The trusty attorneys for Aventis Inc. & Subsidiaries, Docket No. 11832-20, filed 7/5/24, are fellow fans of summary J. Although their case that the convoluted shellgame their clients concocted qualified per Section 860L, hence is a Financial Asset Securitization Investment Trust (FASIT), they’re trying to get Judge David Gustafson to agree that what’s under the shell is in fact debt, not equity, irrespective of whether Section 860L saves the game.

It takes three (count ’em, three) pages for Judge Gustafson to describe the machinations, which the Aventis crew claim will let the treat dividends as interest for US tax, and the same as dividends for French tax. Subsidiaries, siblings, and Chase bank shuttle in and out like line changes in a hockey game.

But Aventis is homeported in DE, thus 3 Cir learning, with its sixteen (count ’em, sixteen) factors for distinguishing debt from equity, bars any chance at summary J.

Too many facts.

Of course, this is an alternative argument, and as hereinabove set forth, whether or not the deal qualified per Section 860L is for another day.

As today is Our National Holiday, and as Tax Court is in lockdown per Rules 10(d) and 25(a)(5), there will be neither of the above from me.

It’s an old Tax Court maxim that Constitutional arguments don’t cut any Glasshouse ice, but Amgen Inc. & Subsidiaries, 16017-21, filed 7/3/24, claim IRS violated Due Process when they disavowed seven (count ’em, seven) closing agreements covering nine (count ’em, nine) tax years.

IRS gave Amgen annual audits for each of those years, with the adjustments culminating in the abovementioned closing agreements. But shortly thereafter, IRS audited another six (count ’em, six) subsequent years, adjusting all and adding chops to the last three, using a transfer pricing method deviating from that in the settled years’ agreements. Amgen petitioned all, but seeks summary J only as to chops in the last three. IRS cross moves as to all six, but Judge Travis A. (“Tag”) Greaves sorts it out.

There’s caselaw that government cannot change the rules justifiably relied upon without giving notice, but that applies to guidance. Here, there’s a specific agreement, covering only the years then at issue. Moreover, the agreements do not discuss the Section 482 transfer pricing methodology.

And Supreme Court learning says IRS isn’t bound by prior years. Another old Tax Court maxim is each year stands on its own.

“Petitioner had no legitimate reliance interest for future years derived from the closing agreements. The closing agreements unambiguously do not cover future tax years. The agreements are silent as to what transfer pricing methodology was to apply for years after [last year]. In fact, the closing agreements related to [last three] tax years made it clear that the IRS could make future transfer pricing adjustments regardless of any alleged prior approval. These closing agreements specifically stated ‘This agreement does not prevent further allocations under section 482 with respect to taxable events involving Amgen and [sub] that are attributable to taxable periods of Amgen for which allocations are not determined by this agreement.’ This clause put petitioner on notice that the IRS might make transfer pricing adjustments in future tax years. Additionally, none of the closing agreements used the phrases ‘best method’ or ‘arm’s length’ to describe the reallocation. Instead, the adjustments are simply those to which the parties agreed in settling the disputes before them at that moment. The closing agreements unambiguously do not cover tax years past [last year], and therefore, petitioner does not have a legitimate reliance interest created by the closing agreements.” Order, at pp. 6-7.

And Amgen could always have entered into advance pricing agreements.

“If petitioner sought to apply its transfer pricing methodology to future years, it could have attempted to negotiate a closing agreement that made the method applicable for future years. Petitioner likewise could have applied for an advanced pricing agreement that would have set forth a ‘binding agreement’ between petitioner and the IRS as to ‘the best transfer pricing method (‘TPM’) within the meaning of § 482 of the Code and the regulations.’ Rev. Proc. 2006-9, §§ 2.04, 10.01, 2006-2 I.R.B. 278. Had petitioner sought one of these options, it would have had a genuine reliance interest grounded in a binding contract. However, the closing agreements fall significantly short of creating a legitimate reliance interest.” Order, at p. 7.

Summary J to IRS.

Of course, the leading case on IRS mind-changing, Dickman v. Commissioner, 465 U.S. 330 (1984), just happened to be decided by the same Court in the same year that decided Chevron.

Taishoff says, post-Loper Bright and post-Boechler, P. C,  exactly what is any Rev. Proc. worth? Is Mayo Foundation still good law? What is any IRS Reg. worth? The Supremes are bringing “discipline” to tax law, all right all right. Yeah, roger that.

No ticket to Tax Court is formed by the conjunction of Notice CP220J and Letter 227-N. It’s surely excusable if you’re unfamiliar with these adjuncts of the much-contemned Patient Protection and Affordable Care Act. They’re IRS’ shots-across-the-bows per Section 4980H(d)(1), which provides for collection of the Employer Shared Responsibility Payment Penalty.

Check out the statute and see if you understand it. Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan says it means this penalty is assessable, that is, IRS can assess it (mark it on IRS’ books) off the bat; it doesn’t require a SNOD, just notice and demand.

Assistive Choices, Inc., Docket No. 14347-23, filed 7/2/24, asserts otherwise.

“… petitioner agrees that no notice of deficiency was issued to petitioner…. Instead, petitioner contends that respondent was required to issue a notice of deficiency to petitioner prior to assessing the ‘Employer Shared Responsibility Payment Penalty’. Petitioner maintains that, since the ‘Employer Shared Responsibility Payment Penalty’ is found in Chapter 43 of the Internal Revenue Code, section 6212(b)(1) requires a statutory notice of deficiency be issued prior to assessment.” Order, at p. 1. (Footnote omitted).

But once again, “as-if” comes into play. Section 4980H(d)(1) says “‘[a]ny assessable payment provided by this section shall be paid upon notice and demand by the Secretary and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68′.” Order, at p. 2.

No SNOD needed, and no assistance for Assistive Choices, but a Taishoff “Good Try, Third Class,” to the Assistives’ trusty attorney, whom I’ll call Jay.

Jon K. Palsgaard and Kimberly A. Kelly, T. C. Sum. Op. 2024-11, filed 7/1/24, exhibit a never-say-die attitude, despite not being represented by their trusty attorney from the before-time, MTW.

For their previous foray six (count ’em, six) years ago, where MTW ran the Section 86 checklist straight into the brick wall erected by Judge Albert G. (“Scholar Al”) Lauber, see my blogpost “Secure and Taxable,” 6/14/18.

It’s the same story for a different year, but Jon and Kim (that’s Doc Kim, M.D., disabled) try again.

STJ Zachary S. (“Highrise”) Fried shows the becoming modesty that is the hallmark of the Special Trial judiciary.

“But for the years and amounts involved in the prior proceedings, the evidence parallels the evidence in this case. We could repeat the reasoning of the prior opinions here, but it is unlikely that we could improve upon it.” T. C. Sum. Op. 2024-11, at p. 4.

No, not a theatre review of the 1961 Michael Shurtleff groundbreaker that joined Alvin Ailey and Robert Duvall. This is the tale of “James Lindor,” Docket No. 217-23, filed 7/1/24. I use inverted commas, because, as CSTJ Lewis (“That Is His Rightful Name”) Carluzzo points out, “‘James Lindor’ is not petitioner’s name.” Order, at p. 4.

CSTJ Lew deals here with a flurry of motions, “James Lindor” goes 0 for 6, but does get couple byes (hi, Judge Holmes). IRS did fail to redact some PII, but covered up before any Nosy Parker tipped the Copycats for a sneak peek, so no sanctions. Order, at pp. 1-2.

And while “James Lindor” did get a Section 7345 certification for a passport grab, IRS’ motion to toss that part of his petition thereof for failure to state a claim didn’t mention any attempt to get a more definite statement.

“Although the petition is not as precise as we would like, and although we tend to agree with much of respondent’s motion, we consider dismissal at this point in the proceedings to be inappropriate given petitioner’s status as a self-represented litigant. Respondent has missed the opportunity to move for more specificity in the petition before answering the case. See Rules 36(a) and 51. At this point, informal and/or formal discovery can be used to focus on the exact nature of petitioner’s challenge to the certification process. Once identified, the matter can properly be prepared for trial, resolved by summary adjudication, or resolved upon agreement of the parties.” Order, at p. 3.

And as for the pseudonym, that doesn’t cut it in Tax Court.

“The Tax Court Rules of Practice and Procedure do not allow for the use of pseudonyms in the captions of cases commenced in this Court. See Rule 23(a). If petitioner’s use of the pseudonym is intended to allow him to proceed anonymously, then he must make an appropriate motion to do so. Within 30 days from date of service of this Order, unless petitioner submits (1) a motion to proceed anonymously, supported by sufficient grounds for such relief, or (2) a motion to voluntarily dismiss the case, the Court will amend the caption of this case to show petitioner’s proper name.” Order, at p. 4.

Though he didn’t ask me, I’d tell “James Lindor” that he’d better have some awful good reasons to seek anonymity (like tangible threats to life, health, and livelihood). Anything short gets short shrift. “Public’s right to know,” y’know. Section 7461 and all that.

I don’t report IRS bulletins or, as a rule, decisions of courts other than Tax Court. The trade press and blogosphere get there first, with resources I don’t have.

But the latest IRS E-news for Tax Professionals has two (count ’em, two) items that foretell whence two sources of blogfodder might spring.

First, IRS announced that anyone filing an amended return to claim a refund for taxes paid under Section 280E (the potters’ field), because certain herbal medicaments are State-legal, will get a swift right-about-face from IRS. More refund cases in Tax Court?

Second, IRS is sending settlement proposals to some of those enmeshed in syndicated conservation easement deals and like dodges. Except those with filed petitions, and those not selected by IRS to come and join the dance, cannot participate. I don’t know if the letters go only to TMPs or representatives (who presumably can bring the rest of their crew with them or not), or whether individual partner-levels can settle out. But the IRS Notice IR-2024-174, June 26, 2024, does the Acts 9:1 number on the non-settlers.

Warms my jagged old heart…more blogposts to come.

The Genius Baristas are cranking it up, as Judge Ronald L. (“Ingenuity”) Buch heads up a lineup straight from the DAWSON’s mouth. The new DAWSON petition generator is front-and-center, with the DAWSON owner hisself to tell you all about this latest self-representeds’ friend.

Looking for a test drive? Click here: https://ustaxcourt.gov/resources/outreach/Petition_Generator_Webinar_June_2024.pdf

IRS’ batteries haven’t ceased fire on Albero Holdings, LLC, Albero Investors, LLC, Tax Matters Partner, Docket No. 16284-21, filed 6/27/24. As we saw just two (count ’em, two) weeks ago, IRS’ bombardment has reached Albero’s rear areas (see my blogpost “A New Weapon From Washington?” 6/13/27).

The latest burst lands among two of the regulars in support, Messrs. VS and W, appraisers, who have appeared in several Dixieland Boondockery battles. It’s the usual: show up with documents, and dish. And the usual response: motion to quash, and to seal said motion.

Judge Elizabeth Crewson Paris does. And IRS to respond next month.

What were originally probing attacks have mutated into set-piece battles. Sixteen (count ’em, sixteen) lawyers for petitioner and IRS combined, plus (who else?) the Jersey Boys for Messrs. VS and W.

La partie continue.

Doc Gale was an optometrist, whose practice, between slow-pay insurance reimbursements and internet competition, was going south. He did pay employees first, rent second, and himself third. We all did that when we owned businesses. And, like us, Doc Gale definitely paid FICA/FUTA/ITW ahead of everyone else.

But he wrote checks to himself and Mrs. Doc Gale for the wages they would have gotten, based on the withholdings, except he didn’t sign some of the checks or cash any, signed or unsigned. And his business, which was a C Corp, deducted the amount of the unsigned and uncashed checks.

IRS allowed the C Corp’s deduction, hitting Doc Gale for those amounts as unreported income. Except Doc Gale never got the money.

This is a natural case for Judge Mark V. Holmes. And he deals with it in an off-the-bencher, Gale Stead, Docket No. 15925-21, filed 6/26/24.

The statutes are ambiguous, and the caselaw mostly involves solvent C Corps and their owners. While Doc Gale’s operation isn’t shown to be insolvent, cashing those checks might just put it there.

Judge Holmes takes a novel tack. Unfortunately, once again the Genius Baristas have made it impossible for me to cut-and-paste the language.

In short, there is no obligation from the C Corp to Doc Gale, no employment contract, declared dividend, or self-rental. But what would happen if a receiver, or bankruptcy trustee, or lien creditor succeeded to Doc Gale’s rights? Could they just sign and cash the checks for any amount? No, but they could cash the signed checks.

So Doc Gale has income to the extent of FICA/FUTA/ITW which the C Corp paid for him, and for any checks signed but uncashed. Unsigned, uncashed checks, no, not income.

Rule 155 to sort this all out.

Taishoff says this is the right emotional result. Fortunately, IRS can’t appeal, because if the C Corp was solvent when the unsigned checks were drawn, IRS could argue there was income and an immediate, nondeductible capital contribution. And I bet IRS would so argue in a similar case that is not a small-claimer.