This time it’s IRS being deft but slimy. The tale is told an undesignated hitter from Ch J Michael B. (“Iron Mike”) Thornton, Barry Leonard Bulakites, Docket No, 16878-14, filed 9/24/14.

For background, see my blogpost “Mail Call”, 9/16/11. Section 7502 “mailed is filed” applies only to private delivery services (like UPS or FedEx) blessed by IRS, and not even all services offered by the blessed ones are included in IRS’ largesse.

Barry Leonard is a belt, suspenders and crazy-glue kind of guy, so he sent off duplicate originals of his petition on the same day (being the last day of the magic 90-day period) both by FedEx First Overnight and USPS Certified Mail.

The intake squad at 400 Second Street, NW, getting what looks like two petitions, opens two docket numbers.

No biggie, right? Close one on ground of duplication, and go on with the case.

Now here’s where IRS gets crafty and slimy.

FedEx First Overnight is not on the magic list. Other FedEx services are; so be careful, practitioner. Read my blogpost aforementioned, get the final regs, check out the services, and ask for the right one. Remember, like aircraft exit signs, the right one may not be the fastest or nearest. So mailing on the last day (or rather, delivery to the person in purple-and-grey) doesn’t help Barry Leonard. He’s a day late and much more than a dollar short.

His certified mail version does satisfy Section 7502, so Barry Leonard is timely.

You can guess what IRS does, and you gotta give them credit for craft and sleaze.

They move to close the timely petition (the certified job) for duplication, leaving the FedEx wrong job, which would set up a motion to dismiss for lack of jurisdiction (untimely filing).

Their attorney is lucky I’m not a judge and didn’t have this case.

They did have Ch J Iron Mike, who is positively douce (as they say in Edinburgh) to IRS, closing out the FedEx petition and leaving the certified job, “…to afford petitioner the greatest protection under section 7502, I.R.C….”, Order, at p. 2.

One Taishoff “Oh Please” to IRS.

Don’t think you’ll get the interest abated. That’s the moral for Maryann Larkin and Thomas Larkin, 2014 T. C. Memo. 195, filed 9/24/14, completing my hat-trick for today.

Maryann and Tom had a big NOL, and decided to carry it forward, wiping out some tax. But they never filed the Section 172(b)(1) and (3) election timely.

You need to do that if you elect not to go back two years with an NOL, but rather to go forward off the bat.

Then they asked IRS for tax advice, were told to amend to carryback and then carryforward. They did, and asked IRS to credit the remainder of the NOL forward.

IRS didn’t. They just refunded whatever was left to Maryann and Tom.

This left Maryann and Tom short the next year, and they got charged beaucoup interest.

They went to Nina (“The Big O”) Olson’s Taxpayer Advocate Service, who told them too bad, so sad, but IRS didn’t create the problem, you did.

And that’s where Judge Gustafson leaves it.

Interest on underpayment and overpayment are asymmetrical, which means unfair, but that’s life.

“On the one hand, a taxpayer will owe underpayment interest beginning on “the last date prescribed for payment”, sec. 6601(a), which for individual income tax is the due date of the return–typically April 15 of the following year, see secs. 6072(a), 6151(a)–without regard to when or whether he actually files his return. On the other hand, the Government will owe no interest on an overpayment before the return is filed, sec. 6611(b)(3); and where (as here) the relevant return is deemed untimely filed… the Government will owe no interest at all if the overpayment ‘is refunded within 45 days after the date the return is filed’, sec. 6611(e)(1).” 2014 T. C. Memo. 195, at p. 15.

And IRS coughed up within 45 days of when Maryann and Tom finally got it right.

Well, what about the advice they got from IRS? Well, first, Maryann and Tom don’t say exactly what was wrong with what IRS told them. Anyway, giving legal advice is neither “ministerial” nor “managerial”, and those are the only IRS acts that set up an abatement.

“Providing an interpretation of Federal tax law (such as on the question whether section 172 requires a taxpayer to carry back an NOL deduction one year or two) is neither a ministerial nor a managerial act. 26 C.F.R. sec. 301.6404-2(b)(1) and (2), Proced. & Admin. Regs.” 2014 T. C. memo. 195, at pp. 24-25. (Footnote omitted, but read it. 26 C.F.R. sec. 301.6404-2(c), Proced. & Admin. Regs., Example 12, states in pertinent part, as my expensive colleagues say, “Interpreting complex provisions of federal tax law is neither a ministerial nor a managerial act. Consequently, interest attributable to an error or delay arising from giving the taxpayer an incorrect amount due to satisfy the taxpayer’s income tax liability in this situation cannot be abated under paragraph (a) of this section. [Emphasis added.]” 2014 T. C. Memo. 195, at p.25, footnote 15.)

And Maryann and Tom blew it by not taking a carryback, or by not electing to waive the carryback timely.

Takeaway–If at first you don’t succeed, be prepared to pay interest.

No, not a P. T. Barnum “sucker”, rather an Internet fraudster. Now John (“Kosi”) Koskinen is warning the FATCA financial institutions that the Internet phishers are hot on their trail.

The cyberbanditi pretend to be Kosi’s myrmidons, sending e-mails seeking customer info. Kosi and Co. know not whence these cyberscoundrels originate, but they spread their nets wide, blasting cyberspace with phony e-mails and even using obsolete technology like faxes.

For those still encumbered by a Twentieth Century mindset, the practice is called “phishing”.

So, international financialisti, read and heed.

“Financial institutions or their representatives that suspect they are the subject of a “phishing” scam should report the matter to the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484, or through TIGTA’s secure website.  Any suspicious emails that contain attachments or links in the message should not be opened, and the email should be forwarded to phishing@irs.gov.” IR-2014-92, 9/24/14.

Sorry, guys, the template to which I was referring in my blogpost “A Template”, 9/19/14, is no longer available. The unredacted petition was taken off the Tax Court website, after I told the webmaster and the Ch J’s chambers that it was there. But you wouldn’t have wanted it anyway, as it is sure to draw a Section 6673 delay-of-the-game penalty on grounds of frivolity.

No, not the 1968 outré memoirs of Quentin Crisp, but rather the story of Dennis R. Bohner, 143 T. C. 11, filed 9/23/14, a day of ten (count ‘em, ten) opinions, burying the poor blogger.

I chose Dennis R. because, of the three T.C.s this date, his was the only opinion that one might argue needed a T.C. Gerd Topsnik, 143 T. C. 12, filed 9/23/14, covers an issue I dealt with in my blogpost “He’s Here Because He’s Here”, 8/26/14, and James C. Cooper and Lorelei M. Cooper, 143 T. C. 10, filed 9/23/14, has to do with the blown hand-off of IP, which I discussed in my blogpost “For Whom The (Telephone) Bell Tolls”, 9/17/14, and a dicey bad-debt deduction (goes off on year of worthlessness; nothing new here).

Anyway, Dennis is a retired civil servant, ex-Social Security Administration, who was offered a one-off chance to add to his retirement booty by making a single-shot contribution of $17K to CSRS. I didn’t know what that was either, but it’s the Civil Service Retirement System.

Dennis emptied his bank account, but came up short, so he borrowed the diff from a chum, and paid back the chum and funded his checking account with two draws from a Trad IRA he had.

He wanted CSRS to treat the money he sent as an IRA rollover, but never told CSRS what he wanted. CSRS said nothing.

Of course, he never reported the income on the 1099-R his Trad IRA trustee sent him, so IRS slapped him with a deficiency.

This is a first impression, as rollovers into CSRS never came up before, but Judge Kerrigan, nowise daunted, jumps right in. And it isn’t good news for Dennis.

First, CSRS doesn’t permit pre-tax contributions, unlike Trad IRAs (subject to limitations). And there is no specific Code provision dealing with trustee refusal to accept rollovers.

“To assure that income will be taxed only once, the Internal Revenue Code deems an annuity, such as one for a CSRS participant, to have two components: one taxable, one not. The employing agency withholds a mandatory contribution from the employee’s salary, and that withheld amount is after-tax income because it is taxable for the year in which it is withheld. On distribution that portion is nontaxable because it was already subject to tax. The amount contributed by the employing agency and any interest earned on the employee’s investment are not taxed to the employee until distributed. This portion of the distribution is the taxable component.” 143 T. C. 11, at pp. 5-6 (Citations omitted).

Great, says Dennis, but I will be double-taxed if my $17K isn’t a rollover, because everything I get from my CSRS pension is taxable.

No it isn’t says Judge Kerrigan. Remember dear old Section 72. What was taken out of your pay was taxed in the year taken out, and therefore is nontaxable. You’re taxed on what SSA matched during your tenure there, plus any interest earned.

But, says Dennis, you can roll over an IRA distribution into a “qualifying trust”, CSRS is a qualifying trust under Section 402(c)(8)(a), and IRS agrees.

Judge Kerrigan strips Dennis’ cloak. “Respondent contends, however, that petitioner’s deposit to CSRS does not constitute a rollover contribution under section 408(d)(3) because CSRS does not, and is not required to, accept rollovers.” 143 T. C. 11, at p. 8 (Footnote omitted, but it says that while you can roll from CSRS to an IRA, you can’t roll from an IRA to CSRS.)

Remember my blogpost “The Case of the Reluctant Trustee”, 6/6/14. You can’t roll if the trustee won’t play.

IRS also claims that the contribution of the loaned funds, followed by repayment, isn’t qualified rollover money, but Judge Kerrigan blows IRS off, saying you don’t need to roll identical dollars to what you took out, as long as the amount and timing are correct, and anyway, the reluctant trustee ends matters.

And even though the CSRS annuity is defined benefit and not defined contribution, mox nix. Dennis never told CSRS he was trying for a rollover, and CSRS couldn’t accept a rollover under its statutory authority (no Congressional grant of authority to CSRS).

So Dennis is totally stripped. Ch J Thornton, and JJ. Colvin, Gale, Goeke, Paris, Lauber, and Nega agree.

Judge Vaquez concurs, solely on the lack of authority of CSRS to accept a rollover, and cites the Dabney case, which I blogged in my blogpost “The Case of the Reluctant Trustee”, op.cit., as my expensive colleagues say. Judge Lauber agrees.

Judge Buch dissents. The majority says there is no specific Code provision concerning whether trustees accept or reject rollovers. We interpret the law and regs, but don’t invent them. CSRS is a qualified trust, and whether or not CSRS has statutory authority to accept or reject a rollover is nothing to the point. Dabney had to do with whether the rollover was a permitted investment by the trustee, not whether taxpayer could roll over an IRA distribution.

We nail taxpayers with harsh Code provisions (especially in child support cases), and Judge Buch cites a bushelbasketful of them (many of which I’ve blogged). But when the Code doesn’t prohibit a transaction, why do we not follow the plain words of the Code and allow the rollover?

Timing of the two draws prompts Judge Halpern to write his own dissent, agreeing in the main with Judge Buch.

Also agreeing with Judge Buch: JJ. Alpern, Foley, Holmes (of course), Gustafson, and Morrison.

Ch J Michael B. (“Iron Mike”) Thornton puts his hand on his head, points to IRS, blows the play dead, and tosses the NODs against David Andrew Lufkin, Sr., Docket No. 28323-13L, filed 9/22/14.

Dave Sr. was an attorney, but he was out of his office when the Form 941 withholdings at issue from his law practice were being fought.

I was out of my office today, for what I suspect is a much happier occasion than Dave Sr., because a receiver had been appointed for his practice.

IRS claimed Dave Sr. was objecting to a NOD out of an equivalent hearing, because he blew the thirty-day cutoff on the original NITL, so he went for an equivalent hearing that doesn’t allow for petition to Tax Court. If you blow a NITL, you can get an equivalent hearing, but if you lose, that’s it, no ticket to Tax Court. Thus, Dave Sr. is auf’d, as they say on the runway.

After much motion practice, Dave Sr. claims he never got the NITL. If he didn’t, the NITL was a nullity, the equivalent hearing was a nullity, the levy goes down, any funds or property levied upon must be returned, and back to Square Uno for IRS.

Ch J Iron Mike explains: “This is because statutes mandate that such notices under section 6320 and 6330, I.R.C., must be given in person, left at the person’s dwelling or usual place of business, or sent by certified or registered mail to the person’s last known address. Secs. 6320(a)(2), 6330(a)(2), 6331(d)(2), I.R.C.; secs. 301.6320-1(a), 301.6330-1(a), 301.6331-2(a)(1), Proced. & Admin. Regs. ‘Last know address’ [sic], in turn, is defined as ‘the address that appears on the taxpayer’s most recently filed and properly processed Federal tax return, unless the Internal Revenue Service (IRS) is given clear and concise notification of a different address.’ Sec. 301.6212-2(a), Proced. & Admin. Regs. In absence of proper mailing to the last known address, the Court will dismiss the case for lack of jurisdiction on the ground that the underlying notice of Federal tax lien filing or the underlying final notice of intent to levy is invalid, a disposition that precludes the Commissioner from going forward with the collection action in dispute.” Order, at p. 3.

It turns out that IRS mailed the NITL to the receiver, notwithstanding that the 941s in question showed Dave Sr.’s old law office as the taxpayer’s address. And IRS couldn’t explain how they got the receiver’s address.

The receiver is an ineligible receiver. The receiver’s address is not the last known address to which Congress mandated the NITL be sent by certified or registered mail.

“Respondent therefore concedes on this issue and asks that the case, insofar as it concerns the 1998 Form 941 liabilities, be dismissed on the ground that the underlying final notice of intent to levy was invalid. Respondent further concedes that all amounts levied pursuant thereto will be refunded and assets [sic; probably “asserts”] that a final notice of intent to levy will be reissued to petitioner at his current (and at present proper last known) address of record.” Order, at p. 4.

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Footnote- The Tax Court Orders page was squirrely in the extreme today, so digging through Orders was a real job.

The Judicial Conference of the United States Tax Court revives the trademark words of the late Joan Rivers, with word of a judicial conference on the campus of Duke University (incidentally home of the Taishoff Aquatic Pavilion, and no, I didn’t build it, nor was it built by those who suggest I should jump in the lake).

The aforesaid judicial parley-voo is to be held between May 20, 2015 and May 22, 2015, both inclusive. To quote from the announcement on the Tax Court homepage, this “judicial conference will provide an opportunity for taxpayer representatives, government representatives, and members of the Court to discuss current topics relevant to Tax Court litigation.”

Space is limited, so get the application and shoot it in. Applications will be accepted through 12/1/14, with acceptances early in 2015. Apparently no charge to attend, but check out the hotels; in college towns they fill up fast at academic year-end.

But it’s a template you really shouldn’t use, for several reasons. First and foremost, it’s protester stuff. Second, it shouldn’t have been put on the Tax Court’s site.

That said, it’s the only order in nine (count ’em, nine) pages today that has any substance.

Unhappily, because the Clerk’s office posted the entire petition, unredacted, I can’t disclose it. Sorry.

You’ll remember the aphorism of the late Andy Warhol of Velvet Underground and soupcan fame: “In the future, everyone will be world-famous for fifteen minutes.”

Well, I’ve been awaiting my shot these last 72 years, and haven’t come close. But as the Bard of Amherst remarked “hope is the thing with feathers”. So my little feathers were all astir when I saw Gregory Scott Savoy, Docket No. 12316-12L, filed 9/18/14, from that obliging jurist Judge David Gustafson.

Greg wants to expand the record on appeal to Fourth Circuit to include “an article dated August 28, 2013 (published on an Internet blog)”. Order, at p. 1.

Only this, and nothing more, as another ornithological poet famously remarked.

I wondered what that article might be. I even wondered if it was one of my poor efforts; see my blogpost “Guess Who Reads My Blog – Part Deux”, 8/11/14.

So I called Judge Gustafson’s chambers, and was courteously but definitely informed that whatever information was publicly available was all that there is.

The order speaks for itself; the article, whatever it is, isn’t going into the record on appeal.

Well, as it happens I published three (count ‘em, three) articles (or rather, blogposts) on 8/28/13. But I could not discern the relevance of any of them, even though one of them had to do with an order of Judge Gustafson’s directing a party seeking a continuance to go to trial, on the ground that delay was unlikely to enable the parties to try the case any better. See my blogpost “Neither Death Nor Disease”, 8/28/13.

Although it was only a fleeting hope, I was hoping to get my humble effort indelibly inscribed on the United States Circuit Court of Appeals for the Fourth Circuit.

Guess not.

Lest I be accused of disrespect for the Tax Court (or, even worse, of being “sardonic”), I omit the balance of Brendan Behan’s celebrated simile.

But when the same canned opinions repeating the same citations rain down endlessly from the glasshouse at 400 Second Street, NW, it’s nice to find something that fits the “angry sweet singer of Ireland”’s description.

“The key fact here is that the Holmeses asked for a CDP hearing to discuss the possibility of an installment agreement to satisfy their unpaid 2011 tax debt. The IRS is usually willing to talk to taxpayers who want to avoid liens or levies on their property, but understandably insists that taxpayers who want to avoid enforced collection submit honest information about their assets and income. The settlement officer handling the Holmeses’ case asked for this information, and there is no dispute that the Holmeses never supplied it.

“That means that the settlement office [sic] did not abuse her discretion when she determined to go ahead with the proposed levy against the Holmeses’s [sic] property. See, e.g., Swanton v. Commissioner, 99 T.C.M. (CCH) 1576, 1580 (2010) (no abuse of discretion when the taxpayer has not submitted financial information).”

Fred Holmes & Maria Holmes, Docket No. 14871-13L, filed 9/18/14, at p. 1.

Forget the sloppy proofreading, and guess who wrote the order. No prize for the correct answer.