No, it’s not a Tax Court Snowden spilling the clichés; it’s none other than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Illustrious, Indefatigable, Ineluctable, Indestructible Foe of the Partitive Genitive, Judge Mark V. Holmes, putting Randy Jenkins and friends wise to getting a low-cost or no-cost transcript of their trial, all nine (count ‘em, nine) volumes’ worth. And not one that fell off the Capital Reporting Co. truck.

Nope, it’s a designated hitter, Randy Jenkins, et al., Docket No. 27139-11, filed 1/14/15. Randy and the et als must get en charette with their post-trial brief. And Randy has a problem, which carries over to the et als.

For the nonce and yet a while after, Randy is an involuntary guest in a governmentally-owned and operated residence for the penally-challenged. In short, the Stony Lonesome.

Randy and the et als need help. They ask Judge Holmes to toss them the nine-volume saga. For free.

Judge Holmes: “Petitioners do not address the relevant factors:

“Do petitioners need the transcript to write their briefs?;

“Do petitioners have the financial means to pay for the transcript?; and

“Does the case present a substantial question?

“See Taxpayer Information: After Trial, http://www.ustaxcourt.gov/taxpayer info after.htm#AFTER9 (last visited Jan. 12, 2015).

“The Court therefore denies the motion, but without prejudice to renewal on a proper showing.

“Petitioners are advised that the Court customarily uses the form for seeking a waiver of the filing fee in considering the second question. See http://www.ustaxcourt.gov/forms/Application_for_Waiver_of_Filing_Fee.pdf.” Order, at p.2.

Judge Holmes extends the briefing deadlines by 60 days, but neither he nor Tax Court will spring for a free copy of the nine-volume saga.

But Randy and the et als can reapply. And they shouldn’t go to a guy in a black raincoat standing outside the Glass Box at Second Street, NW.

Taking up the words of the 1943 hit sung by the King Cole Trio, as written by the late great Nat King Cole and Irving Mills, but using his “softer, gentler” style, Judge Gale joins the ranks of the obliging Tax Court jurists with Melanie L. Thomas-Kozak, Docket No. 802-12S, filed 1/14/15, another Tax Court teletubby day.

You remember Judge Gale gave Melanie the boot. No? Then see my blogpost “He Gave Her the Boot”, 11/11/14.

Melanie and IRS were scuffling over Melanie’s deductions, most of which tanked, but Judge Gale did allow Melanie the deduction for her metatarsal safety boots. IRS conceded some, and Judge Gale allowed a couple others (as Judge Holmes would say).

So off went Melanie and IRS to a Rule 155 beancount.

IRS came up with numbers, but Melanie didn’t, so that should be “game over, decision per IRS’ numbers”, no?

No.

IRS’ numbers left out some of their own concessions and ignored some of Judge Gale’s findings, which Judge Gale itemizes in the order above described, complete with a concordance to his opinion, more particularly bounded and described in my blogpost above referred to.

So Judge Gale again gives the boot, this time to IRS’ motion for entry of decision, and tells IRS to show him where IRS’ numbers include their concessions and Judge Gale’s findings.

IRS, straighten up and fly right.

Caltex Oil Venture meets SECC Corporation up in the air; or rather, on the blocks as the pilot turns off the “fasten seatbelt” sign.

Sufficiently confused? Well, start by checking out my blogpost “Classified”, 4/3/13, for the story of SECC Corporation and when IRS has made a RA ‘78 Sec 530 determination, even if they haven’t told anybody. Then dig my blogpost “Drill, Baby, Drill”, 1/12/12, for how to construe a statute.

Now you should be cleared for takeoff in American Airlines, Inc., 144 T. C. 2, filed 1/13/15 (and Happy Birthday to a family member firmly on the ground).

AA is fighting Subtitle C employment taxes for the cabin attendants paid by its foreign branches (not subsidiaries) as AA and Judge Paris stress, 144 T. C. 2, at p. 5.

The cabineers are local nationals in the Coño Sur, hired by the local branches, paid in local currency (with local taxes withheld), fly from offshore to Miami, FL only, stay in the Land of the Free only for mandatory rest stops (24 hrs or less) and TDY ANACDUTRA (and if you know what TDY ANACDUTRA is, my condolences). They have C1/D aircrew nonimmigrant visas, prohibiting work in the USA. Moreover, “They currently are paid on a ‘block-to-block’ basis, meaning that they are compensated only for the period beginning when the aircraft pushes off from the blocks of the departure gate and ending when it arrives at the blocks of the destination gate. The foreign flight attendants are uncompensated for any other time they are required to be at work, including pre- and post-flight time and training sessions.” 144 T. C. 2, at p. 5.

No, Judge, the blocks are removed before pushback (not “pushoff”), but that’s a detail.

Notwithstanding anything to the contrary hereinabove stated, as my two-Martini-lunch colleagues say, and an earlier IRS audit that accorded the cabineers RA ’78 Sec. 530 relief (once a non-employee, always a non-employee), IRS comes back trying to hit AA with FICA, FUTA and all that jazz.

Now there is a material fact (did AA change how they treated the cabineers since the audit years they got off on?), so all we have is partial summary J: does Tax Court have jurisdiction?

You may well ask whether or not SECC Corporation settled IRS’ hash. But not a whit dismayed, IRS tries again–and loses.

IRS hangs its fifty-mission-crush on Section 7436(a), but wants to ignore Section 7436(a)(2), which specifically mentions RA ’78 Sec. 530 determination. IRS claims neither Section 7436(a)(1) nor Section 7436(a)(2) gives Tax Court jurisdiction.

Judge Paris doesn’t care about (a)(1), but says Tax Court has jurisdiction under (a)(2).

“As the Court has noted previously: ‘[I]n response to the expressed intent of Congress to provide a convenient, prepayment hearing, this Court and the Courts of Appeals have given the jurisdictional provisions a broad, practical construction rather than a narrow, technical meaning.’ Therefore, where a statute is capable of various interpretations, the Court is inclined to ‘adopt a construction which will permit the Court to retain jurisdiction without doing violence to the statutory language.’” 144 T. C. 2, at p. 13. (Citations omitted).

You can see there’s turbulence ahead for IRS.

There’s a four-part test for Section 7436 relief, and AA has it all. There’s an audit, a determination that RA ’78 Sec 530 doesn’t apply, a real controversy and an appropriate pleading. IRS caves on first and last, fights about “determination” (but Judge Paris shoots that one down based on SECC Corporation) and “controversy” (but no need for fight about employment status, only RA ’78 Sec 530 relief; read the statute, IRS).

No specific form for determination, and IRS’s deficiency notice says it all. As for statutory construction, see Caltex Oil Venture.

IRS claims that “failure to agree” by AA to IRS’ denial of RA ’78 Sec 530, which Judge Paris invokes, isn’t a determination, because it doesn’t start the 90-day petition clock running. OK, but as SECC Corporation pointed out, IRS must send a registered or certified letter that starts the clock. Taxpayer isn’t hurt until the letter is sent, so no hurt, no foul. 144 T. C.2, at p. 20, footnote 10.

Tax Court doesn’t need to decide now if AA treated the cabineers as its own employees, or whether RA ‘78 Sec 530 applies.

The issue here is: has Tax Court jurisdiction to decide that, and whatever else the parties are scrimmaging about.

The answer is “Yes.” Partial summary J for AA.

No, not Felix Mendelssohn’s Fifth, Op. 107. This is an essay by Judge Cohen on Tax Court’s power to reform a couple of Forms 872 that recite what Judge Cohen finds to be mutually mistaken dates for SOL expiry.

The opinion is Hartland Management Services, Inc., et al., 2014 T. C. Memo. 8, filed 1/12/15. The “al”s, by the way, are la famille Kunkel and another Corp. (hereinafter designated collectively as “the crew”). The crew were represented by an attorney/CPA, and IRS was auditing the crew extensively.

IRS prepared 872s for the crew, but got the dates wrong. They meant to extend the SOL for assessments for years under audit and nearing the three-year limit, but put in extending the SOL for the current year, which hadn’t even ended yet, much less was subject to audit.

The issue was the Section 6662(a) chops. The crew gave up on the deficiencies, and they weren’t small. Moreover, the case went up on stipulated facts, and the crew put in no reasonable reliance evidence.

Judge Cohen finds that Tax Court can reform the Forms 872.

First, the party asserting SOL has ultimate burden of persuasion, even though it can shift burden of proof; but if the other side (the non-asserter) can show evidence that SOL hasn’t run, the ball goes back to the asserter.

Here, “Respondent and petitioners chose not to present their cases at trial. As a result, there is no testimony to affirm, contradict, or be weighed as to the intent of the parties. Similarly, there are no relevant documents in the record that clearly state the intended taxable periods. Instead, both parties rely solely on the stipulation of facts and attached exhibits.” 2014 T. C. Memo. 8, at p. 8.

Judge Cohen: “While it is long established that the Commissioner ‘takes the risk of any defect in the documents upon which he relies as waivers’, this Court nevertheless has the power to reform Form 872 to conform to the intent of the parties. Reformation is an equitable remedy used to reframe written contracts to reflect the real agreement between the parties when, because of mutual mistake, the writing does not embody the contract intended.” 2014 T. C. Memo. 8, at p 9. (Citations omitted).

I can hear some of my readers saying “Huh? How come? I thought Tax Court had no general equitable jurisdiction.” And that’s true.

But there’s an out, and a good explanation can be found in Kelley v. Com’r, 45 F.3d 348 (9th Cir., 1995). While Tax Court hasn’t general equitable jurisdiction, so that it can extend the statutory limits of its jurisdiction to bail out someone in need, it can apply equitable principles in a case where it has jurisdiction and need not go outside the statutory stockade to apply those principles.

And here Judge Cohen does so. “The only rational interpretation is that the initial Forms 872 were implemented and signed by the parties to cover the years for which assessment was about to be barred without some form of extension. Petitioners’ conduct following execution of the forms was consistent with this intent. Not only did petitioners act as if the period of limitation… had been extended, but they also had negotiated for months and months with the IRS regarding the disputed years and, through their counsel, knew that the disputed years would be the only logical years for extensions at the time respondent made the requests. We conclude that the parties’ intent was to extend the period of limitation for the disputed years.

“Accordingly, we hold that respondent has established by clear and convincing evidence that petitioners intended to extend the period of limitation for the disputed years and that the initial Forms 872 may be reformed to conform with the intent of the parties. As a result, respondent’s notices of deficiency are not barred as untimely under the period of limitation.” 2014 T. C. Memo. 8, at p. 14.

Notwithstanding that the crew had an attorney/CPA onboard, they put in no reasonable-reliance-on experts defense. I find this strange, but hey, it’s what that great New York scholar Prof. Siegel of Albany Law School called “S.E.C”–Someone Else’s Case.

Let IRS be so advised. And who better so to advise than The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Irrefragable, Indefatigable, Indomitable, Irrepressible, Illustrious (but never Inscrutable) Foe of the Partitive Genitive, Judge Mark V. Holmes?

Judge Holmes tells it in the plainest words possible: “The Court urges the IRS to make this index comprehensible to a nonlawyer.” Order, at pp. 1-2.

If desirous of perusing Judge Holmes’ direction and the bases therefor, the reader is directed to Estate of Antonio Santillan, Deceased, Marcos Santillan, Special Administrator, Docket No. 9848-13L, filed 1/9/15.

It’s a CA-based petition from a NOD, which means “record rule”. For those tuning in late, the “record rule” is the contrapositive of the old Yellow Pages slogan: “If it’s not in here, it’s not out there”.

So all Judge Holmes can consider is what Appeals had before it. And the question in advance of judicial review is “what did Appeals have before it?” Marcos and IRS should agree, but if they can’t, IRS should give Marcos a list of what IRS claims Appeals had before it…in people language.

Then Marcos can fight about what documents weren’t before Appeals that IRS claims were, and what documents were before Appeals that IRS left out.

Of course, if Marcos and IRS can’t agree, Judge Holmes will sort it out at the hearing.

Anyway, Judge Holmes “…will also hear at that time any arguments from both parties about whether or not the IRS did abuse its discretion in upholding the lien, and about whether there is any reason to send the case back to the IRS for reconsideration because of new evidence or a change in circumstance since the collection due process hearing was held.” Order, at p. 2.

Judge Holmes loves remands (see my blogpost “Back to the Future”, 8/1/11) almost as much as he loves Chenery (see my blogpost “He Loves Chenery”, 12/17/14).

But he loves writing like a human being even more. And inciting others to do likewise.

An  Alternate Meaning Tells The Story

I am a journalist. The Cyber Age has made every blogger a journalist, quite as much as our colleagues of the hard copy and radio/television. Without meaning to boast, this blog has been read in over 130 countries, commonwealths, dependencies, trust territories and all like that. And these blogposts have been read more than 42,000 times in the three years of this blog’s existence.

I want to stand with my journalist colleagues, living and dead, around the world. People may not like what we write or speak. That’s all right; they can comment, start their own counter-blogs, or ignore us altogether.

But murder is out. If your religion, belief system, or whatever, is so weak that anyone with a keyboard or a microphone can insult it, you should really question why you believe it. You are perfectly free to insult mine–it has been insulted, persecuted, denounced, derided, banished, exiled and denigrated by those far abler and much more powerful than you. It has survived all the foregoing.

This being a non-political blog, I did not want to jump into a fray that I can fight elsewhere. And that we all should fight, wherever and whenever.

The matter here, however, transcends politics. I want to add my voice in this place to “Je Suis Charlie”.

But my wandering mind came upon an almost-forgotten slang phrase I hadn’t heard since the last time I was in England 25 years ago. It went something like “I was a right Charlie for believing that story.”

So we’re all Charlie. Just not right Charlies. That distinction we can leave to those whose beliefs are so weak they can be insulted. By Charlies.

Many times, when a Tax Court opinion is rendered, the story isn’t over. While sometimes Tax Court judges do indulge in arithmetic (see my blogpost “Tax Court as Preparer?”, 9/17/12 but even there a Rule 155 beancount followed), most of the time, to permit Tax Court to render a decision (how much money, if any, is owed?) when arithmetic is needed, Tax Court invokes Rule 155.

That sends IRS and petitioner(s) off to do the numbers. If they agree, then entry of decision follows. If not, each submits their own numbers, and they can argue about them, and the judge will choose her (or his) own.

But–and here’s the point (and my readers will doubtless say “And about time, too”) — Rule 155(c) keeps them on the straight-and-narrow.

“Any argument under this Rule will be confined strictly to consideration of the correct computation of the amount to be included in the decision resulting from the findings and conclusions made by the Court, and no argument will be heard upon or consideration given to the issues or matters disposed of by the Court’s findings and conclusions or to any new issues. This Rule is not to be regarded as affording an opportunity for retrial or reconsideration.”

Except it doesn’t. Judge David Gustafson, obliging as always, doesn’t bother reciting the Rule.

He just tells Jackie H. Robinson, and Estate of Lolita I. Robinson, Jackie H. Robinson, Adm’r, Docket No. 248-11, filed 1/8/15, that he isn’t having any more argy-bargy about what he concluded in 2014 T. C. Memo. 120, filed 6/16/14 (and no, I didn’t blogpost it, because it’s the usual unsubstantiated deductions).

Now ordinarily, even though Judge Gusfason’s order is a designated hitter, I’d skip it, because there’s nothing here to long detain the tourist (or anyone else).

But the problem is endemic. Pro ses like Jackie H. don’t know Tax Court rules and won’t look them up. So maybe each reference to a Rule 155 beancount, rather than the throwaway line “Decision will be entered under Rule 155”, should include at the end of the opinion a statement like “The parties shall prepare and exchange computations within the time limits of, and in the manner set forth in, Rule 155. No additional, further or other argument is permitted.”

Will petitioners obey? Not if they want to stall; but disregarding the Rules, when made explicit, may be grounds for a Section 6673 delay-of-game chop.

It’s nearly sixty years since I was introduced to the principle herein at the head above stated (as my expensive colleagues would say) by my junior high school classmate David Botstein, now Dr. David Botstein, now or formerly head of Lewis-Sigler Institute for Integrative Genomics, whatever they may be, at Princeton University.

I forget what point he or I was arguing, but he asserted that he was right based upon “the principle of dogmatic assertion”. He probably was right, at that.

But the principle comes to the aid of Lawrence Ebert and Rebecca Ebert in 2015 T. C. Memo. 5, filed 1/7/15.

Larry is fighting over a big $1410 of dividend payments he claims he never got, but IRS says he did. Although the deficiency can’t be all that great (Judge Colvin doesn’t say what IRS claimed it was, but states that it is “relatively small”, 2015 T. C. Memo. 5, at p. 6), Larry doesn’t take the small-claimer route, but goes for the big enchilada.

IRS has a recent letter from Computershare, the then registered agent for BNSF (whose shares Larry admits he owns), and a copy of a 1099-DIV they claim they sent Larry. Larry says everything got mixed up when The Oracle of Omaha bought BNSF and changed the registered agent from Computershare to Wells Fargo.

He kept calling Computershare and Wells Fargo about all manner of issues with his stock, he claims, but had no luck. And as to the letter IRS produced, Larry says he called the telephone number on the letter and got a recorded message that told him nothing.

Larry wants a burden shift, but Judge Colvin uses the preponderance-of-evidence gambit.

And Larry’s vociferous assertions, in support of a minimal tax break, carry the day.

“As with many other cases decided by this Court, see, e.g., Diaz v. Commissioner, 58 T.C. 560, 564 (1972), ‘[t]his case epitomizes the ultimate task of a trier of the facts–the distillation of truth from falsehood which is the daily grist of judicial life.’ The documentary evidence that respondent provided conflicts with petitioner husband’s detailed and energized testimony. We must resolve that conflict.” 2015 T. C. Memo. 5, at p. 4. I think you meant “energetic” testimony, Judge.

Howbeit, “We decide whether a witness’s testimony is credible based on objective facts, the reasonableness of the testimony, the consistency of statements made by the witness, and the demeanor of the witness. We may discount testimony which we find to be unworthy of belief… but we may not arbitrarily disregard testimony that is competent, relevant, and uncontradicted…. Petitioner husband has devoted a substantial amount of time to contest the relatively small amount of tax liability at issue here, and he testified consistently, clearly, and with considerable conviction in explaining the negative–that he did not receive the disputed dividend payments. He has persuaded us that he did not receive the disputed dividend payments in 2009.” 2015 T. C. Memo. 5, at pp. 5-6. (Citations omitted).

As for the “daily grist of judicial life”, see my blogposts “Practicing Accountancy Can Be Hazardous to Your Health”, 12/26/12, and “A Non-Christmas Carol”, 12/23/13.

Takeaway–Practitioners and petitioners, remember the words of Matt Hammond and Chris Rohman, not to forget Dr. David Botstein: “Say it loud.” And say it often.

That’s Judge Lauber’s word to MoneyGram International Inc., and Subsidiaries, leading off T. C. 144, at 144 T. C. 1, filed 1/7/15.

MoneyGram claims it’s a bank. Why, you may ask. Well, there’s about $82 million in deficiencies for four (count ‘em, four) tax years riding on the answer. If MoneyGram’s a bank, their worthless securities write-off against ordinary income stands up; if not, they’re capital losses, and must be written off against capital gains for the appropriate years at issue.

Here’s MoneyGram’s story. “MoneyGram sells money orders and money transfer services to consumers through ‘agents.’ These agents include banks, credit unions, supermarkets, convenience stores, and other retail locations. MoneyGram’s agents range from wellknown businesses such as Wal-Mart (during the years in issue), Albertson’s, and CVS Pharmacy, to thousands of ‘mom and pop’ convenience stores. MoneyGram sells payment processing services directly to banks and other financial institutions.” 144 T. C. 1, at p. 4.

Well, don’t banks do that? Yes, but. Check out Section 581. To be a ”bank”, and get the bank  tax goodies, the entity must be Federally or State regulated as a bank, make loans and receive deposits. Here MoneyGram stumbles out of the starting gate.

“In a typical money transfer, a consumer goes to the location of a MoneyGram agent, completes a form, and pays the agent the money to be transferred (plus a fee). This form explicitly states that the agent is not accepting a ‘deposit.’ 144 T. C. 1, at p. 5.

Moneygram also processes payment of official bank checks for more than 1900 banks, thrifts and credit unions for one of the years at issue.

But MoneyGram is not subject to OTS, FDIC, OCC, or those guys. It is regulated by Treasury pursuant to Art. 31, USC, which is the Circular-230 part, but that other stuff I haven’t read either. American Express Travel Related Services and Ezra Cornell’s brainchild Western Union are also regulated thereunder.

And never has MoneyGram told the SEC or its stockholders, past, present or would-be, that it is a bank.

Judge Lauber has a lot more to say about how “money service businesses” like Moneygram are regulated, both by the Federal Government and the States, so if your Sominex has gone past its pull-date, you can read all about it. I’ll spare you.

Bottom line–Banks are 12 USC, money servicers are 31 USC, and never the twain shall meet.

MoneyGram’s problems resulted from the credit meltdown during what W. H. Auden would have called “a low, dishonest decade”.

Mired in junk paper which rendered its net capital below State law money transmitter standards and therefore threatening its State licensure, MoneyGram recapitalized, and took heavy-duty losses in consequence thereof.

Now there are two classes of junk here: REMIC and non-REMIC. The REMICs are settled; it’s the non-REMICs at issue, but I suspect the result would be the same for both classes of junk.

The non-REMICs are concededly debt backed by a security, so available as only as a capital loss under Section 165(g)(2)(C).

But there’s an exception. Don’t you love exceptions? Section 582 provides that, notwithstanding Section 165(g), banks get Section 166 ordinary write-offs. Nothing like having the most powerful lobby in Washington. But I must remember this is a non-political blog.

But to be a bank, the entity must take deposits, make loans, and be regulated by Federal or State banking regulatory authorities. However, courts look to a “practical, commercial, functional approach” (144 T. C. 1, at p. 20, Footnote 5).

In short, “An entity is not ‘a bank or trust company incorporated and doing business’ under section 581 unless it is a ‘bank or trust company’ within the ordinary meaning of those words.” 144 T. C. 1, at p. 25.

So a bank is like pornography. Echoing Justice Potter Stewart’s celebrated remark, we know it when we see it.

And MoneyGram doesn’t make the cut. The money that it gets from its agents are not deposits from the public. Any advances MoneyGram makes on behalf of agents or the banks whose checks it pays have to be paid up very quickly, and the general public cannot deal directly with MoneyGram, either by depositing money or borrowing.

And whatever MoneyGram claims public policy should be, Congress enacted what it enacted. And Judge Lauber can’t change that.

We lawyers get too cynical too fast. I started out much as the Lord Chancellor in Iolanthe: I would never “assume that the witnesses summoned in force, In Exchequer, Queen’s Bench, Common Pleas, or Divorce, Have perjured themselves as a matter of course.”

In that Grove of Academe On The Hill Far Above (courtesy of Myron C. Taylor, Esq.), we were taught that cases are decided based on the weight of the credible evidence. But in after years I have been heard to quip that cases are decided based on the weight of the credible perjury. Especially when I lost.

But hear now The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Imperturbable, Indefatigable, Irrefragable, Illustrious and Irrepressible Foe of the Partitive Genitive, Mark V. Holmes.

It’s an off-the-bencher on a day when Tax Courtiers can take unscheduled leave or teletubby, so there are no opinions and no designated hitters.

It’s the story of Frederick Michael Young, Petitioner, and Rasheda O. Donner, Intervenor, Docket No. 16400-13, filed 1/6/15. And Judge Holmes does get an epiphany.

“This is an innocent spouse case in which everyone testified truthfully and credibly, unlike many innocent spouse cases. They may disagree but there has been not been the blatant dishonesty that plagues this particular area of tax law.” Opinion, at p. 3.

Great start! Honest, candid witnesses. That guarantees the outcome in such a case.

The parties don’t get what they want.

When Fred and Rash divorced, owing tax they properly reported but couldn’t pay because their jointly-owned-and-operated business hit bad patches, they wanted the tax bill split fifty-fifty. Fair enough; they both worked in the business, so the divorce decree said each must bear his or her half.

But taxes don’t work that way. Judge Holmes explains: “The parallels that are used for many married couples is like roommates who agree to share the utility bill; one side paying the electric bill one month and the other roommate paying the bill the second month. That may be a legally binding contract between those two roommates, but the utility company, if both names are on the bill, has the right to come after you both and the IRS is a little bit like the electric company in this regard.” Opinion, at p. 5.

There are exceptions, of course. I ask you, what would tax practice be without exceptions? The exception is our friend Section 6015(f). As there are no deficiencies, because no one challenges the returns Fred and Rash filed, Fred can get relief, if he can pass the factors tests, which, by virtue of his candid, forthright and honest testimony, he can’t.

IRS denied Fred’s request, but their reasons were “bizarre”, to use Judge Holmes’ term. They claim Fred filed a fraudulent return and made fraudulent conveyances. “There’s just no evidence of that in the record, there was no evidence at the trial. The Commissioner’s lawyers in this case didn’t defend this bizarre conclusion, and no doubt it offended Mr. Young and may have been one of the reasons that prompted him to file this petition seeking appeal.” Opinion, at pp. 7-8.

And Judge Holmes assures Fred that there’s no hint of any wrongdoing on his part.

Judge Holmes sums up: “So to summarize here we have a couple that’s divorced and a former husband who is compliant with his ongoing tax obligations. These factors weigh in favor of relief. The fact that he knew the taxes weren’t getting paid at the time that he filed the returns, weighs against relief, and all the other factors are neutral.” Opinion, at p. 10.

Tax Court can’t help Fred. But since the State court where the divorce was granted retained jurisdiction over joint debts, maybe Fred can get help there.

See my blogpost “Innocence is Bliss?”, 11/10/11, wherein I stated :” A repentant sinner saved by his wife’s tears, and an honest witness on a trial–proves the old saying–‘No good deed goes unpunished’–totally.”