No, not Tommy Hardy’s 1878 Venn diagram (beloved pun of my high school days), rather we have Judge Holmes viewing the scene of the conservation easement in another designated hitter concerning Anthony M. Kissling & Suzanne R. Kissling, Docket No. 19857-10, filed 7/24/15.

IRS wants The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a the Inveterate, Indomitable, Irrefragable, Illustrious, Indefatigable, Implacable Foe of the Partitive Genitive, and Old China Hand, to check out the properties, and Tony and Suz don’t object.

“This case has only one issue — the value of conservation easements – and the first motion is to have the Court visit the properties to see what they look like, which might help in placing later testimony in context. The Kisslings don’t object and the general rule is that judges in a bench trial may view the property – the viewing is a form of evidence — as long as both counsel attend.” Order, at p. 1. (Citations omitted).

Anyway, the trial is in Buffalo, NY, the properties are there, so no biggie.

But what Judge Holmes said next surprised me.

“The Court thinks a viewing is especially useful in this case — the judge trying the case is a native of the area and is wary of letting his general knowledge displace the specifics of the building and neighborhood at issue.” Order, at p. 1.

Judge, I thought you were a native of Brooklyn, NY. But maybe that’s because of Holmes v. US, Dockets 95-6009. 95-6103, wherein is stated that you leased an apartment in the St. George Hotel in Brooklyn, right out of law school. I’d hoped to subtitle this blogpost “But a Judge Grows in Brooklyn.” Thwarted, alas. Funnily enough, I did work for the cooperative housing corporation that owned the building some years later.

Back to taxes.

IRS also wants to toss two experts’ reports that Tony and Suz want in.

One report involves the costs of keeping up an easement-encumbered property. I can testify from my own experience that these costs are not insubstantial, if the enforcer, be it municipal or not-for-profit, takes the job seriously. And the issue whether our old chum the National Architectural Trust is more likely to play enforcer than the City of Buffalo rings true to Judge Holmes’ ear.

I haven’t been in Buffalo in more than ten years, but when last I visited it wasn’t exactly preservationists’ Heaven.

And just because the expert quotes others, that doesn’t make him a mere conduit for the opinions of others. He brings his own experience and knowledge to the mix.

IRS wants the valuation expert’s report tossed, because it didn’t comply with Rule 143(g)(1), the expert’s report checklist.

“The Court’s review of this report shows that this is not true. Part of the report is [expert]’s appraisal of the ‘before’ value of the properties using the income approach. The Court may or may not ultimately find it persuasive, but even the Commissioner notes that it is one of the generally accepted ways to appraise rental properties. We might also agree with the Commissioner that [expert]’s 2004 estimation of the properties’ ‘after’ value — which was then (when the case was still before IRS examination) based on reports of percentage reductions in value in other cases — was not ‘helpful,’ but [expert] then did a more detailed analysis in 2007. That addendum is part of his present report. Maybe the Commissioner is right that this addendum is little more than a post hoc rationalization; maybe the Kisslings are right that if [expert] finds a discount –after doing a property-specific analysis — that falls in the range of discounts established in other cases it only strengthens his conclusion.

“But that dispute must await trial on the merits: The report as it now stands meets the criteria of Rule 143(g), Tax Court Rules of Practice and Procedure.” Order, at p. 3. (Name omitted).(Emphasis by the Court).

Did [expert] draw back from the Primoli percentage precipice? What will the native find upon his return?

Who needs Thomas Hardy when we have The United States Tax Court?

JOAN. Thou are a rare noodle, Master. Do what was done last time is thy rule, eh?

G. B. Shaw, Saint Joan, 1920

A designated hitter from Judge Halpern brought to mind Joan of Arc’s retort to Canon de Courcelles. This is Leroy Loudermilk a.k.a. Lee Loudermilk, Docket No. 12054-11, filed 7/23/15.

Lee is griping over IRS’s desire to nail him for transferee liability without having first pursued the transferor in the give-and-go he set up to dispose of the assets in his C Corp, while not paying corporate tax. The usual.

Of course, State law controls, and the Shockley case (see my blogpost “Gude Faith, He Maun Fa That”, 6/22/13) would sink Lee’s argument if Illinois follows Wisconsin.

Judge Halpern isn’t going there, because IRS told enough of its tale of woe to convince Judge Halpern that Lee has the bucks.

To bolster his case, Lee calls on Robert McKenzie, ex-IRS chaser of defaulting rogues. Robert is going to testify based on his report, as an expert.

IRS of course moves to toss Expert Robert McKenzie.

“The report continues that, specifically, Mr. McKenzie will testify that, before proceeding against petitioner, the IRS should have made additional collection efforts against Midwest and its successors. The McKenzie report is 23 pages long. Two plus pages recite his qualifications. Two pages recite the facts he relied on in forming his opinion and the documents he reviewed. Two plus pages list additional efforts that he believes the IRS should have taken to collect the debt from the transferor and others. Thirteen pages recite numerous cases, statutes, regulations and provisions of the Internal Revenue Manual as the basis of his opinions. Finally, two plus pages, under the heading ‘Conclusion/Summary of Opinion’, express again all the things that the IRS should have done and express his opinion ‘that the IRS should have taken further steps to confirm the transferor’s inability to pay before seeking transferee liability against Loudermilk.’” Order, at p. 4.

“Principally, respondent argues that the McKenzie report will not assist the Court because, in the main, it does not help us to understand the evidence or determine a fact in issue, but, rather, it is a prohibited intervention into the function of the Court to draw legal conclusions; i.e., what are reasonable collection efforts. We agree. While perhaps the report contains a fine listing of collection efforts that the IRS could have taken, Mr. McKenzie’s conclusion that the IRS’s efforts ‘do not meet the standard of ‘reasonable efforts’ seems to hinge on just that, what the IRS could have done. Whether what it did do is sufficient is (if relevant) another story. Respondent is right. Without reference to external standards of reasonableness for the sufficiency of collection actions, Mr. McKenzie’s opinion is simply that, his opinion. As described below, based on his experience, we might receive his testimony as to industry practice, but, without more, we will not accept his testimony as to the reasonableness of the IRS’s collection actions.” Order, at p. 5.

Well, what is “industry practice”?

“What is reasonable can be informed by what is customary or usual practice. (‘What usually is done may be evidence of what ought to be done * * *’); (evidence of usual business practice relevant in determining whether contract performance was commercially reasonable). And experts may testify to usual business practice based on their specialized experience. Although we shall grant the motion in limine, there is still time pursuant to our standing pretrial order for petitioner, if he wishes, to submit Mr. McKenzie’s report as to industry practice. Although our rules contemplate that, if the Court permits, a witness may testify as to industry practice without a written report, see Rule 143(g)(3), we think that here, in fairness to respondent, if Mr. McKenzie or any other witness is to testify as to industry practice, a written report complying with Rule 143 is required.” Order, at p. 5 (Citations omitted).

Industry practice is “do what was done the last time,” rare noodle.

Isn’t Good Enough

At least for valuing real property for tax purposes, according to Judge Vasquez in Estate of John A. Pulling, Sr., Deceased, 2015 T. C. Memo. 134, filed 7/23/15. And I agree that “Estate of X, Deceased,” is a tautology, as only dead people have estates.

IRS wanted to argue that the late John A.’s tree farms in the Sunshine State were worth a mint, because they could be assembled with other property in which the late John A.’s friends and family owned the majority interest, and he a minority interest.

But the friends and family had turned down a chance to sell out before, and there was no evidence that any likely suitors were hovering.

Besides, merely because one owns jointly with friends and family doesn’t mean that the parties uniformly agree on everything. (Thanks to whatever gods there be, for friends and familes squabbles have kept me eating for many years.)

State law determines property rights, and Federal law determines how these are taxed. Federal law permits taxing on “reasonable probability” that property may have a better economic value if used otherwise than at present.

“If a special or higher use of the land is only possible when it is combined with other parcels, we may consider that special use, but ‘there must be a reasonable probability of the lands in question being combined with other tracts for that purpose in the reasonably near future.’” 2015 T. C. Memo. 134, at pp. 12-13. (Citation omitted).

But merely because friends and family own a majority interest in lands wherein taxpayer owns a minority interest doesn’t mean they’re all hot to sell.

“Both parties’ experts opined that assembling the estate’s property and [friends and family]’s property would yield the greatest economic benefits, and we agree. However, using that fact as evidence that combining of the properties was reasonably likely places the cart before the horse. The economic benefits of assemblage can only come into consideration once we have established that assemblage is otherwise reasonably likely. The only evidence in the record, however, suggests that assemblage was not likely.

“First, [friends and family] has had at least one prior offer to sell its property as part of a residential development, but it declined the offer. This fact tends to show that [friends and family]’s stakeholders were not interested in selling the property just because it would have been in their economic interests. Moreover, both parties’ experts testified at trial that they would not recommend to a hypothetical buyer of the estate’s property that he purchase the land as a possible investment. Not even respondent’s expert [IRS]’s believed that assemblage was certain enough to recommend purchase to a client.” 2105 T. C. Memo. 134, at pp.14-15.

Ultimately, while relativity may rule the universe, it doesn’t rule property valuation for estate tax purposes.

“The mere fact that they are related to decedent is not enough. See Estate of Bright, 658 F.2d at 1006 (rejecting application of family attribution for purposes of valuing property for estate tax purposes); see also Minahan v. Commissioner, 88 T.C. 492, 499 (1987) (‘It has been noted that the Congress has explicitly directed that family attribution or unity of ownership principles be applied in certain aspects of Federal taxation, and in the absence of legislative directives, judicial forums should not extend such principles beyond those areas specifically designated by Congress.’).” 2015 T. C. Memo. 134, at pp. 16-17. (Footnote omitted, but it says the Bright case is Golsenized onto this case).

So, like my Hong Kong investor of long ago, who pored over a proposed deal for a long time, murmuring “it might be, it could be, it could be, it might be,” and walked away, Judge Vasquez does likewise.

CSTJ Peter Panuthos is befogged by IRS’s counsel’s riding off in two directions at once, and I must say I’m equally befogged. Hence this headline.

I don’t know how James B. Cannon & Jeanmarie Cannon, Docket No. 30077-14SL, filed 7/22/15, feel about this, but if they’re as confused as CSTJ Peter and I, I wouldn’t be surprised.

Ya see, IRS moved to dismiss Jim’s & Jean’s petition off a NOD because Jim & Jean didn’t timely request a CDP. OK, no biggie, so let’s look at the mailing dates.

But IRS then “…filed a motion for summary judgement. In his motion respondent [IRS] asserts that the underlying liability is not in issue and further, that as a matter of law respondent did not abuse his discretion in that petitioners have not requested a collection alternative.” Order, at p. 1. (Emphasis by the Court).

By now my readers, those few, those happy few, know to respond to such an anomalous move with “Mein! Was ist das?”

CSTJ Peter is more demure. “The Court is perplexed by respondent’s position in this case. The filing of respondent’s Motion for Summary Judgment presumes jurisdiction in this case and would appear to be entirely inconsistent with the position taken in the motion to dismiss for lack of jurisdiction.” Order, at p. 1.

So, IRS, are you dropping the “no jurisdiction, so dismiss” motion? Or are you saying the two are consistent?

If the latter, please explain how a court can grant a motion when it has no jurisdiction.

Or more simply: is you is, or is you ain’t?

That’s a consolidated reporting  NOL, per Judge Ruwe, and you can read all about it in Marvel Entertainment, LLC, 145 T. C. 2, filed 7/21/15.

Marvie’s predecessor consolidati filed Chapter 11, and blew off some debt, giving it COD. Taking a short year, some members didn’t recognize the COD, but reduced their NOLs pro rata, per Seciton 108(b)(2)(A).

IRS says no, you can’t split up the Consolidated Net Operating Loss (CNOL), it’s all-in.

Judge Ruwe crystallizes: “Whether the NOL to be reduced under section 108(b)(2)(A) is the entire CNOL or an allocable portion of the CNOL is the sole issue for resolution in this case..” 145 T. C. 2, at p. 14.

IRS says the Supremes decided this years ago, in United Dominion Industries, 532 US 822 (2001).

Marvie says no, got nothing to do with that.

Judge Ruwe: “The Court explained portions of the consolidated return regulations pertaining to consolidated taxable income and CNOL as follows: ‘Under Treas. Regs. §§1.1502-11(a) and 1.1502-21(f), an affiliated group’s “consolidated taxable income” (CTI), or, alternatively, its “consolidated net operating loss” (CNOL), is determined by “taking into account” several items. The first is the “separate taxable income” (STI) of each group member. A member’s STI (whether positive or negative) is computed as though the member were a separate corporation (i.e., by netting income and expenses), but subject to several important “modifications.” Treas. Reg. § 1.1502- 12. These modifications require a group member calculating its STI to disregard, among other items, its capital gains and losses, charitable-contribution deductions, and dividends-received deductions. Ibid. These excluded items are accounted for on a consolidated basis, that is, they are combined at the level of the group filing the single return, where deductions otherwise attributable to one member (say, for a charitable contribution) can offset income received by another (from a capital gain, for example). Treas. Regs. §§ 1.1502-11(a)(3) to (8); 1.1502-21(f)(2) to (6). A consolidated group’s CTI or CNOL, therefore, is the sum of each member’s STI, plus or minus a handful of items considered on a consolidated basis.” United Dominion, 532 U.S. at 826.

I am reminded of Thomas Hobbes’ famous remark in Chapter VIII of Leviathan (1651): “When men write whole volumes of such stuffe, are they not Mad, or intend to make others so?”

I’ll try plain English. There’s only consolidated NOL for consolidati, nothing else. Ya can’t mix-and-match.

But if this sort of thing is really what does it for you (in which case I can but shrug my shoulders), you can read all 36 pages of Judge Ruwe’s exposition of the foregoing.

.com – Part Deux

Here’s a reprise of an oldie but goodie, my blogpost “Stamp Out Stamps.com,” 10/23/14, brought once again into my ken by the author of the order in my aforementioned blogpost, The Judge With a Heart, STJ Armen.

You’ll remember that poor old Joe Sanchez relied on a friend with a computer and stamps.com, which produced a mark dated the last day of the magic 90, but the USPS overrode that with a legible mark one day later, relegating Joe to Outer Darkness, with weeping, wailing and gnashing of clichés.

Well, today comes Robert H. Tilden, Docket No. 11089-15, filed 7/20/15, playing the stamps.com gambit, and he survives to fight another day—maybe.

Bob claims “a Stamps.com ‘postmark’ is ‘evidence of a timely filed petition pursuant to Reg. §301.7502-1.’ Order, at p. 1.

The magic last day of the 90 was April 21. STJ Armen takes it from there.

“The ‘Petition For Redetermination Of Deficiency (Regular Tax Court Case)’ was received by the Court in the late morning of Wednesday, April 29… and filed shortly before noon on that day. The petition was sent via the U.S. Postal Service (USPS) by first-class mail. The envelope containing the petition bears a mailing label with a ‘postmark’ by ‘Stamps.com’ of April 21…. The envelope also bears a ‘certified mail’ sticker with a 20-digit tracking number (the tracking number).

“Because of the aforementioned tracking number, the USPS website provides tracking information regarding the flow of the petition through the USPS mail system from arrival through delivery. Thus, the first entry reflects an arrival date and time of April 23… at 2:48 p.m. at USPS facility in Salt Lake City, UT 84199, and the last entry reflects a delivery date and time of April 29… at 11:02 a.m. at Washington, D.C. 20217. (The latter ZIP Code, 20217, is the Court’s dedicated ZIP Code.). Order, at p. 2.

IRS moves to toss Bob’s petition, citing the USPS Tracking Number as showing real mailing April 23, two days late.

Bob parries with “…the envelope containing the petition ‘bears a postmark date within the time for filing’, citing section 301.7502-1(c)(1)(iii)(B), Proced. & Admin. Regs., regarding ‘Postmark[s] Made By Other Than U.S. Postal Service’ for the proposition that a postmark ‘which, although not made by the U.S. Postal Service still complies with the timely mailing/timely filing rules of I.R.C. §7502.’ Order, at pp. 2-3.

STJ Armen wants a reply from IRS on the subject. I can imagine what it will be. And where Bob’s petition is going.

But Bob gets a Taishoff “good try, first class” nevertheless.

This is, as I have said many times, a non-political (by which I mean nonpartisan) blog. If anyone desires to wallow in the toxic filth that passes for partisan politics, let him or her go elsewhere, with my deepest sympathies.

I must say, however, that as a war veteran who was not, by the grace of God, a prisoner of war, I really do not care whether or not Donald (“five deferments”) Trump likes me or not.

I was about to use rather tougher language, but remembered that this blog is meant for family reading.

I didn’t blog David C. Costello and Barbara A. Costello, 2015 T. C. Memo. 87, filed 5/6/15, when it first appeared, because it seemed to be the usual defectively-appraised charitable easement. I was getting bored with the tax dodges wrapped in sylvan wilderness, or plastered on historic façades.

But Judge Lauber, that scholar of classics at Cambridge, has an interesting riposte to Dave and Barb when they seek Rule 161 reconsideration in David C. Costello and Barbara A. Costello, Docket No. 24995-12, filed 7/17/15.

The Quick gambit is played to open. “’Reconsideration is not the appropriate forum for rehashing previously rejected legal arguments or tendering new legal theories to reach the end result desired by the moving party.’ Estate of Quick, 110 T.C. at 442.” Order, at p. 1.

Dave and Barb were trying to duck the 40% substantial overvaluation chop, alleging Section 6664 cover.

But the appraisal submitted with their return wasn’t qualified, and IRS and Tax Court can only consider appraisals that were in hand when the return claiming the charitable write-off was due.

“In their motion for reconsideration, petitioners challenge our findings only insofar as they relate to the penalties, and they advance three arguments to this end. First, they contend that their CPA incorrectly advised them that they had to claim the charitable contribution deduction for the easement on their original … return…. But for this advice, petitioners say, they would have filed their original return without claiming that deduction and would instead have claimed the deduction on an amended return…. By that time, petitioners say, they would have received their appraiser’s corrected appraisal, which allegedly would have been a ‘qualified appraisal.’ Since the appraisal that petitioners received ‘before the due date of the return on which [the] deduction [was] first claimed’ would then have been a qualified appraisal, sec. 1.170A-13(c)(3)(iv)(B), Income Tax Regs., petitioners conclude that they would be eligible for the reasonable cause defense but for their CPA’s erroneous advice.” Order, at p. 2.

This “does not warrant reconsideration of our holding.” It assumes facts, is purely hypothetical, and wasn’t raised in brief or on trial.

Dave and Barb next claim Judge Lauber was wrong when he said they hadn’t told their appraiser all relevant facts.

Judge Lauber is all over that one: “The thrust of petitioners’ argument is that they adequately disclosed facts to their CPA. But they cite no facts showing that the Court erred in finding that they failed to disclose all relevant facts to their appraiser, which caused him (among other things) to appraise the wrong property. Petitioners do not allege any ‘substantial error’ or ‘newly discovered evidence’ on these points. See Estate of Quick, 110 T.C. at 441. Petitioners are simply disagreeing with certain ultimate facts as found by the Court; this does not form a proper basis for a motion for reconsideration. In any event, our findings of fact on this point were relevant only to the accuracy-related penalty…. Even if we were to reconsider those findings, it would not enable petitioners to avoid the substantial valuation misstatement penalty…, T.C. Memo. 2015-87, at *38 n.13, because they lacked a ‘qualified appraisal.’” Order, at p. 3.

Finally, I can give Taishoff “good try, third class” to Dave’s and Barb’s counsel. He tries to argue that Section 6664(c)(3)(a) just requires that the taxpayer have reasonable cause for not having a qualified appraisal, not actually having gotten one in hand timely.

Well, Judge Lauber is tired of rehash, so he makes some hash.

“Given the statutory text, this argument has little to recommend it. In any event, it is a new legal argument that petitioners did not advance at trial or in their post-trial briefs. Petitioners concede that the argument they now seek to advance ‘was not well-articulated previously.’ Petitioners’ Motion at 15 n.6. That is an understatement.” Order, at p. 3.

No, this is not an exercise in schadenfreude; this could happen to any of us. I offer this order to show the limitations of Rule 161, and the draconian impact of the 40% chop.

Or, Trial by Ambush

The “small court” (see my blogpost “A Rant,” 3/7/13) does differ from the Big Courts (those enshrined in Article III of the Constitution) in many and diverse ways.

I’ll bet you didn’t know that IRS can issue stealth subpoenas to nonparty witnesses in Tax Court litigation, without giving the petitioners the FRCP 45(a)(4) view halloo required in the Big Courts.

I didn’t know that either, until the same was unpacked and ventilated by The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Illustrious, Imperturbable, Irrefragable, Indefatigable, and Incomparable Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes, in a designated hitter, Anthony M. Kissling & Suzanne R. Kissling, Docket No. 19857-10, filed 7/16/15.

You’ll remember that Judge Holmes was following the Kisslings’ case with interest last week. See my blogpost “Back From The Graev – Part Deux,” 7/9/15, wherein Judge Holmes probed the Section 6751(b) Boss-Hoss gambit, as the Kisslings were fighting the 40% chop on a conservation easement case.

The Kisslings found out that IRS was subpoenaing a nonparty, asking for pictures, descriptions and accounts.

“They understandably wanted to know if there were others and what, if anything, the Commissioner got in response. The Commissioner argues that if there’s no Tax Court rule that requires him to notify taxpayers about whom he is subpoenaing, he’d just as soon keep his pretrial preparation to himself.” Order, at p. 1.

So all that good jive we’ve been hearing at CPEs and CLEs about “no trial by ambush” as recently as this morning is “inoperative”?

Maybe not.

The Kisslings claim Tax Court Rule 21(a) turnover applies, but that’s only for filings with the Court, which subpoenas aren’t.

Trust Judge Holmes. Tax Court meant Rule 147 to do what FRCP 45(a)(4) does, it just diverged as the FRCP was amended, but Tax Court didn’t get around to following suit. “We do have to disagree with the Commissioner, however, that this absence of a rule creates an implication that secret subpoenas are favored. We promulgated our Court’s Rule 147, which governs subpoena practice, back in 1973. See 60 T.C. 1137 (1973). At that time, we said that our goal was a rule substantially similar to FRCP 45. Id. Back then, FRCP 45 didn’t require notice for subpoenas. Fed. R. Civ. Proc. 45 (1970). The notice requirement was added in 1991 to give parties the same opportunity to challenge nonparty subpoenas for documents that they had to challenge subpoenas for depositions (since FRCP 30 and 31 already provided notice protection in these circumstances). See Fed. R. Civ. Proc. 45 advisory committee’s note (1991). We have never publicly stated that we intended to deviate from Article III practice — it’s just an example of the two sets of rules drifting apart over time.” Order, at p.3.

So is the IRS headed for the Sin Bin? No, says Judge Holmes.

“The Court will therefore not find that the Commissioner has violated our rules. But we also think that the current federal rule is a good one; and the Kisslings’ motion seeks undoubtedly discoverable information. Their case is, moreover, a conservation-easement case, a category that is currently quite productive of hard-fought litigation. Development of one case often affects others in the pipeline. The Court will therefore adopt the notification requirement of Federal Rule 45 as a modification to the pretrial order that governs this case.” Order, at p. 3.

Hard-fought or not, practitioner, if IRS is going after nonparties, invoke FRCP 45(a)(4), and tell ‘em The Great Dissenter sent ya.

And remember, both sides have to hand over whatever FRCP 45(a)(4) requires.

David Michael Geoghegan, Docket No. 18055-14 L, filed 7/16/15, self-reported an $84K liability. David Michael couldn’t pay, he says, IRS has hit him with a NFTL, so he wants an IA (that’s an installment agreement for you civilians).

But David Michael is a Man in a Hurry; he wants a “Fresh Start” high-speed IA. My astute readers will reply, “But Michael David, you owe more than $50K. Re-read IR-2012-31, March 7, 2012. Ye’re a wee bit ower t’score, as they say in Aberdeen.” That’s Scotland, not South Dakota.

David Michael offers to scrounge up $34K and hand it over, if IRS will then let him board the Streamline Express.

No, says Appeals, you were talking about dropping the NFTL, and we can only do that if you owe $25K, not $50K.

But IRS reckoned without that Obliging Jurist, Judge David Gustafson.

“On the Form 12153 Mr. Geoghegan indicated that he wanted an installment agreement (‘IA’). Notably, on the Form 12153 Mr. Geoghegan did not request withdrawal of the lien, however, he did write ‘Fresh Start Program’ in the “Other” category. The Appeals Settlement Officer (‘SO’) scheduled the collection due process (‘CDP’) hearing…. At the … CDP hearing, Mr. Geoghegan stated that he wanted to enter into a payment plan under the IRS’s Fresh Start Program, but he understood that to qualify for the Fresh Start Program he had to reduce his unpaid tax liabilities from approximately $84,000 to under $50,000. He stated that at that time he did not have 34,000 to reduce his liabilities but that he intended to do so and that his ultimate goal was for the IRS to withdraw the NFTL” Order, at p.2.

So the SO bounced David Michael with a NOD after checking out the Fresh Start rules, thinking David Michael wanted the lien released for $50K, but the rules say only $25K gets you a release.

“On the Form 12153 Mr. Geoghegan did not check the box indicating that he wished to have the lien withdrawn.” Order, at p. 3 (emphasis by the Court).

So Judge Gustafson is confused whether David Michael really was trying for a lien release off a $50K streamliner, which is a no-no.

“On its face, the motion for summary judgment reflects a genuine issue of material fact as to whether the IRS abused its discretion in failing to provide Mr. Geoghegan an opportunity to submit a collection alternative without lien withdrawal under the Fresh Start Program or to consider his informally requested IA for $50,000 under the Fresh Start Program.” Order, at p. 4.

So IRS, seeking summary judgment, now claims that, no matter what, IRM 5.15.1.4 knocks David Michael out of the box, but since neither the NOD nor the SO’s declaration in support of summary J mention that, Chenery sinks that one.

Hint to IRS counsel: don’t try wild-carding in new reasons in a CDP NOD case when the administrative record is bereft of support; it only annoys Tax Court judges.

Summary J denied without prejudice, but as the tax was reported on a MFJ return and the NOD was issued both to David Michael and Mrs. David Michael, if Mrs. David Michael wants in on the fun, let her ratify the petition.