Affidavits in Summary Judgment – Designated Orders: September 16 – 21, 2019

Only one order this week, but it’s a meaty one. Judge Halpern disposed of three pending motions from Petitioner in Martinelli v. Commissioner, a deficiency case. Let’s jump right in.


Docket  No. 4122-18, Martinelli v. C.I.R. (Order Here)

So begins the tale of the brothers Martinelli: Giorgio, the Petitioner in this Tax Court case, and Maurizio, the generous yet problem-causing sibling who—according to Giorgio—created an Italian bank account in Giorgio’s name in 2011. Giorgio argues that he never had knowledge of or control over the Italian bank account; he was a mere “nominee” on the account. He first learned of the account in September 2012.

The IRS, as one might expect, alleged that Giorgio didn’t report the income from the account on his federal income tax returns for 2011 through 2016. To boot, the IRS assessed a penalty under section 6038D(d) for failure to disclose information regarding a foreign financial assets where an individual holds foreign financial assets exceeding $50,000 in value. (NB: This penalty is distinct from the Foreign Bank Account Reporting, or FBAR, penalty found at 31 U.S.C. § 5321. Unlike the FBAR penalty, the IRS may collect the section 6038D(d) penalty using its ordinary collection mechanisms, including the federal tax lien).

Petitioner filed three motions: first, a motion for partial summary judgment to determine that the Tax Court has jurisdiction regarding the section 6038D(d) penalty; second, a motion to restrain assessment and collection of the penalty while the Tax Court case is pending; and third, a motion for partial summary judgment regarding the underlying income tax deficiency.

Jurisdictional Motion

The Court rightly held that it lacks jurisdiction as to the 6038D(d) penalty. As the Tax Court likes to repeat, it is a court of limited jurisdiction. Congress must provide the Tax Court with the authority to hear particular cases. While certain penalties fit into Congress’ grant of authority under the Tax Court’s general deficiency jurisdiction under section 6211(a) and section 6214, this penalty simply doesn’t.  

Judge Halpern reviews the Court’s jurisdiction under section 6211(a). It includes taxes imposed under subtitle A or B, or under chapters 41, 42, 43, or 44. But section 6038D is in Chapter 61 of subtitle F. So no luck there.

Likewise, the penalty isn’t an “additional amount” under section 6214. Tax Court precedent has confined this jurisdictional grant to penalties under subchapter A of chapter 68. See Whistleblower 22716-13W v. Commissioner, 146 TC 84, 93-95 (2016). Failing to find a jurisdictional hook, the Court denies summary judgment on this matter, holding that the Court does not have jurisdiction with respect to this penalty.

Is this the right result as a policy matter? I think not. The IRS likely assessed this penalty during the audit of Mr. Martinelli’s tax return, in addition to the deficiency it proposed. One result of the audit is subject to challenge in the U.S. Tax Court; the other isn’t. Yet a challenge to both may rely on the same set of facts. Why require a taxpayer to litigate twice?

Motion to Restrain Assessment & Collection

The Court’s disposition of the first motion makes the second easy. If the Court can’t determine the amount of the penalty, it certainly can’t tell the IRS not to collect the penalty. This motion is likewise denied.

The Deficiency

Giorgio alleges that he was a mere “nominee” of the account, and that in fact, his brother Maurizio controlled the account. Thus, Giorgio shouldn’t be subject to tax on the interest and dividend income from the account.

Judge Halpern takes issue with the nominee argument. He notes that a nominee analysis doesn’t really fit here; that analysis is usually used to determine whether a transferor of property remains its beneficial owner. Here, the parties disagree on whether Maurizio used his own assets to fund account and then listed Giorgio as the nominee owner. This analysis would allow the Court to determine whether Maurizio had an income tax liability, but would only allow a negative implication as to Giorgio.

Instead, the Court focuses on whether Giorgio exercised sufficient dominion and control over the account. The Court asks whether Giorgio had freedom to use funds at his will. While Petitioner did submit affidavits from himself and Maurizio, there was no other evidence to show that Petitioner didn’t enjoy the typical rights of an account owner (i.e., the right to access funds in the account). So, it appears there’s still a genuine dispute of material fact regarding Giorgio’s ability to access these funds.  

Judge Halpern did, however, allow for the possibility that Giorgio didn’t have any knowledge of the account until after 2011. After all, one can’t withdraw funds from an account that remains secret from the nominal owner. Giorgio says that he didn’t have knowledge until September 2012.

Here’s where we enter a problem for the typical analysis of a motion for summary judgment. Petitioner provided an affidavit that he had no knowledge of the account until September 2012. Respondent denied this, but didn’t provide any other evidence showing that Giorgio did, in fact, have this knowledge. Under Rule 121(d), Respondent can’t rest on mere denials in response to a motion for summary judgment; instead, a party “must set forth specific facts showing that there is a genuine dispute for trial.”  

What’s Respondent to do? There may be no evidence demonstrably showing that Giorgio knew about the account. The only evidence is Giorgio and Maurizio’s affidavit.

Rule 121(e) provides a safety valve: if a “party’s only legally available method of contravening the facts set forth in the affidavits or declarations of the moving party is through cross-examination of such affiants or declarants . . . then such a showing may be deemed sufficient to establish that the facts set forth in such supporting affidavits or declarations are genuinely disputed.” In other words, Petitioner can’t simply provide an affidavit and rest on his laurels. Respondent must have an opportunity to cross-examine the affiant—in this case, Petitioner and his brother.

Thus, because Respondent showed under Rule 121(e) that they had no other way to refute the facts alleged in Petitioner’s affidavits, the knowledge issue is a genuinely disputed material fact for 2011. Whether petitioner controlled and could withdraw funds from the account is likewise a genuinely disputed material fact for the other tax years. As such, Judge Halpern denies Petitioner’s motion for summary judgment.

The case is now set for trial on February 10, 2020 in New York.  

Tax Protesting and 6673 Penalties: Designated Orders 9/2/19 to 9/6/19

There was one sole designated order for the week I monitored the Tax Court in September. It deals with a tax protestor who is a frequent flier with the Tax Court. How did he fare? Find out below. Following that, we provide a survey of section 6673 penalty cases in the Tax Court.

Tax Protesting
Docket No. 17872-18L, Alexander H. Hyatt v. C.I.R., Order and Decision available here.

The petition filed concerns a notice of determination sustaining a proposed levy to collect on unpaid tax liability for 2012. The IRS filed a motion for summary judgment with a declaration in support. The Court ordered Mr. Hyatt to file a response to the motion on the same day. In the Court’s order, they cautioned Mr. Hyatt that his frivolous arguments raised in the petition could be subject to the imposition of a section 6673 penalty of up to $25,000.

Previously, Mr. Hyatt had filed a petition with the Tax Court concerning the notice of deficiency of $39,414 on the 2012 tax year. He filed an imperfect petition and the Court ordered him to file an amended petition and pay the filing fee. Since he failed to do that, the petition was dismissed for lack of jurisdiction.


In response to a notice of intent to levy the unpaid 2012 tax liability, Mr. Hyatt filed for a collection due process hearing. However, his arguments were that no contract exists between the parties, the tax was fraudulently assessed, he objects to the United States financial system, objects to his status as a citizen of the United States, objects to the Social Security system, and desires to rescind his signature on all IRS Forms 1040 he filed because he believes he is no longer legally required to file such forms.

In the collection due process hearing, the settlement officer verified that all procedural and administrative requirements were met. Mr. Hyatt could not challenge the underlying tax liability because of his previous failed petition to the Tax Court. He informed the settlement officer he was not seeking a collection alternative. The settlement officer determined that the proposed levy was appropriate and the IRS issued the notice of determination.

With the current petition, Mr. Hyatt asserts there is no legal authority (statutory, regulatory, or otherwise) that authorizes the notice of deficiency, the IRS fraudulently manipulated its internal systems, and no regulation imposes a tax liability on wages. He also made the other arguments listed above. He did not respond to the IRS motion for summary judgment.

As an aside, I recommend reading (or skimming) the IRS statements regarding tax protesters. The official title is “The Truth About Frivolous Tax Arguments”, available starting here, or in a 73-page PDF here. It is fascinating reading into the world of tax protests. Truly, this group has come up with creative arguments regarding why the federal tax system does not apply to them and why they should not pay their share of taxes.

The official IRS position is that these are frivolous tax arguments. Accordingly, those frivolous tax arguments can lead to hefty penalties. By the way, that sentence is what is known as foreshadowing.

Back to the Tax Court – the Court analyzes the collection due process hearing. Looking at the facts above concerning the settlement officer’s actions, the Court finds there was no abuse of discretion for sustaining the proposed levy.

The Court reviewed Mr. Hyatt’s arguments and concludes they are frivolous and without any basis in law or fact. As a result, the Court determines that summary judgment is appropriate and grants the IRS motion.

Finally, the Court reviews the authority to impose a penalty not exceeding $25,000 under IRC section 6673(a)(1). Now, until this point, I was thinking that this was an average tax protestor case and it would not necessarily be worth reporting on.

However, Mr. Hyatt is a repeat offender at the Tax Court. You can see how each judge leaves hints for the next judge regarding future treatment of such an offender:

• In docket # 7221-07L, the Tax Court imposed a $5,000 penalty – Judge Kroupa first states, “Petitioner deserves a penalty under section 6673(a)(1), and that penalty should be substantial, if it is to have the desired deterrent effect.” Later, “We are also convinced that petitioner is aware of the warnings this Court has given to taxpayers who provide the type of arguments petitioner provided in this case yet petitioner persisted and wasted this Court’s limited time and resources.” After applying the penalty – “In addition, we take this opportunity to admonish petitioner that the Court will consider imposing a larger penalty if petitioner returns to the Court and advances similar arguments in the future.”

• In docket # 26157-08, a $7,500 penalty – From the bench opinion transcript of the hearing (where Mr. Hyatt did not appear) with Special Trial Judge Armen: “The record in this case convinces us that petitioner was not interested in disputing the merits of the deficiency in income tax determined by respondent in the notice of deficiency. Rather, the record demonstrates that petitioner regards this case as a vehicle to protest the tax laws of this country and espouse his own misguided views. We are also convinced that petitioner instituted and maintained this proceeding primarily, if not exclusively, for purposes of delay. Having to deal with this matter wasted the Court’s time, as well as respondent’s. Moveover, taxpayers with genuine controversies may have been delayed. Many years ago, Supreme Court Justice Oliver Wendell Holmes said: ‘Taxes are what we pay for civilized society.’ Petitioner undoubtedly feels himself to be entitled to every benefit that civilized society has to offer; unfortunately, he feels no obligation to pay his fair share. [Regarding the previous penalty,] Petitioner remains undeterred.”

• In docket # 8771-08L, a $10,000 penalty – Mr. Hyatt is before Special Trial Judge Armen again, this time appearing with the same Respondent’s counsel from the last case. Judge Armen reuses a good amount of the language above in another bench opinion transcript. “In view of the foregoing, and as Petitioner remains undeterred, he deserves a significant penalty under section 6673(a). Accordingly, we shall grant that part of Respondent’s motion requesting a sanction and impose a penalty on Petitioner in the amount of $10,000.”

• In docket # 22711-09L, a maximum penalty of $25,000 – This time, it is a bench opinion transcript from a trial before Judge Halpern. “We are convinced that Petitioner has no legitimate grounds for challenging the notice. Rather, Petitioner’s arguments in this case and Petitioner’s previous appearances before this Court demonstrate that Petitioner regards this case as a vehicle to protest the tax laws of this country and espouse his own misguided views. Based on well-established law, Petitioner’s position is frivolous and groundless. We are also convinced that Petitioner instituted and maintained this proceeding primarily, if not exclusively, for purposes of delay. Having to deal with this matter wasted the Court’s tie, as well as Respondent’s.” Regarding the prior penalties – “Petitioner has not been deterred, and we think it appropriate to penalize him to the maximum extent possible. We therefore shall impose on him a 6673(a)(1) penalty of $25,000.”

In this case, the Court states that Mr. Hyatt has not been deterred from maintaining frivolous positions. He advanced frivolous arguments that serve no purpose other than to protest the tax system and delay the collection of his owed taxes, wasting resources of the Court and the IRS. Because of those reasons, the Court again imposed the maximum penalty of $25,000.

Takeaway: See a pattern? Tax protesting is not profitable in Tax Court. I do not advise it. Find better creative outlets than upsetting the Tax Court.

We may never know how many fees the IRS collects from Mr. Hyatt. Keith mentioned that it would be an interesting CDP case in Tax Court regarding the collection of 6673 fines.

§ 6673 Penalty Tax Court Cases

Keith thought it would be worthwhile to survey 6673 penalty cases with the Tax Court using the order function on the website. It is possible that some 6673 cases were decided by opinion and not by order so this list may not be all inclusive. Keith asked his research assistant to run a search using the order function which is one of the best features of the Court’s website. Here, we have a list of the 6673 penalties imposed by judges during years 2011 through 2019. There were 173 penalties imposed during this period. Keith is using the information to write an article in a forthcoming edition of the Journal of Tax Practice and Procedure. Look for more details in that article and a breakdown of penalties imposed by year.

Cases by Judge:
– Judge Armen: 6 cases
– Judge Buch: 2 cases
– Judge Carluzzo: 32 cases
– Judge Colvin: 2 cases
– Judge Copeland: 1 case
– Judge Foley: 58 cases
– Judge Gale: 1 case
– Judge Gustafson: 8 cases
– Judge Guy: 10 cases
– Judge Halpern: 2 cases
– Judge Holmes: 2 cases
– Judge Kerrigan: 1 case
– Judge Leyden: 2 cases
– Judge Marvel: 8 cases
– Judge Morrison: 4 cases
– Judge Nega: 11 cases
– Judge Panuthos: 3 cases
– Judge Paris: 4 cases
– Judge Pugh: 4 cases
– Judge Ruwe: 1 case
– Judge Thornton: 10 cases
– Judge Wherry: 1 case

My main comments are that Judges Carluzzo and Foley are the top two judges with 6673 penalty cases. However, Judge Carluzzo stopped after 2016. Chief Judge Foley picked up the slack in 2018. As Chief Judge, he is setting a new standard for the imposition of this penalty. It’s possible we are seeing a shift in the approach of the court to imposing the penalty but it’s also interesting to note how many Tax Court judges have never imposed the 6673 penalty.

The Difference between Proposed and Determined, Designated Orders August 26 – August 30

Four orders were designated during the week of August 26, including a bench opinion in favor of petitioners in Cross Refined Coal, LLC, et. al v. C.I.R. which is summarized at the end of this post. The only order not discussed found no abuse of discretion in the IRS’s determination not to withdraw a lien (order here).

Docket No. 1312-16, Sheila Ann Smith v. C.I.R. (order here)

First is another attempted development in the ever-expanding universe that is section 6751(b)(1). Petitioner moves to compel discovery related to section 6751 supervisory approval for the section 6702 penalties asserted against her while the Court’s decision is pending.

The Court first explains that some district courts have incorrectly held that the 6702 penalty is automatically calculated through electronic means, and thus, does not require supervisory approval. This is incorrect, because although the penalty is easily calculated since it is a flat $5,000 per frivolous return, it still requires supervisory approval pursuant to IRM section

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Since the penalty requires supervisory approval and the record already contains some proof of approval, the Court goes on to evaluate the timing at issue (and whether additional discovery is warranted) in this case by looking to Kestin v. Commissioner, 153 T.C. No. 2, which it decided at the end of August. Like petitioner’s case, in Kestin, a section 6702 penalty for filing a frivolous tax return was at issue and a Letter 3176C was sent to the taxpayer warning of the imposition of the penalty. The Court held a Letter 3176C is not an “initial determination” of penalty for purposes of section 6751(b)(1), so approval is not required prior to the letter being sent.

This is an unsurprising result. The letter warns the taxpayer that the penalty may be imposed, but also provides the taxpayer with an opportunity to withdraw and correct their frivolous return to avoid the penalty. By providing a taxpayer with an opportunity to act to avoid the penalty, the letter does not need the protection afforded by the section 6751(b) approval requirement. Supervisory approval is required when there is a determination of a penalty, rather than “an indication of a possibility that such a liability will be proposed,” like the Letter 3176C.

The Court denies petitioner’s motion as moot, since the evidence she seeks to compel is already in the record showing that section 6751 approval was timely obtained after the issuance of the Letter 3176C.

Docket No. 26734-14, Daniel R. Doyle and Lynn A. Doyle (order here)

In this designated order, petitioners move the Court to reconsider its decision about whether they can deduct the legal expenses they paid in settlement of a discrimination suit. Unfortunately, petitioners didn’t make this argument during their trial. They had originally argued the expenses were related to petitioner husband’s consulting business, but the fees were not related to his business because they were for a suit against his former employer.

The Court denies petitioners’ motion to reconsider because they are raising a new legal theory that is not supported by the record and they did not allege new evidence, fraud, nor newly voided judgments which would allow the Court to vacate and revise its decision under Fed. R. Civ. P. 60(b).

Docket No. 19502-17, Cross Refined Coal, LLC, et. al. v. C.I.R. (order and opinion here)

Petitioners are victorious in Cross Refined Coal – a case involving a partnership in the coal refining industry and the section 45 credits. The section 45 credits are for refined coal that is produced and sold to an unrelated party in 10 years, subject to certain requirements. The bench opinion consists of 24 pages of findings of fact and 22 pages of legal analysis, so I only highlight some aspects here.

The IRS’s main issue is whether the partnership was a bona fide partnership under the Culbertson test and Tax Court’s Luna test. The IRS had an issue with two (of the eight) factors in Luna which help establish whether there was a business purpose intent to form a partnership.

First, the IRS posits that the contributions the parties made to the venture were not substantial, even though the partners made multi-million dollar contributions of their initial purchase price and to fund ongoing operating expenses. The Court disagrees and points out that the contributions are not required to meet any objective standard, the partners’ initial investments were at risk, and they continued to make contributions to fund operating expenses even when the tax credits were not being generated.

Second, the IRS argues that the partners did not meaningfully in share profits and losses, because the arrangement should justify itself in pre-tax terms in order to be respected for tax purposes. Disagreeing with the IRS, the Court finds petitioners shared in profits and losses, even though the arrangement resulted in net losses because the credit amounts increased as the profits increased.

The IRS also argues that partners shared no risk of loss because the partners joined the partnership after the coal refining facility had been established. The Court points out that the IRS’s own Notice 2010-54 allows for lessees of coal refining operations to receive tax credits. The Court also distinguishes this case from a Third Circuit decision, Historic Boardwalk v. CIR, 694 F.3d 425 (3rd Cir. 2012), rev’g 136 T.C. 1 (2011), where the Court held there was no risk of loss when taxpayer became a partner after a rehabilitation project had already begun. Historic Boardwalk, however, dealt with investment credits. The credits at issue in this case are production credits, so what the IRS argues is the “11th hour” (because the coal refining facility had already been established) is actually the first hour because it is the production of coal that generates the credit, rather than the establishment of the facility.  

An overarching theme in the IRS’s position is that the existence of the credits make it less likely that the partners had a true business purpose, and the Court should find abuse when a deal is undertaken only for tax benefits. The Court responds to this argument at multiple points in the opinion explaining that the congressional purpose behind section 45 credits is to incentivize participation in the coal industry, an industry that no one would participate in otherwise. As a result, the credits should not be subject to a substance over form analysis in the way that the IRS seeks.

I encourage those interested in more detailed aspects of the analysis to read the opinion itself, but overall, this seems like the correct result for petitioners.

Asking the Court to Let You Change Your Mind: Designated Orders September 9 – 13, 2019 (Post Three of Three)

In the previous coverage of the weeks designated orders we looked at how to ask the Court to change its mind via a motion to reconsider (or the very similar motion to vacate or revise). In this final post on the designated orders from the week of September 9, we look at when you can ask the Court to let you change your mind….

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Kurdziel Junior, et. al v. C.I.R., Dkt. # 21186-12 (order here)

This order comes in the aftermath of another interesting substantive case, but one where the substantive issues were largely addressed elsewhere in a memorandum opinion and covered by Professor Bryan Camp here.

The opinion determined whether Mr. Kurdziel engaged in an activity for profit and found in the IRS’s favor that Mr. Kurdziel’s WWII plane flying was actually a hobby, thereby disallowing the losses he claimed. But while the opinion determined all of the substantive issues at point, it did not reach a determination on the final deficiency amount, which is something that Court has to do. Instead of doing that all at once, the Court opted (as it often does) to have the parties determine those computations via Rule 155.

Sometimes genuine computational disputes arise at the Rule 155 stage. Sometimes, however, one party tries to relitigate or raise new issues at the computation stage. The Court tends not to allow that, particularly when the issues could and should have been raised earlier. See Keith’s post here. In the above order, the IRS just now realized it made some mistakes that were in the Form 5278 accompanying the Notice of Deficiency (wayyy back in the process… this case was petitioned in 2012). You can get a sense for how much patience Judge Holmes has for the IRS motion to file an amended answer to fix the errors: “now [the IRS] wants to make [changes] — after discovery, after trial, after even the posttrial briefing –[.]”

A first question that one might have is “why doesn’t the IRS have to raise this in a motion for reconsideration? Isn’t the matter over with?” And the answer (or at least part of the answer), is that the IRS wants to raise new issues, not have the Court reconsider the issues it decided. And the IRS has to do this by an answer, and the Court still has jurisdiction to redetermine a deficiency greater than the amount on the Notice, if the matter is raised before the Court enters a final decision.

We are late in the game for the IRS to be bringing up new issues, but we are not too far gone. In this instance, trial has passed and an opinion has been issued, but no final decision has yet been entered. Judge Holmes cites to two cases (Sun v. C.I.R., 880 F.3d 173 (5th Cir. 2018) and Henningsen v. C.I.R., 243 F.2d 954 (4th Cir. 1957)) for the proposition that the IRS could still, then, try for increased deficiencies under Rule 41

Of course, just because the Court can allow the party to amend its answer doesn’t mean that it will. Or at least, not for all of the changes the IRS wants.

It may then surprise some readers that Judge Holmes, in this case, actually does allow some of the proposed changes to be made. From the outset it should be noted, however, that all of the changes the IRS asks for can be best understood as mathematical and not conceptual: they don’t really involve new legal arguments. Rather, the mathematical changes flow (you guessed it) mathematically from the changes that were properly at issue in the case.

Tax laws and deductions are often interconnected by taxable income or AGI “phase-outs.” A change to one part of the return frequently has an effect on another. If I fail to report $500K in income, the Notice of Deficiency might only assert that I have an additional $500K of taxable income, but a side-effect may be that I lose the Child Tax Credit I claimed because I am now “too rich” for it (usually, in my experience, the Notice of Deficiency also accounts for these mathematical changes).

In this case the increase to petitioner’s taxable income (which the Court determined by disallowing the “hobby loss”) would or should result in a phase-out of the losses he can claim on his rental real estate. Even though that wasn’t put directly at issue in the Notice of Deficiency (or answer), this side-effect apparently was raised in the trial and largely acknowledged by petitioner’s counsel. Judge Holmes has no qualms about allowing those changes to be made now.

But asking for changes that would come as a surprise, even if they are still mostly mathematical changes, is one step too far. Apparently, the IRS also failed to properly add in gross receipts from the flying (hobby) to the taxpayer’s income -as best I can tell, all they did was deny the loss. This would have not only increased taxable income, but have reduced some itemized deductions subject to the 2% floor (at IRC 67 and in effect during the pre “Tax Cuts and Jobs Act” year at issue here). This issue was never raised in trial, or at any other point, until this motion. Judge Holmes has no patience left for finding these late mistakes (for which the IRS offers no excuse other than “we just didn’t notice it”) and denies that portion of the motion. This case has been around since 2012, after all: it is time to move on.

And so shall we.

Getting to “Yes” When the Court’s Already Said “No”: Designated Orders September 9 – 13, 2019 (Post Two of Three)

In the second of three posts covering the designated orders from September 9 – 13, we will take a look at petitioners that refuse to take “no” for an answer… even if they are eventually stuck with it. While most people (lawyer and layman alike) are aware of the ability to appeal a lower court decision to a higher one, few are familiar with the processes for asking the court to reconsider its own decision. Fortunately for those with the curiosity to learn more on this topic, we were blessed with three designated orders in one week which deal with exactly that phenomenon.

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Asking the Court to “Change Its Mind,” Three Flavors of a Motion to Reconsider: Hurford Investment No. 2 Ltd. v. C.I.R., Dkt. # 23017-11 (order here)

Asking an appellate court to reverse a lower court is generally a difficult proposition -by some accounts the lower court is upheld roughly 90% of the time. If I had to bet, I’d say that asking the lower court (in this case, the Tax Court) to essentially reverse itself (that is, reconsider its decision) is even less frequently availing. There are really three grounds for the Tax Court to reconsider its decision: (1) manifest error of law or facts, (2) intervening change in controlling law, or (3) newly discovered evidence. 

Although petitioners may be hesitant to phrase it as such, many appear to make their motions based on the theory that the court manifestly erred on the law or facts. I imagine petitioners don’t exactly emphasize that point because the accusation of being manifestly wrong about a core component of your job as a judge (determining facts and applying the law) is perhaps not the easiest foot to start a motion on. 

Perhaps that is why petitioners in Hurford Investments try to flavor their motion to reconsider as a “change in the prevailing law.” And not completely without reason. The Hurford case is all about trying to get attorney’s fees after making a qualified offer under IRC 7430(g). The Tax Court held (as one of two grounds for denying the fees) that because the suit was a TEFRA proceeding the qualified offer rule doesn’t apply.

But wait! Haven’t we seen a qualified offer result in attorney’s fees with a TEFRA proceeding before? Why yes we have, in a post about BASR here.

BASR is the reason why this motion comes before Judge Holmes: the original denial took place before BASR was affirmed in an appellate court. The only problem is that BASR took place in the Federal Court of Claims -and as Judge Holmes drops in the first footnote, no Tax Court case can ever be appealed to the Federal Court of Claims, so it can never control the Tax Court under the Golsen rule. Since the BASR decision isn’t, to Judge Holmes’s mind, a change in the prevailing law, the only way Hurford can succeed is if Judge Holmes committed a manifest error of law or fact. Perhaps not surprisingly (though you can read the order if you’d like more details as to why) Judge Holmes finds that no such error was committed. In fact, Judge Holmes need not even address the conflicting BASR rationale (though he does anyway, explaining why he continues to disagree with the Federal Circuit Court) because regardless of whether qualified offers apply to TEFRA proceedings as a rule, the qualified offer in this instance would fail.  

And the reason for that ultimately comes down to the terms of the qualified offer that Hurford made. Under the Treasury Regulations, a qualified offer must (a) fully resolve the taxpayer’s liability for the adjustments at issue, and (b) must only pertain to those adjustments. See Treas. Reg. 301.7430-7(c)(3). In the Hurford offer there were (apparently) other items beyond what was contained in the FPAA that the petitioners sought to address. That, by itself, ruins it as a “qualified” offer. It is at that point your run-of-the-mill settlement offer.

So while it was a valiant effort by the taxpayers in Hurford to attempt to get the Tax Court to change its mind, it ultimately went the way of so many other motions to reconsider: denial. Though the petitioner tried for the “change in prevailing law” flavor, Judge Holmes said it tasted more like “manifest error in law or fact.” It wasn’t the only designated order of Judge Holmes that week to make such a denial, and on essentially the same grounds (see Mancini v. C.I.R., Dkt. # 16975-13, order here.)

But what of the third flavor, “new evidence?” For that, unfortunately, no designated orders came out the week of September 9, 2019 that would directly touch on it, though one came close enough.

The Third Flavor of a (Kind-Of) Motion to Reconsider: Ansley v. C.I.R., Dkt. # 388-18L (order here)

The motion put forward by the pro se petitioner in this case was apparently done in a letter, and not correctly characterized when filed. As the Tax Court is wont to do when unrepresented parties want to ask something of the Court, but aren’t sure the proper Court jargon, Judge Urda determines that the letter should be treated as a “motion to vacate or revise” pursuant to Rule 162 -which is quite similar to a motion to reconsider under Rule 161. The general reasons for granting such a motion look familiar, though are perhaps a bit broader than the motion to reconsider: mistake, newly discovered evidence, fraud, or “other reasons justifying relief.” (Judge Urda cites to, among other sources, Taylor v. C.I.R., T.C. Memo. 2017-212 for these standards.)

The petitioner in Ansley isn’t quite saying that there is newly discovered evidence, but really that the evidence in the record has changed -that is, that the petitioner’s financial circumstances that led to the IRS upholding a levy determination are now significantly different than they were when the decision was reached. Generally, that is a fair ground for remand to Appeals (when the case is still on-going) as it dovetails with IRC 6330(d)(3). However, in this case Judge Urda sees no reason to vacate the decision because (1) the petitioner doesn’t actually provide sufficient information to show a material change in his circumstances, and (2) he doesn’t really need the Court for the relief he’s after: IRS Appeals has retained jurisdiction, so he can still go to them with an Offer, or whatever other collection alternative he hopes to propose. 

I’ll admit that as someone that deals with a fair amount of Collection Due Process cases, the fact that IRS Appeals has “ongoing jurisdiction” (Judge Urda’s words) under section 6330(d)(3) after the hearing (more importantly, after an adverse Tax Court decision) isn’t of that much comfort to me. But since I have never had a Tax Court decision uphold a levy determination, I accepted that I may just be out-of-practice with the benefits of Appeals’ retained jurisdiction. So I looked further into exactly what retained jurisdiction would mean for the taxpayer. This led me to more questions than answers.

The IRM on point ( provides some guidance for when taxpayers may invoke a “retained jurisdiction” hearing.  Essentially all of routes require exhausting other routes with the IRS before getting back to Appeals, so it isn’t quite as if the petitioner in Ansley could just return to Appeals with a new Offer (it would be a bit off if you could). In Mr. Ansley’s case, he would have to go through the “CAP” procedure (see Publication 1660) first.

But perhaps worse, even if you have changed circumstances (one of the grounds for retained jurisdiction), the IRM provides that “the ONLY issues considered are those from the original Appeals determination” and that new issues should be sent to CAP. IRM To me this means that a taxpayer that originally requested an installment agreement or currently not collectible could not, after things go really badly, now propose an Offer in Compromise in a retained jurisdiction hearing. Maybe that is a moot point, since you can get to Appeals in that case just by filing an Offer in Compromise through the normal channels (and then appealing it, if need be). Which leads to my main question…

Does retained jurisdiction by Appeals really provides any additional protection (or shortcut) to Appeals that the taxpayer wouldn’t otherwise have? To me, it appears that it is only of any use where Appeals makes a determination and then Collection decides to somehow ignore it -in IRM speak, where collection does not “implement Appeals determination” (we’ve previously written on the potential perils of trusting a determination letter to be carried out here). Even then, however, you have to try to work it out with Collection management first. I suppose that’s something… but to me, not a whole lot.

Again, however, I have never directly dealt with a retained jurisdiction hearing, so I may be off. If anyone out there has experience, I appreciate any shared wisdom in the comments.

Fun Substantive Tax Issues, From the Procedural Point of View: Designated Orders September 9 – 13, 2019 (Post One of Three)

There were five designated orders in the second week of September, and some of them were fairly substantial (one was even covered in Tax Notes). In fact, they were substantive enough to warrant three separate posts. This first of three will focus on the same order covered by Tax Notes. Since this blog focuses on procedure (and the Tax Notes coverage was mostly pertaining to the interesting “substantive” tax issues) we’ll be taking a look at it from a different angle.

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Substantive Issues in Designated Orders: A Different Perspective. Conyers v. C.I.R., Dkt. # 13969-18 (order here)

Conyers involves a fact situation you are likely to encounter on a Fed. Income Tax I exam. The petitioner was awarded a brand-new car after winning a local car dealers competition for high school seniors excelling (or apparently just showing up 100% of the time) in class. The petitioner didn’t actually enter the competition (her name was entered by the school), but that didn’t stop her from accepting the 2016 Jeep Renegade. And who can blame her? 

Conversely, however, who can blame the IRS for saying “you’re going to have to pay tax on that” after they get tipped off to the transaction via a 1099-MISC. Students and practitioners alike may think to themselves “non-taxable gift!” at this point and run through the troublesome “Duberstein” tests.

Judge Buch, however, does a wonderful job of walking through the difference between a non-taxable gift under IRC 102 and a taxable “prize or award” under IRC 74, and why this falls into the latter. I highly commend reading the order for those that are interested in the history and substantive niceties of IRC 74 (and why it came about as a result of the frequent confusion between “gifts” and “prizes”). I get the feeling that it is because of that analysis that Tax Notes Today covered the case (fairly obviously, no free links available to that). 

However, as a Tax Procedure blogger something else caught my eye in reading this, which was that it was disposed of in a motion for summary judgment. Judge Buch convincingly comes to a conclusion on the merits (that this Jeep Renegade is, in fact, a taxable prize). But that by itself does not resolve the case or mean that summary judgment is appropriate. And that is because there a second issue lurking behind the legal conclusion of whether the Jeep Renegade is a gift or taxable award: even if it is taxable, how much is the Jeep Renegade worth? That is much more of a question of fact, which generally ruins summary judgment motions.

Petitioner raises the issue of valuation in her objection to summary judgment, but Judge Buch disposes of it in one rather short paragraph: “Ms. Conyers claims a genuine dispute exists as to the value of her car. But Ms. Conyers provides only her bare allegation and does not provide an alternate valuation of any evidence of erroneous valuation by the Commissioner. Ms. Conyers may not rest on mere allegations or denials.”

So the question becomes, how far does one have to go to raise a genuine dispute of material fact that cannot be resolved in summary judgment? 

We’ve seen that a self-serving affidavit may be enough to defeat a motion for summary judgment, in the right circumstances. See Keith’s post here. That case involved the FRCP 56 not Tax Court Rule 121, but because the rules are essentially identical the analysis should remain the same: both allow for affidavits to be used in opposition, so long as they are based on personal knowledge and set forth facts that would be admissible in evidence. 

It isn’t immediately clear if any affidavit was filed in opposition to the summary judgment motion, though the docket listing “exhibits” to the petitioner’s response and Judge Buch’s reference to Ms. Conyer’s “allegation” lead me to believe that it is likely. If so, the question shifts to what the affidavit would need to contain to defeat the motion. Judge Buch says it needs to be more than just a denial of the IRS’s position, and then seems to imply that it also needs to affirmatively provide either (1) a correct valuation, or (2) evidence that the IRS’s valuation is incorrect. Saying just “the IRS’s valuation is wrong” would not meet that requirement -it would simply be an “allegation or denial” of the moving party’s pleading, which Rule 121(d) forbids. So, had petitioner’s affidavit provided “I think the car is worth [x]” (i.e. an affirmative valuation) that would appear to be enough to preclude summary judgment.

Of course, you can’t just pick a number out of the air to defeat summary judgment and then swear in an affidavit that the number is correct based on your personal knowledge. That would clearly be an affidavit “made in bad faith” under Rule 121(f), which opens up a lot of collateral issues (like possibly having to pay the other side’s attorney fees, being subject to contempt, or otherwise disciplined by the Court).

But what if you are convinced that the car is worth less than the IRS’s valuation, but haven’t had the time to come up with an affirmative valuation of your own (that you could swear to in the affidavit)? Are you out of luck just because the IRS pushed the issue with a summary judgment motion? 

Possibly not. Rule 121(e) provides exceptions to providing an affidavit like the one Judge Buch would seem to require when such “affidavit or declaration [is] unavailable”. This rule allows the Court to find a genuine dispute of material fact if the non-moving party could only be expected to put the facts at issue through cross-examination or through information from a third party that cannot (yet?) be secured. The Court also may deny the motion or provide a continuance to get an affidavit, as the circumstances demand. 

Because it does not appear that petitioner, in this case, could provide an affidavit that really put the value of the car at issue (other than by saying “the IRS is wrong”) Rule 121(e) may have been the only saving grace… And even that may have been fleeting. Since the car was brand new, and presumably was going to be sold at a set price by the dealership, arguing a value apart from what the dealership reported to the IRS was going to be an uphill battle. Maybe an appraiser could say the dealership marked it up too much. Maybe the taxpayer could testify that this specific car (and not the model generally) had some defects that should lower the value. But the petitioner had to say something credible on those matters, and if it was based on personal knowledge it isn’t clear why they couldn’t have been in an affidavit in opposition (that is, it isn’t clear why they’d need more time under Rule 121(e)). 

And so this interesting case ends in summary judgment against the petitioner, as the IRS was entitled to judgment as a matter of law. Though the final finding necessary for summary judgment (no genuine issue of material fact) only warranted one paragraph in the order, hopefully this post elucidates how much may lurk behind that.  

A Journey Through Rule 81(i) – Designated Orders: August 19 – 23, 2019

There were only four orders this week. The first and most interesting order explores Rule 81, which governs the taking and use of depositions in the Tax Court. Two CDP orders and a tax protester in a deficiency case round out this week’s orders.


Docket  Nos. 16634-17L, 15789-17, Raley v. C.I.R. (Order Here)

This short order from Judge Buch strikes from the record Respondent’s lodging of a document entitled “Respondent’s Designation of Deposition Testimony To Be Used At Trial.” Judge Buch characterizes Respondent’s filing as “an attempt to put into the evidentiary record of this case a deposition of a non-party taken pursuant to a stipulation under Rule 81(d) . . . .” For those practitioners who don’t often take depositions in cases before the Tax Court (myself included), a brief review of Rule 81 is called for.

Rule 81 provides that a party may take depositions only where (1) the parties agree to do so under Rule 81(d), or (2) the party seeking the deposition applies for permission from the Court under Rule 81(b). Compared to Rule 30 of the Federal Rules of Civil Procedure, which requires an application only in limited circumstances, the Tax Court has much more discretion under its Rules to allow an unconsented deposition. But here, the parties stipulated, and so didn’t need Court permission to take the deposition.

Now we have a deposition. But what can we do with it? Rule 81(i) governs use of the deposition in the Court. Rule 81(i) is analogous, but not identical, to FRCP 32.

At the trial . . . any part or all of a deposition, so far as admissible under the rules of evidence applied as though the witness were then present and testifying, may be used against any party who was present or represented at the taking of the deposition or who had reasonable notice thereof, in accordance with the following provisions:

1. The deposition may be used by a party for the purpose of contradicting or impeaching the testimony of the deponent as a witness;

2. The deposition of a party may be used by an adverse party for any purpose;

3. The deposition may be used for any purpose if the Court finds: (A) That the witness is dead; (B) that the witness is at such a distance from the place of trial that it is not practicable for the witness to attend, unless it appears that the absence of the witness was procured by the party seeking to use the deposition; (C) that the witness is unable to attend or testify because of age, illness, infirmity, or imprisonment; (D) that the party offering the deposition has been unable to obtain attendance of the witness at trial, as to make it desirable in the interests of justice, to allow the deposition to be used; or (E) that such exceptional circumstances exist, in regard to the absence of the witness at the trial, as to make it desirable in the interests of justice, to allow the deposition to be used.

So, to summarize, the deposition may be used in three circumstances: (1) impeaching the deponent as a witness at trial; (2) for any purpose, if the deponent is a party; and (3) purposes related to the unavailability of a witness at trial, including death, distance, inability to attend or compel attendance, or other exceptional circumstances.

Here, Respondent, according to Judge Buch, simply attempted to put the entire deposition into the record. That won’t work, because Respondent didn’t even identify how Respondent intended to use the deposition. Without at least this, the Court has no basis to determine whether the deposition will be permissibly used under Rule 81(i).

Respondent’s counsel didn’t take this lying down. A week later, Judge Buch issued a subsequent order in this case. The parties held a conference call with Judge Buch, and explained that the deponent would be unavailable for trial—one of the reasons a deposition can be used, for any reason, under Rule 81(i)(3). Judge Buch accordingly vacated the August 21 order, retitled Respondent’s filing of the deposition as a “Motion Under Rule 81(i),” and ordered the parties to stipulate to the admissibility of so much of the deposition as possible. That stipulation was filed on September 6, and the Court accordingly granted Respondent’s motion under Rule 81(i) on September 18.

Docket  Nos. 5227-18L, 4986-18L, Koham v. C.I.R. (Order Here)

This CDP case from Judge Buch involves petitioners who don’t appear sympathetic. The liability arose from the taxpayer’s self-assessment of income tax liabilities on returns they filed for 2013 and 2014. The taxpayers filed an OIC, but listed “patently excessive” expenses (e.g., $9,500 for housing expenses). In the interim, the Service filed a NFTL, and so Petitioners elected to pursue the OIC through the CDP procedures.

The settlement officer calculated a monthly net income for the taxpayers of $987, after reducing their monthly expenses to the IRS collection standards amounts. The SO found a reasonable collection potential of $312,361—far greater than the corresponding tax liability of $35,117 and dwarfing petitioners’ offer of $2,500.

The SO offered a streamlined installment agreement of $332 per month (i.e., the total liability divided by 72 months). But Petitioner didn’t accept it and the SO issued a Notice of Determination that sustained the NFTL. Petitioners proceeded to the Tax Court, arguing in their response to Respondent’s eventual motion for summary judgment that the SO made a “blanket rejection” of the OIC.

There was simply nothing here for the Court—or frankly, the IRS—to work with. Petitioners provided no evidence of an IRS error with the expense calculation to lower the “reasonable collection potential”; no purported special circumstances that would justify acceptance of an offer for less than the reasonable collection potential; and no further allegations (e.g., that the SO failed to verify all applicable statutory and procedural requirements). They complained of the SO’s “blanket rejection” of the OIC; instead it seems the SO considered the circumstances and rejected the OIC for a fair reason. Pro se CDP litigants should take note: your reasons for seeking reversal must be well-grounded in the facts and law.

Docket  No. 24599-17L, Marra v. C.I.R. (Order Here)

Another CDP case, this time from Chief Special Trial Judge Carluzzo. Respondent filed a motion for summary judgment, while Petitioner moved to remand the case to IRS Appeals. The primary issue is whether Petitioner may challenge the underlying liability pursuant to IRC § 6330(c)(2)(B). Respondent objects because they believe Petitioner did not raise the underlying liability during the CDP hearing itself, and is therefore precluded from raising that issue before the Tax Court. See Giamelli v. Commissioner, 129 T.C. 107, 112-13 (2007). Petitioner responded that, in fact, he raised the issue in a Form 1127, Application for Extension of Time for Payment of Tax Due to Hardship, which he allegedly submitted during the CDP hearing.Judge Carluzzo notes a further disagreement to whether Petitioner had reasonable cause for failure to pay the underlying liability, in addition to the liability itself.

Because Judge Carluzzo finds there to be a continuing dispute regarding the underlying liability, he denies Respondent’s motion for summary judgment, because genuine issues of material fact remain in dispute (though the order does not detail precisely what facts are material or in dispute).

Further, Judge Carluzzo denies Petitioner’s motion to remand—likely because the issue centers on the underlying liability. If the Court finds that Petitioner did raise the underlying liability at the hearing, then the Court may consider it de novo without need for remand. See Sego v. Commissioner, 114 T.C. 604, 610 (2000). If not, then it’s a moot point anyway. In any case, remand doesn’t make sense here.

Docket No. 322-19, Barfield v. C.I.R. (Order Here)

Finally, Judge Guy defeats a classic tax protester tactic. In an earlier proceeding, Petitioner alleged an issue regarding tax year 2015. But at that time, the Service hadn’t issued a notice of deficiency for 2015. So, Respondent moved to dismiss for lack of jurisdiction as to 2015, which the court granted.

Later, the Service did issue a notice of deficiency for 2015. Petitioner asked the Tax Court for review, and filed a motion for summary judgment, arguing that the earlier proceeding had dismissed the 2015 tax year, and thus, was res judicata as to this new proceeding. Respondent filed a motion for judgment on the pleadings in response. 

Judge Guy parries this tax protester’s attempt to nullify the Service’s notice of deficiency and grants Respondent’s motion for judgment on the pleadings. Because Petitioner didn’t allege any errors or facts with respect to Respondent’s notice—aside from the baseless res judicata argument—Judge Guy found that “the petition . . . fails to raise any justiciable issue.” Judge Guy also warns petitioner about the section 6673 penalty, but does not impose one. A review of the case’s docket suggests that Petitioner heeded Judge Guy’s warning, as there have been no further filings in this docket. 

Lazy Mid-Summer Tips and Traps: Designated Orders August 12 – 16, 2019

It was a fairly lax mid-August week at the United States Tax Court. There were only three (non-duplicative) designated orders issued. One was a common example of the taxpayer simply not giving the IRS anything to work with in a CDP hearing and won’t be discussed (found here). The other two, however, provide a few useful tips and traps of general application worth noting.

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What Time-Zone Determines Timely (Electronic) Filing? NCA Argyle LP, et. al. v. C.I.R., Dkt. # 3272-18 (order here)

One of the more interesting tidbits from this week’s designated orders was buried in a footnote. The order above mostly dealt with an objection to the IRS’s motion for a deposition that (petitioners felt) came way too late to be fair (i.e. one month before trial). But it isn’t the timing of IRS’s motion that is interesting, but the timing of the petitioner’s objection. 

When the IRS moved to compel depositions the Court ordered petitioners to file any response by August 14. I’m assuming this case involves big dollars, because petitioners are partnerships and LLCs represented by expensive law firms in California. Those law firms are probably very busy, with lawyers working very late hours. So they figured they’d electronically file their response on August 14th at 10:04 pm… Western time.

And why not? The “Practitioners’ Guide to Electronic Case Access and Filing” stated (but has since been changed as a result of this order) at page 42 that “A document is considered timely filed if it is electronically transmitted no later than 6:00 a.m. Eastern time on the day after the last day for filing.” [Emphasis added.] In other words, the petitioners had almost six more hours to get their response in, if you take the practitioner’s guide seriously.

Alas, in the hierarchy of legal authority the “Practitioner’s Guide” is a step below Tax Court Rule 22. That rule states (effective November 20, 2018) that “A paper will be considered timely filed if it is electronically filed at or before 11:59 p.m., eastern time, on the last day of the applicable period for filing.” [Emphasis added.] Petitioner’s response was filed 10:04 p.m. the day of the filing deadline… but only on western time. We live in an east coast dominated country (take it from a mid-westerner). In the time-zone that matters, the response was late by a solid hour and five minutes. 

As a side-bar, it is important that other courts have different rules than the Tax Court. For example, as discussed here one preliminary difference is that Federal District Court determines the effective date of a complaint based on receipt, and not when it is mailed. Second, other courts (including Federal District Courts not located in Washington D.C.) are unlikely to set a deadline of 11:59 Eastern Time. The Federal District Court for Minnesota provides that an electronic document is timely if submitted “prior to midnight on its due date.” See page 4 of the ECF User Guide here. Though a time-zone is not provided (which midnight are we talking about?) one would surmise the Central Time zone, since the next rule covering timely paper filing sets the deadline at 5:00 p.m. Central Time on the due date. These rules from the ECF User Guide comport with the Federal Rules of Civil Procedure, which provide that for calculating the “last day” you generally look to the time zone in the court you are filing with. See FRCP Rule 6(a)(4).

So, bringing it back to Tax Court, is the West Coast law firm response thrown out for being filed out of time? Judge Buch is not one to stand on such formalities, stating that “no one was prejudiced by the 65 minute delay” and allowing it to stand.

Nonetheless, while this slight timeliness issue does not end up causing any problem for the parties in this case, it is important to recognize how different it would be if the deadline at issue was “jurisdictional.” As both Carl and Keith have extensively written about, based on the Tax Court’s current interpretation of the law, Judge Buch’s hands would be tied: deprived of jurisdiction, he would also be deprived of the ability to excuse the timeliness issue (say, for lack of prejudice, or more likely equitable tolling).   

Who To Ask For Help: Tax Court Isn’t a One-Stop Shop. Crawford v. C.I.R., Dkt. # 4318-18L (order here)

We have previously seen that the Tax Court is reluctant to stand-in as a federal district court on FOIA issues (see post regarding Cross Refined Coal, LLC here) or dismiss a case where it is up to the bankruptcy court to amend the stay (see post regarding Betters v. C.I.R., here). In the above order we have a similar issue involving the enforcement of a federal district court injunction. 

Essentially, the petitioner in this case has received informal Tax Court assistance (that is, no entry of appearance under Rule 24) from someone the IRS doesn’t much care for. And likely for good reason: the individual assisting the petitioner is associated with the Williams Financial Network, currently under indictment for a $5 million fraud scheme. The IRS accordingly has enjoined all individuals associated with that entity from “representing people before the IRS.” Of course (or as sometimes needs to be explained to taxpayers), the Tax Court is not the IRS so those individuals are not (technically) prohibited from representing petitioners before the Tax Court if they otherwise meet the requirements of Rule 200

(As an aside to new tax court practitioners, don’t overly concern yourself with the reference to a “periodic registration fee” in the rules to practice. Once, in a fit of stress, I called the Tax Court to see if I was current on the fee (I couldn’t ever remember paying) and was told they hadn’t actually required it for decades.)

It isn’t clear if the individuals associated with the Williams Financial Network meet the requirements of Rule 200 (I’d bet they don’t), but that isn’t really the problem. The problem is that the IRS asks the Tax Court to essentially make up rules and exercise power it probably doesn’t have: that is, the IRS asks Judge Buch to order that the individuals helping the petitioner be prohibited from doing so when the case is remanded to IRS Appeals. Judge Buch declines to do so: the Tax Court wasn’t the court that issued the injunction, and the Tax Court has no rules on who can represent people before the IRS, just who can represent them before the Tax Court. 

In other words, if Williams Financial Network violates the district court injunction it’s not the Tax Court’s problem, and not their place (or power) to fix it.