Returning from my break in the Magnolia City and the great hospitality of nearest and dearest, I find Judge Lauber so admonishing Samuel Striker, 2015 T. C. Memo. 248, filed 12/28/15.

Sam, a social scientist, desires to serve his country and “breathe short-winded accents of new broils to be commenced in strands afar remote,” as a far better writer than I put it. Sam gets his wish, and signs up as what we used to call a DAC (Department of the Army Civilian).

Only instead of broiling, Sam serves two successive hitches, first as a GS12 and next as a GS13, with the usual DoD fringe benefits, putting his social science to work helping the Afghan government and NATO, to which organization Sam was attached.

“Petitioner’s mission as a social science expert was to act as a liaison between the NATO command and the local people of Kandahar and its surrounding area. He sought to help military officers gain a better cultural understanding of this population. He also gathered and analyzed information concerning local commerce (including illicit commerce) with the aim of helping NATO create a successful local security apparatus. Petitioner regularly participated in NATO- sponsored training and workshops, some of which were mandatory.

“Petitioner wore a NATO-ISAF civilian name tag and a NATO badge when rendering these services, which he performed as part of a Human Terrain Team (HTT). The HTT was composed of citizens from various NATO countries, and the team’s composition changed as personnel came and went.” 2015 T. C. Memo. 248, at p. 5.

Sam was never employed directly by NATO, although a NATO officer evaluated his performance. While the NATO officer could throw him off the HTT, only the US Army could fire him. Sam never knew where he would be deployed or what he would be doing until the Army told him when he landed at Bagram.

So why is Sam in Tax Court? He wanted the foreign earned income exclusion, claiming he was out of the country the requisite days (IRS agrees) and working for NATO (not! says IRS, and wins).

The US Army had hired Sam, and had hire-fire power over him. Sam’s claim about IC-EE status is not to the point. Even without day-to-day supervision or evaluation by a US Army person, his employment fate was in the hands of the US Army, not NATO.

And his paychecks came from Defense Finance & Accounting Services.

Section 911(b)(1(B)(ii) puts paid to Sam’s exclusions. He was in the Army.

Yet another chapter in the ongoing battle between form(s) and substance, just before Tax Court takes its Christmas break, shutting down for December 24 and December 25, is written by Ch J Michael B. (“Iron Mike”) Thornton, in Latrina Gray, Docket No. 27996-15, filed 12/23/15.

IRS proffers a PS Form 3800, Receipt for Certified Mail, that green thingy that the post office windowperson runs through the register to show you paid the postage and fee and hits with the red stamp, to show when they mailed the SNOD to Latrina. And of course IRS claims Latrina’s petition therefrom is late.

But all the PS Form 3800 established is that something got mailed by a certified mail to a certain address. “It does not establish that the contents of that certified mailing was the notice of deficiency upon which this case is based.” Order, at p. 1.

So let IRS supplement its motion to dismiss by coming up with documents that show what was in the envelope.

Form does not overrule substance.

OK, but when we do, how will Tax Court deal with it? And that’s not Berry Gordy, Hal Davis and Willie Hutch asking, but rather Usman Bhutta, 145 T. C. 14, filed 12/22/15.

Usman claims benefit of the U.S. – Pakistan Tax Treaty, because his purpose in coming to the Land of the Free was to teach; IRS says it was to advance his medical training, and Judge Marvel agrees. The treaty makes tax-free (for US purposes) earnings by foreign teachers, which Usman wasn’t, although he did do some incidental teaching, because teaching wasn’t his principal purpose.

And the University of Oklahoma, where Usman was studying during the year at issue, is not a US instrumentality for purposes of the treaty (or at least Usman can’t prove it was), so Usman doesn’t get the $10K free kick a student-trainee at such an instrumentality gets from the treaty. Aside to a son-in-law: no “Boomer Sooner” for Usman.

To answer the question that leads off this blogpost, here’s Judge Marvel: “When interpreting a treaty, we begin with the text of the treaty and the context in which the written words are used. E. Airlines, Inc. v. Floyd, 499 U.S. 530, 534 (1991); Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 179-180 (1982). The plain meaning of the language of a treaty controls unless its effect is contrary to the intent or expectations of the signatories. Sanchez-Llamas v. Oregon, 548 U.S. 331, 346 (2006) (citing 1 Restatement (Third) of Foreign Relations Law of the United States sec. 325(1) (1986)); Sumitomo Shoji Am., Inc., 457 U.S. at 180; Amaral v. Commissioner, 90 T.C. 802, 812 (1988). Because treaties are contracts between sovereigns, we construe them more liberally than private agreements to give effect to the signatories’ intent. See United States v. Stuart, 489 U.S. 353, 365-366 (1989); Air France v. Saks, 470 U.S. 392, 396 (1985); Factor v. Laubenheimer, 290 U.S. 276, 293 (1933); Estate of Silver v. Commissioner, 120 T.C. 430, 434 (2003) (citing Nw. Life Assurance Co. of Can. v. Commissioner, 107 T.C. 363, 378-379 (1996)). Where appropriate, we may ascertain the meaning of a treaty with an eye toward the treaty’s legislative history and the parties’ negotiations, diplomatic correspondence, and practical construction they have adopted. See Air France, 470 U.S. at 396; Factor, 290 U.S. at 294-295; Estate of Silver v. Commissioner, 120 T.C. at 434; Rust v. Commissioner, 85 T.C. 284, 288-289 (1985). We also give weight to how the departments of the respective governments charged with negotiating and enforcing a treaty interpret that treaty. See Kolovrat v. Oregon, 366 U.S. 187, 194 (1961); Rust v. Commissioner, 85 T.C. at 288.” 145 T. C. 14, at pp. 16-17.

Of course, the only part of this learned disquisition that appears at all relevant in Judge Marvel’s opinion is the plain meaning of the word “purpose,” and for that we go to Hank Black and Merriam-Webster. Neither the treaty itself nor the legislative history, diplomatic correspondence and departments of the respective governments say anything to the point except “plain meaning.”

So I include all these tips to interpreting treaties solely as a checklist. And, of course, for string-cites in your memoranda of law.

It’s called Protecting Americans from Tax Hikes Act of 2015, effective 12/18/15. I call it the Revenue Act of 2015. Effectively there is no Internal Revenue Code.

Its 233 pages do contain some interesting points.

As for where Tax Court gets its rules of evidence, now it’s from the FRE. So says Section 425. See my blogpost “Paraphrasing Mark Twain,” 12/12/12.

Section 431. Tax Court is authorized to provide a complaint mechanism for those claiming judges and STJs done them wrong, and applies to all proceedings commenced 180 days after enactment. Watch all the protesters line up.

Section 432 provides for an annual Tax Court judicial conference, with reasonable fees for attendees. Maybe somebody in Congress reads this blog.

And Section 441 is the famous declaration of independence for Tax Court. So Tax Court is independent of the Executive Branch. It is also not an Article III court. And a legislative court is an oxymoron. So what is poor old little orphan Tax Court?

One day before trial, IRS moves to amend its answer to up the deficiency by $268K in Phyllis E. McGrady & Christopher R. Antoniacci, Docket No. 20602-12, filed 12/21/15.

They’re a wee bit late, as their answer was filed two-and-a-half years before IRS made the motion last February. IRS claims they only got a copy of the 2007 tax return in question in January, 2015. That’s a wee bit thin for Judge Lauber, even though Rule 41(a) suggests that requests to amend pleadings should be liberally granted.

It’s another big-ticket scenic easement case.

“We think that respondent has unduly delayed in moving to amend his answers. The administrative case file makes clear that the IRS examination team was aware of the $268,000 contribution and made an explicit decision not to disallow it. The rationale that respondent now asserts for disallowing that deduction seems to be the same as its rationale for disallowing the deduction for the $4.7 million contribution. If respondent’s trial counsel believed that the examination team had erred in failing to disallow a deduction for the $268,000 contribution, it is unclear to the Court why respondent waited two and one-half years after filing his answer in docket no. 20602-12 before seeking leave to amend his answers. Since petitioners’ 2007 tax year was the principal tax year under audit, the assertion that petitioners’ 2007 tax return was not previously available does not strike the Court as a sufficient excuse for this delay.” Order, at p. 2.

I cannot very well say how it strikes me in a blog meant for family reading.

Motions denied.

No, Tax Court doesn’t specialize in tear-jerkers, but Judge Gerber has a moving tale for us nonetheless. It’s the story of Matthew Thomas Parmeter, 2015 T. C. Sum. Op. 75, filed 12/21/15, as I prepare for the holiday jaunt to the Magnolia City to visit the kinfolks.

Matt is an Army information technology engineer, civilian type, who gets what we who once wore green called at that time a PCS (Permanent Change of Station). Unlike us, Matt’s moving costs were not picked up by Our Uncle in Washington. His fellow civilian schleppers, if I may so denominate the moving companies, wanted between $22K and $30K to haul Matt’s lares et penates the 182 miles from old home to new.

Echoing the famous 1962 commercial for a pain pill, Matt said he’d rather do it himself, and he did. He fired up his trusty pickup truck, hitched up a U-Haul or equivalent, and made 20 roundtrips between old and new, stashing goods in rented storage over two months. Matt also rented a hotel room for two nights, waiting for his new home to be ready.

Matt claimed a Section 217 deduction of $29,527, but claimed on the trial his software did it and he had no idea how that number wound up on his 1040. IRS, technophobic or not, disallowed the whole shebang.

IRS claims Matt gets one trip to bring over his goods, citing Reg. 1.217-(2)(b)(4): “The deduction for traveling expenses from the former residence to the new place of residence is allowable for only one trip made by the taxpayer and members of his household; however, it is not necessary that the taxpayer and all members of his household travel together or at the same time.” 2015 T. C. Sum. Op 75, at p. 5.

Matt can use the standard mileage rate for moving expenses, but Matt wants 20 round-trips and IRS only wants to give him one.

Judge Gerber gives Matt 19.

“Respondent [IRS] cited no cases for his interpretation that the one-trip limitation of paragraph (b)(4) applies to travel to transport personal property to a new residence. Petitioner, confronted with a $22,000 to $30,000 cost to have a moving company move his personal property, transported the property to the new location in anticipation of moving to that residence. The property was stored near the new residence in anticipation of the final move to the new residence.

“Respondent’s interpretation would ignore the actual cost incurred by individuals who move their own personal property and would effectively limit the purpose of section 1.217-2(b)(3), Income Tax Regs., to instances where taxpayers paid to have their personal property commercially moved or moved by someone not a member of the family.” 2015 T. C. Sum. Op. 75, at pp. 5-6.

But to make IRS happy, Judge Gerber says the last of the 20 trips doesn’t count, to preserve the majesty and terror of the one-trip rule of Reg. 1.217-2(b)(4). So Matt gets docked $41.82.

Matt gets trailer rental,  30 days of storage expense (30-day limit on storage expense deduction per Reg. 1.217-(2)(b)(3)), and his round-trip standard-rate mileage minus the one trip.

His hotel bill is out, as Section 217 and its pendant regs do not provide for interim lodging expenses.

And Judge Gerber gives Matt and IRS a holiday present: a Rule 155 bean-count.

When Children Play With Matters of Importance

I am obliged to a Director in a Big Four accounting firm for bringing to my attention a series of delightful conjectures from no less than the University of Chicago Law School, alma mater of Judge Mark V. Holmes.

Assistant professor Daniel Hemel speculates on a legislative shoe-drop embedded at page 231 of the 233-page tax bill, a/k/a Revenue Act of 2015. Here’s the text: “Clarification Relating to United States Tax Court,” amends the Internal Revenue Code to add the following language: “The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.”

Great. This coruscation from the desk of Sen. Hatch (R-UT) is intended to assure the public (or so much thereof as pays taxes) that the Tax Court is in fact independent.

Apparently what got Sen. Hatch’s UnderArmours in a running bowline was the Court of Appeals’ decision in Kuretski v. Com’r, 755 F.3d. 929 (DC Cir., 2014). That affirmed Judge Wherry’s reconsideration of the Tax Court decision, which I blogged in my blogpost “Not Even a ‘Good Try’,” 3/5/13.

But I have to give credit to The Gang From Hackensack. They made IRS and DC Circuit throw pitches, even though they were called out on strikes at the close of play.

So what is Tax Court, Sen. Hatch?

Well, Prof. Hemel has some possibilities in his blogpost “Tinkering With the Tax Court,” 12/18/15. And I’m sure my inventive readers can come up with some variations on this theme.

For myself, I will let others try to unscramble this ill-made omelet. I eschew political comment…at least in this venue.

But if Mark Twain was right, that no one’s life, liberty or property is safe while the Legislature is in session, that goes double for Tax Court.

So the Standard Mileage Rate, for those who can successfully navigate the Section 274 giant slalom in this snowless non-winter, is down to 54 cents for business, 19 cents for medical and moving, and 14 cents for charitable, commencing 1/1/16.

So business down 3.5 cents, and the others down 4 cents.

For as much about this penguin as you want to know, check out https://www.irs.gov/uac/Newsroom/2016-Standard-Mileage-Rates-for-Business-Medical-and-Moving-Announced.

Again a sort-of follow-on to the 1976 Woody Allen – Zero Mostel movie that should have been a cult classic but wasn’t. Perhaps two exceptional comedians should have stuck to comedy, and left serious stuff alone; “‘twas caviare to the general,” as a much better writer than I observed long ago.

Howbeit, here the story of Benyamin Avrahami & Orna Avrahami, et al., Docket No. 17594-13, filed 12/18/15. This case also involves an outfit called Feedback Insurance Company, Ltd., which has engendered many an order, none of which I deemed worthy of my wordprocessor.

But this apparently pedestrian set-to involves matters of “great pith and moment,” in the words of that same much better writer. So much so that another outfit called the Self-Insurance Institute of America wants to file a brief amicus after the trial and while the parties are gearing up for their post-trial briefing.

As they used to say on the red clay at Fort Jackson, “What ya gonna do, company commander?” No, they never said it to me; I was just rabble.

But here’s The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Indefatigable, Incontrovertible, Incomparable and Illustrious Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes, who sorts it out.

“…the Court received a motion to file an amicus brief from the Self-Insurance Institute of America. This is either a trade association of those involved in captive insurance, especially smaller captive insurers; or, if respondent [IRS] is to be believed, a front for those promoting micro-captive insurers as a tax-saving scheme. This is a lead, if not quite a test, case; the Court would benefit from hearing all views on the subject and those with an interest in the industry are most likely to have an incentive to produce a useful brief. This amicus brief, however, comes at the end of the Court’s established briefing schedule for the parties. In the interest of fairness, we will give respondent a chance to reply to it — but only to answer what’s in the new brief, not to surreply to petitioners’ forthcoming reply brief.” Order, at p. 1.

So the front, if it is a front, is front-and-center.

Striking a jarring note in this season of peace and goodwill, both Judge Chiechi and the IRS unload on petitioners’ counsel.

Judge Chiechi first. IRS wants summary J against Neil S. Schuster, Docket No. 28217-14L, filed 12/17/15, and asks for it December 7, reply due 12/16/15. Neil gets two attorneys on board on December 15, and they ask for 12/26/15 to reply. Judge Chiechi gives them 12/21/15 in a same-day order.

When the lawyers ask for reconsideration, and more time, they get a judicial tongue-lashing.

“Any time-related burden on newly-retained counsel that is attributable to petitioner’s decision to retain counsel one week after December 7, 2015, the date on which respondent filed a motion for summary judgment and the date on which the Court ordered a response to that motion, is a burden for which petitioner is responsible and for which he shall bear the consequences. In this connection, although petitioner represented in petitioner’s motion for extension of time that he did not receive respondent’s motion until December 14, 2015, the Court sent by Federal Express overnight delivery a courtesy copy of its Order dated December 7, 2015, in which it ordered petitioner to file a response to respondent’s motion on or before December 16, 2015. Petitioner was thus aware on December 8, 2015, that respondent had filed a motion for summary judgment and should have taken the appropriate steps to obtain a copy of it, rather than waiting until December 14, 2015.

“The Court also notes that it does not appreciate the attempt at gamesmanship by petitioner’s counsel in asking for what at first blush appeared to be a request for an extension of time of 10 days, until December 26, 2015, which that counsel knows is a Saturday, when in fact the request is for 12 days because of the operation of Rule 25(a) (2) (B), Tax Court Rules of Practice and Procedure.” Order, at p. 2.

It’s one thing if Schuster and counsel are wiseguys. But a quick docket search discloses no obvious gamesmanship, and Judge Chiechi doesn’t mention frivolity. So how many ordinary people enmeshed in a Tax Court fight for the first time (and another quick docket search shows Neil S. is a first-timer) carry a roster of battle-hardened Tax Court admittees in their Smartphones (or anywhere else)?

And how long does it take an attorney to do a face-to-face intake interview after having reviewed pleadings and papers, and maybe even talked to potential witnesses, and prepare and have client and attorney both sign a detailed retainer agreement (without all of which I won’t take a client)?

A week is fast, even when there are no holidays, religious and otherwise.

May I point out that IRS served its answer on January 16, 2015? IRS had a year to move. There are no discovery motions showing on the docket search, so IRS had twelve months and Neil’s attorneys have seven days?

And no one at Tax Court ever got a date wrong? That Neil S.’s attorneys got the wrong date doesn’t mean they’re playing games, unless there’s some evidence aliunde, like they’ve tried little witticisms before now.

Judge, I understand “The Court wants to be able to decide respondent’s motion for summary judgment, if at all possible, before the parties spend time preparing the pretrial memoranda required by the Court’s standing pretrial order, which are required to be filed by no later than January 25, 2016. The Court also wants to be able to decide respondent’s motion for summary judgment, if at all possible, before the trial session in Baltimore, Maryland, begins on February 8, 2016. That is because if the Court were to decide to deny that motion and a trial were necessary, that trial could take place at that trial session. Any delay, especially given the time of year, will affect the Court’s ability to do so. In this connection, the Court is officially closed on December 24, 2015.”” Order, at pp. 2-3.

OK, Tax Court is closed 12/24/15. But maybe some attorneys will be working that day, even if their offices are officially closed. You can ask my wife and daughters about the days I worked when my office was officially closed.

Judge Chiechi gives counsel until 12/23/15. But unless I’m missing a lot, the suggestion of gameplaying is over the top.

Now for IRS’s little gameplaying, which Judge Wells is too douce to rebuke.

Keith P. Taylor, Docket No. 1641-15, filed 12/17/15. IRS wants to toss Keith’s counsel, hereinafter “Bird,” based on an alleged conflict of interest.

“[Bird] is petitioner’s counsel in the instant case as well as counsel for the Modest Needs Foundation, a tax-exempt organization. Respondent contends that [Bird] is preventing counsel from interviewing the organization’s board members and is placing the organization’s tax-exempt status at risk.” Order, at p. 1.

Judge Wells: “In the instant case, there is no conflict of interest because the Modest Needs Foundation is not a party in any case currently docketed before the Court. Additionally, [Bird] provided the Court with a Conflict of Interest Waiver. Moreover, future loss of tax-exempt status is a mere possibility of subsequent harm which cannot justify disqualifying petitioner’s counsel in this case.

“Regarding respondent’s contention that [Bird] is obstructing discovery, if petitioner has failed to properly respond to discovery requested by respondent, then respondent should file an appropriate motion to compel such response.” Order, at p. 1.

‘Tis the season for cheap shots? I hope not.