Attorney-at-Law

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THE STEALTH DETERMINATION

In Uncategorized on 08/16/2019 at 12:26

Geoffrey R. Myers & Lin C. Liu, Docket No. 7998-18S, filed 8/16/19, claim their DC tax refund was grabbed by IRS. IRS says State tax refund grabs don’t need no NODs, and therefore Section 6330 avails naught.

Geoff and Lin reply thus: “The IRS determined to seize assets from us, and effected that seizure on three separate occasions, creating a valid basis for a petition to the Tax Court for Tax Year 2017. When the IRS indicated its intention to seize our assets, in January 2019, that did not constitute a determination. But when the IRS actually seized our assets, that action did constitute a determination. As far as the IRS is concerned, its actions are now final, and thus its seizures are unquestionably subject to jurisdiction of the Tax Court. The IRS’ Motion to Dismiss suggests that the Tax Court may not consider this case until the IRS issues a notice of determination. However, the IRS inconsistent communication and lack of response prove that the IRS will not hesitate to seize assets without a formal notice of determination. Thus I assert that the IRS’ repeated seizure of our assets constructively form any and all notice sufficient to provide the Tax Court with jurisdiction. Further, we have complied with every other timeliness requirement established by law or by the IRS, while the IRS has consistently failed to respond timely, or respond at all until required to do so by this petition to the Tax Court. Thus it is reasonable to conclude that the only way the IRS will respond to our valid concerns is for the Tax Court to insist that the [sic] it do so.” Order, at p. 3.

Ch J Maurice B (“Mighty Mo”) Foley tells the rest of Geoff’s and Lin’s sad tale. “The balance of the objection then continued with a litany of complaints regarding the treatment received by petitioners in their extensive efforts to communicate with the IRS and to resolve the 2017 tax problems, which petitioners largely attributed to a computer or data entry error occurring during the agency’s processing of their 2017 return. Petitioners characterized the IRS operations as unfair, incompetent, and in bad faith, justifying corrective and controlling measures by the Tax Court. They did not, however, allude to or attach any further notices from the IRS that could bear upon the jurisdictional question before the Court.” Order, at p. 3.

Of course, that does it for Geoff and Lin. Even though there is no prescribed form of NOD, just like there is no prescribed form of SNOD, if you don’t have whatever it is, the doors of the Glasshouse at 400 Second Street, NW, are closed to you.

Ch J Mighty Mo suggests Geoff and Lin continue to work administratively with IRS. But as Al Hoffman and Dick Manning put it in their 1952 hit, “Takes Two To Tango,” and apparently IRS ain’t dancing.

So much for the sixty buck ticket to justice.

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LOVING AND MONEY – PART DEUX

In Uncategorized on 08/16/2019 at 00:44

The title of this petit opuscule derives from the time that Judge Boasberg and DC Cir put the slug on Doug Shulman and Dave Williams, ex-IRS Com’r and RPO honcho, respectively, when they tried to regulate preparers. Congress, which could have solved the problem, of course did nothing, and did it very well, rather like Sir W. S. Gilbert’s House of Peers.

I’m not going to expatiate on ex-Ch J L Paige (“Iron Fist”) Marvel’s opinion in Todd Myron Moore, 2019 T. C. Memo. 100, filed 8/15/19.

I just got home from the Stadium, where I was watching the Cleveland Indians score 19 (count ‘em, 19) runs on 24 (count ‘em, 24) hits, against the Yankees’ 5 runs on nine (count ‘em and weep, nine) hits. I’m not a fan of either team, but that game had to make history.

I will say that Todd Myron, ex-civil engineer who ran a multi-state tax prep business, having taken “…online training courses and also attended a 12-week program provided by Jackson Hewitt before he embarked on his new career,” 2019 T. C. Memo. 100, at p. 3, was extremely successful.

Todd Myron’s recordkeeping was of course not of the best, but ex-Ch Judge Iron Fist gives Todd Myron the benefit of the Cohan for the commissions he pays to the actual return preparers. “In his tax return preparation business petitioner hired return preparers throughout the country as independent contractors. Petitioner’s company served as a clearinghouse for processing returns and also provided training and support to his contractors. Each contractor developed and maintained his or her own client base and prepared returns for these clients.” 2019 T. C. Memo. 100, at p. 4.

Myron Todd’s method of compensating himself and his contractors would get us Circular 230 types hanged.

“Petitioner maintained several business bank accounts. When one of petitioner’s return preparers would file a return for a client that generated a tax refund, the refund was deposited into one of petitioner’s bank accounts, which petitioner referred to as a third-party bank account and appears to have treated as an escrow account. Petitioner would then take from the client’s refund the agreed-upon preparation fee, which would be deposited into another of petitioner’s business accounts, and the remainder would be paid to the client. From the preparation fee petitioner would then pay a commission to the individual return preparer, ranging from 60% to 90% of the preparation fee depending on the return preparer’s expertise and client base. Petitioner would retain the rest of the preparation fee.” 2019 T. C. Memo. 100, at pp. 4-5.

I need not, of course, remind my readers, positively jagged with sophistication, of the provisions of 31CFR§10.31(a): “A practitioner may not endorse or otherwise negotiate any check (including directing or accepting payment by any means, electronic or otherwise, into an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to a client by the government in respect of a Federal tax liability.”

But of course such unenrolled types as Todd Myron and his cohorts may do so with impunity.

I’ll spare you the rant.

 

ASSIGNED COUNSEL? – ONE VOTE “MAYBE”

In Uncategorized on 08/14/2019 at 15:56

As I said two-and-one-half years ago, “My ongoing perplexity on the assigned counsel issue in Tax Court continues apace. I’m trying to get an answer I can share with my readers, without, I hope, unduly wearing their patience.” See my blogpost “Assigned Counsel? – Two Votes ‘No,’” 2/5/16.

Today gives me a further perplexity, James Dupas, Deceased and Judith M. Dupas, Docket No. 5287-19S, filed 8/14/19.

It seems that being obliging is contagious, because Ch J Maurice B (“Mighty Mo”) Foley is trying to help Judy out. Judy petitioned on behalf of herself and the late James, but when she did the late James was already the late James.

Ch J Mighty Mo reads us all the usual catechism about how only authorized representatives can represent the deceased in US Tax Court. So Ch J Mighty Mo wants a show-and-tell about what powers, if any, Judy has.

Judy sends a billet doux, stating the will of the late James was admitted to probate two years ago, but no letters testamentary or of administration.

Ch J Mighty Mo must have talked to that Obliging Jurist, Judge David Gustafson, because he enlists aid for Judy.

“By Order dated June 13, 2019, the Court directed respondent [IRS] to file a response discussing his position whether, under applicable Texas law, petitioner Judith M. Dupas has the capacity to litigate in this Court on behalf of the Estate of James Dupas. On July 11, 2019, respondent filed a Response to Order dated June 13, 2019, in which he states that he is working with Judith M. Dupas and her representative to retrieve the documents necessary to establish Judith M. Dupas’ standing before this Court with regard to the Estate of James Dupas.” Order, at p. 2.

Judith is listed as pro se on the docket sheet, so whoever her representative may be, s/he is not admitted to US Tax Court.

IRS counsel to the rescue?

ENJOIN? – NO CAN DO

In Uncategorized on 08/13/2019 at 16:23

Dadisi W. Crawford, Docket No. 4318-18L, filed 8/13/19, gets remanded, because the SO at Appeals failed to consider overstated withholding assessments.

But the issue isn’t whether Dad goes back to appeals, but who goes back with him. On a phoneathon with IRS and Judge Buch, Dad was joined by TW (name omitted) “to help facilitate the call.” Order, at p. 1.

Now IRS claims TW is in the prohibited class of those acting in concert with or participating with Cubby Williams, against whom IRS got an injunction. So IRS wants Judge Buch to prohibit TW from showing up at Appeals on the remand.

No dice, says Judge Buch.

“We have rules governing who may appear before the Court. See Rule 200. We do not have rules, and we are not inclined to create ad hoc rules, governing who may appear before the IRS.

“The Commissioner has already obtained an injunction against Cubby Williams and any other person acting in active concert with him. That injunction is not a matter for this Court to enforce.” Order, at p. 2.

If in fact TW is in the prohibited class, it’s for the court that enjoined that class to toss TW. Tax Court can’t enjoin someone enjoined by another court from doing anything somewhere else.

Check out Judge Buch’s order for the cases to cite in your brief.

Readers with long memories will remember that Cubby Williams made a cameo appearance in my blogpost “He Wuz Robbed – And How,” 3/2/15. But whether Cubby was with the good guys or not at that time is unclear.

 

ABATEMENT OF INTEREST

In Uncategorized on 08/12/2019 at 16:45

In a Nutshell

Judge Patrick J. (“Scholar Pat”) Urda has summed up the whole abatement of interest conundrum. Take a look at Jon D. Adams, 2019 T. C. Memo. 99, filed 8/12/19.

Jon went down for tax fraud when he sold one of his Mississippi cabarets and didn’t bother reporting the sale. IRS first went the criminal route, and only later went for the deficiency and civil fraud 75% chop.

Jon wants to claim that Section 6404(e)(1)(A) “unreasonable delay” began with the criminal stuff, long before the civil stuff began. Judge Scholar Pat isn’t having it. “The flush language of section 6404(e)(1) authorizes abatement of interest only ‘after the Internal Revenue Service has contacted the taxpayer in writing with respect to’ the deficiency in question.  In other words, ‘the period pursuant to section 6404(e)(1) may begin when the IRS commences an audit.’  Allcorn v. Commissioner, 139 T.C. 53, 57 (2012); see also Sims v. Commissioner, T.C. Memo. 1999-414, 78 T.C.M. (CCH) 1198, 1200 (1999).  Although Mr. Adams contends that the period should begin with the first issuance of written contact regarding his criminal investigation, he offers no support for deviating from our precedent. So we will not.” 2019 T. C. Memo. 99, at p. 11.

There is no abatement for interest due on income tax. See Section 6404(b). “Section 6404(a)(1) empowers the IRS to abate the unpaid portion of the assessment of any tax or any liability in respect thereof that is “excessive in amount”.  But what section 6404(a) gives, section 6404(b) takes away (in certain circumstances).” 2019 T. C. Memo. 99, at p. 8. Title A taxes (that’s income tax) are expressly excluded from abatement.

The only saver is Scti0on 6404(e)(1)(A) unreasonable delay. But that means abuse of discretion. And IRS trial counsel have discretion how to proceed. And once audit began, Jon’s people delayed the game.

Anyway, a decision how to apply Federal income tax law involves judgement and discretion.

Simply, Section 6404(a) allows abatement. But Section 6404(b) says that doesn’t apply to interest on income taxes. And although Section 6404(e) allows abatement for “unreasonable delay” once IRS has commenced examination, unreasonable delay means moving files and assigning personnel, not exercising judgment and discretion in interpreting and applying tax law. Finally, mere passage of time is not necessarily unreasonable delay.

THE STEALTH JUDGE

In Uncategorized on 08/12/2019 at 13:07

No announcement on the Tax Court website preceded Judge Courtney D. Jones’ arrival at The Glasshouse at 400 Second Street, NW. Guess the hard-laboring clerks and flailing datestampers are on vacation.

A click on her name at the Judges’ page on said website revealed no link.

Your enterprising blogger only discovered confirmation of her nomination on August 1, 2019, by Senate voice vote by scouring the internet.

Anyway, here’s the story.

“Jones earned her Bachelor of Science, magna cum laude, from Hampton University and was the recipient of the President’s Award for Exceptional Achievement. She earned her Juris Doctor from Harvard Law School, where she served for two years as the editor in chief of the Harvard BlackLetter Law Journal, (which has since been renamed the Harvard Journal on Racial & Ethnic Justice). She practiced for four years at Bird, Loechl, Brittain & McCants, a boutique law firm in Atlanta. Prior to joining the IRS she practiced for three years in the exempt organizations and intellectual property practice groups of the Washington, D.C.-based firm Caplin & Drysdale.” Wikipedia.

Prior to hitting the Glasshouse, she was a senior attorney in the Tax-Exempt and Government Entities division in the Office of Chief Counsel.

Sometimes the one who limps in scoops the pot.

I expect great opinions from Judge Jones.

DEMAND FOR REMAND ? – SACKED AGAIN

In Uncategorized on 08/09/2019 at 14:36

Once again Judge Tamara W. Ashford whistles IRS’ play dead, as demanding a remand to Appeals because IRS is “unsure of the appropriate way to proceed with collection” in Jevon Kearse, Docket No. 14080-14L, filed 8/9/19, (order, at p. 1) doesn’t get it when IRS can find neither USPS Form 3877 or IRS equivalent signed off by a USPS employee to prove they sent Jevon the SNOD.

No remand when IRS blew the statutory requirement for verification of all necessary steps, stipulates that they can’t provide necessary items, and hopes for remand to bail them out.

So once again “The Freak” triumphs. For the backstory, see my blogpost ”Sacked,” 5/20/19.

And I’m gratified to see Judge Ashford has adopted the Taishoff Convention: a SNOD is a Statutory Notice of Deficiency, to distinguish it from a NOD, Notice of Determination. Order, at p. 3, footnote 4.

“CERTAIN”

In Uncategorized on 08/08/2019 at 16:14

This word sinks Lily Hilda Soltani-Amadi and Bahman Justin Amadi, 2019 T. C. Sum. Op. 19, filed 8/8/19, when Lily draws $6K from her New York State Employees’ 401(k) to buy a first home for her and Bah.

Lily’s plea: “Penalties and fees are too high. We spent the money purchasing our very first house. Our house is a form of retirement money.  The money went towards our house, which is like a saving for us when we get old! We just need a break.  We have worked very hard and put ourselves through school.  We could use a break.” 2019 T. C. Sum. Op. 19, at p. 4.

When she and Bah bought the house, someone told them they wouldn’t pay a penalty. I suppose that meant the Section 72(t) 10% tax or addition or whatever it is.

That would be true if Lily drew down an IRA. But not a 401(k).

The Judge with a Heart, STJ Robt N Armen, has this one, but he can’t help Lilly.

“Regardless of the advice received, the law is clear–the distribution Ms. Soltani-Amadi received…from her section 401(k) retirement plan is taxable and must be included in its entirety in petitioners’ taxable income….  Secs. 402(a), 72(a), (e).” 2019 T. C. Sum. Op. 19, at p.

OK, no difference between IRA and 401(k) when it comes to the base draw. But what about the 10%? Lilly and Bah are both younger than 55.

Well, back in 1997 Congress accorded relief to first-time homebuyers who drew down retirement plans in order to become first-time homebuyers. And they chose upon whom to bestow this largesse in Section 72(t)(2)(F), exempting from the 10% chop or hit “(F) Distributions from certain plans for first home purchases.–Distributions to an individual from an individual retirement plan which are qualified first-time homebuyer distributions * * *  [Emphasis added.]” 2019 T. C. Sum. Op. 19, at p. 11.

Tax Court must construe any statute by giving effect to every word. Tax Court must presume that Congress meant what it said.

“Congress chose to grant relief under section 72(t)(2)(F) for distributions from IRAs but not for distributions from other qualified plans, such as a section 401(k) retirement plan.  Although the Court found petitioners to be sincere, credible, and earnest, the fact remains that the Court is a court of limited jurisdiction and lacks general equitable powers. Thus, the Court is constrained by the text of the statute and may not act contrary to it.” 2019 T. C. Sum. Op. 19, at pp. 14-15.

THE WAY AHEAD

In Uncategorized on 08/07/2019 at 16:47

I’m taking the title of the classic World War II David Niven movie to tell the story of Cathy Lynne Kennedy, Docket No. 609-19S, filed 8/7/19. Cathy Lynne’s petition got tossed by Ch J Maurice B (“Mighty Mo”) Foley, but last week Cathy Lynne sent in the sixty Georges, with a letter.

Ch J Mighty Mo treats letters with respect. He treated this one as a motion for vacation, and tossed his previous toss.

“…petitioner states, among other things, that: (1) she received a $0 amount due letter months ago and assumed the case was resolved; (2) the case should never have been referred in the first place; (3) she is working with an individual at the Internal Revenue Service (IRS); and (4) requests assistance with closing this case. Petitioner attached various documents to her letter, including: (1) a Notice CP2000…from the IRS which states that petitioner did not file a petition with the Tax Court and proposes an amount due of $0; and (2) a letter…from the IRS Appeals Office stating that at issue in her Tax Court case is unreported non-employee compensation.” Order, at p. 1.

Ch J Mighty Mo helps Cathy Lynne. “As this case is based upon a notice of deficiency, the Court is required to enter a decision. However, we note that it appears this case may be susceptible to settlement and subsequent entry of a stipulated decision. We will, therefore, grant petitioner’s motion and direct the parties to confer as to the present status of this case.” Order, at pp. 1-2.

It’s very well to keep your case alive while negotiating a settlement with IRS. Withdraw your case (if you can), and you lose a lot of leverage. The way ahead is often made smooth by the prospect of a trial if the way ahead is not made smooth.

 

 

THEIRS IS TO REASON WHY

In Uncategorized on 08/07/2019 at 16:27

Unlike the Light Brigade, Appeals has to reason why IRS terminated an IA. So says Judge James S (“Big Jim”) Halpern, in Don R. Means, Docket No. 2018-17L, filed 8/7/19.

Don fell foul of some tax shelters and got heavy-duty deficiencies. Don, being retired, entered into an IA, but two years later IRS terminated same, and gave Don a NITL at no extra charge. Don sent in a Letter 12153, as asked Appeals why they dumped his IA.

Articulation didn’t come easy to IRS, but finally they came up with the following, after Appeals issued a NOD sustaining the NITL.

“In the Attachment to the Notice of Determination issued to petitioner, Respondent states that he did not know why the installment agreement was terminated. SO R’s notes from the hearing states the same. Yet, notes taken by another one of respondent’s agents…appear to indicate the termination may have been attributable to petitioner’s ex-wife. Respondent’s Answer to Mr. Means amended petition responds to his contention that he received no explanation of the termination by alleging that SO R informed him that it may have been due to a failure of Mr. Means, his ex-wife, or both, to provide the IRS updated financial information.” Order, at p. 3, footnote 1 (Name omitted).

Well, that’s a wee bit thin for Judge Big Jim. Section 6159 requires a notice of termination, with a 30-day lead time, stating the reason. The hodgepodge that SO R found satisfied Section 6159 didn’t satisfy Section 6331(k)(2)(C), which bars collection activity while an IA is in effect.

“Because there is no mention in the Notice of Determination of SO R’s verification of section 6159(b)(5)’s requirements being met nor any conclusive indication in the record that respondent provided such notice to petitioner, we hold that SO R failed to properly verify that ‘the requirements of any applicable law or administrative procedure’ were met as required by section 6330(c)(1). Furthermore, in the absence of such verification, we cannot agree with respondent that SO R’s determination comports with section 6330(c)(3). We therefore conclude that SO R’s determination sustaining the proposed levy was an abuse of discretion.” Order, at p. 3.

But Don isn’t home free, because SO R’s team gets a mulligan.

“For the reasons elaborated upon above, we remand this case to Appeals for a supplemental hearing to investigate whether the requirements of section 6159(b)(5) were met. On remand, if it is determined that respondent did not provide proper notice to petitioner regarding his intent to terminate the installment agreement, petitioner should either be given an opportunity to continue making payments under it to satisfy his unpaid liability for the years in issue or otherwise be provided proper notice of the intended termination, with the right to appeal, pursuant to sections 6159(b)(5) and (e) and the regulations promulgated thereunder.” Order, at pp. 3-4.

A very wise former law partner, now regrettably deceased, used to say that the trouble with winning your case short of dismissal with prejudice is that you educate your adversary.