Seems a lot of scarce Tax Court judicial resources are being expended on getting anonymous blowers to redact their documents properly. STJ Diana J (“Sidealks of New York”) Leyden is getting a bunch lately.

Here’s Whistleblower 17543-19W, filed 9/21/20 (hereinafter “Three One Niner Whiskey”). Like his/her comrade Four Twenty (see my blogpost “An Unveiling,” 9/18/20), Three One Niner Whiskey got the OK to go anonymous, but never bothered redacting his/her documents to delete personally identifiable information, despite the usual two-step instruction order, and a couple IRS filings (hi, Judge Holmes) to try to remedy Three One Niner Whiskey’s miscues. Three One Niner Whiskey objects that IRS didn’t do a proper job, but some filings from Three One Niner Whiskey aren’t good either, so STJ Di seals those.

STJ Di sets up the obligatory phoneathon, wherein she admonishes Three One Niner Whiskey to do the right thing.

Today, she threatens unveiling if Three One Niner Whiskey doesn’t do his/her homework.

There follows two decretal pages of recharacterizations and “thou shalt”s, as STJ Di tries to recharacterize, redirect, and reconstruct this stuff into something that looks like it might go in the public file.

Should anyone with the qualifications of STJ Di really be spending her time on grade-school busywork?

What about taxpayers with meritorious claims? What about IRS’ counsel’s time? What about the rights of taxpayers who just want the system to work?

Taishoff says end the redaction distraction. Get it right the first time, blower.

We’re often the recipients of retailers’ offers to “Buy One, Get One Free,” acronymized to “BOGO.” Today Ch J Maurice B (“Mighty Mo”) Foley, zealous guardian of the “small court” purse, grabbing every available George for The Glasshouse Gang, won’t play that game.

Ricardo J. Perez, Donor, and Michelle L. Perez, Donor, Docket No. 20877-19, filed 9/21/20 “…filed a petition seeking to dispute notices of determination regarding the value of gifts for tax year 2012 issued to petitioners … and notices of deficiency for tax year 2014 issued to petitioners…” on the same day. Order., at p. 1.

We all know, as Ch J Mighty Mo man-‘splains to Ricardo and Michelle, and incoming trusty attorney, that each action needs a separate petition. Tax Court again is unlike every other Federal and State court I know of, where one can allege multiple causes of action or bases for relief, either collectively or alternatively.

Here we have a declaratory judgment action regarding gift valuation, and a separate action for redetermination of a SNOD, joined at the cliché.

So what to do?

Sever, of course. Leave the first Docket No. for the declaratory judgment and create a separate Docket No. for the SNOD.

And get another sixty Georges for the second Docket No.

BOGO is No Go for Ch J Mighty Mo.

In my youth, this had to do with tombstones. The custom was to install the tombstone a year after the deceased had been sited in; family and friends would gather, and a sheet would be removed from the tombstone for all to admire. I thought this bizarre at the time, and haven’t attended any in many decades. I don’t even know if this is still done.

But today STJ Diana L (“The Taxpayer’s Friend”) Leyden, having lost patience with a blower who refuses to redact when politely asked, threatens an unveiling of her own.

13420-19W, filed 9/18/20, (hereinafter “Four Twenty”) started anonymously in March, when STJ Di told Four Twenty to redact a few documents, which were replete with personally identifiable information. Also Four Twenty and IRS were to redact and file another eleven (count ’em, eleven) other such documents. STJ Di also gave the parties the usual redaction two-step to follow. And even gave them an extension of time to do so.

Of course Four Twenty did nothing, except file an unredacted motion to toss his own petition. STJ Di orders Four Twenty to redact that, and while he’s about it, to redact further his petition; apparently the original version was imperfectly redacted.

IRS enters the dance, moving to modify STJ Di’s earlier order, because Four Twenty had duck-dived. IRS wants to file twelve (count ’em, twelve) redacted documents.

STJ Di gave Four Twenty an Order to Show Cause why IRS’ redactions shouldn’t go in, at no extra charge.

“… petitioner filed a Response to Order… (response). In his response, petitioner states he has no objection to the submission of the redacted Court Orders attached to respondent’s motion to modify. Petitioner noted an objection to footnote 1 in respondent’s motion to modify as containing ‘other information of petitioner’. Petitioner also noted an objection to footnote 5 of the redacted version of respondent’s motion for summary judgment, attached to respondent’s motion to modify, as containing ‘other information of petitioner’. The Court will take steps to seal these two documents so that this case can proceed on petitioner’s motion to dismiss.” Order, at pp. 2-3.

For those whose eyes have not yet glazed over, STJ Di recounts a phoneathon with IRS and Four Twenty, wherein she told Four Twenty to get that Sharpie in hand, reform and redact.

But STJ Di has finally lost patience with Four Twenty.

“If petitioner fails to comply with this Order, the Court may revisit the question of whether the Court should continue to allow petitioner to proceed anonymously. Whistleblower 12568-16W v. Commissioner, 148 T.C. 103, 107-108 (2017).” Order, at p. 3.

As to 12568-16W, see my blogpost “Now You Don’t See Him, Now You Do,” 3/23/17. As I said back then, if there’s any disincentive to whistleblowing, unveiling is leading.

All of a sudden Ogden is having a German invasion. You may remember Christian Bernd Alber, star of my blogpost “We Don’t Need Lacey,” 1/30/20 BV (Before Virus), and his hotel in Thuringia.

Well, today we have Cindy Damiani, 2020 T. C. Memo. 132, filed 9/17/20, and Felix Ewald Friedel, 2020 T. C. Memo. 131, filed 9/17/20. And they’re both going on about German skullduggery (no US characters or US tax laws), and blowing whistles.

The Ogden Sunseteers, wise to Lacey, send Cindy and Felix to SB/SE classifiers, subject matter experts who sort the wheat from the cliché, and report to the OS. In these cases, since everything was German, they both got tossed by the OS.

Cindy and Felix both have an interesting question. Though both blew the thirty (count ’em, thirty) day deadline to petition the OS toss, Judge Albert G (“Scholar Al”) Lauber gives both Felix and Cindy equitable tolling thereof. See my blogpost “For Whom The Equitable Tolls,” 4/10/20. Maybe since they both filed from Germany, they have got something of a claim for equitable tolling. But as Cindy plays a Michael Corleone gambit on summary J, and the stuff she sent Ogden was junk, IRS wins.

Felix’s case isn’t a lot better. He “…identified six targets, all of whom appear to be German Government officials. He alleged that the targets committed (among other things) fiduciary fraud, breach of trust, bond fraud, identity theft, torture, abuse of power, corruption, and human trafficking. He asserted the targets are ‘criminal Nazi * * * judges / prosecutors’ and alleged that they committed tax fraud by ‘refus[ing] to submit the IRS Forms 1099-OID, f1096 and f1040.’

“Petitioner supplied little information to support his claims. He provided: (1) a memorandum reiterating his allegations, (2) a Form 3949-A, Information Referral, and a Form 14039, Identity Theft Affidavit, and (3) letters that appear to be from a German court and German prosecutor that are written entirely in German. He made no discernible allegations regarding the U.S. tax liability of any person.” Order, at pp. 2-3.

Judge Scholar Al seems to be Tax Court’s latest specialist in Von der Wand blowers.

IRS moves for summary J, surprise, surprise. “Petitioner submitted a one-page response written entirely in German. We ordered him to file a certified English translation of his response. See Administrative Order No. 2020-02 (May 29, 2020) (requiring that all documents must be filed in English or include a certified English translation). He filed a reply stating: ‘[P]lease get an interpreter/translator.’” Order, at pp. 4-5.

This goes over like a lead Zeppelin.

“On the basis of this record, we have no difficulty concluding that the Office did not abuse its discretion in rejecting petitioner’s claims. We will therefore grant summary judgment to respondent.” Order, at p. 10.

Ex-Ch J Michael B (“Iron Mike”) Thornton has that hard lesson for Clinton Deckard, 155 T. C. 8, filed 9/17/20. Clint formed and bankrolled a KY N-f-P (Not for Profit Corp.) to run fashion shows to assist the redevelopment of the Louisville waterfront. It never got 501(c)(3)ed, and its first fashion show cratered, leaving Clint with heavy-duty out-of-pockets and no way to write them off.

Two years later, Clint files a retro Sub S election, and takes two years’ worth of passthrough Sub S losses on his 1040s.

Unhappily, the KY N-f-P law says “no shareholders, no distributions to individuals or for-profits.” Clint claims beneficial ownership of the non-existent stock.

” [A]lthough the meaning of ‘shareholder’ for purposes of Subchapter S election has been said to be a matter of federal law rather than of state law, this means only that it is federal law which determines which kind of shareholder–namely, beneficial rather than record–is required to elect in order for the corporation to achieve Subchapter S status. Whether a particular investor was a shareholder of that kind– in this case was a beneficial shareholder of * * * [the corporation] on the date of the election–is an issue of state law. [Citation omitted.].” 155 T. C. 8, at p. 12.

And at pp. 14-16 ex-Ch J Iron Mike has his usual “copious citation of precedent and somber reasoning” to show that “nonprofits do not have owners,” except maybe cemeteries. The idea is that nonprofits cannot provide benefits to insiders like officers, directors and shareholders, both record and beneficial.

Clint’s argument that the N-f-P is tantamount to a profitmaker founders on KY law and Nat’l Alfalfa. “He asserts that he intended [N-f-P] to be a for-profit entity and ‘objectively operated’ it ‘consistently with it being a for-profit entity that he owned entirely.’ He urges that ‘the only fact inconsistent with [N-f-P] * * * being a for-profit entity is that an attorney formed * * * [it] as a nonprofit corporation prior to when the economic realities of the project came to light.’ He states that although he ‘should have sought to change [N-f-P’s] * * * corporate documents to reflect’ these changed plans, he was ‘mistakenly unaware of these formalities of corporate law’ and so treated [N-f-P] ‘like he was the sole owner in every practical sense.’” 155 T. C. 8, at p. 21.

Like Nat’l. Alfalfa says, “Taxpayers are generally bound by the form of the transaction they choose.” 155 T. C. 8, at p. 21.

Of course Clint blames his former attorney for everything. I’ll spare me from having to write it and you from having to read it.

And ex-Ch J Iron Mike spares himself from having to figure out whether pore l’il ole Tax Court has jurisdiction to determine whether a valid retro S election was made. The previous cases involved determinations at shareholder level in TEFRA cases. Here no stock, so nothing to elect.

Judge Emin (“Eminent”) Toro is direct. He tells the (now former) attorney for Robin Rothrock, Docket No. 17936-19, filed 9/17/20, to “… cooperate immediately and energetically in transmitting to petitioner all of the files and papers relevant to this case requested by petitioner.” Order, at p. 1.

This order follows a phoneathon Robin requested, wherein she announced she had dumped said attorney. Any client can discharge their attorney at any time for any reason, or for no reason, so that’s no biggie. And the client can replace their attorney or go it alone; their call.

Robin chose to go it alone. Although Judge Eminent reminds all and sundry that this case is on for trial in November, “(D)uring the same conference call, the parties agreed that respondent would forward decision documents to petitioner for review.” Order, at p. 1.

Questions arising: “Immediately and energetically”? Was said attorney dilatory? Did Judge Eminent suspect a meter-run (wasted motion to run up the bill)? But a docket search shows no motions, no discovery issues, and the standard scheduling and pre-trial orders issued not remarkably late.

Was there an unreasonably high fee? We know Tax Court doesn’t decide those. See my blogpost “A Court of Limited Jurisdiction,” 10/25/16, although then-STJ Lewis (“Quel Nom!”) Carluzzo came close.

“Immediately” makes sense, if Robin has to decide whether to stip out on IRS’ terms, try to negotiate a better deal, or go to trial. She needs to check out what discovery her former attorney got from IRS, if anything, and what he gave IRS, if anything. And see what research he did, if any.

But “energetically”? I don’t see delay. This is obviously a fact case, or IRS would have moved for summary J already. And either the facts have been Branertoned and stiped out, or the parties are ready to go with whatever they’ve got. If decision documents have been drafted, then fact disputes are not stumbling blocks.

Of course, there may be a fee dispute here. If there’s a question of an attorney’s retaining lien on the file to secure payment of fees, that’s outside Tax Court’s jurisdiction. You’ll find a variant, the attorney’s charging lien for a piece of a recovery, discussed by Judge Gustafson in my blogpost “We Don’t Need No Stinkin’ Badges,” 4/2/14. As I said back then anent the charging lien, “(T)his is to keep deadbeats from tossing hard-laboring peasants like Your Humble Servant under the proverbial on the eve of victory and scampering with the boodle.”

All this is pure speculation, but as Mark Twain said, “(O)ne gets such wholesale returns of conjecture out of such a trifling investment of fact.”

CF Headquarters Corporation, Docket No. 22321-12, filed 9/16/20, was here back in ’14, in a discovery joust; see my blogpost “Be Late But Be Plausible,” 11/14/14, but I doubt that story will leave either of us any the wiser about why CF HQ and IRS are jousting about what 3Cir did in BrokerTec.

BrokerTec, you’ll recall, starred in my blogpost “The Capital of New Jersey,” 4/9/19, wherein His Honor Big Julie, a/k/a Judge Julian I Jacobs, hereinafter “HHBJJJIJ,”decided the Garden State’s unguided largesse to a World Trade Center runaway was a capital contribution per Section 118, and not payment for a benefit, thus not ordinary income.

Except 3Cir reversed. See CIR v .Brokertec Holdings, Inc. f.k.a. ICAP US Investment Partnership, No. 19-2603, decided 7/28/20. New Jersey’s unguided largesse was too unguided. No strings means it wasn’t capital, just income.

So CF HQ apparently relied on what HHBJJJIJ said, until they got word from 3Cir. Then CF HQ filed a Notice of Supplemental Authority. But CF HQ went a bridge too far.

So IRS “…filed a Motion to Strike, requesting therein that the Court strike, as prejudicial, certain portions of petitioner’s Notice of Supplemental Authority that ‘raise legal arguments and direct the Court to findings of fact and trial testimony that petitioner posits supports its legal argument.’ Respondent further argues that he ‘on the other hand has not been afforded the opportunity to rebut petitioner’s argument.’ Respondent advises that petitioner opposes the granting of the Motion to Strike, and further that, should the Court deny it, he ‘intends to file a Motion For Leave to respond to Petitioner’s Notice.'” Order, at pp. 1-2.

Remembering that “play nice” is Tax Court’s bedrock, Judge Gale treats the Notice of Supplemental Authority as a supplemental brief, and allows IRS thirty (count ’em, thirty) days to respond.

Takeaway- This is a good guide for dealing with adversaries who try to wild-card in legal arguments when scheduled briefing is completed.

Those practitioners too young for Medicare won’t remember when those of us geriatric types actually had legal secretaries, whose syntactical, grammatical, and legal skills equaled or in some cases far outpaced ours. I remember Dolores and Lydia, to name just two; of course, their daughters became lawyers.

There were others, of course, less good. One of them, when the dictation was “very truly yours,” ended a letter with “Virtually yours.”

But that’s what today’s blogpost is about.

I have often praised the Low Income Tax Clinics, their motivated future Bar leaders, and their distinguished faculty advisers. They are definitely there to help.

But even they are useless if those of Low Income fail to show, even virtually.

Here’s Raymond J. Owens, Docket No. 20681-18, filed 9/15/20.

Raymond J. had apparently stiped out back in February, but never returned the signed documents for entry. So Judge Nega did a whass’up phoneathon with all hands in June.

“During that call, petitioner expressed interest in seeking assistance from a low-income taxpayer clinics (LITCs) and the Court provided petitioner with a list of those clinics available in the Chicago, Illinois area.” Order, at p. 1.

But Raymond J. tells IRS he “…had contacted multiple LITCs and that ‘none of the clinics reached back out to him.'” Order, at p. 1.

Maybe the law schools were all locked-down and teletubbying their classes; I don’t know. In any event, Judge Nega sent Raymond J. and IRS off to teletry the case this November.

But now IRS moves to dismiss for want of prosecution.

“…respondent represents that on August 18, 2020, respondent spoke with petitioner and ‘schedule[d] an appointment to speak with LITCs and pro bono legal volunteers at a Virtual Settlement Day event held on August 28, 2020’ to which petitioner indicated he would be available to attend. Respondent further represents that on August 28, 2020, petitioner failed to attend the Virtual Settlement Day even though respondent made numerous attempts to contact and reach petitioner. Lastly, respondent states that petitioner’s views as to the granting of respondent’s motion to dismiss are unknown.” Order, at pp. 1-2.

So let Raymond J. respond.

And it’s nice to know the LITCs are “virtually yours.”

(Very Much Off-Topic)

Today is the eightieth anniversary of Battle of Britain Day. Eighty years ago, democracy around the world was under attack, dictatorships were ascendant, and in many countries freedom had been entirely crushed.

On this day, much evil was matched by the very few, who prevailed.

In these times, when we are imperiled both physically and morally, let us remember and honor the few then and the few now. “Let us therefore brace ourselves to the challenge, and so bear ourselves,” that whatever may come, this will be our finest hour.

Pass the word for Peter Reilly, CPA, Forbes’ intrepid blogger and Webinar mayvinn (if you’ll pardon an arcane technical term)! Judge Holmes needs CPAs and RAs on the bridge.

It looked at first like a simple NFTL for two quarters of FICA-FUTA-ITW in Life-Skills School, Ltd., Docket No. 10114-19L, filed 9/14/20.

But Judge Mark V. Holmes quickly found himself embrangled in “several other quarters and years.” Order, at p. 1.

“And the particular problem is that one of petitioner’s employees was embezzling money to pay taxes owed by a completely different entity. That now-former employee has since paid restitution, which has led to a complex tangle of credits, overpayments, and assessments.” Order, at p. 1.

So what is a judge, even one whose opinions have reached “to such rarefied heights of pure mathematics that it is said that there was no man in the scientific press capable of criticizing” them, as Judge Holmes, to do?

Why, call in people who can actually do arithmetic without removing their socks.

“After a brief review, the Court concluded that turning this tangle over to accountants and revenue agents would be likelier to lead to its unraveling than leaving it with the lawyers.” Order, at p. 1.

I’m sure my colleague and esteemed luncheon companion Peter Reilly, CPA, would have the whole frittata unscrambled, with the mushrooms back in the ground, the bell peppers back on the vine, and the eggs back in their shells, in time for a quick Sam Boston Lager at day’s end.