STJ Lewis (“What a Splendid Name!”) Carluzzo reprises the Michael Jackson 1971 hit heretofore sung by the now-disgraced Judge Kroupa (see my blogpost “Got to Be There,” 5/30/14), only this time the object thereof is petitioners’ lawyer, not IRS’ lawyer.

It’s Friday in August, so you know there’ll be no opinions today from the 400 Second Street, NW, Glasshouse. The hard-laboring blogger has go through about 150 (count ‘em, 150) orders to get you, my trusty and well-beloved readers, the latest hot flashes therefrom.

So here’s STJ Lew’s designated hitter, Faith Lynn Brashear & Hendel N. Thistletop, Docket No. 13189-13, filed 8/26/16.

Faith & Hen are having a tussle with their lawyer (surprise, surprise). Their trial had been twice continued before the arrival of their attorney, whom I’ll call DJ. Now both sides (IRS and Faith & Hen) want another continuance, and DJ is asking, apparently for the second time, to be relieved.

And his reason should hardly shock any of us. “According to [DJ], petitioners have not paid his fees; according to petitioners, they have, and they are now being charged additional amounts by [DJ]. The factual disputes between [DJ] and petitioners cannot be resolved upon the submissions of the parties.” Order, at pp. 1-2.

Without seeing the engagement letter (or retainer agreement, or both, if such there be), one cannot comment. For DJ’s sake, I hope he has one, signed and in a safe place. DJ isn’t a NY lawyer, so our Rule 1215 would not apply.

But the engagement (or retainer) letter is today what steel pot and flak jacket were many years ago.

End of sermon.

STJ Lew wants all parties standing tall in his courtroom in LA, so he can take evidence and sort out whether to let DJ bail. Faith & Hen designated LA as place of trial when they petitioned three years ago. But DJ’s homeport is in Stillwater, MN.

“In his various submissions, [DJ] suggests that it would be unfair to require him to travel from Minnesota to Los Angeles for the hearing at what might turn out to be his own expense. We appreciate [DJ’s] concerns, however, he must have been aware that the place of trial in this case was in Los Angeles when he entered his appearance. Furthermore, we assume that his decision to do so was informed by the procedural history of the case as of that date, and that history strongly indicated that travel to Los Angeles was likely for a hearing or trial.” Order, at p. 2.

There has to be witnesses, evidence, confrontation and cross-examination if an evidentiary hearing is to be held. STJ Lew needs evidence beyond what DJ and Lynn & Hen have provided.

No use trying for a phonecon.

“Resolution of their factual dispute, and the pending motion, must be resolved by evidentiary hearing. That being so, to the extent that [DJ’s] supplement to his second motion requests a telephonic hearing, that request is denied.” Order, at p. 2.

The roadshow must go on. DJ, got to be there.

Maybe the Indians are not taxed, but those who gamble on their reservations certainly are.  Judge Kerrigan wastes no words in hitting Amas Canzoni, 2016 T. C. Memo. 165, filed 8/25/16.

The only reason I’m blogging Amas is that the rest of today’s output from 400 Second St., NW, is comprised of two thoroughly fact-bound innocent spouseries and a no-abuse finding in a small-claimer NOD from a CDP.

Amas files the usual protester returns, to which IRS responds with SFRs. Amas had a W-2G he never gave IRS showing gambling winnings from a casino, and those show up on the SFR.

Amas claims, in addition to the usual  “State residents not subject to Federal income tax” blather, that  …the gambling winnings from the Red Wind Casino should not be included in his income because he had losses and because they came from an Indian reservation which is not part of the United States.” 2016 T. C. Memo. 165, at p. 5.

Judge Kerrigan misses an opportunity to declare that, whether or not the Indians are “Indians not taxed,” Amas is.

She expends no electrons on that subject. His claimed losses are unsubstantiated, anyway.

When the sole shareholder of a Sub S pumps in cash to run the business, and claims it’s a loan and not a (non-deductible) capital contribution, whereof repayment is return of principal and not wages or a distribution, IRS looks for the Big 13 (count ‘em, 13) indicia that a loan was intended: (1) the names given to the documents that would be evidence of the purported loans; (2) the presence or absence of a fixed maturity date; (3) the likely source of repayment; (4) the right to enforce payments; (5) participation in management as a result of the advances; (6) subordination of the purported loans to the loans of the corporation’s creditors; (7) the intent of the parties; (8) identity of interest between creditor and stockholder; (9) the ability of the corporation to obtain financing from outside sources; (10) thinness of capital structure in relation to debt; (11) use to which the funds were put; (12) the failure of the corporation to repay; and (13) the risk involved in making the transfers.

You’ll find this list, and some cases applying the factors, at page 9 of Scott Singer Installations, Inc., 2016 T. C. Memo. 161, filed 8/24/16.

Scott made loans to his wholly-owned Sub S, of which he was the only director and officer and called all the shots. And there were no notes, maturity dates or stated rates of interest.

But Scott booked all the loans as loans, and when things were good paid some of them back. Scott sold kitchen cabinets and repaired, serviced and fitted out RVs, but the 2008 meltdown seriously cramped his cashflow, and he borrowed from friends and family and used his personal credit card to run the business.

The Sub S paid for some of Scott’s personal expenses, which he claimed were repayments of the loans.

You were expecting income tax here, weren’t you? But this is a FICA-FUTA case. Was what Scott got from the Sub S wages subject to FICA-FUTA, or repayment of loans?

Judge Vasquez doesn’t go out on a limb here. “Petitioner does not object to respondent’s determination that Mr. Singer was its employee for the years at issue, and the evidence clearly supports such a finding.  As president of the company, Mr. Singer was petitioner’s only officer.  Furthermore, he performed substantial services for petitioner.  Accordingly, we find that Mr. Singer was an employee of petitioner for the years at issue.” 2016 T. C. Memo. 161, at p. 8.

So Scott is up for the FICA-FUTA, right? Just run the checklist.

Not quite.

“Rather than analyze every factor on the debt-equity checklists, we confine our discussion to those points we find most pertinent.  In our analysis we look at the relative financial status of petitioner at the time the advances were made; the financial status of petitioner at the time the advances were repaid; the relationship between Mr. Singer and petitioner; the method by which the advances were repaid; the consistency with which the advances were repaid; and the way the advances were accounted for on petitioner’s financial statements and tax returns.  After looking at all these criteria in the light of the other factors traditionally distinguishing debt from equity, particularly the intent factor, we believe Mr. Singer intended his advances to be loans and we find that his intention was reasonable for a substantial portion of the advances.  Consequently, we also find that petitioner’s repayments of those loans are valid as such and should not be characterized as wages subject to employment taxes.” 2016 T. C. Memo. 161, at pp. 10-11.

Scott always booked the loans as such, the Sub S paid back by paying Scott’s personal expenses consistently and timely, and, most importantly, the Sub S was paying Scott’s expenses even when it was running at a loss.

A creditor gets paid – win, lose or draw.  One making a capital contribution, as IRS claims Scott did, only gets paid if the operation makes money.

When the business was doing well (and it did do well before 2008), Scott had a reasonable expectation of repayment, so the loans for those years are loans. And the loan balances outstanding in the good years were greater than the amounts repaid, so no distribution.

But the post-2008 loans weren’t: Scott had little to no chance of repayment.

Scott wins.

And once again acknowledgement to James R. Monroe, Esq.  See my blogpost “When You’re Down and Out – Part Deux,” 6/28/16.

Not big dollars here, so maybe no appeal, but if I were IRS I’d go for it.

I’m sure I’d not be the only listener applauding Judge Mark V. Holmes if he joined Petula Clark, Astrud Gilberto, Frank Sinatra and Frankie Valli on youtube.com and began singing the eponymous tune above-captioned.

In default thereof, The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Illustrious, Incontrovertible, Indefatigable, Imperturbable, Ineluctable and Ineffable Foe of the Partitive Genitive, and Old China Hand, addresses his request in writing to Rosie Lawler, Docket No. 16712-13, filed 8/24/16.

Rosie wants innocent spousery, and IRS is willing to give her some, but Rosie wants the whole enchilada.

Rosie thinks Judge Holmes gave her that, but she’s confused by Tax Court’s docket squad’s somewhat arcane legal phraseology.

“The IRS reported by the end of last year that a settlement was near, because it was willing to grant her partial relief. Ms. Lawler then refused to sign a decision document, because she claimed that a previous order of the Court…somehow granted her full relief. The Court will concede that its prior order is confusing — it granted what the Docket Section titled Ms. Lawler’s ‘Motion for Leave to File Amendment to Amended Petition, as Amended Embodying the Amendment to Amended Petition, as Amended.’ But, to a trained eye, this just means that the Court was allowing Ms. Lawlor to amend her petition to ask for innocent-spouse relief. It does not mean that the Court had decided to grant her full relief.” Order, at p. 1. (Emphasis by the Court).

I’ll confess that title confused me.

OK, so does Rosie want to take the partial win, or continue to go for the gold?

Judge Holmes attempts to put that question to Rosie, but as the old chewing gum commercial put it, “she ain’t talkin’ while the flavor lasts.”

“Since earlier this year, this division has tried to set up a telephone call with Ms. Lawler to try to explain this. She has steadfastly refused to do so. The Court will therefore add her case to its next calendar in Birmingham for a status conference. If she refuses to appear to discuss her case then, the Court will invite the IRS to move to dismiss it for her failure to properly prosecute.” Order, at p. 2.

Rosie, ya should’a called the Judge. Judges, like IRS, get peevish when ignored.

As my longer-term readers know, I have a love-hate thing with continuing ed. We certainly need refreshers, especially as we have reverted to the pre-1939 annual Revenue Acts, where laws sunrise and sunset like the Bock and Harnick tune of that name.

But there’s a lot of junk CLE and CPE out there. And the overseers of the process sometimes get taken as well as the eductaees.

I understand AICPA and NASBA have enacted the following restriction on self-study CPE courses: “S9-06. Program or course expiration date. Course documentation must include an expiration date (the time by which the participant must complete the qualified assessment). For individual courses, the expiration date is no longer than one year from the date of purchase or enrollment.” The Statement on Standards for Continuing Professional Educational (CPE) Programs Revised August 2016, at p.13.

That’s all very well for CPAs. My CPE provider, which does CPE for EAs like me as well as for CPAs, dropped two of the courses for which I’d paid thirteen months ago or so, but hadn’t completed. I reminded them that the AICPA/NASBA rules don’t apply to EAs who aren’t CPAs, and neither OPR nor RPO has similar rules.

And both courses had the PATH 2015 updates in them.

Given that EAs need 72 hours’ CPE triennially, with at least 16 hours each year in the triennium, it makes sense to buy courses on sale when the area isn’t likely to change for one year (e.g., divorce, education). I hope neither OPR nor RPO blindly follows the AICPA lead.

This trend looks like the old textbook scam. Every year the authors “update” the textbook by adding a paragraph here and there, and charging a couple hundred bucks (hi Judge Holmes) for the new edition. Students who of necessity must buy or sell “used” textbooks are out of luck. And the authors, as my UK clients say, are “quids in.”

I’m not denigrating all CPE. I find that I learn every day, and a good course is well worth the time, effort and money. My provider’s AMT course was worth the price. To repeat something I said a long time ago, I agree that snoring through an in-person class, or taking an on-line test, will not of itself rid our fields of endeavor of every bad actor; but it is at least a start.

Only, while trying to improve all CPE, let’s not make it a racket.

If your preparer fails or refuses to give back your records or show up for trial, you may have your deductions scuppered, but still avoid the negligence chop.

That’s the story for Johnnie C. Walker, 2016 T. C. Memo. 159, filed 8/23/16.

Johnnie folded her single-member LLC ambulance company, and stored her records in a storage unit that got opened and dumped for nonpayment of rent. She had given her accountant copies, from which said accountant prepared Johnnie’s timely returns for two years, and late return for a third year.

When IRS socks Johnnie with heavy-duty deficiencies, Johnnie asks for her records back. Getting nothing, her attorney tries, and Judge Pugh even holds up trial for a month to await the outcome of the tug-of-war. Alas for Johnnie, at close of play she is relegated to the Michael Corleone gambit.

The deficiencies arose when IRS disallowed Johnnie’s vehicle expenses and legal and accounting fees. You’re right, Section 274 doesn’t apply to ambulances or to legal and accounting fees.

Judge Pugh: “Ambulances used in a trade or business are excluded from ‘listed property’ as defined in section 280F(d)(5)(B)(i) and thus not subject to the strict substantiation rules.  Similarly, legal and professional services expenses are not subject to the strict substantiation rules.  See sec. 274(d).” 2016 T. C. Memo. 159, at p. 6.

Johnnie loses the vehicle stuff anyway. She has zero records and no reconstruction, so Cohan doesn’t help, and IRS claims whatever it allowed Johnnie for contract help (drivers who drove her ambulances or their own) covers all that and the $400 per week gas money she gave them. Judge Pugh agrees.

Johnnie did OK on the witness stand as to legal and accounting. “Petitioner credibly testified that the deduction for legal and professional services expenses…incurred to hire a consultant and a bookkeeper….  On the basis of her testimony, and considering the nature of these expenses in the context of her business, we hold that her testimony is sufficient to satisfy the requirements of section 162 and to support the claimed deduction.” 2016 T. C. Memo. 159, at p. 8.

IRS wants the chop for the one late year, and Johnnie has nothing except that she thought the missing accountant got an extension, which s/he didn’t, so IRS gets that chop.

But Johnnie escapes the negligence and substantial understatement chops.

“Petitioner credibly testified that she gave [her LLC’s] receipts and other records to her accountant and relied upon her accountant to calculate and report her [years at issue] Federal income tax liabilities properly.  Considering the nature of her business and our observations as to her ‘experience, knowledge, and education’, we conclude that her reliance was reasonable.  Therefore, we hold that petitioner is not liable for the section 6662(a) accuracy-related penalties for the years in issue.” 2016 T. C. Memo. 159, at pp. 11-12 (Citations omitted).

Takeaway- Backup doesn’t only apply to vehicles. It goes double for business records.

No, this is not about legal ethics, law practice management or continuing legal education. This is how to draft an employment discrimination complaint so as to get the most bang for the buck, taxwise.

The lawyer who drafted the employment discrimination complaint for Abraham J. George, 2016 T. C. Memo. 156, filed 8/22/16, got it right.

AJ complained he was harassed by his fellow car salespeople on account of national origin. He got another job, claimed he had no economic injury, and so his $45K from his previous employer’s insurer must have been for physical injury. Except he never pled that with specificity. And mental suffering is a Section 104 nonstarter.

He tried arguing State law, and IRS and AJ disagree about what State law says, but Judge Lauber says “mox nix.” We all know that when it comes to tax treatment, Federal law governs. “Although State law determines what rights a person has vis-a-vis a particular item of property, the proper characterization of those rights for Federal income tax purposes is governed by the Internal Revenue Code. See United States v. Nat’l Bank of Commerce, 472 U.S. 713, 722-723 (1985).” 2016 T. C. Memo. 156, at p. 10.

Of course the stip AJ signed when he got the payout was the usual broad-spectrum, kitchen-sink release of and for all that is, seen and unseen.

IRS hits AJ for the $45K, and Judge Lauber is down with that.

But AJ forked over $15K to his trusty attorney. IRS says ”OK, Section 212 expense for production of income, therefore Sched A, 2% AGI floor.”

Negatory, says Judge Lauber (only a lot more formally). It’s above the line, and goes to reduce AGI. Check out Section 62(a)(20).

And no, I never heard of it either, but obviously AJ’s crafty lawyer did.

“Section 62(a)(20) allows an above-the-line deduction for attorney’s fees and court costs paid by a taxpayer in connection with any action involving a claim of  unlawful discrimination.  Section 62(e) defines ‘unlawful discrimination’ to include (among other things) acts that are unlawful under ‘Section 703, 704, or 717 of the Civil Rights Act of 1964 (42 U.S.C. 2000e-2, 2000e-3, or 2000e-16).’  These sections refer to unlawful employment discrimination on account of race, color, religion, sex, or national origin.  The amount of the deduction cannot exceed the amount includible in the taxpayer’s gross income for the taxable year on account of a judgment or settlement resulting from such claim.  Sec. 62(a)(20) (last sentence).” 2016 T. C. Memo. 156, at pp. 10-11.

And here’s the takeaway for you tort types to plug into your checklists and adjust your forms.

“Petitioner’s complaint alleged discrimination on account of national origin and referenced the relevant provisions of the 1964 Civil Rights Act.  The settlement agreement specifically stated that it applied to claims for compensation ‘with respect to the employment relationship and termination thereof.’  We conclude that petitioner paid legal fees to secure a settlement of his claim for unlawful employment discrimination, and section 62(a)(20) thus entitles him to an above-the-line deduction of $15,000 for his legal fees.” 2016 T.C. Memo. 156, at p. 11.

“Compare and contrast,” as the old college essay questions used to read, the various forms of frivolity encountered here in United States Tax Court. Well, here are Judge Pugh and The Judge With a Heart, STJ Armen, each with a possible frivoller on hand, and the approach taken by each may be instructive.

First up, Judge Pugh, and Kenton R. Fleming, Docket No. 26391-14. Filed 8/19/16, undesignated. If something here rings a bell, check out my blogpost “Is There a Doctor in the House,” 10/16/14. Kenton R. had some physical ailment and Judge Morrison granted him a continuance.

But Kenton R. still had lost a Rule 91(f)(2) motion back then. And his batting average in the Rule 91 department hadn’t been great before then, either. “In Dkt. nos. 8814-10, 27608-10, and 14386-11, petitioner failed to respond to an Order to Show Cause under Rule 91(f), dated December 18, 2012. By Order date January 15, 2013, the Order to Show Cause was made absolute and the facts and evidence set forth in respondent’s proposed stipulation of facts, including stipulations regarding petitioner’s employment with SPSU, were deemed to be established for purposes of those cases.” Order, at p. 2, footnote 2.

SPSU is Southern Polytechnic State University, which my sources tell me is now part of Kennesaw State University, in Marietta, GA.

Kenton R.’s current Rule 91 problems are dealt with seriatim (as my already-on-their-way-to-the-ballgame colleagues would say). “Petitioner’s objections do not raise any reasonable factual disputes for purposes of Rule 91. His primary objections are based on his arguments that he has zero tax liability and no filing obligation. While he may dispute whether respondent’s [IRS’] actions were legally correct, he may not fairly dispute whether respondent took those actions. It is understood that he does not agree with the actions represented by those documents; and we do not consider stipulation to be a concession that the actions were proper.” Order, at pp. 1-2.

And objecting to IRS transcripts as hearsay does not mean that they are not actual records. Admissibility is a question for trial…if it gets that far. And Judge Pugh gives Kenton R. a reservation on that point, so he can duke it out with IRS.

Likewise, he doesn’t need to stip that he was an employee of SPSU, but if he can’t show facts different than the three (count ‘em, three) times a Rule 91 order said he was, he’s looking at a Section 6673 red card.

Kenton R. does get a bye. “For certain stipulations, petitioner proposed different wording. That negotiation should have occurred before respondent’s motion to compel was filed. We infer from the record that petitioner did not provide a working telephone number to respondent despite our order to do so. Nonetheless we will not require petitioner to stipulate that assessments were ‘in error’ in stipulations 11 and 12. Respondent’s proposed stipulation 15 that ‘Respondent maintains his position’ as to the deficiencies owed is not a fact to be established at trial; therefore we will not compel stipulation of that statement.” Order, at p. 2.

Read those stipulations, practitioner. IRS, like every litigant, will try to steal a base.

But Kenton R. already got a Section 6673 chop in a prior case. So he’d best watch his legal arguments.

STJ Armen is a lot tougher on Joshua Wade Bettar, 19633-15S, filed 8/19/16. He socks JW with a $500 Section 6673 chop over a $1540 deficiency, and tosses his case for failure to state a claim (Rule 40).

STJ Armen: “There is neither assignment of error nor allegation of fact in support of any justiciable claim. Rather, the petition appears to be merely an expression of protest and contains nothing but frivolous and groundless arguments. Under the circumstances, there is no need to catalog petitioner’s arguments and painstakingly address them.” Order, at p. 2.

And STJ Armen throws in the Crain “somber reasoning and copious citation of precedent” line, of course.

Notwithstanding the instances wherein I have blogged STJ Armen’s benevolence to the deserving, JW must have really gotten to him.

“Petitioner’s position, as set forth in the petition, consists of tax protestor rhetoric. Based on well-established law, petitioner’s position is frivolous and groundless.

“We are also convinced that petitioner instituted and maintained this proceeding primarily, if not exclusively, for purposes of delay. Having to deal with this matter wasted the Court’s time, as well as respondent’s. Moreover, taxpayers with genuine controversies may have been delayed.” Order, at p. 3.

I don’t know what JW put in his petition, but whatever it was, I suggest one would do well to avoid repeating it. At least in STJ Armen’s division.

There are a couple these on the Tax Court bench, one of whom is The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Incontestable, Incontrovertible, Ineluctable, Indefatigable and Imperturbable Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes.

In UK courts-martial, the “prisoner’s friend” is the defending officer. Here, it’s Judge Holmes trying to help Eugenio Espinoza Martinez, Docket No. 29472-12, filed 8/18/16.

Remember Eugenio? I almost forgot him as well, until I scoped out my blogpost “Hitting the Superfecta – Part Deux,” 3/16/16.

Facts are same as before. Eugenio still guest of TX, he’s not going anywhere soon, and he hasn’t got any documents for his Sched C and Sched A deductions.

IRS wants summary J, but there are fact questions.

“Prisoners routinely exercise their right to petition Tax Court to challenge notices of deficiency. And, despite the undoubted problems of conducting litigation from behind bars, we do try to develop and resolve cases instead of continuing them until the end of an inmate’s sentence — which of course may never come. See, e.g., Rader v. Commissioner, Docket No. 7952-12S (serial killer serving 10 consecutive life sentences); “BTK Sentenced to 10 Life Terms,” CNN (Aug. 18, 2005), http://www.cnn.com/2005/LAW/08/l8/btk.killings/.” Order, at p. 2 (Footnote omitted).

Because moving State prisoners to Federal Court is expensive, and the deficiency here is $5K, Judge Holmes wants IRS and Eugenio to do a Branerton stipulation and agree as far as they can. Eugenio complains about his hard life behind Texas bars, so IRS’ facts are deemed.

It takes Eugenio a couple years (we’re in Judge Holmes’ courtroom), but finally “(H)e filed a supplemental response that did go through the respondent’s motion point by point. He also stressed again he had pleaded and argued that he had not even filed a return for [second year at issue].” Order, at p. 7 (misnumbered as page 2).

Income is no contest. Eugenio doesn’t deny he received what IRS claims in either of the years at issue. So summary J to IRS on that point.

As to the deductions for the first year at issue, IRS moved Eugenio’s Sched C items to Sched A, but that doesn’t change the numbers. However, Eugenio claims under penalty of perjury he had unreimbursed employee expenses. That’s a fact question, so no summary J to IRS.

As to Eugenio’s Sched A deductions and the dependent exemption for the second year at issue, “He completely disavows the return that the IRS received as having been prepared and filed without his consent. He does not contest in pleadings or on this motion the income reported by his employer, but he does, in the end, contest the disallowance of the reported Schedule A deductions. And on the issue of his entitlement to a dependency exemption for his aged mother for the [second year at issue]. The Commissioner points to Mr. Martinez’s letter to the Commissioner where he stated that ‘I cannot support my contentions that I am entitled to these deductions.’ We agree that this is an admission that Mr. Martinez cannot support his claim; his response to the summary-judgment motion raises no genuine dispute to the contrary. If Mr. Martinez is to be believed, and on a motion for summary judgment we have to assume he would be, he filed no return for that year. But if he filed no return, it means that he himself did not claim any exemption for his mother or any Schedule A deductions. Even though he says that his mother was a dependent that year, he concluded that ‘whomever made such decision to include her as a dependent was done in the process of fraud.’ Respondent prevails on both these issues as well.” Order, at p. 8.

So IRS can talk to Eugenio about the first year at issue (I’m sure they know where to find him), try once more to stip their way out, but if they can’t, let IRS tell Judge Holmes whether they want to keep fighting, and how to do so.

This case affords the practitioner who represents the incarcerated a good checklist for doing so. Read all the orders.

This is a week for non-adjustments. First came Mark L. Nebeker; see my blogpost “I Don’t Want To Get Adjusted,” 8/16/16, Now comes Judge Tamara Ashford to wave off Allied Adjustment Services, Inc., Docket No. 23849-14L, filed 8/17/16, with a designated hitter.

Allied is fighting liens and a levy involving income and employment tax liabilities, which fight began four years ago. After successive NODs blowing off Allied’s CDPs and a remand with a Supplemental NOD, Allied, seeing the interest snowballing and cascading, pays up.

IRS says, “OK, dismiss as moot, we’ve got nothing to collect.”

Allied says, “we wuz robbed, and we want to fight, and we only paid up to save on the interest.”

Judge Ashford: “Given the limitations on our jurisdiction in lien and levy actions under section 6230(c) and 6330(d), the relief that we can provide to a petitioner in adjudicating such actions is limited, amounting to giving a ‘thumbs-up or thumbs-down’ on whether respondent may proceed with the collection action in question. If we find that the existence and amount of the underlying tax liability is correct and Appeals’ determination did not constitute an abuse of discretion, we may uphold the determination and sustain the collection action. If we find that the existence and amount of the underlying tax liability is incorrect or that Appeals’ determination constituted an abuse of discretion because of Appeals’ failure to consider relevant information or for some other reason, we may, as the Court did earlier in Docket No. 12037-13L, remand the case for further consideration by Appeals, or reject Appeals’ determination and overrule the collection action.

“As a result, if subsequent to the filing of a petition in this Court commencing a lien and levy action under section 6230(c) and 6330(d), respondent no longer intends to pursue collection of the outstanding tax liability by levy and has released the applicable lien, then there is no further relief that we are able to grant under sections 6320 and 6330 and the case must be dismissed as moot, even if the petitioner maintains some dispute regarding the propriety of the liability.” Order, at pp. 5-6.

So after four years. Allied can file for a refund and sue in USDC or USCFC. If they can afford it.

Great result…yeah, right.