A Checklist for Approval of Stipulated Decisions

November 30, 2022 by Leave a Comment

We welcome back Commenter in Chief Bob Kamman who has been looking at Tax Court orders returning (bouncing) decision documents to the parties. Today, Bob looks at orders from eight days in November.  I will follow up in the coming days with a more detailed discussion of some of the orders.  You will be struck by how many mistakes the parties make in submitting decision documents.  Because these documents are generally prepared by Chief Counsel attorneys and because so many taxpayers are pro se, the post suggests additional training is needed for the Chief Counsel attorneys.

This post addresses orders regarding stipulated decisions, but we want to note that this morning the Tax Court has already begun issuing what will be a deluge of orders dismissing the approximately 400 cases being held in abeyance pending the outcome in the Hallmark case decided yesterday.  A team will be carefully reviewing each order and taking steps to protect the interest of petitioners with viable equitable tolling arguments.  Keith

You have avoided the hazards of further litigation by agreeing to a settlement with IRS in a Tax Court case. Now comes the final step of what should be easy but seems difficult: getting the stipulated decision past the eagle eyes of the judge who must sign it. Have rejections of these become more frequent this year? Has the quality of Chief Counsel paperwork diminished? Does this have something to do with the Tax Court changing the top line on its orders from 12-point Times New Roman to 20-point Gothic-style Archive Black Title, similar to the mastheads of the Washington Post and New York Times?

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My guess is that the judges have a checklist, but Chief Counsel does not. Petitioners, represented or not, can assist the Court by learning from the mistakes of others. The following are from orders issued in the eight business days between November 14 and November 23, 2022. Petitioner surname and docket number are shown. All of them order that “the Proposed Stipulated Decision is hereby deemed stricken from the Court’s record in this case.” Unless otherwise indicated, the order came from Chief Judge Kerrigan.

Gaddie, Docket No. 12604-22: On November 21, 2022, the parties filed a Proposed Stipulated Decision for the Court’s consideration. However the deficiency proposed therein for the 2018 taxable year, $5,173.00, is more than the deficiency determined for that year in the Notice of Deficiency, $3,449.00. Respondent did not assert an increased deficiency in the Answer and nothing below the line in the Proposed Stipulated Decision accounts for the increase. Accordingly, the Court is unable to process the parties’ Proposed Stipulated Decision.

Shoemaker, 1793-22: On November 22, 2022, the Court received from the parties in the above docketed matter a Proposed Stipulated Decision resolving this litigation. That decision was premised on a Settlement Stipulation filed the same date purportedly establishing an overpayment for the underlying 2020 taxable year. However, review shows that the Settlement Stipulation fails to attach the Statement of Account referenced therein reflecting such overpayment. (Similarly, Dudeck in 29676-21S, noting that this is Form 3623; and Lockwood, 2379-22S, both Judge Leyden. )

Sletten, 29431-21 (Judge Copeland): On November 9, 2022, the parties filed with the Court a Proposed Stipulated Decision (Index No. 9). Upon review of the Proposed Stipulated Decision, it was discovered that there was an incorrect docket number listed on the signature page. On November 18, 2022, the parties filed with the Court a corrected Proposed Stipulated Decision (Index No. 10).

Henderson, 35625-21S (Judge Landy): This case is scheduled for trial at the session of the Court to commence at Dallas, Texas on December 5, 2022. On November 16, 2022, the parties filed a Proposed Stipulated Decision (Doc. 11) which contained extraneous documents. The Court is therefore unable to process the parties’ Proposed Stipulated Decision.

Ordonez-Haggard, 1088-22S (Judge Choi): On November 18, 2022, the parties filed a Proposed Stipulated Decision document (index # 7). Upon review it was seen that on in [sic] the second paragraph indicating there is a penalty due from petitioner, the taxable year listed is 2018 instead of the taxable year at issue, 2019. Therefore, the Proposed Stipulated Decision document is erroneous, and we will strike it and instruct the parties to file a corrected one.

Kostelac, 9711-15 (Judge Paris): On October 28, 2022, docket entry 82, the parties filed a Proposed Stipulated Decision. The document had several inconsistencies, making the Stipulated Decision incorrect. Therefore, the Court will strike this document. On November 16, 2022, docket entry 83, the parties again filed a Stipulated Decision. This decision document appears to be correct, and the Court will accept and enter this Decision. On November 18, 2022, docket entry 84, due to an inadvertent clerical, the Court issued an Order to strike the Proposed Stipulated Decision document, filed October 28, 2022, docket entry 83. The Order which was intended for the case at Docket No. 9710-15, but instead was inadvertently filed in this Docket No., 9711-15. Therefore, the Court will strike the November 18, 2022, Order from the Court’s record for the case at Docket No. 9711-15.

Strickland, 19121-21S (Judge Landy): On November 18, 2022, the parties filed a Proposed Stipulated Decision (Doc. 17) which did not address the accuracy-related penalty pursuant to I.R.C. § 6662(a). The Court is therefore unable to process the parties’ Proposed Stipulated Decision.

Niedermayer,36207-21S (Judge Leyden): On November 18, 2022, the parties filed a Proposed Stipulated Decision. Upon review, it appears that the parties attached both the decision and the settlement stipulation in one document. Thus, it is an improper filing because the Settlement Stipulation and the Proposed Stipulated Decision shall be filed separately.

Rios, 8775-22S (Judge Landy): This case is calendared for trial at the Court’s Miami, Florida Trial Session, scheduled to commence on February 27, 2023. On November 10, 2022, the parties filed a Proposed Stipulated Decision (Doc. 8) which does not address the addition to tax pursuant to I.R.C. § 6651(a)(3). The Court is therefore unable to process the parties’ Proposed Stipulated Decision.

Yoozbashizadeh, 25837-21S (Judge Choi): This case was calendared for trial at the Court’s Los Angeles, California trial session, which was scheduled to begin November 14, 2022. On November 14, 2022, this case was called. There was no appearance by nor anyone on behalf of petitioner. Respondent’s Counsel appeared and was heard. At that time respondent informed the Court that on November 10, 2022, a Proposed Stipulated Decision (index #14) had been electronically filed with the Court. The Court then informed respondent that petitioner’s signature was typed and that an original signature was needed. Respondent agreed, therefore the Proposed Stipulated Decision filed by the parties on November 10, 2022, (index #14) is erroneous and we will strike it.

Stuhlman, 6504-20S (Judge Nega): This case was calendared for trial at the session of the Court conducted in person on Tuesday, September 6, 2022, in Fresno, California. On July 10, 2020, petitioner filed the petition commencing this case. In that petition, petitioner requested that the Court proceed with this case under the Court’s small tax case procedures. On November 16, 2022, the parties filed a Proposed Stipulated Decision. The caption of that decision reflects the correct docket number associated with this case but failed to include the “S” designation. (Similarly, Burke, 31804-21S, Judge Leyden.)

McBride, 34784-21S (Judge Copeland): On August 31, 2022, the parties filed with the Court a Proposed Stipulated Decision (Index No. 10). Upon the Court’s review, an error was noticed. The Proposed Stipulated Decision stated that there was no penalty for taxable year 2018 under I.R.C. Section 6651(a)(2) and should have stated that there was no penalty for taxable year 2018 under I.R.C. Section 6651(a)(1). On November 16, 2022, the parties filed with the Court a corrected Proposed Stipulated Decision (Index No. 13).

Martin,7427-22: By Order served August 26, 2022, the Court directed petitioner to pay the Court’s $60.00 filing fee on or before September 23, 2022. To date, the Court’s filing fee in this case remains unpaid. Upon due consideration and for cause, it is ORDERED that the parties’ Proposed Stipulated Decision, filed August 25, 2022, is hereby deemed stricken from the Court’s record in this case.

Loper, 2492-22: On November 16, 2022, the parties filed a Joint Proposed Stipulated Decision. Upon review of the proposed decision, the Court notes that petitioners signed the proposed decision using a cursive font. The Court does not accept for electronic filing a stipulated decision that contains a stylized signature such as one using a cursive font. See Rules 23(a)(3); Frequently Asked Questions About DAWSON.

Leo, 32671-21S (Judge Landy): On October 26, 2022, the parties filed a settlement stipulation and proposed stipulated decision at Doc. 8 and 9. Upon review of the settlement stipulation and proposed stipulated decision, the Court was concerned whether the notice of deficiency (notice) for the taxable year at issue underlying this proceeding was valid. The settlement stipulation suggested that the deficiency was paid prior to the issuance of the notice. By Order served October 27, 2022, the Court directed respondent to file either: (1) a report addressing and establishing the validity of the notice of deficiency for 2019, or (2) an appropriate jurisdictional motion. Respondent filed a response on November 9, 2022, attaching a complete copy of the notice. On November 14, 2022, respondent filed a Motion to Dismiss for Lack of Jurisdiction on the ground that the deficiency was paid prior to the issuance of the notice. Respondent’s motion stated that petitioners do not object to the Court granting this motion, and petitioners confirmed this statement on November 14 and 17, 2022.

Deverter, 8675-22: On November 10, 2022, the parties filed a proposed stipulated decision for the Court’s consideration. A review of that document discloses that it does not address a penalty under I.R.C. section 6662(a) that is set forth in the notice of deficiency on which this case is based and includes additions to tax under I.R.C. sections 6651(a)(1) and (a)(2) that do not appear to have been set forth in the notice of deficiency.

Wong, 20602-21 (Judge Foley): Upon review of the record, there are several typographical errors on the Proposed Stipulated Decision, filed November 10, 2022. Further, discrepancies exist between the Stipulation of Settlement, filed November 10, 2022, and the Proposed Stipulated Decision.

Conrad, 17750-21: On November 10, 2022, the Court received from the parties in the above docketed matter a Proposed Stipulated Decision purporting to resolve this litigation. However, review reveals multiple shortcomings. First, there is a typographical error in one of the references to the 2018 taxable year. Second, the decision appears to deal with a penalty under section 6662(b)(1) of the Internal Revenue Code, whereas the underlying notice of deficiency involves section 6662(b)(2), I.R.C. Third, the signature block does not reflect the current address of record for petitioner.

Brevil, 29919-22: On November 3, 2022, the parties filed for the Court’s consideration a proposed stipulated decision. By Order served November 7, 2022, the Court removed the small tax case designation and amended the docket number by deleting the “S”. On November 10, 2022, the parties filed a revised proposed stipulated decision.

Gallegos, 1177-22S: On November 15, 2022, the parties electronically filed a Joint Proposed Stipulated Decision and a Joint Settlement Stipulation. Upon review of the proposed stipulated decision, the Court notes that the overpayment amount is incorrect.

Ritchings, 4261-22S: On November 9, 2022, the parties filed a Proposed Stipulated Decision (Doc. 15) which states a deficiency for taxable year 2018, not 2019, and the decision does not address the accuracy-related penalty, pursuant to I.R.C. § 6662.

Licorish, 3524-22S: On November 10, 2022, the parties filed a Settlement Stipulation and a revised Proposed Stipulated Decision. However, upon review of the former, the Court notes that the Settlement Stipulation appears to be a duplicate of the Settlement Stipulation filed October 11, 2022, at Docket Index No. 5. Upon review of the latter, the Court notes that the proposed decision document references an I.R.C. section 6662(a) penalty. Conversely, the underlying Notice of Deficiency upon which this case is based does not. Moreover, the Court notes that the proposed decision document does not address petitioner’s liability, if any, for the I.R.C. section 6676 penalty determined in the Notice of Deficiency.

Vailes, 27998-21 (Judge Ashford): On November 10, 2022, the parties filed a Proposed Stipulated Decision. However, on the same day, the Court entered and served on the parties an Order and Decision that resolved all issues in this case (reflecting the same terms as the Proposed Stipulated Decision) and this case was closed.

And so forth. These errors should be caught by attorneys or paralegals before documents are filed. I assume that Tax Court judges have clerks or administrative staff to review filings for obvious mistakes, but it wastes judicial resources when rejections must be signed by a Presidential appointee whose confirmation by the Senate was not based on proofreading skills.

I looked at a similar period during 2021. There were about as many “bounced” stipulated decisions, but often the reasons were different. Then-Chief Judge Foley caught cases, for example, where the stipulation and the decision were the same document, rather than separate ones as required. Or the “S” designation was missing from captions. Or the Notice of Deficiency was not filed, or its contents varied from the stipulation.

In the military, troops are sometimes ordered to “stand down,” taking a break from regular duties to address major operational concerns. Perhaps it is time for Chief Counsel to order a “stand down” for all personnel to review document preparation after a Tax Court case has settled.

Filed Under: Bounces, Tax Court Tagged With:

Bouncing Documents at the Tax Court

June 11, 2021 by 1 Comment

I wrote about documents bouncing back from the Tax Court last month in connection with the Tax Court policing the timely filing of petitions.  The post caused commenter in chief Bob Kamman to pay careful attention to the orders coming out of the Tax Court and he noticed a particularly bad day for Chief Counsel’s office on June 9, 2021.  Because we do not routinely track all of the Court’s orders each day, it’s a bit hard to say when one day is worse than another.  We can look at each order to try to better understand practice before the Court.

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The Tax Court has always been more likely, at least in my view, to return documents to the IRS rather than to petitioners.  This makes sense from the perspective that the IRS participates in every case.  It generally has the resources and the knowledge to correct mistakes that many petitioners do not.  When the Court sees something in a filing that is wrong or that it just does not like, it can return, or bounce, the document and tell the party, or parties, to start over.  Usually, when it does so, it provides in an order a brief explanation of the problem and how to fix it.  If a Chief Counsel office routinely receives a high volume of bounces, it is an indication that something is wrong at the office.  This can cause phone calls from the attorneys in the national office who monitor the bounces as well as calls from the area office about the problem. 

No office wants this attention.  In addition to those less than pleasant contacts, at gatherings of Chief Counsel attorneys, the national office attorneys in charge of monitoring relations with the Tax Court would occasionally read select documents to the collected group.  These documents would demonstrate serious bloopers in an effort to spur greater attention to detail.  Since Bob has identified the cases, we have the opportunity to look at a form of Tax Court bounce sheet.

Bounce #1

This case presents the same issue discussed in the Villavicencio case blogged on June 3, 2021, and discussed in a brief filed by the Tax Clinic at Harvard with the Supreme Court.  Even though the parties agreed to the outcome of the case, the Tax Court bounces back that agreement saying that it is unconvinced that it has jurisdiction.  It invites the parties to address the jurisdictional issue:

Bounce #2

The notice of deficiency included a penalty under IRC 6662; however, the decision document filed by the parties does not mention the penalty.  The Tax Court sends the document bouncing back for the parties to address all of the issues in the notice of deficiency.  Remember that when you go to Tax Court, the outcome closes out the tax year.  So, the Court wants to make sure that everything gets addressed as it signs the document closing the case.

Bounce #3

This is the kind of bounce you really hate to receive.  Here, a stipulated decision document gets bounced because it describes the IRC 6651 addition to tax as a penalty.  Many of you might think and regularly speak of the liability imposed by 6651 as a penalty.

Bounce #4 (not really a bounce)

This order shows a few things but does not really qualify as a bounce.  An order of dismissal and decision was entered in this case in September 2020, but in October 2020 the IRS moved to vacate the order.  The Court would have written to petitioner to respond to the IRS motion.  Not having received a response from the petitioner, the Court grants the order.  We don’t know why the IRS wanted to vacate the order and finding out the answer to that question would involve ordering the motion from the Court since it is not publicly available otherwise.  We don’t know whether the issue raised in the motion was difficult, causing the Court to pause for almost six months after the stated response date set for the petitioner, or whether this order was just backlogged along with other matters at the court.

Looking at these routine orders provides a glimpse of the day to day action taking place at the Court.  The majority of cases get decided with stipulated decision documents and with orders.  Decisions continue to be a small minority of case dispositions.

Filed Under: Bounces, Tax Court