Odds and Ends: Designated Orders 10/26/20 to 10/30/20

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As the United States Tax Court made their conversion from their prior court filing system to the DAWSON system, we are no longer going to have designated orders selected by the Tax Court. Instead, we can browse the orders of the day and select which orders are worthy of interest. Perhaps the longest orders are the best ones, but I have found that short orders might be ones of interest also.

While Samantha Galvin had substantive orders in the last week of designated orders, my last week of designated orders was earlier and I felt more like they were odds and ends being cleaned out. There were 7 designated orders in the week that I will give brief descriptions for as they were generally 2-4 pages in length and varied in category.

Dismissal for Lack of Jurisdiction

  • Docket No. 5103-19, Joseph C. Ho v. C.I.R., Order of Dismissal for Lack of Jurisdiction 10/28/20 available here.

One of the strict rules for the Tax Court is the deadline for filing a petition within the prescribed time period. For a notice of deficiency, the time period is a 90-day period that is generally provided on the notice mailed out by the IRS.

Mr. Ho was able to meet the deadline for filing his petition. The problem is that he mailed it to the wrong place. He mailed his petition by certified mail to the IRS in Holtsville, New York, where it arrived on his deadline of February 11, 2019. It was forwarded by the IRS on March 8 and the Tax Court received it on March 14 (both dates after the 90-day period expired). The result is that the Court granted the IRS’s motion to dismiss for lack of jurisdiction.

All is not lost for Mr. Ho, however. The motion from the IRS states: “Although the petition was not timely filed in this case, Respondent’s counsel has been working with Petitioner to attempt to administratively resolve this case…Petitioner informed Respondent’s counsel that he has no objection to the granting of this motion.”

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Motion to Dismiss for Lack of Prosecution 1

  • Docket No. 13644-19, Timothy Stevens, Jr., v. C.I.R., Order of Dismissal and Decision 10/28/20 available here.

If you spend time working Tax Court cases, you become familiar with motions to dismiss for lack of prosecution. In person or in a court order, there is an inevitable discussion between the Tax Court judge and IRS Counsel about the lack of responsiveness from the petitioner. Usually, the petitioner files the petition and does nothing else. The IRS Counsel will usually relate about attempts to contact the petitioner like telephone calls and mail that got no response. That is the case here, but I want to commend Judge Gale for the thorough order in this case. The order goes through the case law involved supporting the order of dismissal. If you want to read through textbook analysis of the law supporting a Tax Court judge’s order of dismissal in a case, I would recommend that you look at this order.

Motion to Dismiss for Lack of Prosecution 2

  • Docket No. 2322-19, Jaideep S. Chawla v. C.I.R., Order of Dismissal and Decision available 10/27/20 here.

Once again, we have a routine order of dismissal based on the motion to dismiss for lack of prosecution. In this instance, I wanted to note petitioner’s letter where petitioner stated that “petitioner’s name is now John Adams; multiple lawsuits have been filed by petitioner against the Internal Revenue Service related to the alleged tax bill; and the petitioner will not pay any debt until the Internal Revenue Service releases all federal tax filings of President Barack Obama to petitioner.” Following that letter, the petitioner did not appear for the remote hearing on the case. Understandably, the respondent’s motion to dismiss for lack of prosecution was granted by the Court.

Incompetent Person Needing Next Friend

  • Docket No. 3136-20S, Laura B. Walker v. C.I.R., Order 10/30/20 available here.

The IRS filed a motion to change or correct the caption in this case to name the petitioner’s daughter, Kimberly Walker Fuller, as her next friend. They represent that Laura Walker is currently incapacitated and unable to manage her own financial affairs, plus she previously appointed Ms. Fuller as her agent to handle such matters. Ms. Fuller has no objection to the granting of the motion.

Tax Court Rule 60(a)(1) requires a case seeking redetermination of a deficiency be brought by and in the name of the person that the deficiency was determined against, or by the fiduciary entitled to institute a case on behalf of such a person. Rule 60(d) provides that a representative, such as a guardian, conservator, or like fiduciary, may bring a Tax Court case on behalf of the incompetent person. An incompetent person without a duly appointed legal representative may act by a next friend.

Ms. Fuller has a power of attorney that allows her to act as Ms. Walker’s agent for purposes that include pursuing claims and litigation and pursuing tax matters. The power of attorney is not affected by Ms. Walker’s subsequent disability or incapacity, and is governed by Pennsylvania law.

The Court reviewed Pennsylvania law and the power of attorney form. Finding that the power of attorney form is sufficient, the Court recognized Ms. Fuller to commence and prosecute the case on Ms. Walker’s behalf and recognized her as next friend pursuant to Rule 60(d). The caption was also ordered to be changed.

Whistleblower Denial

  • Docket No. 10452-19W, Bobbi J. Marvel v. C.I.R., Order and Decision (order here).

The Tax Court has jurisdiction under I.R.C. section 7623(b)(4) to review decisions of the Whistleblower Office to reject a claim for failing to meet the threshold requirements applicable to whistleblower claims. In short, a whistleblower needs to prove that there was administrative or judicial action to collect unpaid tax or otherwise enforce the internal revenue laws based on the information provided by the whistleblower.

Here, the whistleblower submitted that the target taxpayer had not filed tax returns for tax years 2013 through 2018. The issue is that the IRS did not pursue any action because the unfiled tax returns fell below the threshold for an audit. Since the IRS did not audit the target taxpayer, they did not take any action based on the whistleblower’s information. In the Tax Court’s review, there was thus no abuse of discretion by the IRS examiner and the Court sustained the final determination denying the whistleblower claim.

CDP – No Hearing in Person

  • Docket No. 14307-18 L, Scott Allan Webber v. C.I.R., Order available 10/30/20 here.

This case has been documented at previous times in Procedurally Taxing because of some groundbreaking issues related to collection due process (here and here).

This time, there is discussion of the Court granting an IRS motion to modify the remand instructions for remanding the case to be reviewed by IRS Appeals. The hearing on the motion to modify the remand instructions was going to be conducted by video conference or telephone unless the parties agreed to meet in person. Mr. Webber filed a motion to reconsider the Court order because he wanted the hearing to be in person. Mr. Webber has 6-8 bankers boxes of records that contain potential relevance to the case.

The Court repeats that it is not going to adjudicate Mr. Webber’s entitlement to an overpayment regarding the credit elect in controversy and that the issue on remand is whether the IRS allowed the overpayment but failed to credit it. That is a question of what the IRS did, not what Mr. Webber did. Those records would likely be in IRS records about Mr. Webber’s case and not Mr. Webber’s records about his transactions. Since Mr. Webber did not explain the relevance of his boxes of documents, the Court denied his motion for reconsideration.

Results for Motion to Compel

  • Docket No. 25934-17, Dean Kalivas v. C.I.R., Order available 10/26/20 here.

In this case, IRS Counsel filed a motion to compel production of documents with regard to 4 requests. Mr. Kalivas did not file a response to the court, but sent it to IRS Counsel. In their status report, the IRS summarized Mr. Kalivas’s response that he had no documents for requests 1, 2, and 4. Also, he provided documents for request 3 during informal discovery and had no further documents to provide. IRS Counsel stated in their status report that requests 3 and 4 were now moot.

Request 1 concerned whether payments made by Richard McKinney to Mr. Kalivas were taxable income or repayments of a loan. Request 2 concerned Mr. Kalivas’s entitlement to Schedule C and E expense deductions.

The Tax Court granted the motion to compel in part so that Mr. Kalivas is precluded from producing at trial documents responsive to those 2 requests that he failed to produce prior to the order. The motion to compel was denied in part, with prejudice, in that they do not take as established the taxability of Mr. McKinney’s payments or how Mr. Kalivas would not be entitled to the Schedule C and E expense deductions.

Not groundbreaking cases this week, but I think there have been some pearls of wisdom to find in my last post on designated orders. Overall, writing about designated orders has been a great experience as it stretched my writing abilities. In addition, I have learned about the Tax Court and areas of tax law outside of the Low Income Taxpayer Clinic realm (whistleblower cases, for example). I am grateful for this opportunity with Procedurally Taxing and look forward to writing on the next tax topics.

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 3 Kansas City metro area Low Income Taxpayer Clinics. He records and edits a tax podcast called Tax Justice Warriors and is now an adjunct professor for Washburn University School of Law.

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