I don’t get upset about cases that somebody else loses. I may observe from a comfortable distance that an attorney or a pro se (or even a judge) got it wrong. Sometimes my remarks might even show a slight acerbic (not to say sardonic) quality.

But this one is just bad. And I’m not faulting Judge Colvin. Tax Court Judges must follow the law as it is, not the law as they might wish it to be.

But this is not a great start to a weekend.

Robert R. Whiteley, Docket No. 22628-16SL, filed 5/4/18, made a very minor mistake on the 1040 wherein he claimed HOH, a dependent daughter and the education credit in respect of said daughter.

Judge Colvin: “…petitioner correctly reported his daughter’s Social Security number, as he had done in prior years. However, instead of spelling out his daughter’s two middle names as he had done in those years, on his…return petitioner used his daughter’s two middle initials. Because of that difference (abbreviating his daughter’s middle names) respondent disallowed the head of household filing status and disallowed the deduction for a personal exemption for his daughter and the claimed education tax credit.” Order, at p. 1.

OK, so issue a SNOD and let RR and IRS counsel settle it with a phonecall.

Oh no. “The Internal Revenue Service (IRS) notified petitioner that it concluded that petitioner had made mathematical and clerical errors on his 2011 return. What the IRS treated as math and clerical errors included denial of the three tax items discussed above (filing status, a deduction for a personal exemption, and an education credit, all relating to petitioner’s daughter) and also petitioner’s calculation of taxable Social Security benefits and his total income. The IRS recalculated the tax due based on these changes and assessed the tax due pursuant to section 6213(b) without issuing a notice of deficiency. According to Chief Counsel Notice CC-2006-019 (Aug. 18, 2006), petitioner was not provided an opportunity to dispute respondent’s assertion of his tax liability for 2011.” Order, at pp. 1-2 (footnotes omitted).

OK, so when RR gets the NFTL or NITL, he can duke it out at Appeals on a Letter 12153, or if Appeals sustains this abomination and unloads a NOD, petition.

Appeals does and RR does.

Except IRS grabs a refund from another year, says RR owes nothing, and Tax Court has no jurisdiction, Greene-Thepadi and all that, y’know.

Judge Colvin sustains. IRS can grab refunds from one year to satisfy liabilities for another year, and if no tax due (and the 4340 says there isn’t), tough luck, RR. Poor l’il ol’ Tax Court got no jurisdiction to order refunds.

Except. There was no math error. There was at most a minor typographical error, and if you call it a clerical error to avoid working you get the comments I am making here. IRS had all the information they needed to compute RR’s liability, and he manifestly filed a return. And IRS took the path of least resistance.

This is beyond nonsense. If this is what Congress and IRS think is a proper resolution, I am without language to describe this “resolution” otherwise than with language I have but rarely used when not wearing combat boots.

Word to Nina E. (“The Big O”) Olson and her Taxpayer Advocate squad: This one’s for you.

All of us solo and small-firm practitioners live for repeat business. It’s the best kind, to deal with the clients we know well, the operating styles and cast of characters we’ve seen before, and the bond of trust and confidence between us that grew like a coral reef over many years.

Well, today Tax Court has repeat business, but it isn’t the kind about which I waxed lyrical in the immediately preceding paragraph hereinabove set forth, as my already-on-their-second-Grey-Goose G&T colleagues would say.

First is Derringer Trading, LLC, Jetstream Business Limited, Tax Matters Partner, 2018 T. C. Memo. 59, filed 5/3/18, and its companion Marlin Trading, LLC, with the same TMP. And our well-known DAD flogger John E. Rogers is joined by Tax Lawyer Michael D. Hartigan.

I’ve blogged Mr. Rogers extensively, and you’ll remember Tax Lawyer Michael Hartigan from my blogpost “Getting Out of the Neighborhood,” 8/11/17.

So if you’re a stipulation wonk (in which event you have my sincerest condolences), this is your kind of case, as Derringer, Marlin and their members are trying to bail from various stips they made. Judge Goeke cruises through the FRE and considers “unfair prejudice, confusions of issues, or accumulative evidence [that] substantially exceeds the probative value of any stipulation.” 2018 T. C. Memo. 59, at p. 7. None of the foregoing helps out Derringer or Marlin.

If you’re looking for caselaw on Tax Court stips, this is your kind of case.

Next is another repeat customer, come back after a long hiatus. It’s Michael Craig Worsham, n/k/a Michael C. Worsham, Docket No. 26210-16, filed 5/3/18.

I won’t be too hard on the readers who don’t remember Mr. W. He last appeared here almost six (count ‘em, six) years ago. See my blogpost “Pay the Man,” 7/31/12. Mr. W has almost as many degrees as Mr Rogers.

Mr W makes his appearance before Judge Colvin, and shows his old form.

Mr W shows up last month and files a “…Motion to Show Cause for the IRS to Provide Factual Basis for Cost Determinations and a Motion to Determine the Constitutionality of 26 U.S.C. § 6673(a)(1).” Order, at p. 1.

Mr W follows this up with a Motion to Dismiss for Lack of Jurisdiction.

Judge Colvin orders IRS counsel to respond to the whole shootin’ match, but I’m not sure what Mr W is trying to accomplish. Why dismiss your own request for substantiated numbers? And why dismiss your own Constitutional challenge to the Section 6673 frivolity chop?

Of course Tax Court hasn’t jurisdiction to determine the Constitutionality of anything. And given Mr W’s credentials and prior experience with the 400 Second Street, NW, crowd, I’d be surprised f he didn’t know that.

But substantiation of numbers is another story in a deficiency case.

I’m sure all these players will be back again.

No, not the medieval English assize court. This is the conclusion of the 57 (count ‘em, 57) year saga of Shirley Jean Oyer, Docket No. 2555-18, filed 5/2/18.

Shirley Jean petitioned the 57 years from and including 1960 to and including 2017.

IRS can’t find hide nor hair of a SNOD or NOD for any of those years. Wherefore Ch J L Paige (“Iron Fist”) Marvel tosses Shirley Jean for want of jurisdiction.

I’ve commented before that those who file these petitions seem to be seeking sixty-buck plenary indulgences. See my blogpost “I’m Beginning to See the Light,” 4/9/18.

But Ch J Iron Fist is onto that game.

If no jurisdiction, Tax Court can’t decide anything. And IRS has plenty of options when no SNOD or NOD has issued, from refund grabs to enhanced SOL to no SOL to non-assessables to jeopardy assessments.

Might be better to save the sixty bucks.

I’ve noted in the past that the obliging nature of Judge David Gustafson might be contagious; I noted instances where CSTJ Carluzzo, ex-Ch J Thornton and Ch J Marvel each demonstrated an obliging  nature.

Now it’s STJ Daniel A (“Yuda”) Guy’s turn to allow a pro se the benefit of the doubt.

Here’s Merle D. Melvin, 12803-17S, filed 5/1/18.

When Merle D. proffered evidence that he owed nothing, IRS folded.

Merle D. wanted his sixty buck entry fee back. He wasn’t going to sign the decision documents settling the case (which showed he owed nothing).

STJ Yuda told Merle D. he could make a Section 7430 motion for admins, but Merle didn’t take the hint. Merle D. admitted to STJ Yuda “…he had not cooperated with the IRS during the examination process or when the case had been referred to the Appeals Office for consideration. He had only provided the documentation necessary to substantiate the deduction in dispute to respondent’s counsel about one week before the calendar call.” Order, at p. 1.

Merle D. was wise not to try for admins on that record.

IRS’ counsel was perhaps less obliging than STJ Yuda.

“Respondent subsequently made an oral motion for entry of decision, and, in the alternative, an oral motion to dismiss for failure to properly prosecute. Petitioner then left the courtroom and stated that the Court could do what it pleased.” Order, at p. 1.

Comment is superfluous.

But STJ Yuda keeps his cool. “Given petitioner’s conduct outlined above, the Court would be justified in granting respondent’s motion to dismiss. Giving petitioner the benefit of the doubt, however, and assuming that he was simply having a bad day, the Court will deny respondent’s oral motion to dismiss and grant respondent’s oral motion for entry of decision.” Order, at pp. 1-2.

Takeaway- It’s always nice to see judicial gentility. Just don’t push it too far.

The popular advice from the personal finance bloggers is likely a good idea for the wage-earner and the self-employed, but is not the path to a 501(c)(3) approval, as we see today in Abovo Foundation, Inc., 2018 T. C. Memo. 57, filed 4/30/18.

Emmanuel C. Okonkwo. M. D., is a military veteran and board certified expert in patient safety and risk management. He seeks tax exemption for his Texas domestic nonprofit corporation, the petitioner herein. “Abovo’s primary purpose would be to deliver quality management consulting services to medical providers and advance Government programs through patient safety initiatives.  Its quality management services would include ‘defining, identifying, analyzing, measuring and controlling systems and processes to ensure desirable outcomes’.  In addition, Abovo would provide ‘uplifting services for the elderly and veterans’, housing for low-income individuals, and internal auditing services.” 2018 T. C. Memo. 57, at p. 2.

Sounds great, no?

Well, there’s a hitch that brings Abovo down. And here’s my chance to unveil my latest cognomen, after an exhaustive search and review, for Ch J-elect Maurice B (“Mighty Mo”) Foley.

Ch J-elect Mighty Mo: “Abovo would solicit donations and receive fees relating to its services.  Dr. Okonkwo, Abovo’s president, chief executive officer, and sole employee, would perform services provided to clients (i.e., at an hourly rate of $350), receive a $217,000 salary, and be eligible for an annual performance-based bonus (i.e., not to exceed $100,000).  While Abovo has not entered into any service contracts, its fee structure would be market based and dependent on the nature of the project and the expertise required to complete it.” Order, at p. 3.

For those of my readers who shouted out “inure to the benefit,” congratulations.

“Abovo contends and bears the burden of establishing that its services would advance Government programs pursuant to Federal patient safety laws and lessen the Government’s burden.  See Rule 142(a).  To the contrary, Abovo’s services would not serve an exempt purpose, would be commercial in nature, and would serve Dr. Okonkwo’s, rather than the public’s, interest.  The administrative record does not establish that Abovo would act on the Government’s behalf or that Abovo’s consulting services would lessen the Government’s burden. “ 20187 T. C. Memo. 57, at p. 4 (Citations omitted).

“In short, Abovo is a facade for Dr. Okonkwo’s consulting activities.” 2018 T. C. Memo. 57, at p. 4.

If you’re seeking tax-exemption and deductions for contributions, don’t pay yourself first.

STJ Lewis (“Great Name”) Carluzzo echoes the words of the late great Sir George Harrison in a designated hitter off-the-bencher, Glen Tremayne Morgan, Docket No. 7695-17S, filed 4/27/18.

Glen had some looseleaf pages showing his backs-and-forths to the asbestos-removing gigs whereat he worked, wherewith to substantiate his unreimbursed employee mileage deductions.

He had no permanent worksite.

“The distance between petitioner’s residence and the jobsites, according to his notes, varied from 20 miles to 58 miles, with a majority of the jobsites being 50 miles or less from his residence.

“At trial petitioner called the Court’s attention to an IRS publication that addresses deductions for travel to temporary jobsites. The Court treated that document as petitioner’s pretrial memorandum and had it filed as such. That document provides a sufficient explanation of the applicable law and we see no need to repeat that analysis here. All of petitioner’s jobsites were ‘temporary’, but as petitioner’s pretrial memorandum correctly points out, taxpayers such as petitioner, who have no regular place of employment, may only deduct travel expenses to temporary jobsites if the jobsite is outside of the metropolitan area where the taxpayer lives and normally works.” Order, Transcript, at p. 5. (Citations omitted).

STJ Lew buys Glen’s notes, despite IRS throwing some serious shade on Glen’s claim that they were contemporaneous. I don’t suggest trying the looseleaf bit otherwise than in a small-claimer with a truthful-looking petitioner, but Glen gets past the Section 274 traffic stop.

Problem: what is Glen’s metropolitan area? His notes don’t help.

STJ Lew is inventive.

“Taking into account the information shown on petitioner’s notes, we find that travel to jobsites 40 miles or less are within the relevant metropolitan area and petitioner is not entitled to a deduction for travel to those jobsites. More likely than not, some of the jobsites shown to be more than 40 miles from petitioner’s residence would be considered inside the relevant metropolitan area, and some would not. In the absence of specific evidence on the point, we find that petitioner is entitled to a deduction for one-half of those miles.” Order, Transcript, at pp. 7-8.

And IRS’ counsel and Glen can do a Rule 155 beancount, using standard mileage rates.

His Honor Big Julie, better known as His Honor Judge Julian I Jacobs, hereinafter HHBJJJIJ, reaches back for a State Court remedy and finds it in Rule 104(e)(3).

Amnesty National, Docket No. 4570-17, filed 4/26/18, isn’t a first-timer at 400 Second Street, NW, although it’s been years between appearances.

IRS claims the documents it seeks are necessary to prepare a defense for the trial. HHBJJJIJ buys it, especially as Amnesty has been ducking IRS’ counsel.

So here are the sanctions HHBJJJIJ will lay upon Amnesty if the documents aren’t forthcoming: “…the issues to which respondent’s discovery request pertain shall be taken as established in this case as set forth in (and petitioner will be prohibited from offering evidence to rebut the determinations made in) the notice of deficiency issued to petitioner, …the assignments of error set forth in the petition will be struck, and … such other and further relief as the Court deems proper.” Order, at p. 2.

Of course, in the days of my youth such a drastic remedy was rarely if ever imposed in State Court.

No, this is not about yesteryears’ TV performers waxing comfortably stout in the wallet as their ancient epics fill the midnight streamings of the exotic entertainment providers. This is about the residual exception to hearsay in FRE 807.

Now where would one encounter this catch-all? Well, one might guess when a party is trying to wild-card an otherwise inadmissible statement into evidence, hasn’t got anything better, and the judge is leaning toward that party’s case anyway.

And in Tax Court, that has to be the Section 6751(b) Boss Hoss sign-off, the flavor de l’année post-Graev. All manner of Civil Penalty Approval Forms (CPAF) made their appearance in record reopeners, as the silt-stir predicted by Judge Holmes (see my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17) shifts into overdrive with the afterburners cutting in.

Judge Ashford goes off here on Nikta Fatemeh Abdolrahim & Melvin Collins, 9650-14, filed 4/25/18. Each of them and both of them have tax problems, but Mel is looking at some Section 6663 75% fraud chops. And when they tried their cases back in 2015, neither Mel nor Nik nor IRS mentioned Section 6751(b).

But the RA who proposed chopping Mel testified on the trial, although the CPAF, allegedly duly signed by the RA’s immediate supervisor, never made it into the record.

Mel & Nik object that they never got a chance to challenge the CPAF. But they can’t tell Judge Ashford what evidence they would adduce now to challenge it.

Mel “…seemed only to question the authenticity of the Civil Penalty Approval Form, stating that he thought the form was recently signed and that there were undated handwritten notations on it. The form, however, clearly shows that it was signed on October 21, 2013, several months before the January 23, 2014, notice of deficiency was issued to petitioners, and the handwritten notations (which are below the signature and date line of the form) confirm the assertion of the section 6663 penalties and the section 6651 additions to tax for 2009 and 2010. Similar to their written objection, at no point during the [Court’s phoneathon] did petitioners identify any particular testimony they would wish to elicit from either Mr. [RA] or Mr. [Boss Hoss], or suggest any other additional evidence they would like to proffer.” Order, at p. 4. (Names omitted).

So Mel & Nik got enough advance warning to satisfy Judge Ashford that they got sufficient FRE 902(11) heads-up. And though the CPAF stumbles at the FRE 803 barrier, it recovers enough to jump the FRE 807 residual fence.

Read this designated hitter, practitioner. Think carefully: what might you proffer to avoid the chops hitting Mel, when aimed at your clients?

I am quite sure that Judge David Gustafson, however obliging he may be, has never encountered RuPaul Andre Charles, or has had dealings with supermodels, whether on or off the runway. So the title of this little essay will not recall to His Honor the 1993 cavatina whence cometh said title.

Howbeit, Judge David Gustafson echoes Mr./Ms. Charles’ injunction to counsel in Johannes Lamprecht & Linda Lamprecht, Docket No. 14410-15, filed 4/25/18.

Linda’s counsel (and also Johannes’, which might spell trouble; see infra, as my expensive colleagues say) is as big a fan of summary J as I am. But his problem is as expressed hereinabove. Yesterday Judge Gustafson bounced an attempt at summary J by Linda to get out by asserting that Johannes’ fraud can’t be attributed to Linda.

“Our order of April 24, 2018 (ECF 80), observed that ‘the memorandum in support of her motion states very few facts; it cites no evidence’; and we criticized petitioner’s apparent intention to “leave to respondent (or perhaps to the Court) the task of extracting from prior filings the facts in this action that are relevant to this motion” and then the task of searching the record to see whether those alleged facts can be supported by materials in the record. Rule 121 does not permit this approach.’ We denied the motion.” Order, at p. 1.

Well, ya gotta admit the dude isn’t a quitter, whatever his skills as a pleader. And he sure checks the Tax Court website even more carefully than I do. Later the same day (yesterday), counsel shoots in another summary J motion with memorandum.

“The memorandum appears to assert that alleged fraud attributed to Mr. Lamprecht cannot be attributed to Ms. Lamprecht, but it gives no factual information whatsoever that would permit this distinction to be examined. The memorandum (at 21) cites an affidavit that appears in a prior filing to support an assertion about the IRS’s intention to issue a summons; but the memorandum generally alleges facts about issuance of the summons, summons litigation, and withdrawal of the summons, for which allegations it cites no support. Once again, petitioner seems to assume that the Court will itself derive the specific facts from somewhere in the record, or will assume facts in petitioner’s favor unless respondent disputes them. This reflects a misunderstanding of the movant’s burden under Rule 121.” Order, at pp. 1-2.

So Judge Gustafson bounces the second summary J try. And imposes a limitation I’ve seen in State court, where a too-energetic litigator (whether pro se or counsel) tries the bombardment tactic. It’s called the “Mother, may I?” rule.

“…neither petitioner shall hereafter file a motion for summary judgment without first scheduling and conducting a telephone conference with the Court and respondent.” Order, at p. 2. Pre-motion conference is a rule in a number of courts.

And counsel has yet more homework.

The main case upon which counsel relies doesn’t quite say what he says it says, at least not to Judge Gustafson, but I’ll leave that for those of you who want to read Judge Gustafson’s order and the case therein cited. You tell me.

But there’s more. What would a Tax Court case be without at least one look at the Section 6751(b) Boss Hoss sign-off?

“…Section 6751(b) makes no mention of ‘fraud’ in particular and makes no provision whatsoever affecting the running of the statute of limitations under section 6501(c)(1) as the result of ‘a false or fraudulent return’. Even if we were to accept petitioner’s novel suggestion that section 6501(c)(1) constitutes a ‘penalty’ of sorts, it would not be the sort of penalty affected by section 6751(b), which provides that ‘No penalty shall be assessed’. A statute of limitations is not ‘assessed’. … If one of the petitioners in this case has separate contentions that would relieve her of liability to the relative disadvantage of the other petitioner, then due attention should be paid to whether a conflict of interest might exist that would prevent one attorney from representing both petitioners. See Rule 24(g).” Order, at p. 2. (Emphasis by the Court).

I love summary J. But for it to work, you better work.

No, not the Barbara Stanwyck-Bert Lancaster thriller of seventy years ago. This is the story of the wrong EIN on a 941, and the taxpayer’s attempt to get proper credit after the 3SOL has run.

So it’s equitable recoupment to the rescue for Emery Celli Cuti Brinckerhoff & Abady, P.C., 2018 T. C. Memo. 55, filed 4/24/18, a local law firm.

For the skinny on equitable recoupment, see my blogpost “Equitable Recoupment,” 7/8/13.

ECCBA went from LLP to PC, in the process getting a new EIN but putting the old LLP EIN on the 1Q 941 for the transition quarter. The clock had long since run when IRS dinged the PC for the “unpaid” FICA/FUTA/ITW that its predecessor had in fact paid.

PC’s counsel was a wee bit late (like about seven weeks) getting the SO all the documents, pictures, descriptions and accounts to paper the goof. The SO had already determined to drop a NOD on PC, but same had not yet issued when PC’s counsel unloaded the exculpatory material.

Judge Gale: “First, we note that the administrative record includes not only material that the settlement officer reviewed but also material that was available for his review. See Thompson v. U.S. Dept. of Labor, 885 F.2d 551, 553-556 (9th Cir. 1989); West v. Commissioner, T.C. Memo. 2010-250, slip op. at 11 n.11.  Moreover, at the time of … PC’s CDP hearing, the Internal Revenue Manual (IRM) instructed Appeals employees conducting such hearings to “[c]onsider information received after the due date for supplying information but prior to issuance of the Notice of Determination/Decision Letter.”  IRM pt. 8.22.2.2.4.11(1)(c) (Oct. 30, 2007); see Shanley v. Commissioner, T.C. Memo. 2009-17, slip op. at 15 (noting the de facto extension of time for submitting information arising from the requirement in IRM pt. 8.22.2.2.4.11(1)(c) that an Appeals employee consider information submitted before the issuance of a notice of determination).  It is undisputed that Emery PC submitted substantial information and supporting documents 11 days before the notice of determination was issued and that the settlement officer did not consider the submission. The submission included two letters with extensive attachments.  In view of the fact that these materials were available for the settlement officer’s review, and that IRM guidelines instructed him to review them, we find that the two letters and their attachments are part of the administrative record.” 2018 T. C. Memo. 55, at pp. 21-22 (Footnote omitted).

IRS was going to collect twice. LLC was too late to go back, and PC was sufficiently aligned in interest with LLC to get the benefit of the payment. IRS’ argument that the alleged overpayment arose out of two taxable events is wrong; the taxable event was payment of taxable wages, not the Commissioner’s assessment of tax. And PC used reasonable care: the right amount of tax was timely paid and reported. Only the EIN was wrong. So no late-filing or late-payment chops.

As for remand to Appeals, there’s nothing fresh for Appeals to decide. The bushelbasketful of papers that PC’s counsel put in before the NOD issued was part of the administrative record. It was introduced on the trial as well. So it was “all ye know on earth and all ye need to know,” as a much finer writer put it.

Whether PC or LLC, ECCBA wins it.