William Schmidt

About William Schmidt

William Schmidt joined Kansas Legal Services in 2016 to manage cases for the Kansas Low Income Taxpayer Clinic and became Clinic Director January 2017. Previously, he worked on pro bono tax cases for the Kansas City Tax Clinic, the Legal Aid of Western Missouri Low Income Taxpayer Clinic and the Kansas Low Income Taxpayer Clinic. He records and edits a tax podcast called Tax Justice Warriors.

Shades of Graev and Whistleblower Awards: Designated Orders 6/10/19 to 6/14/19

While we come to another week for designated orders, this week only had a set of three released on the same day.  Two of the designated orders are based on bench opinions from Judge Carluzzo while another order comes from Judge Gustafson.  I will begin with Judge Carluzzo’s bench opinions, which touch on Graev regarding supervisor approval.  At the end, Judge Gustafson’s order delves into IRS approvals of a different sort, this time for whistleblower awards.

Taxpayer Substantations and Supervisor Approval for More Graev Considerations

Docket No. 13675-18S, Michael Hanna & Christina Hanna v. C.I.R., Order available here.

The first order does not stand out at the beginning as Mr. Hanna testified regarding his medical expenses and employee business expenses.  He provided no other proof regarding his medical expenses, vehicle expense deduction, or purchases of tools and supplies.  Since there was no substantiation, the judge sustained those denied deductions.


Docket No. 11648-18S, David L. McCrea & Denise McCrea v. C.I.R., Order available here.

The second order also does not seem terribly noteworthy.  Ms. McCrea ran a business as a wholesale seller of herbal medical products.  At first, the McCreas disagreed with an IRS assessment of their beginning inventory and purchases, but came to accept the IRS adjustments. 

The McCreas still disagreed with the IRS regarding their ending inventory.  The McCreas want the value to be the amount on their Schedule C for 2014.  The IRS, however, provided a different exhibit received by the IRS revenue agent during the course of examination.  The document is a physical inventory, which the petitioners claim is taken at the end of each year.  The results are provided each year on a document to their return preparer, who claimed he used the document to prepare their tax return, but did not supply the document to the IRS.  In fact, it seems a mystery for the petitioners who provided the document to the IRS.  Even though the parties’ exhibits are similar, there are items omitted from the Schedule C document that are on the IRS exhibit.  The difference between the two values is $21,112.

Judge Carluzzo finds a compromise.  The ending value on the Schedule C shall be supplemented with the items on the IRS exhibit that are not shown on the Schedule C.  The result needs to be calculated and will either match the Schedule C or a lesser amount.

The likely reason both orders were designated by Judge Carluzzo comes from an examination in both cases of 6662(a) penalties.  The evidence in each case showed that a supervisor approved imposition of a penalty on a date that preceded the issuance of the notice of deficiency.  The petitioners for each case were first formally advised regarding the imposition of the penalty on a date that preceded issuance of the notes.  As a result, the IRS imposition of the section 6662(a) penalties were rejected.

Takeaway:  Judge Carluzzo is reviewing 6662(a) penalties and will reject those penalties if they do not line up correctly in the timeline.

Whistleblower Claim Remanded to Whistleblower Office for Further Consideration

Docket No. 13513-16W, Loys Vallee v. C.I.R., Order available here.

In a whistleblower case, one of the main questions under IRC section 7623(b) is “whether the IRS collected proceeds as the result of an administrative or judicial action using the whistleblower’s information.”

Petitioner Loys Vallee provided information to the Whistleblower Office, but he was denied a claim by the IRS for a whistleblower award.  At issue before the Tax Court is the completeness of the administrative record.  Mr. Vallee filed a motion to compel production of documents in 2017 that led to what the IRS contends is the complete administrative record in 2018.  The parties filed their responses concerning the completeness of the record and it is now before the judge to make a decision.

The debate concerns the number of individuals who received the information and whether they forwarded that information to other IRS employees.  Partially, this debate is supported by the fact that not all the declarations stated that they did not forward Mr. Vallee’s filed information to any other group or person than those stated in the declaration.  Mr. Vallee provides his own list of individuals who had access to the information he provided.

Mr. Vallee makes statements concerning Corporation D, Related A, and Related B in his submissions to the Court.  Corporate D and Related A consolidated and he argued the consolidation allowed Corporate D to use Related A’s accumulated tax credits to satisfy its own tax liability in a method known as refund netting.  The Tax Court notes that Mr. Vallee did not use the term refund netting in his Form 211 or the lengthy attachments so cannot advance a new claim or try to cure deficiencies in previous claims.

The Court reviews the information from the IRS and notes there is an issue with what they provided.  The IRS states that the four individuals they cite that received the information followed the protocol of the Internal Revenue Manual (IRM) and kept the petitioner’s information confidential.  They have provided a declaration for one individual named and state there was no need to follow up with the other three individuals since her form provides feedback about the division.  Judge Gustafson disagrees, stating that while the actions discussed indicate the individuals followed IRM provisions, the IRS needs to provide affidavits or declarations concerning the other three individuals.  The declaration in question provided cannot cover personal knowledge about the actions of the other three individuals.

The judge says that there are still two unanswered questions regarding Mr. Vallee’s entitlement to a whistleblower award.  Who received the Form 211 information and what did they do with it?  Was that information used in an examination that resulted in the collection of proceeds?  Even though Mr. Vallee argues against remand, the judge shows that it is proper in a whistleblower award determination for remand regarding an insufficient administrative record.

Ultimately, the case is remanded to the Whistleblower Office for further consideration of those two questions and development of the administrative record.  The Whistleblower Office is to issue a supplemental determination with an explanation of the determination regarding the two questions.  They are to certify additions to the administrative record and that what has been provided constitutes the entire administrative record.  The judge ends by requiring the parties to provide (joint or separate) timetables for further administrative proceedings.

Takeaway:  There have been several looks at whistleblower claims in designated order blog posts in Procedurally Taxing.  While I do not know how much the IRS approves whistleblower claims, we get to review the denials.  From this vantage point, it seems like the IRS will fight the claims as much as possible.  The IRS basically attacks the claims on either of two fronts: (1) no action was taken by the IRS against anyone mentioned in the information provided or (2) any actions taken by the IRS concerning the individuals or businesses mentioned in the information provided by the whistleblower was based on other information and not based on the information provided by the whistleblower.

Mr. Vallee is fighting in Tax Court concerning the completeness of the administrative record and Judge Gustafson supports that fight by requiring the IRS to update who received that information and what actions they took.  Ultimately, the answer to be settled is whether the IRS took action against the businesses in question based on Mr. Vallee’s submission, settling whether he truly has a whistleblower claim.

Collection Due Process and Webber v. C.I.R.

I am part of the Collection Due Process (CDP) Summit Initiative that Carolyn Lee wrote about in a recent post to Procedurally Taxing.  The initiative consists of a group of tax practitioners and others working with the IRS to discuss CDP issues toward the goal of eventual improvements for the IRS and taxpayers.  The genesis of that initiative comes from a panel I was on as part of the American Bar Association May Meeting this year in Washington, D.C.  Among others, that panel included Carolyn, Keith Fogg, and Judge David Gustafson of the U.S. Tax Court.  More information is available here.

Recently, when I read a particular order submitted by Judge Gustafson during a week Samantha Galvin was monitoring Tax Court designated orders, I requested to submit a separate piece focusing on that order. Since I knew Judge Gustafson had an interest in CDP issues and since he spends a good portion of the order’s focus on CDP procedure, I wanted to provide some analysis of its significance.

The designated order in Scott Allan Webber v. C.I.R., here, has facts that on their face can be simply summarized (a CDP request mailed by a taxpayer to the wrong address led to an IRS motion to dismiss in Tax Court), but what makes the order so interesting instead are procedural issues and Judge Gustafson’s analysis.


Procedural Issues

The procedural history for Mr. Webber begins with his 2013 income tax liability.  After the IRS assessed a liability which he did not pay, the IRS mailed to Mr. Webber a Notice LT11, the CDP Notice.  That notice is a notice of intent to levy and notice of right to a hearing.  Judge Gustafson describes the LT11 as performing double duty, because it also serves as a demand for payment by its conspicuous language and larger type.

At the top of page 1 for Mr. Webber’s LT11, the return address showing where the IRS mailed the notice from was a post office box in Philadelphia, Pennsylvania.  At the bottom of page 1, with payment information, there was listed a post office box for the IRS in Kansas City, Missouri.  The bottom of page 2 also provides the post office box for the Philadelphia address on the reverse side of the Kansas City address.  To summarize:  two addresses for Philadelphia on pages 1 and 2 with an address for Kansas City on page 1, but on the reverse side of the Philadelphia address on the second page.

Mr. Webber filled out Form 12153 to request a CDP hearing.  He filled out his paperwork correctly until it came to how he placed the paperwork in the envelope (with the address showing through the cellophane) on where to mail his form to the IRS.  He placed the Kansas City address facing out in the envelope as though he was making payment rather than requesting a CDP hearing, mailing it to the incorrect address for making a CDP request rather than to the Philadelphia address to which the IRS wanted a CDP request to go.

He mailed his Form 12153 on February 22, 2018, for the CDP hearing which had a request deadline of March 4, 2018.  March 4 was a Sunday so timely arrival would have been on or before Monday, March 5.  The request was received by the IRS in Kansas City on Thursday, March 1.  Five calendar days (three business days) later, the Kansas City location faxed the CDP hearing request to the Philadelphia location on Tuesday, March 6.  Effectively, the CDP hearing request arrived at the correct location one day after the deadline.

IRS Appeals treated the CDP hearing request as untimely so did not grant a CDP hearing, but an equivalent hearing.  The CDP hearing is subject to judicial review by the Tax Court, but an equivalent hearing is not.  A CDP hearing produces a Notice of Determination that supports Tax Court jurisdiction.  Mr. Webber received a Decision Letter dated June 13 based on his Equivalent Hearing.  Mr. Webber timely mailed a Tax Court petition even though he received the equivalent hearing’s form. The case stating the Tax Court can review an equivalent decision letter as if it were a notice of determination is Craig v. Commissioner, 14649-01L, here.

On May 22, 2019, the IRS filed a motion to dismiss for lack of jurisdiction.  In the motion, the IRS stance is that the hearing request was timely mailed, but sent to the wrong address.  Receipt to the correct address a day late means the taxpayer is not entitled to a CDP hearing.

Judge Gustafson’s Analysis

Judge Gustafson’s order requested a supplemental memorandum from the IRS regarding their motion to dismiss regarding two issues:

1. The addressing of the CDP hearing request

Judge Gustafson cites Question and Answer C6 of Treasury Regulation § 301.6630-1(c)(2), which states the written request for a CDP hearing must be sent to the IRS office and address as directed on the CDP notice.  He points out that there were not one, but two addresses on the CDP notice.

From there, Judge Gustafson mentions how he almost mailed a bill payment to an incorrect address in a similar fashion.  “That is to say, we sympathize with a taxpayer who is confused by the design of Notice LT11.”  He also notes that the IRS has to deal with complex paperwork for the nation and “it is entirely reasonable for the IRS to request a given type of document to be submitted to a given location.”

Judge Gustafson summarizes his position regarding the address issues with Notice LT11 best in this paragraph:

However, where the IRS intends to require that a CDP hearing request be sent to a particular address, and where it takes the position that a CDP hearing request sent to a different address is invalid and ineffectual, and where it argues that the use of the wrong address ultimately deprives the Tax Court of jurisdiction over the case–in such a circumstance, we wonder whether an occasion for confusion is predictably and unfairly created by (a) combining the CDP notice with a gratuitous demand for payment, (b) providing multiple address slips back to back with multiple addresses , (c) putting the wrong address slip on the front page of the notice, and (d) failing to label the CDP address slip with any indication that it is the CDP address slip. It would seem reasonable for the IRS either to insist that a CDP hearing request must be sent to a specific address or to decide to make use of its mailing of a CDP notice for the additional purpose of soliciting payments to be mailed to a different address–but probably not both.

2. The timeliness of the CDP hearing request

Looking at Internal Revenue Code §§ 6330 (a)(3)(B) and (a)(2), Judge Gustafson notes that a taxpayer has the right to request a CDP hearing within the period of “30 days before the day of the first levy” while other statutory language cited by the IRS refers to the “30-day period commencing the day after the date of the CDP notice.”

The judge states he would benefit from the IRS filing the supplement to the motion and would also like them to state how they reconcile the statutory language above with the position taken in the motion to dismiss.  Additionally, the judge requested to know when (if ever) the IRS made a “first levy” with respect to Mr. Webber’s liability, and the IRS position whether treating a CDP hearing request as untimely in such a circumstance constitutes an abuse of discretion by Appeals. 

Taylor v. C.I.R.

First of all, I would like to take a detour into another Tax Court order that I found when researching CDP for the panel presentation I mentioned above.  I came across Rodney A. Taylor v. C.I.R., order here, which is an order by Judge Carluzzo.  In the order, we have a similar CDP situation.  Here, the Tax Court petitioner timely mailed the CDP hearing request to the IRS, but sent it to the wrong address.  By inference, it made it to the correct address after the deadline.

The order is two paragraphs long so I could quote it in its entirety, but I will focus on this: 

because respondent has not demonstrated sufficient prejudice resulting from the manner that the request was mailed to insist upon strict compliance with the Treasury Regulations relied upon in support of his motion, we find that petitioner’s request for an administrative hearing was timely made.

The decision letter was treated as an equivalent of a notice of determination to allow for Tax Court jurisdiction.  Judge Carluzzo ordered that the IRS motion to dismiss for lack of jurisdiction is denied.

Judge Carluzzo gets to his result in a direct fashion.  While he lacks Judge Gustafson’s analysis in this order, he makes the point that the IRS should show how they suffered prejudice by receiving a CDP hearing request at the wrong address within the IRS bureaucracy or he will deny their motion to dismiss for lack of jurisdiction.


After the entry of the order requesting that the IRS provide responses regarding its motion to dismiss, Keith Fogg, through the Legal Services Center of Harvard Law School, entered his appearance for Scott Allan Webber.  He did not want to comment on current litigation, but shared with me documents filed in the case.

The IRS filed a motion to withdraw the motion to dismiss for lack of jurisdiction.  The body of the motion is 2 pages and cites Judge Gustafson’s order, where he ordered them to supplement the motion to dismiss for lack of jurisdiction “unless [the Commissioner] withdraws his motion to dismiss.”  Basically, the IRS takes door number two and quietly exits the stage.  There is no explanation of IRS reasoning regarding either of the motions.

The Harvard clinic filed a response in support of the IRS motion to withdraw.  Basically, their stance is that the 30-day statutory period to request a CDP hearing is a nonjurisdictional claims-processing rule subject to equitable tolling and waiver, which they claim are present in Mr. Webber’s case.  I am not going to steal the clinic’s thunder regarding its arguments for equitable tolling and waiver as it will take further space to summarize those pages.  I will note that he does disclose adverse legal authority in the Tax Court as Judge Nega granted IRS motions to dismiss in two cases involving the same taxpayer (Nunez v. Commissioner, 2925-17L here and 2946-17L here).  I found the response to be well drafted and note that the response was prepared with assistance by law students Michael Waalkes and Silvia Perdochova.

Judge Gustafson granted the IRS motion to withdraw by a court stamp that states “granted” on the motion.  While it would have been nice if there was an opinion from Judge Gustafson on the jurisdictional issues, it was not to be.  Though the Tax Court has the Webber case scheduled for trial on September 16, the jurisdictional portion is no longer at issue.


It is difficult to draw conclusions from this case regarding positions from the IRS and the Tax Court.  The IRS did not say much and the Tax Court says less.  From the Tax Court, I noted that some past orders look to be taxpayer-friendly while others seem to favor the IRS.  From the IRS in this case, the motion to dismiss took the stance that a day late is not good enough and then backtracked for unstated reasons following Judge Gustafson’s order requesting further explanation.

Overall, my takeaway from the filings in this case are that there are problems with the CDP process affecting everyone involved.  Judge Gustafson pointed out several issues with the LT11.  It is framed like a billing statement, not a notice for informing taxpayers of their rights.  It is confusing for taxpayers on where to mail Form 12153 to request a CDP hearing due to multiple addresses listed on the notice.  Perhaps a centralized address would be better.  If a taxpayer makes a mistake and timely mails the form to the wrong address within the IRS organization, what should be the result?  What should be made of the different 30-day standards Judge Gustafson cites regarding timeliness?  In the clinic’s response, it makes several arguments that the 30-day statutory period is a nonjurisdictional claims-processing rule subject to equitable tolling and waiver.  I do not know that this case brought answers, but it certainly brought several questions regarding CDP.

I am proud to be part of a CDP Summit initiative that is working to bring improvements to the CDP process.  I am glad that we are sparking conversations with various IRS departments, private practitioners, LITC directors, Tax Court judges, and others to develop processes that bring benefit to the tax system and everyone involved.  Hopefully we can learn lessons from Webber to improve the CDP process for taxpayers in the future.

Reflections on the impact of Nina Olson by William Schmidt

William is the director of the tax clinic at Kansas Legal Services. His bio is below because he is one of the designated order authors. The scholarship that William references is one of the many ways that the ABA Tax Section assists Low Income Tax Clinics and the clinicians who work there. Keith

I was a student intern at an LITC during law school but then there were several years in private practice where I juggled tax research with work in other areas of law during the rest of the year. When I started working full-time for the Kansas Legal Services LITC in 2016, I made a point of diving in to the LITC world. I received a scholarship to the American Bar Association Tax Section Fall Meeting in Boston. As part of the scholarship, I had to attend the Pro Bono & Tax Clinics Committee meeting on Saturday morning. On the slate was an address by the National Taxpayer Advocate, Nina Olson, at 8:30 so the scholarship recipients were told not to show up late.

When the address started, I was taken in by Nina’s manner — bold, outspoken and highly intelligent. She was one to speak her mind and she launched into a recount of that year’s taxpayer forums she held across the country. During that conference’s session, Nina updated us on her recent interactions and what the status was on various efforts to make improvements for taxpayers, especially low income taxpayers.

I made a point of introducing myself to Nina at that conference and she was polite, welcoming me in to the LITC world. I also made a point of introducing myself to Keith Fogg at that conference, offering to get involved in his writing projects. I wonder what became of that little suggestion.

I learned Nina was a frequent participant at ABA Tax Section conferences and LITC conferences. She sometimes chided those of us in the LITC, but that is because she has high standards and holds everyone working with taxpayers to those standards.

By now, I have come in contact with the reports to Congress, the blogs, the videos, and other various communications from Nina and the Taxpayer Advocate Service. Nina has been a zealous advocate for taxpayers, winning battles in support of taxpayer rights.

I am unable to recount all of Nina’s accomplishments since I do not share that history. I can say, though, that without her involvement there would not be an LITC program that could have taught me about tax controversies and eventually provided me this career path and the various opportunities I now have.

She has inspired me to work harder for low income taxpayers. I became part of an initiative this year that is working to bring improvements to collection due process. That initiative could impact taxpayers, the IRS, and the U.S. Tax Court to help everyone involved. I think Nina has been a direct example of how to fight for taxpayer improvements because they benefit us all.

I do not want anyone to think that tributes like this mean it is the end of the road. Nina has promised that she will continue to advocate for taxpayers. She also agreed to be interviewed on my podcast in the future. I expect she will keep those promises and I know she will say something worth hearing.

Designated Orders: Another Graev Issue and More Petitioners Refusing to Sign a Decision (5/13/19 to 5/17/19)

This week had only three designated orders. The subjects include further Graev analysis, an issue again before Judge Buch where petitioners signed a stipulation but refuse to sign the decision, and a short order concerning odd behavior by petitioners.

Graev Issues Affect Rich and Famous Petitioners
Docket No. 17514-15, Hisham N. Ashkouri & Ann C. Draper v. C.I.R., Order available here.

Caleb Smith previously blogged on this case, noting the celebrity nature of the petitioners here. Without digging too deep into the nature of the case, I will say that it is another notice of deficiency Tax Case falling under Graev analysis concerning IRS supervisory approval for section 6662 penalties.
In this case, the IRS seeks to introduce evidence of supervisory approval into the record. The petitioners argue that Appeals amended the tax liability by offering to reduce the deficiencies by 50% of what was previously stated. They argue that offer amounts to a fundamental change and it supersedes the prior 30-day letter.


The Court’s analysis is that it is not a fundamental redetermination of the tax liabilities, but a simple offer reducing the proposed adjustment in half. The Court determination is that the evidence the IRS seeks to introduce concerning supervisory approval is not cumulative or impeaching, is material to the penalty issues, and has potential to change the Tax Court decision concerning the penalties by establishing IRS compliance (the evidence concerning one of the supervisors would not have been sufficient and would have been late but opening the record would include the second supervisor’s statement, which will bolster the record).

The Court’s order is to reopen the record and, because petitioners have no grounds for exclusion, the declarations by both supervisors with accompanying attachments will be received into evidence. Also, it is found as a fact that the penalties determined in the notice of deficiency were proposed, then approved by the immediate supervisor.

Takeaway: Being rich and famous may mean raising better arguments than low income taxpayers, but that doesn’t mean you will automatically win in a Graev/Chai ghoul case.

Déjà Vu – Judge Buch Set Aside Another Signed Stipulation?
Docket No. 5629-17, Thomas L. Kitts & Amanda M. Kitts v. C.I.R., Order and Decision available here.

In a bit of a repeat of my April posting on designated orders, Judge Buch is again in the position where petitioners have signed a stipulation with the IRS but do not want to sign the decision. Will Judge Buch come to the same decision here?

The parties were scheduled for a trial December 10, 2018, but signed and submitted a stipulation of settled issues. The case was not called and the Court gave the parties until February 8, 2019, to submit a decision based on the stipulation.

In December, the IRS mailed to the Kitts a proposed decision with accompanying computations. The Kitts did not sign the decision. In February, their accountant sent to the IRS a letter stating they did not agree with the decision because they felt they received misrepresented information in the stipulation mainly because they did not have income tax computations at that time.

After the IRS received the letter, the parties held a conference call with the Court. The IRS agreed to correct a computational error in the proposed decision. The IRS later filed a motion asking for entry of a decision under Rule 50 pursuant to the stipulation and in accordance with the corrected proposed decision. The Kitts filed a motion to be relieved of the stipulation with claims of IRS misrepresentation.

Within the analysis, the judge states the Court uses broad discretion to permit relief from a stipulation only when necessary to prevent manifest injustice. While damaging relief upon a false or untrue representation of a party is ground for relief from a stipulation, the Kitts did not provide basis to support their claim of misrepresentation. They may have misunderstood the tax effect of their stipulation but their unilateral mistake (if there is one) is not grounds to set aside the stipulation. The Court is unlikely to grant relief from a stipulation entered into through considerable negotiation. Here, the parties freely and fairly signed the stipulation after both parties were aware of what was at issue.

The Kitts contend the IRS did not follow their internal rules for Rule 155 computations or the Department of Justice Tax Division Settlement Reference Manual regarding timely supplying Rule 155 computations. The judge states these contentions are irrelevant and not binding on the IRS.
The parties had opportunity to negotiate or go to trial, choosing to stipulate to resolve all issues. The judge determines that manifest injustice will not result from enforcement of the stipulation and orders that the IRS motion for entry of decision is granted.

Takeaway: Again, it will be difficult to avoid signing a decision after signing a stipulation in Tax Court. The burden to prove manifest injustice will result by signing a decision is high so petitioners should expect to sign the decision after signing a stipulation.

Short Take
Docket No. 19951-18SL, William B. Recarde & Dorothy A. Recarde v. C.I.R., Order of Dismissal available here.

The petitioners filed their “Petitioners’ Withdrawal of Case.” Judge Carluzzo reads it as their request for the case to be dismissed, so he orders that their case is dismissed and that their motion to compel is moot.

Carl Smith reminded me that this would be a Collection Due Process (CDP) case as the Tax Court has held that a taxpayer may voluntarily dismiss a CDP or whistleblower award case at any time (so long as it is not prejudicial to the IRS), but not a deficiency or a transferee liability case.

Takeaway: I’m not sure if this is a case of being careful what you wish for or not. Since the petitioners filed to withdraw their case, that is what they got. Be sure that what you file with Tax Court is consistent with what you want.

Designated Orders: Whether to Set Items Aside and Denied Motions for Summary Judgment (4/15/19 to 4/19/19)

This week brought a series of five designated orders. The subjects include Collection Due Process, Notices of Federal Tax Lien, settlements agreements, innocent spouse analysis, and denied motions for summary judgment.

Setting Aside a Notice of Federal Tax Lien?
Docket No. 3402-18 L, Esteban Baeza v. C.I.R., Order & Decision available here.

This case concerns Collection Due Process (CDP) for a notice of federal tax lien for years 2012 to 2015.

Mr. Baeza’s issues for 2012 are quickly dealt with. For 2012, Mr. Baeza filed an amended tax return that took care of his liability and resulted in a tax refund. The lien has been released so the IRS moved that the case be dismissed for that year on grounds of mootness. Mr. Baeza did not object so the Court granted that motion.

For years 2013 to 2015, Mr. Baeza had liabilities for those years and eventually entered into an installment agreement concerning the three years. However, the IRS machinery was already working and days before he entered into the installment agreement, they sent him a Notice of Federal Tax Lien, showing liabilities totaling about $58,000 for the three years. It is presumed he did not have that notice before entering into the installment agreement.


Mr. Baeza’s representative sent a form 12153 to the IRS, requesting a Collection Due Process hearing. The form requested withdrawal of the lien because of the installment agreement. There was no dispute of the liability or proposal of collection alternative (beyond the installment agreement in place). The argument was that the lien was improper due to the pending installment agreement.

IRS Appeals determined that all required legal procedures were followed in filing the notice of federal tax lien. The notice of determination had an attachment explaining why withdrawal was not appropriate.

The IRS filed a motion for summary judgment but Mr. Baeza did not respond. Because it is reasonable the IRS filed a notice of lien in order to protect its ability to collect in the event Mr. Baeza fails to fulfill the terms of the installment agreement and Mr. Baeza also did not provide arguments against that filing, Judge Gustafson granted the motion for summary judgment concerning tax years 2013 to 2015.

Takeaway: The notice of federal tax lien filing is routine for the IRS in collection cases, even when a taxpayer sets up an installment agreement. As the standard of review in Tax Court for these CDP cases is abuse of discretion by the IRS, the petitioner will need to actually make an argument concerning an abusive IRS practice in order to overcome the IRS motion for summary judgment.

Setting Aside a Signed Settlement?
Docket No. 27486-16, Edward Roberson & Connie Roberson v. C.I.R., Order and Decision available here.

The IRS sent the Robersons a notice of deficiency for 2011 and 2012 and Mr. Roberson a notice of deficiency for 2013 and 2014. The Robersons timely petitioned the Tax Court for a redetermination of both notices of deficiency. The IRS eventually amended its answer to assert Schedule C gross receipts for 2014.

The case was calendared for trial and called on November 5, 2018. After the case was called but before trial, the parties submitted a signed stipulation of settlement. The parties agreed in the stipulation that Mr. Robersons’ 2014 Schedule C gross receipts were $108,717 and gross expenses were $30,616. Counsel for both parties signed the stipulation. The Court gave the parties until January 7, 2019, to submit a decision reflecting the stipulation.

In November 2018, the IRS mailed the Robersons a proposed decision reflecting the stipulation for all years at issue. The IRS returned to work on January 28, 2019, (following the government shutdown) and found the Robersons had not signed the decision. They informed the IRS they would not sign the proposed decision.

The IRS filed a motion, asking the Court to enter a decision pursuant to the stipulation of settlement. The Robersons responded to the motion with new calculations adjusting the 2014 Schedule C gross receipts from $108,717 to $68,019 and gross expenses from $30,616 to $55,268, with penalties and interest adjusted accordingly.

Judge Buch analyzed the situation, stating that the claim of an error in the stipulation does not relieve the Robersons from responsibility for signing the stipulation. The Court may modify or set aside a stipulation that is clearly contrary to the facts, but does not set aside a stipulation consistent with the record simply because one party claims the stipulation is erroneous. They may grant relief if a party asserts contractual defenses, but a unilateral mistake of fact in a binding, unambiguous stipulation is not a ground for relief.

In this case, the Robersons did not present contractual defenses. They raised the issue of the error only after entering into the stipulation. Their unilateral mistake (if there is one) is not grounds to set aside a contract. The Court is unlikely to grant relief from a stipulation entered into after considerable negotiation. The Robersons note that the stipulation was following a “take-it-or-leave-it” offer by the IRS. Judge Buch points out the Robersons and their counsel were on notice of the IRS amended answer so all parties signed the stipulation long after being aware of what was at issue and had ability to go to trial. The judge was reluctant to relieve the petitioners from a stipulation after already entering into the stipulation with full knowledge of the relevant facts, so granted the IRS motion for entry of decision.

Takeaway: This case details the difficulties to avoid signing a decision after signing a stipulation. The stipulation will generally bind the parties and the judge detailed the few exceptions. One should expect to sign the decision after signing a stipulation in a Tax Court case.

Innocent Spouse Analysis
Docket No. 5680-18S, Elaine S. Thomas, Petitioner, & Robert Roy Thomas, Intervenor, v. C.I.R., Order (bench decision) available here.

The petitioner and intervenor married in 1987 and divorced in 2016. The parties filed a joint tax return in 2012 and had a liability for that year of $5,551, which the parties stipulate was due to the intervenor.

The petitioner had filed for innocent spouse relief for that year, which was denied by the IRS, and filed a subsequent petition to Tax Court concerning that decision and the intervenor filed to be a party to the Tax Court case.
Judge Carluzzo agrees with much of the analysis and conclusions in the IRS pretrial memorandum and comments on the areas of disagreement. First, the judge finds that petitioner did not know, or have reason to know, that the intervenor would not pay the unpaid liability shown on the return. The judge considers the factor neutral, rather than weighing against relief, as the IRS categorized it.

In the marital separation agreement, both former spouses agreed to split the IRS liability. The judge weighs this factor against granting relief, though the IRS categorized it as neutral.

The judge notes that he arrived at the same score of factors as the IRS – one in favor, one (possibly two) against relief, and the rest neutral – but the analysis is not simply mathematical.

The judge details what influenced him concerning the case. He is particularly influenced by petitioner’s agreement to pay half the 2012 liability. Next, by the decision of the spouses to pay other expenses than the 2012 income tax liability as they had the resources to pay the liability but chose to save or allocate funds for other purposes. Finally, that the liability is mostly, or entirely, due to intervenor.

Giving effect to the marital settlement agreement, the judge sees no reason why it is inequitable to hold the parties liable for their shares of the debt. The decision is then to provide innocent spouse relief to petitioner regarding the excess of one-half of the unpaid 2012 federal income tax liability reported on the 2012 tax return. Essentially, each of the former spouses is liable for one-half of the tax debt, reflecting their marital settlement agreement.

Takeaway: As noted, innocent spouse relief is not a mathematical decision concerning what is in one column or another. The judge will consider the facts and circumstances to determine what will weigh heaviest concerning relief.

Denied IRS Motions for Summary Judgment
1. Docket No. 19146-18 L, Jason E. Shepherd v. C.I.R., Order available here.
In this Collection Due Process case before Tax Court, Petitioner filed for review of a Notice of Federal Tax Lien concerning unpaid employment taxes and trust fund penalties concerning unpaid employment taxes quarterly periods from 9/2010 through 12/2011. The IRS filed a motion for summary judgment and Petitioner opposed the motion by asserting challenges to material facts.

Of note for trust fund penalties is that a Letter 1153 must either be personally served on the responsible person or sent by certified mail to the responsible person’s last known address. In the record on the IRS’s motion there is no copy of a Letter 1153 or any proof that it was either personally served on the petitioner or sent by certified mail to his last known address. Since the record did not prove that the Appeals Officer verified all applicable laws or administrative procedures were met concerning the assessment of the section 6672 penalties, Judge Leyden denied the IRS motion for summary judgment without prejudice.

2. Docket No. 1781-14, John Edward Barrington & Deanna Barrie Barrington v. C.I.R., Order available here.

The petitioners have previously been convicted for tax evasion based on guilty pleas – John Barrington for tax year 2005 and Deanna Barrington for tax years 2003 through 2005. The Court granted in part and denied in part an IRS Motion for Partial Summary Judgment through its order dated June 19, 2015. The order held the IRS was entitled to summary judgment so far as the petitioners fraudulently failed to file tax returns. The order denied the request to the extent the IRS sought to collaterally estop the petitioners from contesting they failed to report certain amounts of income for the years at issue and further collaterally estop John Barrington from contesting he fraudulently failed to file tax returns for tax years 2003 and 2004.

The IRS filed a new Motion for Summary Judgment on February 22, 2019. This motion included several of the same arguments and factual assertions as before, but now includes the argument that John Barrington made “judicial admissions” at a hearing held December 17, 2018 (with those admissions eliminating the need for trial). IRS Counsel cites his statements of “…I’m not arguing the fraud amount” and “…cannot argue the fraud on it, which we’re not.”

Judge Panuthos reviewed the 28 page transcript and did not come to the conclusion that John Barrington made a clear, deliberate and unequivocal factual assertion relating to the issue of fraudulent failing to file federal income tax returns for tax years 2003 and 2004. Since there is a dispute as to material fact, the Court denied the IRS’s motion.

Takeaway: These look to be times the IRS either tried to rush procedure or believed there was no dispute as to material fact and lost regarding motions for summary judgment.

Procedurally Taxing at the ABA Tax Section 2019 May Tax Meeting

The American Bar Association Tax Section 2019 May Tax Meeting commences in Washington, D.C. and runs May 9 through 11, 2019. Several Procedurally Taxing contributors will be speaking at the conference and this is your guide to finding those sessions.


Leslie Book –
Saturday, May 11, 9:30 – 10:30 a.m.
Pro Bono & Tax Clinics Committee
Procedural Due Process and the Tax System: A Fresh Look.

Procedural due process is rooted in the Magna Carta and is embedded in our constitution. The right to notice and the opportunity for a hearing are the two key ways that the constitution helps ensure that the sovereign does not erroneously deprive people of essential rights, including the right to property. Procedural due process, a concept closely related to procedural justice, ensures that the sovereign treats its subjects as human beings entitled to a sense of dignity and is a foundational aspect of good government in general and tax administration in particular. In this panel, we will explore the historical roots of procedural due process jurisprudence, consider the ways that that current and proposed IRS procedures relate to due process protections and procedural justice norms, and explore insights from areas other than tax when there have been challenges to agency actions that violate procedural due process protections.
Moderator: Sarah Lora, Legal Aid Services of Oregon, Statewide Tax Clinic. Portland, OR
Panelists: Professor Leslie Book, Charles Widger School of Law, Villanova University, Villanova, PA and Professor in Residence, Taxpayer Advocate Service, Washington, DC; Nina E. Olson, National Taxpayer Advocate, Taxpayer Advocate Service, Washington, DC; Professor Susannah Camic Tahk, University of Wisconsin School of Law, Madison, WI
Cosponsored by: Individual & Family Taxation and Teaching Taxation
Note: Professor Jamie Andree, Maurer School of Law, Indiana University, Bloomington, IN, is no longer able to attend due to injury.

Keith Fogg –
Thursday, May 9, 1:45 – 2:45 p.m.
Tax Bridge to Practice, Sponsored by: Young Lawyers Forum and Diversity Committees
Statutes of Limitations in Tax Litigation: Friend or Foe?

Statutes of limitations are an important, but often overlooked, aspect of tax litigation that can work to the advantage or the detriment of a party. Most practitioners are familiar with the general three-year period of limitation on assessment, as well as basic exceptions, including those for a false return, no return, or a substantial omission of gross income. This panel will address more nuanced rules affecting statutes of limitations in tax, including the interplay of section 6511(a) and (b) in refund suits (and, as appropriate, Tax Court litigation), the failure to notify the IRS of certain foreign transfers, and the failure to disclose listed transactions. The panelists will also discuss strategies for navigating statute of limitation issues in litigation, as well as the effect of the government shutdown on both statute of limitations and filing deadlines with courts and the IRS.
Moderator: Kelley C. Miller, Reed Smith LLP, Washington, DC
Panelists: Paul Butler, Kostelanetz & Fink LLP, Washington, DC; Professor T. Keith Fogg, Director of the Federal Tax Clinic, Harvard Law School, Jamaica Plain, MA; Elie Mishory, Attorney, Office of Associate Chief Counsel (Procedure and Administration), IRS, Washington, DC; Lawrence A. Sannicandro, McCarter & English LLP, Newark, NJ; Rebecca M. Stork, Eversheds Sutherland LLP, Atlanta, GA
Co-sponsored by: Court Procedure & Practice and Young Lawyers Division Tax Law Committee

Keith Fogg & William Schmidt –
Friday, May 10, 9:00 – 10:00 a.m.
Individual & Family Taxation Committee
CDP – Beyond the Weeping and Gnashing of Teeth; What Can be Done to Fulfill CDP’s Beneficial Intent?

Collection due process (CDP) rights launched twenty years ago to provide additional procedural protections to taxpayers facing tax liabilities. CDP is an essential part of the practitioner’s toolkit: It offers independent review of IRS collection actions, including the chance for alternatives to enforced collection and, in certain instances, review of the liability itself. CDP may be used to achieve meaningful and lasting collection resolutions for both pro se and represented taxpayers. However, CDP also may be an expensive and emotionally wrenching experience for taxpayers who enter the process in good faith, only to be greeted by inflexible, unrealistic deadlines, overworked IRS professionals applying cookie cutter tactics to move a file off their desk, and a Court swamped with equally cookie cutter motions for summary judgment by the IRS against which pro se taxpayers are ill-equipped to defend. Even seasoned tax practitioners are frustrated by inadequate case records, inelastic government responses, and seemingly limited judicial remedies. This program will move beyond “let me tell you how it all went wrong” to brainstorm what realistically might be done to fulfill the promise of CDP.
Moderator: Carolyn Lee, Morgan Lewis and Brockius, San Francisco, CA
Panelists: The Honorable David Gustafson, US Tax Court, Washington, DC; Professor Keith Fogg, Harvard Law School, Boston MA; Mitchel Hyman, IRS Office of Chief Counsel, IRS, Washington, DC; William Schmidt, Kansas Legal Services Low Income Tax Clinic, Kansas City, KS; Professor Erin Stearns, University of Denver Low Income Tax Clinic, Denver, CO
Co-Sponsored by: Pro Bono & Tax Clinics

I will be speaking with Keith Fogg at the panel listed above. First of all, I want to thank Leslie Book for providing creative input at the starting stages of planning the panel. Next, I want to mention that the panel is not going to be a history or a gripe session about collection due process. It is a panel designed for dialogue between practitioners in several areas of tax law with the intent of finding solutions to improve taxpayer interactions with the IRS. We will be looking at the administrative and judicial levels, plus discussing creative remedies that may be available. We hope this panel brings more debate and leads to positive systemic change.

Christine Speidel –
Saturday, May 11, 8:30 – 9:30 a.m.
Pro Bono & Tax Clinics Committee
Family Members as Caregivers

Section 131 promotes community care for disabled adults by excluding certain state payments from caregivers’ gross income. Historically, Service challenged the excludability of payments to a parent caring for an adult disabled child in the provider’s home. In 2014 the Service reversed this position for certain Medicaid waiver payments, effecting a major economic change for affected families. This panel will discuss the impact of the 2014 guidance, areas of continued uncertainty, and other remaining barriers to the uniform treatment of caregivers’ income.
Moderator: Camille Edwards Bennehoff, Attorney, IRS Office of Chief Counsel (Income Tax & Accounting), Washington, DC
Panelists: Victoria J. Driscoll, Senior Attorney, IRS Office of Chief Counsel (Income Tax & Accounting), Washington, DC; Professor Christine Speidel, Villanova University Charles Widger School of Law, Villanova, PA; Wayne Turner, Senior Attorney, National Health Law Program, Washington, DC
Cosponsored by: Individual & Family Taxation and Diversity

Caleb Smith –
Thursday, May 9, 3:45 – 5:00 p.m.
Low Income Taxpayer Representation Workshop (Pro Bono & Tax Clinics Committee)
EITC and Benefits Law: Conceptualizing, Understanding (and Navigating) the Interplay of EITC and Benefits Law

What makes the EITC “different” from other tax provisions? And when do those differences matter (in a legal sense)? This panel will discuss the history and purpose of the EITC, how it interfaces with other disparate areas of law like benefits and bankruptcy.

Moderator: Professor Caleb Smith, University of Minnesota Law School, Minneapolis, MN
Panelists: Margot Crandall-Hollick, Congressional Research Service, Washington, DC; Carrie Welton, Center for Law and Social Policy, Washington, DC

Designated Orders: Too Little, Too Late (3/18/19 to 3/22/19), Part Two

In Part One of this week’s designated orders, I discussed four orders where the petitioners either did too little or were too late. In the following case, the petitioners did way too much so the final designated order of the week merits an examination of its own.

Too Much
Docket No. 20102-17, Victor Maurice Brown & Kimberly Denise Brown v. C.I.R., available here.

There is a lot to unpack in this case where the petitioners, the Browns, have been overzealous in their litigation.


• Tax Years 2014 and 2015 Notices

The IRS issued a notice of deficiency to the Browns for tax year 2014. The Browns did not file a petition with the Tax Court within the following 90-day time period. The IRS next issued a notice of intent to levy to the Browns for the 2014 tax year. The Browns did not file an appeal with the IRS within the 30-day time period for a Collection Due Process (CDP) case. The IRS later issued to the Browns a notice of intent to seize property for tax year 2014. This is a notice that does not support jurisdiction for a CDP case in Tax Court. Finally, the IRS issued to the Browns a notice of deficiency for tax year 2015 of $3,728, resulting from alleged unreported income from the sales of securities.

• The Browns’ Petition

The Browns filed their petition by attaching the valid 2015 notice of deficiency, plus the invalid 2014 notice of intent to levy and notice of intent to seize property. The petition stated “Deficiency-2015; Determination-2014.”

But, wait, there’s more!

The Browns’ petition describes a dispute Ms. Brown had with her former employer and alleges errors the employer made in reporting Ms. Brown’s 2014 compensation. Within the petition, there is a prayer for relief, which asks for: punitive damages for emotional distress (likely from the employer, filing false documents with the IRS), punitive damages for emotional distress (again likely from the employer as ‘redress for undetectable torts’), compensatory damages from the employer, that the Court grant the Browns a withdrawal of the 2014 tax year lien, “an increase in the recovery limit due to the unauthorized collection activities in connection with the collection of Kimberly Brown’s federal tax by way of unauthorized W-4 Withholding changes,” filing fees for amended tax returns for tax year 2014 and tax year 2015, a jury trial, all other relief the court deems just and proper, and “temporary, preliminary and permanent injunctive relief prohibiting further malicious and deceitful conduct.” The Browns did not later file an amended petition, nor any motion for leave to amend their petition.

• Dismissal of 2014

The IRS filed a motion to dismiss tax year 2014 from the case and the Court issued an order February 28, 2018, holding that the Browns’ petition was not timely filed regarding the 2014 notice of deficiency and that no notice of determination conferring jurisdiction had been sent to petitioners for 2014. The IRS motion was granted regarding dismissal of tax year 2014. References to that year were deemed stricken from the record, with a reminder that tax year 2015 was still pending before the Court.

• The Browns’ Subpoena

The Court issued notice that the case would be tried in Atlanta, Georgia, at the calendar beginning April 29, 2019. The Browns used Tax Court Form 14 to fill out a subpoena duces tecum and sent that to IRS counsel. The subpoena asks for various documents related to tax years 2014 and 2015. The subpoena does not list the production date as the trial date of April 29, but rather lists March 15. The place of production is not the courtroom, but the office of IRS counsel. A letter attached by the Browns indicates they did not include the fees and mileage required by Tax Court Rule 148.

• The IRS Motion for Entry of Decision

The IRS filed a motion for entry of decision in favor of the Browns for tax year 2015. The decision would be that there is no deficiency in income tax from and no refund due to the Browns for the 2015 tax year. The motion stated that the IRS Appeals Office agreed to concede all issues asserted on the 2015 notice of deficiency. However, the Browns refused to accept the concession, and objected to the granting of the motion. The Court ordered that the Browns were to state their objections with a succinct statement of their preferred decision and a succinct description of the issues no later than March 15, 2019.

The Court received the Browns’ response on March 18, 2019. They argue that the IRS motion attempts to circumvent the proper judicial review of the matters at issue, calling them “new matters” with contentions (1) the issuance of the notice of deficiency was the IRS proceeding in bad faith against the petitioners, (2) “the Court’s review of the evidence relative to tax year 2014, will demonstrate a systemic year-over-year pattern of fraudulent misstatements and other inaccuracies,” (3) “pursuant to the Federal Rules of Civil Procedure Rule 19, by order of this Court, the Court shall order AT&T be made a party to this case as a defendant,” (4) the IRS failed to develop facts supporting its position before issuing the notice of deficiency, (5) the burden of proof is on the IRS, pursuant to IRC section 7491(a) and Tax Court Rule 142(a), (6) the notice of deficiency lacked a factual relationship to the petitioners’ liability, (7) the IRS committed “fraud on the Court” and took positions it knew to be false, (8) for various reasons the determinations in the notice of deficiency are incorrect, so the Browns do not owe the tax asserted, and (9) the IRS has “engaged in unauthorized collection activities.” The response did not assert any overpayment for 2015 or any claims for litigation or administrative costs under Tax Court Rule 230 or IRC section 7430.

• The Browns’ Motion to Show Cause

The Court received on March 14, 2019, a Motion to Show Cause Why Proposed Facts in Evidence Should Not Be Accepted as Established from the Browns, filed pursuant to Tax Court Rule 91(f). Their Proposed Stipulation of Facts which accompanied the motion included a preamble listing 13 “new matter” issues. The stipulation included 152 numbered paragraphs of factual assertions with subparagraphs. Some issues and many allegations in the proposed stipulation relate to tax year 2014.

• Judge Gustafson’s Responses

The judge reviewed the Tax Court’s jurisdiction for this case. The Court has jurisdiction over the notice of deficiency for tax year 2015. They do not have: jurisdiction over the disputes between Ms. Brown and her former employer (or the ability to award damages for the dispute); authority under the Federal Rules of Civil Procedure to order a third party to be joined as a defendant; jurisdiction under IRS liens, levies or other collection activity without a timely CDP request (or other required documents); jurisdiction to award fees for filing amended tax returns or any other fees other than those allowed under IRC section 7430. The Tax Court judge is the trier of fact and the Tax Court is not authorized to conduct jury trials. The Anti-Injunction Act generally prohibits injunctions against the IRS, and the Browns showed no applicable exception.

The Browns’ response to the motion for entry of decision and motion for order to show cause includes issues they call “new matter” – a term drawn from Tax Court Rule 142(a). That Rule, however, actually concerns the burden of proof on “any new matter” raised by the IRS Commissioner beyond what the IRS asserted in their notice of deficiency. The Browns did not allege that the Commissioner actually asserted new issues. (In fact, the Commissioner was proposing to concede the 2015 issues in full.) What the Browns call “new matter” is likely a rehashing or elaboration of previous allegations and not issues relating to the 2015 tax year.

The Court determined that the IRS concession for tax year 2015 means there is nothing further to be decided. The IRS motion to quash the subpoena will be granted because it is moot; additionally, it is improper due to overbreadth concerning tax year 2014, for failure to proffer the required witness and mileage fees, and for demanding production somewhere other than the courtroom at the trial session. The Browns’ motion for order to show cause is moot and it proposes a stipulation that is overbroad.

The Court denied the Browns’ motion for order to show cause and granted the IRS motion to quash the subpoena and motion for entry of decision. As a result, there is no deficiency of income tax due from and no refund due to the petitioners for tax year 2015.

Takeaway: Know your audience and pay attention when the Tax Court explains items like jurisdiction and tax procedure to you.

First, the Browns did not understand which IRS notices bring eligibility for filing a petition with the Tax Court. Second, the Browns did not realize when to drop the issues related to the 2014 tax year. Third, do not take items from Tax Court rules and use them without understanding their meaning or context. Fourth, they brought in several issues that did not relate to the case or that were outside the Tax Court’s jurisdiction. I realize the Browns were unrepresented so that excuses some of their ignorance, but they really needed someone to keep them on track. I have a feeling the positive results they gained for tax year 2015 came about despite their efforts.

Designated Orders: Too Little, Too Late (3/18/19 to 3/22/19), Part One

The five designated orders for this week presented a series of petitioner issues. Generally, they fall into categories where the petitioner either did too little, too much, or was too late. In an interesting twist, two of the cases deal with a petitioner’s filing a motion to vacate or revise a decision under Rule 162.


Too Little
Docket No. 4965-18S, Christopher J. Bard v. C.I.R., available here.

The petitioner, a Chicago police officer, was self-represented in the petition he filed with the Tax Court. The petitioner was not active in his case so the IRS filed a Motion to Dismiss for Failure to Properly Prosecute on February 12, 2019. The Court entered and served its Order of Dismissal and Decision on February 28. That order granted the IRS motion, dismissed the case, and entered a decision in favor of the IRS deficiency and penalty determinations in the notice of deficiency.

On March 19, 2019, petitioner filed a Motion To Vacate Or Revise Pursuant to Rule 162. He states he “was completely shocked when he recently discovered that his case had been dismissed” because, “based on a misunderstanding and miscommunication with his tax return preparer, an enrolled agent,” he “mistakenly believed that his only obligation with respect to this tax court case was to file the petition at the beginning of the case and to do nothing more.”

Oh, really?

The judge begins with the Notice Setting Case For Trial, which set the case for calendar call at 10:00 a.m. on Monday, February 25, 2019. Within the notice it states that “the parties are expected to be present and to be prepared to try the case” and “failure to appear may result in dismissal of the case and entry of decision against you.” Within the notice, it guides petitioners to the Tax Court website and Judge Armen describes some of the assistance available there for self-represented petitioners. At the end of the notice, it states again, that “failure to cooperate may also result in dismissal of the case and entry of decision against you” (emphasis in the original).

The Court sent another notice of trial on January 29, 2019 reminding the parties of the time, date, and place of the trial session. In that notice, there is another warning that failure to appear may lead to dismissal of the case. The remaining two paragraphs are directed to self-represented taxpayers to assist with navigating the trial process, including how to seek assistance from a tax clinic.

When the IRS filed its Motion To Dismiss For Failure To Properly Prosecute, they provided details regarding communications with the petitioner. The following are listed in the order: (a) A letter from IRS Appeals regarding substantiation of disallowed Schedule A deductions provoked an insufficient response by petitioner; (b) Petitioner did not respond to a second similar letter from IRS Appeals; (c) IRS counsel left a voicemail at petitioner’s telephone number of record on February 6, 2019, in order to ascertain petitioner’s views and warning him that failure to participate in the case may lead to its dismissal, to which petitioner did not reply; and (d) IRS counsel left the same message on February 8 with the same result. The Court refers to the language in the petitioner’s pending motion to describe his actions – that he ignored all correspondence from the Service relating to the case because he mistakenly believed that his only obligation in Tax Court was to file the petition and do nothing more.

The day after the IRS filed its motion to dismiss (February 13), the Court served an Order that calendared the motion for hearing and included another warning. The entire order is quoted and once again it states that failure to appear may result in dismissal and a decision entered again the petitioner.

When the case was called and recalled from the calendar for the Chicago trial session on February 25, 2019, the petitioner did not appear and no one appeared on his behalf at either time. By contrast, IRS counsel appeared, supported their motion, and stated in response to the Court’s inquiry that there had been no response from the petitioner since filing the motion to dismiss.

In Judge Armen’s conclusion, he summarizes the issues with the petitioner’s motion. The petitioner “received multiple warnings from the Court about the need to appear in court” and the consequences for failing to appear (emphasis in original). The petitioner was warned by the Court and the IRS regarding the consequences for failing to cooperate in preparation of the case for trial (also emphasized in the original). The notices were not in “legalese” or arcane language, but were clear, concise, written in plain English, and easily understood by a reasonable person so petitioner’s alleged belief his only obligation was to file the petition and do nothing more struck the Court as disingenuous. Also, a police officer would know what to do when a court says to a party in a judicial proceeding that the party is supposed to show up. The judge states that the petitioner did not show up and did not offer any reason to excuse his failure to do so, plus the motion fails to offer a convincing reason justifying his failure to appear. The petitioner’s motion was denied.

Takeaway: This is a thorough review of the Tax Court’s efforts to notify petitioners regarding the necessity to participate in the Tax Court process and the consequences of failure to do so. I would agree that a police officer, while not a legal expert, should know it is necessary to appear in court when the court says you need to be there.

Judge Armen did not address the elements of Rule 162 in his order because, frankly, the petitioner’s actions did not even rise to the level where that should be analyzed. Instead, he focused on how the petitioner was warned to be active in his Tax Court case and was not.

• Docket No. 12070-18 L, Janine P. Antoine v. C.I.R., available here. The petitioner did not do anything after filing Form 12153 for a Collection Due Process hearing such as accept the settlement officer’s offer of a telephone conference or submit supporting documents. Following the Notice of Determination, the petitioner filed a petition with Tax Court. The IRS filed a motion for summary judgment and the petitioner filed a one-paragraph notice of objection with a statement that “there is a dispute between the parties in regard to withholdings” without elaborating or submitting supporting documents. The Court granted the IRS motion.

• Docket No. 4472-18 L, Richard Conant Giller v. C.I.R., available here. Petitioner did not respond to the settlement officer’s document requests in the 5 letters sent to him based on his Collection Due Process hearing requests. The IRS Notice of Determination led to the petitioner filing with the Tax Court for tax years 2011, 2013 and 2015. At trial, petitioner conceded issues with respect to 2013 and 2015. Concerning 2011, petitioner asserted he filed a Form 1040 for 2011 and the substitute for return prepared by the IRS was invalid. The evidence presented by petitioner shows his Form 1040 was not processed by the IRS because it lacked his wife’s signature. Also, the TurboTax materials petitioner offered state in two different places that “you can still file electronically” so they also indicate he never completed the electronic filing of his tax return. Petitioner’s evidence and the IRS transcripts did not indicate the 2011 tax return had been filed by petitioner. Decision was entered for the IRS that there was no abuse of discretion and that they may proceed with the proposed collection action.

Too Late
Docket No. 30082-14SL, Victor M. Crown v. C.I.R., available here.

Following a trial in this case, the Tax Court issued a Summary Opinion, and on April 5, 2016, entered an Order of Dismissal and Decision. Petitioner filed a motion to vacate or revise the decision on March 18, 2019. Here, Judge Guy analyzes Rule 162 and how it applies to the petitioner’s case.

Pursuant to Tax Court Rule 162, a motion to vacate or revise a decision must be filed within 30 days after the decision is entered, unless the Court allows otherwise. The Court generally cannot consider a motion to vacate that is filed after a decision becomes final. IRC section 7481(a)(1) provides the rule that a decision of the Tax Court becomes final on expiration of the time to file a notice of appeal. Section 7483 provides a notice of appeal generally must be filed within 90 days after a decision is entered.

There are exceptions for narrowly circumscribed situations such as that the Court may vacate or revise a final decision if (1) the decision is shown to be void, or a legal nullity, for lack of jurisdiction over the subject matter or the party, (2) the decision was obtained through fraud on the Court, or (3) there is a need to correct a clerical error in the decision.

Since the petitioner did not establish any of those exceptions to the finality of the decision in the case, the Court lacked jurisdiction to vacate the Order of Dismissal and Decision entered April 5, 2016. The Court therefore denied the petitioner’s motion to vacate or revise the decision.

Takeaway: I could understand being late on filing the motion, especially for a petitioner that is ignorant of the Tax Court Rules. To wait nearly 3 years and file the motion is unreal. The Tax Court will not wait for the petitioner who needs years to respond.