No, not that phone call, the one that is every practitioner’s nightmare; I described it in my blogpost “The Phone Call,” 4/15/14.

This is Judge Goeke laying out the parameters for IRS telephonic testimony in the long-running saga of Scott A. Blum & Audrey R. Blum, Docket No. 5313-16, filed 5/6/24. Y’all will remember Scott, the toddler toy salesman turned computer millionaire; what, no? Then see my blogpost “OPIS Finis,” 1/18/12.

Judge Goeke doesn’t tell us why telephone testimony is allowed. I would have thought Zoom or equivalent, allowing observation of body language, would be a better choice when credibility of testimony is at issue. You can’t hear sweat or eyes turned away.

Howbeit, here’s what the terms are: “…the witnesses testifying by telephone are directed to complete their testimony: (1) with no notes or other documents/information accessible by them (unless permitted by the Court during the testimony); (2) with no one else present in the room with them; and (3) from a quiet location. If they plan to use cellular phones, the witnesses are also directed to testify from a location that they know to have good reception and to not view any text messages, websites, or other information during their testimony.” Order, at p. 1.

And to avoid the complications described in my blogpost “Oaths in Vietnam,” 3/30/21, “(T)he witnesses must also complete their testimony from the United States, and not be out of the country during the above-referenced Special Session.” Order, at p. 1.

No, not the innocent spousery special. Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan crafts a Rule 103 protective order for whistleblowing  in Thomas Shands, Docket No. 14483-23W, filed 5/3/24.

Tom has been here before, most notably last year, when he got a full-dress T. C. See my blogpost “A Statue in Ogden,” 3/8/23.

But Tom is still in there pitching, with his trusty attorneys hanging in there.

I recommend eyeballing the order, as a template not merely for whistleblowing, but for other Section 6103(h)(4)s. With some custom tailoring, of course.

To lose in Tax Court on a gross receipts adjustment of $2,741,399, and yet reduce a deficiency of $3,111,363 to an ultimate liability of $21,956, earns the trusty attorneys for Michael G. Parker & Julie A. Parker, Docket No. 16021-16, filed 5/2/24, a Taishoff “Good Job, Hors Concours, with oak leaves, swords, and diamonds”.

For the loss, see my blogpost “A Recourse,” 8/14/23.

Said trusty attorneys, alas, must be content with whatever long green Mike & Julie shelled out, and my heartiest congratulations, because Judge Nega said it took Mike & Julie too long to come up with the records that proved their case.

Hence IRS substantially justified, wherefore no Section 7430 legals-and-admins payday for said trusty attorneys.

Of course, IRS folded the chops, and notwithstanding the multi-year delay in Mike & Julie coming up with the stuff, Judge Nega finds (as IRS stiped) that Mike & Julie didn’t unduly protract the proceedings, and they met the dollar limits.

There’s minor argy-bargy over exhaustion of administrative remedies, but “…if a party never receives a notice of proposed deficiency (30-day letter) prior to the issuance of the statutory notice of deficiency and the party does not refuse to participate in an Appeals conference while the case is docketed, that party shall be deemed to have exhausted the administrative remedies available to it for purposes of section 7430(b)(1). Treas. Reg. § 301.7430-1(f)(2); see also § 7430(b)(1) (‘Any failure to agree to an extension of the time for the assessment of any tax shall not be taken into account for purposes of determining whether the prevailing party meets the [exhaustion of administrative remedies requirement].’).” Order, at p. 4.

IRS asked for a Form 872 extender, which trusty attorneys refused. Consent gets you the 30-day letter and a mandatory trip to Appeals (take it, if you want admins-and-legals), but refusal doesn’t.

“Under Treas. Reg. § 301.7430-1(f)(2), petitioners to the Court who never received a 30-day letter shall be deemed to have exhausted the administrative remedies available to them if they participate in an Appeals conference after the case is docketed. In the present case, petitioners never received a 30-day letter and participated extensively in an Appeals conference while the case was docketed with the Court. Accordingly, petitioners are deemed to have exhausted the administrative remedies available to them for purposes of section 7430(b)(1).” Order, at p. 4.

But, as always, there’s a catch; and, as usual, it’s found in a footnote. “Under section 301.7430-1(f)(2)(ii), the taxpayer does not actually need to participate in an Appeals conference while the case is docketed as long as the taxpayer does not refuse to participate.” Order, at p. 4, footnote 4.

The trusty attorneys played the strategic shellgame right. Practitioners, keep this in your toolbox; if you must go to Appeals, when and how you go matters.

The problem that the trusty attorneys can’t solve is digging up the records.

“In analyzing whether respondent’s position was substantially justified, we focus on the documentation available to respondent at the times that respondent stated its position. Respondent issued the notice of deficiency on April 15, 2016, and did not receive any additional information from petitioners other than the information on the face of the Petition between that date and respondent’s answer to the petition on September 2, 2016. For respondent to eventually concede many of the issues in this case, petitioners had to subpoena their own CPAs and spend many years tracking down documentation, with the last documents that led to a concession appearing to have been exchanged three years later in September 2019.” Order, at p. 5.

And that IRS folded a bunch heavy-duty items in the SNOD (hi, Judge Holmes) avails not.

“In the absence of supporting documentation, respondent’s position on each of the issues stated in the notice of deficiency was justified to a degree that would satisfy a reasonable person. Petitioners point to no misapplication of law or mistake in how respondent interpreted facts known to him—instead, petitioners highlight the later good-faith concessions by respondent as somehow establishing that respondent took a position lacking substantial justification. As noted above, the fact that respondent ultimately concedes an issue does not necessarily indicate that respondent’s position was unreasonable.” Order, at p. 5 (Citation omitted).

Judge Nega doesn’t cite Reg. Section 1.6001-1(e), which requires records “shall be kept at all times available for inspection by authorized internal revenue officers or employees.”

There being nothing noteworthy on the US Tax Court website today, I went back over some statistics, furnished me by WordPress, who hosts my lucubrations for a modest fee.

I find that this my blog has been read in 164 (count ’em, 164, and I have) countries, territories, and semiautonomous regions.

I remember a certain whiskey billing itself, many years ago, as “the best in the house in 167 countries.”

Only three to go.

I’ve noted before that one of IRS’ favorite moves from its cubby of happy tricks, feints and ruses is to slip an argument, fact, or admission past a petitioner. I call it submarining.

Here, it’s a Rule 90 Request for Admissions. I am a fan of these. They save time, eliminate factual issues. Of course, one can try to submarine dubious facts and conclusions of law on one’s own account, but beware. Too much gameplaying destroys credibility.

Goldmark Manufacturing, Inc., Docket No. 17866-22, filed 4/30/24, isn’t necessarily an injured innocent, neither it nor its principal having bothered to file income tax returns for the four (count ’em, four) years at issue. Said principal was uncooperative at exam, thus provoking IRS to assert Section 6651(f)(1) fraudulent failure to file chops.

The obligatory discovery joust leaves Goldmark short-stacked for failure to Branerton and make Rule 72 prior requests, before asking for copies of checks that neither IRS nor Goldmark’s bank has, due to passage of time. Judge Courtney D (“CD”) Jones adverts to Section 6001 recordkeeping obligations, but never squarely places the burden on Goldmark. She gives IRS summary J on the deficiencies and one chop (more about that infra, as my expensive colleagues would say) because Goldmark has no facts.

But the submarine comes in when IRS pulls a Rule 90(f)(1) deemed-admitted. Now deemed admissions can support penalties. And for fraudulent failure, a Section 6020 SFR doesn’t count as a return. However, the badges-of-fraud are required, as is clear and convincing proof that failure was willful and fraudulent. Deemed admissions don’t cut it.

“Respondent’s Motion for Summary Judgment relies on the deemed admission that ‘[f]or [the taxable years at issue], petitioner is liable for the penalty for fraudulent failure to file under I.R.C. §[ ]6651(f) in the amounts determined in the statutory notice of deficiency . . . .’ Under Rule 90(a), a request for admission must ‘relate to statements or opinions of fact or of the application of law to fact.’ Respondent’s request for admission impermissibly seeks to admit a legal conclusion.” Order, at p. 10. (Citations omitted).

And without the deemed admission, IRS has only the Michael Corleone gambit, classical variation, to play on the fraudulent failure to file.

IRS does eke out a Section 6655 failure-to-pay-estimateds chop.

Please excuse execrable pun (sorry, guys, the devil made me do it), but the trusty attorneys for I-20 Oconee, LLC, I-20 Oconee Limited, LLC, Tax Matters Partner, Docket No. 12663-21, filed 4/30/24, get a Taishoff “Good Try, First Class,” even as Judge Elizabeth Crewson Paris gives IRS summary J on the Boss Hossery in their Dixieland Boondockery.

It’s all the usual suspects, Belair, Raifman, Palmolive, and a bunch others (hi, Judge Holmes), all (or almost all) of which I’ve blogged, so I won’t waste time citing to them. “Personally approved” means what?

According to well-settled Tax Court precedent, just “OK.”

Said trusty attorneys aren’t buying, and apparently they have clients willing to call. As usual, the story is in a footnote.

“Petitioner’s Response to Respondent’s Motion for Summary Judgment… states that ‘Petitioner understands the Tax Court’s applicable precedent does not require Respondent establish a certain level of review to satisfy [section 6751(b)(1)].’ Therefore, petitioner ‘opposes Respondent’s Motion solely to preserve its position on appeal that a mere rubber-stamping of a penalty determination is not sufficient to constitute a “personal” review.’” Order, at pp. 3-4, footnote 4.

Of course, the I-20s are Golsenized to 11 Cir, the Circuit that gave us Hewitt. Cain’t hardly wait for the appeal. Maybe a Section 7482(a)(2(A) interlocutory?

Edited to add, 4/30/24: A word with one of I-20’s trusty attorneys reminded me that they had tried the Section 7482(a)(2)(A) route four (count ’em, four) years ago, and Judge Albert G. (“Scholar Al”) Lauber slammed the door on them. The trusty attorney was too well-bred to ask if I bothered to read my own blog, but I have, and here’s the story. See my blogpost “Chops Aren’t Ultimate,” 3/20/20.

We’ve seen plenty of cascade cases, where credit elects roll down and down. But Elizabeth White, T. C. Memo. 2024-53, filed 4/29/24 (The End of Palindrome Week), has a cascade of unpaid years, to which were applied the entire payment she now seeks to apply to the year for which she petitions the NITL.

The NITL arises from a Section 6213(b)(1) “math error” notice. So Elizabeth had no opportunity to contest her miscalculation of taxable Social Security (no easy task for a pro se) and overstated withholding for the one year at issue. IRS had told her the $7K she’d previously paid was applied to wipe out one past year and partially-pay another, but left year-at-issue unpaid.

Her petition says she wants to contest all three (count ’em, three) years, but only the last of these is at issue, as IRS has taken no collection action for the others.

Judge Albert G. (“Scholar Al”) Lauber has this one.

There’s no deficiency jurisdiction for a math-error, but a petitioner can backdoor this in a CDP. For more, see my blogpost “Searchin’, Searchin’,” 6/19/17.

However, Elizabeth said at first she didn’t want a collection alternative, but wanted to fight about what payments were applied to all years.

“In sum, petitioner did not properly raise an underlying liability challenge to her [year at issue] tax liability during the CDP hearing. Rather, she contended that her tax for [year at issue] had been paid. That contention did not constitute a challenge to her underlying liability, and the contention in any event was incorrect.” T. C. Memo. 2024-53, at p. 6.

Elizabeth finally said at the CDP she wanted an OIC, but put in no offer.

No abuse of discretion.

That’s Judge Morrison’s advice to IRS counsel, and all parties who want to preclude testimony but find they must avail themselves thereof on the trial.

Here’s Eric Maurice Pinckney, Docket No. 5050-19, filed 4/26/24. Setting the scene, “…respondent filed a Motion in Limine asking the Court to ‘preclude petitioner from examining Revenue Agent . . . M regarding his manner and motives in examining petitioner’s income tax liabilities for the years at issue.’ In the motion, respondent relied on Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327 (1974). The Court did not rule on the Motion in Limine.” Order, at p. 1. (Name and citation omitted).

Ol’ Greenberg has been throwing out tales of woe at Exam for fifty (count ’em, fifty) years, with no end in sight.

Most pro ses never got the word that, when a SNOD is on the menu, the past is off the table. De novo means tabula rasa.

But IRS counsel calls M as a rebuttal witness, and saves Judge Morrison the trouble of deciding the motion. “Some of the testimony adduced by respondent from M involved ‘his manner and motives in examining petitioner’s income tax liabilities.’ Putting this testimony into the record suggests that respondent was no longer standing by its broad position in its Motion in Limine that all testimony by M as to his manner and motives in examining petitioner’s income tax liabilities is inadmissible. Later petitioner also examined M. During this examination, respondent made several oral objections to portions of M’s testimony. At least one objection was based on Greenberg’s Express, Inc. v. Commissioner. Making these specific oral objections suggests that respondent was no longer standing by its broad Motion in Limine position that all testimony by M as to his manner and motives in examining petitioner’s income tax liability is inadmissible.” Order, at p. 1. (Name and citations omitted).

Motions in Limine are the usual thing in Tax Court litigation. Might be a good idea to put one in up front, and ask the judge to reserve ruling until trial. But remember, if you decide (or are forced by the other side or the judge) to cross the threshold, the motion won’t save you if you miss an objection to testimony or documents.

“We conclude that the Motion in Limine did not preserve any objections that were not made by respondent orally during the testimony of M. All such oral objections were considered and resolved during the trial. Therefore the Motion in Limine is moot.” Order, at p. 1. (Name omitted).

So, if you need to object, say it loud.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan announces the appointment of Charles Jeane, Esq., as Chief Clerk of the United States Tax Court, said appointment to date from 19 April. Mr. Jeane had been acting Chief Clerk since January.

Now as we welcome Chief Clerk Jeane, we can hope for the appointment of a Public Affairs Officer to serve under him.

STJ Jennifer E. (“Publius”) Siegel’s three-page Sum. Op., Caren Kohl, a.k.a., Caren Rein, T. C. Sum. Op. 2024-4, filed 4/25/24, tells a story that’s all too familiar to those of us who served our apprenticeships in what was then called “the snakepit,” or “the zoo,” the calendar call in New York City Housing Part; mine was at 111 Centre Street, long ago.

Of course, STJ Publius’ exalted career path took her far from the sordid purlieus wherein this story takes place. To summarize, “… when she was in her early 50s, petitioner received a taxable retirement plan distribution of $10,342. She withdrew the money to pay past-due rent and to avoid being evicted by her landlord. Petitioner did not include the distribution in income on her 2018 Form 1040, U.S. Individual Income Tax Return.” T. C. Sum. Op. 2024-4, at p. 2.

Easy enough to recall lawyers with bushels of files, pro ses with haunted eyes, crying babies and muttering old folks, Court officers alternately harried or bored, a scene looking for a Daumier. Finally, a bank check handed over, a stip scrawled and handed to a clerk, and we head for the office and a dozen telephone messages.

“Petitioner’s position remains, however, that she should not be liable for the additional tax imposed by section 72(t) because she withdrew the funds due to economic hardship.” T. C. Sum. Op. 2024-4, at p. 2.

The ending is simple enough.

“Petitioner’s only argument in opposition to the imposition of the additional tax is that withdrawals made for economic hardship are exempt from it. To support her claim, petitioner points to section 72(t)(2)(I), enacted by the Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, div. T, 136 Stat. 4459, 5296 (2022). That provision exempts certain withdrawals made for emergency expenses from the additional tax. However, section 72(t)(2)(I) applies only ‘to distributions made after December 31, 2023.” Consolidated Appropriations Act § 115(c), 136 Stat. at 5297. It is not applicable to the distribution petitioner received in 2018. And because it is not, petitioner is liable for the additional tax on her early retirement plan distribution.” T. C. Sum. Op. 2024-4, at p. 3.

The law, of course, is the law, and STJ Publius may not vary it.

Taishoff, laboring under no such restraint, may point out that being homeless in Fun City is no fun. Especially for a woman in her fifties, early or late.

And, while I’m about it, why has OCC, underfunded, understrength, overworked and underpaid, as Danny Werfel would have us believe, allocated and deployed three (count ’em, three) of their hard-pressed attorneys to this case? Is Caren, broke and facing homelessness, a threat to the fisc equal to the clients of some of my two-Grey-Goose-martini luncheon colleagues?