Once again the immortal words of Elizabeth Akers Atkins are sung at 400 Second Street, NW, but IRS’ plaintive rendition doesn’t help, as Mehrdad Rafizadeh, 150 T. C. 1, filed 1/2/18, avoids a chop from Section 6038(D) for years prior to the effective date of that amendment.

And no, I didn’t know what that was either. But Judge Pugh enlightens us. The 2010 Hiring Incentives to Restore Employment (the HIRE Act, another cutesy acronym covering many things not encompassed in the statute said acronym allegedly covered) amended Section 6038 to require reporting of certain offshore financial assets. And amended Section 6501 to extend the 6SOL to that nonreporting, but only if reporting was required. Which Mehrd argues it wasn’t.

Mehrd had four (count ‘em, four) years of nonreporting returns, only one of which would have been swept up by the ordinary reading of the amendment. Except that year’s assets were under the $5K threshold for reporting.

IRS hit him with a John Doe subpoena at the critical moment, extending the SOL for six months. IRS says this lets in the 6SOL for the three remaining years, as the 3SOL had already run.

Except the language of the statute imports the effective date of the statute into the reporting requirement.

“The notice of deficiency before us is timely only if the six-year period of limitations in section 6501(e)(1)(A)(ii) applies. Petitioner argues that the effective date of section 6038D precludes application of that six-year period of limitations. Specifically petitioner argues that the defining phrase in section 6501(e)(1)(A)(ii) (‘assets with respect to which information is required to be reported under section 6038D’) also limits application of the six-year limitations statute to assets for which there was a reporting requirement under section 6038D (or there would be a requirement but for specified exceptions) at the time the income was omitted.” 150 T. C. 1, at p. 7.

Congress said it. Tax Court must apply each and every word in its ordinary meaning unless an absurd result would follow.

“We must give effect to all of the words in the key phrase before us—‘assets with respect to which information is required to be reported under section 6038D’.” 150 T. C. 1, at p. 7.

Congress could have imported the definition of the reportable assets directly, with no need to speak of those assets being required to be reported. Congress did that with other reportable transactions, but in those the requirement to report predated the extension of the 6SOL.

Here it didn’t. Mehrd gets a bye.

So it seemed this morning as the clock struck or the ball descended. The income and estate tax landscape had undergone a seismic displacement. Everything transformed.

Well, so the vendors of software and continuing ed would have it. But the changes that will affect most ordinary taxpayers are of limited duration. We learned when the estate tax underwent its 12-month repeal (which the sages and savants assured us would never happen) that sunsets do happen (even far from Ogden, UT).

The rest is a massive tweak. But massive tweaks have been de-tweaked before now.

So while, in the words of the “Beautiful” lyricist, I feel the earth move under my feet, it moves rather slightly, and the sky isn’t “tumblin’ down.”

Sorry, poets. This theme isn’t worthy of your efforts.

Happily, the rest, residue and remainder of the cases and controversies engendered under the old law will slowly beat their firm, impassioned stress through the wilderness of examination and Appeals, to appear each working day on the website at 400 Second Street, NW.

And I’ll be there to report it as long as my luck holds out.

Happy New Year.

I was truly disappointed in STJ Armen, The Judge With a Heart, when he sent off poor late-filing Amy L. Goline, with an off-handed cite to McCormick and no mention of anything else; see my blogpost “Ya Gotta Have Heart,” 11/9/17.

Well, today Ch J. L Paige (“Iron Fist”) Marvel lays out the full contents of the toolbox for Charlotte Marie Strickler, Docket No. 18477-17S, 12/29/17.

Charlotte Marie was two days late and a lot more than a dollar short, because she used an unblessed variant of FedEx. Remember that only those sanctified versions of the Black-and-Purple gang slide under the Section 7502 mailed-is-filed tag. FedEx Express Saver saved Charlotte Marie nothing, as it wasn’t among the “blessed communion, fellowship divine.”

So Charlotte Marie is tagged “out.”

But Ch J Iron Fist manifests the kindliness of spirit worthy of this season, and counsels Charlotte Marie of other shelter than the Inn at 400 Second Street, NW.

“However, although petitioner may not prosecute this case in the Tax Court, petitioner may continue to pursue administrative resolution of the tax liability for 2015 directly with the Internal Revenue Service, possibly by way of a request for audit reconsideration or by filing an amended income tax return. Another remedy available to petitioner is to pay the tax, then file a claim for refund with the Internal Revenue Service. If the claim is denied (or not acted upon within six months), petitioner may sue for a refund in the Federal district court or the U.S. Court of Federal Claims. See McCormick v. Commissioner, 55 T.C. 138, 142 (1970).” Order, at p. 3.

STJ Armen, please copy.

Perhaps failing to respond to an IRS motion for leave to file an amendment to its answer out of time isn’t grounds to dismiss one’s petition after all.

Y’all will surely remember Katarzyna Kruczak, Docket No. 21469-17S, filed 12/27/17, in its original version, as more particularly bounded and described in my blogpost “Grounds for Dismissal,” 12/27/17.

It’s not that long ago, guys.

Well, today Ch J L Paige (“Iron Fist”) Marvel calls back the early order. Apparently it was the result of a “clerical error,” and not even an inadvertent clerical error. And there was some other cause as well.

Here’s the link: Katarzyna Kruzcak, Docket No. 21469-17S, filed 12/29/17.

But trust Ch J L Paige (“Iron Fist”) Marvel. The corrected version appears 1/2/18. Katarzyna Kruzcak, Docket No. 21469-17S, filed 1/2/18.

Remember that Little League truism? When you’re the catcher,  lying in the dust at home plate, tag the baserunner, the batter, the umpire and yourself. That way you got ’em all.

IRS took that route in John L. Roth and Deanne M. Roth, 2017 T. C. Memo. 248, filed 12/28/17. Especially is that wise when IRS messes up the SNOD and its answer to the petition by leaving out the 40% substantial undervaluation chop, and has to do a flying line change in an amended answer.

The flying line change should shift the burden of proof per Section 7491(a) and Rule 142(a), but Judge Wherry falls back on preponderance of the evidence.

John’s and Deanne’s beef is the Boss Hoss sign-off on the amended answer’s assertion of the 40% chop, when they and IRS had stiped away the 20% negligence version. Y’all remember that Section 6664(c)(3) bars reasonable cause as an out from the 40% chop.

John and Deanne had another busted conservation easement; they stiped down to $30K from their claimed $970K. Exam recommended the 40% substantial undervaluation, and in the alternative the 20% negligence chop, and the RO got the Boss Hoss’ signoff. John and Deanne went to Appeals, and the AO approved both the chops, and the AO’s Boss Hoss approved the AO.

“The notice of deficiency issued by the Appeals Office omitted the 40% penalty and included only the 20% section 6662(a) accuracy-related penalty. Petitioners timely petitioned this Court for redetermination of the deficiencies and penalties. Respondent affirmatively asserted in his answer that the section 6662 penalty should be calculated at a rate of 40% under section 6662(h)….” 2017 T. C. Memo. 248, at p. 5.

And the amended answer was signed by senior counsel and her immediate supervisor.

Now, obeisance must be paid to Graev. “Compliance with section 6751(b)(1) is appropriately considered in this deficiency proceeding, and showing such compliance is part of respondent’s burden of production under section 7491(c). See Graev v. Commissioner, 149 T.C. __ (Dec. 20, 2017), supplementing 147 T.C. __ (Nov. 30, 2016).” 2017 T. C. Memo. 248, at p. 8.

Burden of production, be it noted. The “burden of proof” addition from 2 Cir is off the table.

John and Deanne want to lay the blame on the AO, but that falls flat.

“In all three of the instances in which respondent sought to assert penalties in this case, the individual proposing the penalties received personal approval from his or her immediate supervisor. The examiner who proposed the 40% gross valuation misstatement penalty the first time (and the 20% accuracy-related penalty in the alternative) received personal, written approval from her group manager. Likewise, the Appeals officer received personal, written approval from his team manager for the 40% gross valuation misstatement penalty (and for the 20% penalty that was shown on the notice of deficiency). And the senior counsel who pleaded affirmatively in respondent’s answer to the petition that petitioners are liable for the 40% gross valuation misstatement penalty received her associate area counsel’s personal, written approval, as evidenced by the latter’s signature on the answer filed in this Court. In sum, no matter which of these three instances was the initial determination of the 40% penalty, section 6751(b) was satisfied because each instance was approved in writing by an immediate supervisor.” 2017 T. C. Memo. 248, at pp. 9-10.

The 40% chop sticks.

John and Deanne sold some CO State tax credits from a different deal years ago, but had to repay them later as a result of subsequent litigation. They want to take Section 1341 treatment and deduct the repayment back in the year when they paid the tax.

Nope, says Judge Wherry. Maybe they can deduct the repayment for some other year, but as cash basis taxpayers they can’t go back.

Tax Court petitions can be dismissed for various reasons, and we all can recite most, if not all, of those most commonly encountered: petition not manually signed (preferably in blue ink) by petitioner or Tax Court admitted person, failure to state a basis for relief, electronic filing, late filing, filing with IRS and not with Tax Court, mootness (tax, additions and penalties paid), invalid SNOD or NOD (wrongly-addressed, facially-defective), and violates automatic bankruptcy stay.

I’m sure my learned readers can name a couple more (Merry Christmas, Judge Holmes).

But today Ch J L Paige (“Iron Fist”) Marvel has a new one, or rather, a new one on me. It’s failure to respond to IRS’ motion to be permitted to file an answer out of time.

Here’s Katarzyna Kruczak, 21469-17S, filed 12/27/17.

“…respondent filed a Motion To For Leave To File Out of Time Answer and lodged an Answer. Upon due consideration, it is ORDERED that…petitioner shall file an Objection, if any, to the above-described motion to dismiss. Failure to comply with this Order may result in the granting of the motion to dismiss.” Order, at p. 1.

So unless Katarzyna objects to IRS’ late answer, her petition is dismissed?

Always something new out of Tax Court.

Edited to add, 4/3/18: Turns out this was a mistake. Maybe someone does read this my blog, although at Tango Charley Juliet last week people were coming up to me and announcing they did indeed, sometimes maybe. Howbeit, the next day, 12/28/17, this order was vacated, and on 1/2/18, Katarzyna was told to object or IRS would get to file an out-of-time answer.

The recent tax legislation gives new meaning to Robert Graves’ 1929 autobiography, as it repeals more than one stand-by of tax court litigation. We’ll see the vestigial remnants work their way through the pipeline, and then silence.

Today, we have two small claimers: Mary A. Colliver, 2017 T. C. Sum. Op. 93, filed 12/26/17 and, of even date therewith, Robert Gollnick, Jr. and Piyanut Ustsasan-Gollnick, 2017 T. C. Sum. Op. 94.

They both have documentation problems, but those are not going to be rendered obsolete by any Congress yet assembled or to be assembled.

No, these are unreimbursed employee expense cases, and Section 199A(d)(1)(A) of the 2017 enactment ends these going forward from next week.

I’ll be sad to see them go.

Mark Twain wrote of the stirring times in Austria in 1898. Now it’s my turn.

Tax Court is back from “making merry ‘neath the white and scarlet berry” so the Bench again assembled emits a barrage of orders, enGraeving the 6751(b) Boss Hoss signoff far and wide.

Be prepared for even more silt-stirring between now and the horns blown at midnight on Sunday night.

For those tuning in late, here’s a random sample, with chronology; Hrach Shilgevorkyan, Docket No. 9247-15, filed 12/26/17. I won’t summarize, as Judge Ashford has the whole saga laid out in the abovecited order. And see my blogpost “Stir, Baby, Stir – That Silt,” 12/20/17.

IRS got zip from Zip, so Debra Ray doesn’t have to pay. That’s the good news from Judge Buch, who seems to think the United States Attorney for the Central District of Illinois is a District Attorney (a District Attorney is a State official, Judge), telling Deb that she doesn’t owe interest on her civil restitution, in Debra J. Ray, Docket No. 12358-16L, filed 12/22/17.

Deb took a Section 7206 false return fall, and USDCCDIL hit her for $7K in restitution, with a $250 credit for sums previously paid. Deb paid up timely, and the US Attorney filed a satisfaction of judgment.

IRS came looking for interest, got the entire payment wrongly applied, straightened it out (more or less), but still wanted interest. After working with collections, Deb went to Appeals. There, the AO said no managerial or ministerial delay, so no abatement.

Deb petitions, but in the meantime the Philosopher-Judge, Judge Lauber, hands down the case of Zipora Klein. For the skinny on that one, see my blogpost “IRS Gets Zip,” 10/3/17.

First, scope of review. “Here, Ms. Ray has not had a prior opportunity to dispute the amount of restitution that remains due, as such we review de novo. Although Ms. Ray has continuously argued that she paid the full amount of the restitution, neither the appeals officer nor the settlement officer addressed the issue. We will address it here.” Order, at p. 5.

And the satisfaction of judgment from the miscalled DA estops IRS from claiming any part of the restitution wasn’t paid.

In the immortal words of Izzy Baline, “I just got an invitation through the mails.” It isn’t formal (business attire), and it isn’t this evening (no, it’s in March). It’s the Section 7470A Tango Charlie Juliet, the upcoming Tax Court Judicial Conference.

So I hope to see as many of my readers as can make it to “that toddlin'” town on the shores of Lake Michigan. Alas, if you’re an employee I can’t assure you it’s deductible.

While, unlike Fred Fisher, I also can’t guarantee “you’ll have the time, the time of your life,” we’ll swap some war stories, learn a lot and have fun.