A designated hitter from that Obliging Jurist, Judge David Gustafson, channels Judge Lauber’s earlier rendition of this 1966 Paul Simon classic. See my blogpost “Slow Down, You Move Too Fast,” 9/24/13.

Once again, Appeals are in a red-hot rush during the holidays. Here’s the story of Keith Chambers Brown, Docket No. 4894-16SL, filed 4/14/17.

Keith Chambers’ construction business got hammered and nailed (sorry, guys) by the real estate meltdown commencing 2009, and he owed undisputed tax plus one unfiled year’s return. IRS gave him a NFTL.

He went to Appeals, claiming the NFTL put him out of business, as he could not borrow from banks with an NFTL. He wanted an OIC and a lien lift.

I’m throwing in the dates here, contrary to my usual practice, because they’re especially relevant.

On December 15, Appeals scheduled a hearing for January 13, less than a month later. The AO told Keith Chambers he’d need to have the missing return in her hands by that date. Keith Chambers said he’d need thirty days to generate the return.

The AO said “no return, no OIC, lien sustained.” So the AO generated the NOD sustaining the lien within 14 days after January 13.

Judge Gustafson, his usual genteel self, notes that between December 15 and January 13, “the holidays intervened.” Order, at p. 2.

“Appeals thus handled the case in a month and a half–commencing it on December 15, 2015, and concluding it on January 27, 2016–and its entire communication with the taxpayer apparently consisted of one letter and one telephone conversation.” Order, at p. 2.

Undaunted, Keith Chambers files the missing return on February 25 and sends off his petition the next day, beating the thirty-day clock.

Fast (or maybe not so fast) forward.

“More than a year after the petition was filed, the Commissioner moved for summary judgment on April 13, 2017 (i.e., 60 days before the trial calendar at which this case will be tried, which is the last day permitted by Rule 121(a) for filing a motion for summary judgment).” Order, at p. 2.

That’s perfectly cool, because they did beat the deadline. But the way they beat the deadline does not please Judge Gustafson. And there are State courtiers I have encountered who pull the same…well, let me not characterize, but those types get a similar response.

“Mr. Chambers elected this Court’s ‘small case’ procedures pursuant to 26 U.S.C. section 7463 and Tax Court Rules 170-174. Under those procedures, cases are handled ‘as informally as possible, consistent with orderly procedure.’ Rule174(c). A motion for summary judgment in a small case is not improper but is less common than in regular cases. If a motion for summary judgment is granted in a small case and decision is entered without trial, the taxpayer–who elected informal procedures–may feel that he did not get his day in court. We acknowledge that a motion for summary judgment could be helpful and appropriate in some small cases, but we think this is not such a case, for the reasons we now explain.” Order, at p. 3.

Some Judge ‘splainin’.

“The flaw in Mr. Brown’s CDP hearing on which Appeals based its determination was his failure to file his [missing] return. He was told by letter of December 15, 2015, to produce the overdue return in less than a month; and when he explained that he needed 30 more days, no additional time was given. We cannot say definitively whether this was an unreasonable deadline. If there was good reason for the denial of more time, then presumably we should sustain Appeals’ decision; but the record before us gives no reason that the Appeals officer denied Mr. Brown any additional time. There is no indication of Mr. Brown’s having been unresponsive, nor of prior incidents of delay on his part.” Order, at p. 3.

“‘[S]etting unreasonable deadlines can constitute an abuse of discretion’. In the admittedly anecdotal experience of the undersigned judge, the month-and-a-half duration of this CDP case seems very short (an impression that, if incorrect, the IRS could correct at trial). On the one hand,we must applaud the efficiency of an Appeals officer who processes her business so briskly; but on the other hand, it is possible, under the few facts we have, that this denial was not reasonable. The IRS’s motion for summary judgment that was filed more than a year after Appeals was finished with the case was timely, but its deliberate submission did not vindicate the pace of Appeals’ handling of the case.” Order, at p. 4. (Citaiton omitted).

So let’s see if Keith Chambers was a wiseguy, or the AO was arbitrary and capricious. And the best way to do that is to try the case.

IRS, I suggest you move to remand to Appeals for a lengthy supplemental hearing.

No, my practice does not include personal injury, whether plaintiffs’ or defendants’; rather, today we have a discussion of Scar, an opinion often cited.

For those tuning in late, Scar v Com’r, 814 F.2d 1363 (9th Cir. 1987), rev’g 81 T.C. 855 (1983) dealt with a SNOD that dinged the taxpayer as a member of an entity with which taxpayer had never dealt, and IRS had never examined the return in question. Moreover, the deficiency used the top marginal rate, rather than the graduated rate.

So the SNOD got tossed, along with the case.

But today, though he reviews Scar, His Honor Big Julie, Judge Julian I Jacobs, hereinafter HHBJJJIJ, refuses the benefit thereof to Lewis Teffeau, et al., Docket No. 27901-10, filed 4/14/17.

Not a good Friday for Lewis, even though he spells his name right.

Lewis claims he is a Virgin (Islander), but IRS says he’s a phony per Notice 2004-45 Meritless Position Based on Sections 932(c)(4) and 934(b), torpedoing various dodges to export US onshore income to our Insolvent Islands in the Sun.

I’ve blogged any number of these, so I won’t repeat myself.

Lewis claims IRS never “determined” a deficiency. But the SNOD did state Lewis never filed with IRS (so his IRS return is deemed to show zero), and the SNOD discussed the items in Lewis’ VIBIR return, which IRS got through the TIA (Tax Implementation Agreement between IRS and VIBIR; the master-snitch deal). The SNOD and the items therein clearly relate to Lewis.

I’ll spare you the FRCP argument. Section 6212 overrides FRCP. At best, a SNOD is the tax analogy to a complaint per FRCP. But FRCP is out as far as mandating the contents of a SNOD.

But there’s a further point HHBJJJIJ makes, although it’s truly boilerplate. But it expounds a rule that can be extremely mischievous. In fact, it’s the nearest analogy I can find to a well-contrived and expertly-placed IED.

“It is well settled that no particular form is required for the notice of deficiency to be valid. See Benzvi v.Commissioner, 787 F.2d1541,1542(11th Cir. 1986); Jarvis v. Commissioner, 78 T.C. 646, 655 (1982). The Court of Appeals for the Eleventh Circuit, the court to which this case is appealable barring a stipulation to the contrary, has held that the notice will be treated as valid if the Commissioner demonstrates that ‘the IRS has determined that a deficiency exists for a particular year and specify the amount of the deficiency.’ Stoecklin v. Commissioner, 865 F.2d 1221, 1224 (1 l th Cir. 1989) (quoting Benzvi v. Commissioner, 787 F.2d at 1542), aff’g. T.C. Memo. 1987-453.” Order, at p. 4.

OK, then how is a litigant or his/her/its/their counsel to know what the Commissioner will demonstrate when they get one of IRS’ multifarious billets doux?

I won’t rehash the number of cases I’ve blogged, which were tossed when a pro se who sends in the sixty bucks and Forms 2, 4 and 5 gets told that the billet doux in question wasn’t really a SNOD.

And this, even when the billet doux says that a deficiency was determined and a SNOD sent, even when it wasn’t. See my blogpost “Fake Out,” 12/16/14.

But see also my blogpost “Fake Out – Part Deux,” 6/23/15, where I proposed sending in a petition and immediately repetitioning when IRS claims “no jurisdiction.” And of course asking for the sixty bucks to be waived on petition number 2.

But rather than wasting time, effort, postage and carbon on this stupidity, why not mandate a form of SNOD?

Permit me to suggest that the top of that document, in 16-point type, there appear a legend: “THIS IS THE STATUTORY NOTICE OF DEFICIENCY. IF YOU WANT A COURT TO REVIEW YOUR CASE, FILE A PETITION NOW. THERE ARE NO EXTENSIONS OF TIME TO FILE. GO TO http://www.ustaxcourt.gov AND CLICK ON “NEED HELP?”

Today, that Obliging Jurist Judge David Gustafson has two designated off-the-benchers. The first is the usual small-claimer unsubstantiated deductions, charitable type. I only mention it because the court reporter got principals-principles wrong in both, but Judge Gustafson corrected the error in the second.

Here’s Dean Rodney Fulton, Docket No. 6840-16, filed 4/13/17. “Employing the principals of section 170(f), discussed below, we are unable to find that Mr. Fulton made any cash contributions to charitable organizations in 2011 or 2012.” Transcript, at p. 4.

A “principal” in this context is a person who takes a leading role. A “principle” is a generally-accepted rule.

BTW, Dean Rodney didn’t bother filing two years’ worth of returns until he found out what would happen with two other years in dispute. This was ”…a tactical misjudgment that, he admitted at trial, did not excuse his non-filing.” Transcript, at p. 14. Experiment may yield principles, but it is not recommended when taxes are concerned.

Next we have an error by a bank when a depositor tried an IRA rollover. The depositor asked for an IRA account, was told she had one, but the bank’s employees made a mistake and opened a non-roller. The depositor thought she’d gotten a roller. What she got was a 1099-R, which she didn’t report, whereupon she got a SNOD with the 10% under 59-1/2 chop included at no extra charge. This woke her up, she went to the bank (never having touched the money), got an apology and the money moved to an IRA.

Judge Gustafson: “Section 408 and the regulations thereunder prescribe the rules generally applicable to IRAs, including how taxpayers may roll over amounts in their IRAs without the inclusion of those amounts in their taxable income. However, we have concluded in a prior rollover case that “a bookkeeping error does not alter the rights and responsibilities between the parties to a transaction”, and that there is not ‘any indication in the statute, legislative history, or case law that Congress intended to deny rollover benefits to taxpayers on the basis that a financial institution or other qualified IRA trustee made a mistake in recording a transaction.’ Wood v. Commissioner, 93 T.C. 114, 121-122 (1989).” Lifang Wang & Ke Zhong, Docket No. 8763-16, filed 4/13/17, at transcript, pp. 9-10.

While Section 408(d)(3)(I) allows a waiver, only the Secretary can waive. Rev. Proc. 2016-47 tells us how, and even includes trustee error as grounds for waiver. Although Li & Ke ask politely and in writing, Judge Gustafson regretfully can’t oblige them.

“Since we decide the case on other grounds, we do not need to resolve this issue. However, for petitioners’ information we note that it is the Secretary of the Treasury (acting through the IRS), and not this Court, to whom the statute gives discretion to determine whether to grant such a waiver. Assuming that the Tax Court has authority to review the Secretary’s exercise of that discretion, it seems we could do so only after the Secretary had considered and denied a taxpayer’s request for a waiver. The statute does not seem to grant us the authority to entertain in the first instance in litigation a request for a waiver.” Transcript, at p. 11.

Judge, I doubt IRS would agree you could review denial of a 408(d)(3)(I) waiver for abuse of discretion. Judge Halpern is still wrestling with the question whether non-exercise of discretion under any circumstances is an abuse of discretion in the collection-alternative context, where there is clear statutory jurisdiction to review denial of collection alternative. See my blogpost “Big Jim, Poor Jim,” 3/31/17.

But good catch at page 8 of the transcript.

I’m referring to the private delivery services (PDS), which received the benediction of John (“Kosy”) Koskinen and predecessors in the Commissionariat at 1111 Constitution Ave, NW.

As you know, Kosy doesn’t fan tutti. (Sorry, guys).

There may be some among my readers (fewer in number than Gideon had, but mighty nevertheless) who might care to know how a particular PDS product reaches the Delectable Mountains of Kosy’s approval. So I’ll let Ch J L Paige (“Iron Fist”) Marvel tell you.

“…as Notice 2016-30 indicates, the procedures by which a private delivery services applies for designation to the IRS are set forth in Rev. Proc. 97-19, 1997-1 C.B. 644. Among other things, a private delivery service must submit a written application to the IRS for each type of service for which designation is sought. Rev. Proc. 97-19, 1997-1 C.B. at 645 (sec. 5) -646. Further, for each type of delivery service for which designation is sought, certain criteria must be satisfied, including (1) either the private delivery service must record electronically to its data base (kept in the regular course of its business) the received date by the private delivery service, and enter into, and comply with, a written agreement with the IRS that addresses the period for which such data must be maintained and the terms and conditions under which the IRS will be provided with such data, or (2) indelibly mark the received date on the cover of the item so that it is readable by the human eye without mechanical assistance. Rev. Proc. 97-19, 1997-1 C.B. at 645 (sec. 4.03). A private delivery service is also required to provide prompt written notification to the IRS at one of the prescribed application addresses listed in Rev. Proc. 97-19 if any application information changes during the time that private delivery service is under consideration for designation or during the time it is a designated private delivery service. Rev. Proc. 97-19, 1997-1 C.B. at 646 (sec. 10.1).” OIH Inc., Docket No. 3141-17, filed 4/13/17.

I can see why FedEx, UPS and DHL have better things to do than negotiate with Kosy’s minions (if they can get the minions on the phone) “a written agreement with the IRS that addresses the period for which such data must be maintained and the terms and conditions under which the IRS will be provided with such data.” So what made the cut last May is it, at least for now.

Wherefore, get a copy of Notice 2016-30, copy the list, and pin it on every wall in your office. Then you can blow your trumpets, break your empty jars and send your petitions charging into Tax Court.

Section 1402(a)(13) entered the IRC before LLCs were more than an oddity, and PLLCs were undreamt of. The PC (or professional corporation) was the newest gimmick way back then.

So even battle-hardened 40-year CPAs could think that everything after guaranteed payments were exempt from SE by dint of said statute, which exempted from SE limited partners’ distributions above guaranteed payments.

Except.

Vincent J. Castigliola and Marie Castigliola, 2017 T. C. Memo. 62, filed 4/12/17, teaches us that, though you may be a member of a Professional Limited Liability Company, you are not limited if you exercise command and control.

Vince and his fellow members John and Harry have command and control over their law practice, which switched from a partnership to a PLLC. Of course, there was no written operating agreement. Not that Mississippi law requires a written, or even an oral, operating agreement. I hasten to add I am not licensed to practice law in MS, so this observation is strictly casual and is under no circumstances to be taken as legal advice. But my experience is that relations at partner level are most often on a handshake.

I joined one law firm as a partner on a six-page, one-year agreement that we never looked at the whole time I was there. If you need an overlawyered, hundred-page deal with those to whom you entrust your professional life, fortune and sacred honor, don’t do the deal.

Well, Vince and fellow members run the whole show.

So Judge Paris, scampering as usual to ordinary language when a statutory term is undefined, finds Vince and fellow members aren’t limited partners.

“The PLLC had no written operating agreement, nor is there any evidence to show that any member’s management power was limited in any way.  Furthermore, all members participated in control of the PLLC:  For example, they all participated in collectively making decisions regarding their distributive shares, borrowing money, hiring, firing, and rate of pay for employees.  They each supervised associate attorneys and signed checks for the PLLC.  On the basis of the foregoing facts, the respective interests held by [Vince, John and Harry] could not have been limited partnership interests under any of the limited partnership acts.  Therefore, they were not limited partners under section 1402(a)(13).” 2017 T. C. Memo. 62, at p. 12.

But the deficiencies for SE are under the five-and-ten, and they relied on their trusty 40-year CPA, so no chops.

IRS claims that $15K sitting in their escrow account was undistributed income. That’s a total nonstarter, as Vince, John and Harry collected payments from uninsured tortfeasors for the benefit of a major insurer, and twice yearly sent what they collected to said insurer. But they didn’t know to whom the $15K belonged.

Judge Paris: “[John testifies credibly] that the funds in the trust account were not PLLC funds and could not be withdrawn as fees by the members.  He was not sure to which clients the funds belonged but was certain that it would be a violation of professional ethics to withdraw the money as fees (the consequences of which might have included disbarment).  He was not sure how the discrepancy arose but stated that it may have been attributable to losing the PLLC’s office in Hurricane Katrina.  He also stated that at some point the money might be deposited into Mississippi’s fund for unclaimed moneys.  [John’s] testimony was corroborated by the credible testimony of [Vince].

“The members testified credibly that the funds respondent identified do not belong to the members.  Rule 1.15 of the Mississippi Rules of Professional Conduct requires that a lawyer keep client funds–and funds the ownership of which is disputed–separate from the lawyer’s own property.  Petitioners argue that, because the members know they do not own these funds, the funds must be kept separate in the trust account.  Respondent has offered no evidence or arguments to support his contention that the members are entitled to withdraw these funds as fees.  The Court therefore finds that the funds in the trust account do not belong to them.  Consequently, the funds remaining in the PLLC’s trust account are not income to petitioners for 2010.” 2017 T. C. Memo. 62, at pp. 14-15.

Before too readily scoffing at IRS’ counsel (“they obviously never practiced law outside the government”), I am told (but do not know of my own knowledge) that malefactors in our profession played games with escrow accounts. And my unfamiliarity with MS escheat law forbids my asking why unclaimed funds were not deposited with the appropriate governmental authority.

Ch J L. Paige (“Iron Fist”) Marvel is truly modest. While her order in Crystal N. Hardiman, Docket No. 298-17, filed 4/11/17, may be just a rehash for Tax Court admitted attorneys and USTCPs, it’s a useful introduction to Tax Court jurisdiction.

It really should have been a designated hitter, rather than requiring me to go fishing through a plethora of orders, some of which came close to Crystal N.’s, but none of which covered as much ground.

I respectfully suggest that designating an order is not an act of self-aggrandizement. We’ve seen a lot of that within less than fifty miles from the Glasshouse at 400 Second Street, NW (I remind myself that this is a non-political blog). Designating this order would not be one such.

I’m not going to copy or paraphrase Ch J Iron Fist’s prose extensively. I must assume perforce that all who read this far have at least a nodding acquaintance with written American English, legal subdivision.

That said, there are two excerpts worth repeating.

“…the record at this juncture suggests that petitioner may have sought the assistance of the Court after having become frustrated with attempts to work administratively with the IRS but that the petition here was not based upon or instigated by a specific IRS notice expressly providing petitioner with the right to contest a particular IRS determination in this Court. Suffice it to say that none of the IRS communications supplied by petitioner to date constitute, or can substitute for, a notice of deficiency issued pursuant to 6212, I.R.C., or a notice of determination issued pursuant to sections 6320 and/or 6330, I.R.C, regarding 2014 and 2015, or any other of the narrow class of specified determinations by the IRS that can open the door to the Tax Court. Further, even if a notice of determination had been issued…as suggested by petitioner, this case would be premature with respect to any dispute of such a notice. A petition cannot precede notice issuance.” Order, at p. 3.

And once again, Congress has created a court that does everything but provide cheap and expeditious relief.

“In summary then, the Court on the present record lacks jurisdiction in this case to review any action (or inaction) by respondent in regard to petitioner’s…taxes. Congress has granted the Tax Court no authority to afford any remedy in the circumstances evidenced by this proceeding, regardless of the merits of petitioner’s complaints.” Order, at p. 3.

In the world of Sub S Corp stock basis-building, taking on corporate debt builds a stockholder’s basis. But the stockholder must prove s/he is truly the primary obligor, to whom the lender looked at inception of the debt.

Of course, actually paying the lender, even when a mere guarantor, elevates the stockholder’s basis.

Briefly, you have to pay the buy-in, or be truly the first one on the hook.

I just discussed this in my blogpost “The Check’s the Thing – Part Deux,” 2/28/17, but since it was a paltry Sum. Op. small-claimer, it didn’t get the citation it deserves in Rupert E. Phillips and Sandra K. Phillips, 2017 T. C. Memo. 61, filed 4/10/17.

And the reason my blogpost is delayed is the overwhelming hospitality of my brother and his wife. Many thanks again; what a great family I got.

Anyway, Judge Lauber is dealing with Sandy. Rupe was a bit player, an employee in the developer Sub S of which Sandy owned 50%. But Sandy’s castlebuilding enterprise turned into sand castles in the Great Meltdown of 2006-2007.

Sandy and fellow stockholders personally guaranteed loans, but most of those were collateralized by land and buildings, that initially looked good. Sandy couldn’t get any bank witnesses to swear they were really lending to her.

The banks foreclosed, but the properties brought way less than the debt, so they sued Sandy. The banks got judgments, but Sandy never paid.

Sandy nevertheless got a law firm (apparently a respected one, as the penalties gets scrubbed) to opine she could build basis on that basis. She did, took losses, got audited, and claimed her guarantees were proper basis builders.

We all know that actual economic outlay is “coin of the realm” when it comes to building basis in Sub S stock. The phrase is erroneous, of course. Put simply and more accurately, “no pain, no gain.”

The leading case for personal guarantees without actual payment, blessed by 11 Cir., to which Sandy is Golsenized, involves the stockholder pledging personal assets, borrowing in stockholder’s own name, with a novation at lender’s request resulting in the note being recast in the name of the Sub S but guaranteed by stockholder because Sub S was an undercapitalized start-up. And stockholder’s personal assets remain pledged for the indebtedness.

That’s not the case here.

“There is no evidence that [Sub S]’s lenders had a prior relationship with petitioners or that petitioners previously had been obligors on these loans. Petitioners did not pledge any of their personal assets as collateral for the loans; all the collateral (consisting primarily of real estate) was supplied by the [Sub S’ wholly-owned special purpose entities] or their subsidiaries. [Sub S] was a well- established company with a good reputation, and petitioners conceded that the loans when made were ‘clearly supported by the collateral that was pledged.’ Most importantly perhaps, petitioners produced no testimony or other evidence from any of the lending banks that any bank ‘look[ed] to the shareholder as the primary obligor’ on any loan. It is hard to see how a taxpayer could establish a bank’s intentions or expectations on this point without producing testimony from someone at the bank.” 2017 T. C. Memo. 61, at p.18 (Citation omitted).

And Sandy’s argument that the deficiency judgments obtained by the lenders injured her credit so as to create and economic outlay is about as useful as those judgments.

“A court’s entry of a deficiency judgment against a guarantor many years later, after the corporation has defaulted and the corporation’s collateral has proven insufficient, is simply not relevant in determining whether the lender, when initially extending credit, looked to the shareholder as the primary source of repayment.” 2017 T. C. Memo. 61, at p. 20.

Besides, there were co-guarantors with Sandy. Sandy’s allocation of deficiencies among the co-guarantors makes assumptions not sustained by the record. It’s not the Court’s job to make favorable guesses where the record is empty.

But Judge Lauber gets to the point thus: “Had Mrs. Phillips made an actual payment toward these judgments, of course, the basis increase to which she would be entitled would be obvious. The speculative and conjectural nature of the computational exercise in which petitioners must engage absent any payment underscores the wisdom of the rule that no basis increase is allowed without an actual economic outlay.” 2017 T. C. Memo. 61, at pp. 23-24.

Sandy, to repeat myself, the check’s the thing.

Judge Halpern has a designated hitter for us today, as Tax Court invariably issues no opinions on a Friday.

And he again stresses that, no matter how thinly an issue was raised at a CDP, provided that it was not frivolous, it will receive de novo review, rather than the usual abuse of discretion for everything else.

Kevin Scott Bjornson, Docket No. 3615-16L, filed 4/7/17 gets CNC (Currently Not Collectible) from Appeals for seven (count ‘em, seven) tax years. The NITL IRS wanted got knocked out.

Kevin Scott claimed on his Form 12153 that he was not responsible for some or all of the taxes. But he put in no information at all as to three of the years at the CDP. As for the rest, he put in what the SO called illegible checks for one year, and information relating to employment taxes and not income taxes as to the other years. However, his financial information was enough to put Kevin Scott in CNC status.

So why is Kevin Scott on for trial next month in Seattle?

Kevin Scott says he owes less than IRS claims he owes, whether currently collectible or not.

“Thus, as we understand petitioner, he is not challenging his underlying liabilities for the years in issue by claiming that the amounts reported on his returns overstated his actual liabilities. Instead, petitioner challenges only the extent to which the taxes remain ’unpaid’. Compare sec.6330(c)(2)(A) (allowing a taxpayer to raise at a CDP hearing ‘any relevant issue relating to the unpaid tax or the proposed levy’), with sec. 6330(c)(2)(B) (allowing a taxpayer to challenge ‘the existence or amount of the underlying tax liability for any tax period if the * * * [taxpayer] did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability’). As we wrote in Freije v. Commissioner, 125 T.C. 14, 26 (2005): ‘Since an ‘unpaid tax’ is the sine qua non of the Commissioner’s authority to levy, * * * a claim directed at the status of the tax as “unpaid” is a “relevant issue relating to the unpaid tax or the proposed levy”.” Order, at p. 2.

But whether Kevin Scott owes the exact amount IRS says or not, if he didn’t raise the issue at the CDP, he’s out at Tax Court.

Except he did. IRS concedes Kevin Scott proffered some stuff for some years.

“The SO’s determination that those documents were not credible evidence does not necessarily mean that petitioner did not ‘properly raise’ the issue. Therefore, section 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs., may not have prevented us from considering the amount of petitioner’s unpaid taxes for [three of the years]. In his response to respondent’s motion, however, petitioner says nothing about any year [except one}. Therefore, petitioner has not identified any genuine dispute as to material fact in regard [four of the years]. We thus treat petitioner as having conceded the amounts of his unpaid taxes for those years.” Order, at p. 3.

So, Kevin Scott has nothing for three years out of seven. And he didn’t object when IRS sought summary J as to three of the rest.

IRS gets summary J on six years. Nothing to try next month on those.

But as to the seventh, it’s another story.

“Petitioner’s response does, however, raise a genuine dispute as to material fact in regard to [the last of the seven]–that is, the amount of the tax he owes for that year that remains unpaid. Again, the SO’s determination that the documentation petitioner submitted to her did not demonstrate uncredited payments does not prevent petitioner from bringing before us any evidence he may have in regard to his unpaid tax….” That issue is the only one remaining for consideration at the scheduled trial.” Order, at p. 3.

It’s an old story…raise every nonfrivolous issue. Raise them at the CDP. Raise them in opposition to the summary J motion.

Or as a much finer writer than I put it, “A lawyer is not to tell what he knows to be a lie: he is not to produce what he knows to be a false deed; but he is not to usurp the province of the jury and of the judge, and determine what shall be the effect of evidence—what shall be the result of legal argument.” James Boswell, A Journal of a Tour to the Hebrides with Dr. Samuel Johnson, LL.D., London, 1785.

No, not the recent television show; I’m showing my age, remembering the days, pre-Betty Friedan, when Otis Wiese devised a brilliant advertising slogan: “Togetherness, inspired by McCall’s, of course.”

If you remember McCall’s magazine in that iteration, you probably are eligible for Medicare, but the “togetherness” can be costly at any age if you amend your tax returns.

To tell you how, here’s Bradley A. Ballard and Poncella Ballard, 2017 T. C. Memo. 57, filed 4/6/17. Brad and Poncella have other problems than the one I will discuss, but hopefully your clients don’t have those. Judge Nega nails Brad for tax fraud. Poncella escapes the fraud chop, but the deficiencies are there.

For the year I wish to discuss, Brad and Poncella filed separately.

“Ms. Ballard filed timely, reporting herself as a head of household, independently supporting her three children. Mr. Ballard filed as single with no dependents. Mr. Ballard, however, filed his return nearly five months past due….” 2017 T. C. Memo. 57, at p. 4. Brad apparently never got an extension.

OK, and it was Brad who was the heavy, violating copyright by copying CDs and DVDs and hiding the loot through cash dealings and multiple bank accounts.

But the problem comes up when IRS’ auditor turns up Brad’s delicitons.

Brad and Poncella go to a professional preparer, who files amended returns as MFJ, including one for the year when they’d filed separately.

All of a sudden Poncella finds she filed late, even when she didn’t.

Judge Nega explains. “For purposes of sec. 6651, the Code assigns ‘deemed filed’ dates to the amended joint returns of couples who had previously filed separately. Sec. 6013(b)(3). By virtue of the filing of their amended … return Mr. and Ms. Ballard are deemed to have filed untimely on … the date of Mr. Ballard’s initial individual return. See sec. 6013(b)(3)(i).” 2017 T. C. Memo. 57, at pp. 8-9, footnote 2.

And neither Brad nor Poncella has reasonable cause for why Brad filed late.

Thus the professional preparer who prepared the amended MFJ return (which also understated Brad’s income, but less than Brad had done) landed Poncella with a late filing chop for Brad’s deficiency.

I know, I know…there but for the grace of you-know-Whom go any of us.

But the takeaway: When amending, if changing filing status, have a really good reason, and see if any past late filings could blow up your client. Where togetherness is, there be dragons.

A blogpost that evoked 104 views comes to an anticlimactic end, in David M. Sweetman & Laura L. Sweetman, Deceased, Docket No. 20268-12, filed 4/6/17*.

Check out my blogpost “Wow,” 7/1/16, for the backstory.

Now new counsel is in for the Sweetmans, Judge Holmes had bailed back in June last year and Judge Nega takes up the nonstory.

David Sweetman and IRS stip out the case, case dismissed as to the late Dr Laura (no probate, innocent spousery has vanished, and the minor kids apparently have nothing to say) and decision entered for deficiency and penalties amounting to $137K.

I am unstunned. It was a great story while it lasted.

*Sweetman 20268-12 4:6:17