the trouble of clicking the link.
What I asked was “why TIGTA didn’t deal with the unending stonewalling by the Whistleblower Office, which seems to spend its waking hours denying claims when they’re not claiming that they haven’t determined anything. I cannot disclose his reply, here or elsewhere, as I asked informally.” I wish I could display the body language my question evoked, but I cannot, as I had not identified myself as a journo.
Howbeit, if TIGTA needs a new project, they can be sure that the Ogden Sunseteers are “consuming miles of red tape in the correctest forms of activity,” as another Nobel laureate put it. And accomplishing…well, take a look at Wai-Cheung Wilson Chow and Deanne Chow, 2021 T. C. Memo. 106, filed 9/1/21.*
The Chows whistled their former landlord, who, they said, only paid tax on the one building wherein the Chows rented, but boasted to them that she owned others, which she rented on a cash-only basis, paying no tax. The Chows attached to their Form 211 “a list of possible aliases used by the target taxpayer, a list of 50 addresses possibly associated with the target, and the identity of a possible relative of the target and that person’s associated addresses. The Chows obtained most of this information from internet research. From this research, they surmised that the target hides her property ownership from the IRS by purchasing properties in cash and registering them under various names, trusts, and companies.” 2021 T. C. Memo. 106, at p. 3.
Well, confronted with this, and mindful of Lacey (see my blogpost “The Whistleblower Office – Blown,” 11/25/19), the OS bucked the Chows’ materials to an SBSE classifier, who checked IRS’ databases and bounced the Chows as not credible.
“As the basis for this recommendation, the classifier stated that the target’s tax filings indicated income from one rental property and the database revealed that the target owned only one property. The SBSE classifier concluded that the claim provided no specific or credible information regarding Federal tax noncompliance.” 2021 T. C. Memo. 106, at p. 4.
Exactly what the SBSE classifier expected the target’s tax filings to show, except that the target filed for only one property, I cannot divine.
Need I point out that, if the Chows are correct in any particular, none of the target’s subterfuges will show up on any IRS database? The entire point is that target wasn’t filing for other properties. It might have been well to see who, if anyone, was filing for one or two of the properties on the Chows’ list, and, if they were filing, what, if anything, were they filing.
Looking on the radar for that which flies below the radar rarely if ever produces a worthwhile result.
So Judge Buch tosses the Chows.
But in the words of anther Nobel Laureate, “the answer, my friend, is blowin’ in the wind.”
I’m sure Denise Sadjian Curcio loudly shouted the title hereof, as the Wildcats’ LITC got her Section 6015(f) innocent spousery from STJ Daniel A (“Yuda”) Guy, without even so much as a tiptoe, much less a trudge, through Rev. Proc. 2013-34, 2013-43 I.R.B. 397, modifying and superseding Rev. Proc. 2003-61, 2003-2 C.B. 296.
Denise may be happy. Kenneth, I doubt not, may take a different view, as he’s left on the hook for $9K plus chops. Turns out a $9K credit elect sat beyond the pull date, as the return claiming same was filed beyond the three-year Section 6514 lookback.
Neither Denise nor Kenneth were particularly good money managers, but Denise went through a $2 million PI settlement, thus claiming poverty. True, she was badly hurt inn a wreck and got the minor children in the divorce.
I don’t want to knock the Villanova Widger School of Law’s LITC crew, but IRS folded their denial of Section 6015(f) equity at the courtroom door, and Kenneth (pro se, of course) was hardly a formidable adversary. He stiped pre-trial that he’d be responsible for everything if Denise wins this case, or if he wins, they’d split the bill, and this gets into the record. Comment is superfluous.
“It is worth noting here that in preparing this case for trial, respondent reconsidered and concluded that petitioner’s claim for relief should be granted. Additionally, when given the chance, intervenor had little to offer the Court in support of his opposition to petitioner’s claim for relief. Intervenor’s primary complaint is that petitioner could have used funds in the settlement account to pay the couple’s tax liability for the year in issue when she first learned about the underpayment in early 2018.” 2021 T. C. Sum. Op. 31, at pp. 13-14.
Denise wins.
I point out that Denise started with a $2 million settlement, and after expenses and set-asides, still had $1 million, yet “…the home that petitioner purchased in 2017 is encumbered by a home equity line of credit and is subject to a lien attributable to unpaid property tax…Petitioner owes $160,000 to her cousin and $16,000 to her divorce attorney. In addition petitioner has outstanding credit card debt totaling approximately $100,000.” 2021 T. C. Sum. Op. 31, at p. 9.
Btw, the home was purchased for $605K out of the net settlement proceeds. 2021 T. C. Sum. Op. 31, at p. 5.
And Denise apparently took $70K of proceeds to engage in some kind of business, as to which nothing was heard thereafter. 2021 T. C. Sum. Op. 31, at p. 5, at which STJ Yuda comments “(T)he record does not include any additional information about the success or failure of this enterprise.”
How do you spell dissipation of assets? Why did IRS fold? And Denise apparently qualified for low income tax clinic treatment, having blown through a million bucks.
Of course, Kenneth gave the case away, and can’t appeal. But if this is equity, I’ll be dipped.
For the record, the case is Denise Sadjian Curcio, Petitioner, and Kenneth Curcio, Intervenor, 2021 T.C. Sum. Op. 31, filed 8/31/21.*
*CURCIO 2021 T C Sum Op 31 8 31 21
Edited to add, 9/1/21: As best I, a mere old-time, beaten-up, beaten-down, single-shingle dirt lawyer “of limited experience and mediocre qualifications” can discern, Denise blew through $1 million net from the settlement: she owes another $100K credit card debt, $160K to a cousin who lent her money (use of proceeds unknown), $16K to her divorce lawyer, and an undisclosed amount in real estate taxes and home equity line of credit on her MacMansion. Plus put $70K into a business, the fate of which is unknown. This is low income? This is not dissipation of assets? I won’t mention that a high-low settlement agreement got into the record of a trial, to the prejudice of a pro se. It’s been almost five (count ’em, five) years since I said this (and turns out I was right back then): If ever an opinion needed reargument, it’s 2021 T. C. Sum. Op. 31.
Lose Your CNC
Judge Christian N. (“Speedy”) Weiler has a hard lesson for Sherrie L. Webb, 2021 T. C. Memo. 105, filed 8/31/21*. Sherrie filed for a CDP off a NITL, asking for abatement of penalty, reasonable cause for the add-on for failure to pay timely, and eligibility for collection alternative. But her representative did not request OIC for the chop or add-on at Appeals, and only went for CNC.
Sherrie fired her representative (a bad sign), and didn’t provide some information the AO requested. So the AO bounced Sherrie, figuring per the guidelines that Sherrie could pay $56 per month, based on a recalculation of her monthly withholding, and dropping Sherrie’s 401(k) contribution.
Sherrie petitions. IRS moves for summary J, and Judge Speedy Weiler finds he can go outside the administrative record as Sherrie petitioned from FL, which is in 11 Cir. 11 Cir hasn’t limited Appeals review to admin record.
Mox nix, he decides.
“The only issue petitioner now raises is whether her account should have been placed into CNC status by Appeals. However, even after specific requests from [AO] petitioner did not provide the supporting documentation [AO] needed to be able to grant such a collection alternative. Furthermore, petitioner conceded that she still contributes to a section 401(k) account. [AO] adhered to the IRM in determining that contributions to voluntary retirement plans (including section 401(k) accounts) are not necessary expenses for purposes of CNC status based on financial hardship. See IRM pt. 5.15.1.28(2) (Aug. 29, 2018). Accordingly, we are compelled to determine that [AO] has not abused her discretion as to her consideration of the CNC issue petitioner raised.” 2021 T. C. Memo. 105, at pp. 9-10. (Name, citation and footnotes omitted, but they say Sherrie raised the prospect that her rent might go up in response to the summary J motion, and that fails because she could have raised it at Appeals and didn’t; anyway, Appeals still has jurisdiction and Sherrie can go back there if her situation worsens, but if Appeals tosses her she gets no second shot at Tax Court).
I’m a great fan of 401(k)s, and contributed to them when I was employed. All, or almost all, financial advisers are fans as well. 401(k)s are among the very few places where your gain is compounded without the tax siphon. But if you want CNC, the 401(k) contribution must go on hold.
No, I am not, and I’m sure Ch J Maurice B (“Mighty Mo”) Foley is not, snobbish or given to lording it over the non-admitted. Whether entering the ranks of the Second Street Squad (nonpolitical, of course) automatically or the hard way, we are all bound to serve with honor and fidelity.
But the horde of non-admitteds filing petitions with no notion of statutes or rules is fatiguing. They ignore the website except to download the Form 2 petition package and slam it in. Not a working day passes without at least half a dozen admonitions from Ch J Mighty Mo to such as they to join up.
As I said hereinabove, it gets so fatiguing that it all becomes a blur. By way of illustration of the foregoing, here’s Marjorie K. Costello, Docket No. 17826-21, filed 8/31/21*. And unlike most of these, Marjorie signed the petition her own self.
“However, it appears that petitioner’s non-attorney representative, David M. Daggett, who is not admitted to practice before this Court is referred to as petitioner’s non-attorney repredentative [sic]. The United States Tax Court, which is separate and independent from the IRS, has certain requirements that must be met before an individual can be recognized as representing petitioners before the Court. The Court has prepared Q&A’s on the subject ‘Representing a Taxpayer Before the U.S. Tax Court’. The Court also encourages practitioners and nonattorneys seeking admission to practice before the Court to consult “Guidance for Practitioners” on the Court’s website at http://www.ustaxcourt.gov/practitioners.html. At this juncture, James B. Schmidt will not be associated with this case and we encourage petitioner’s representative to review the Court’s admissions requirements.” Order, at p. 1.
Ch J Mighty Mo orders the Clerk to serve this order on Mr. Schmidt.
Daggett – Schmidt. After a while it’s all a blur.
Taishoff Law 