Charlie (not his real name) was excited yet apprehensive. The long awaited decision from the US Tax Court had just arrived. He had read it. Better put, he had tried to read it. Charlie is a construction worker, not an attorney, and nine pages of legalese were just too much. Could he come over and get me to decipher it? I instantly agreed. I was as eager to know the result as Charlie was.

Charlie's journey through the tax jungle had started four years earlier when his wife Charlene (not her real name either) chose to leave him and the kids, but also chose to claim the kids on her tax return. By the time Charlie called me, both he and Charlene had filed separately; both had claimed "Head of Household"; and both had claimed all the kids. Besides the impossibility of both claiming all the kids, neither qualified as "Head of Household". They were still married and had lived together during the last half of the year; a clear disqualification. Someone was going to get hammered, and given that Charlie earned a substantial income and Charlene didn't, I was pretty sure it would be Charlie. If the IRS is anything, it is pragmatic. Like Willie Sutton, the IRS goes "where the money is."

My first advice to Charlie was to get Charlene to join him in amending their separate returns and to file a joint return. Charlie was certain Charlene would be unwilling, and he was correct. Despite his best efforts, she was unwilling to even discuss it. We then amended Charlie's return to "Married Filing Separate", divided the income pursuant to The State of Washington's Community Property laws, and claimed some of the kids.

The IRS balked. They wanted nothing to do with Charlie's amended return. Their first position was that "We are the IRS and we don't have to accept amended returns filed after the due date of the return." That is not exactly what the law states. While they do some have discretion, there are plenty of court cases that make it abundantly clear that they may not abuse their discretion. When we pointed that out, they responded with FULL DISALLOWANCE and a NOTICE OF DEFICIENCY. Charlie had 90 days to pay up or petition the US Tax Court. After much discussion, Charlie petitioned.

Then the "Good Cop" called. I was contacted by an absolutely delightful lady from the IRS appeals office. She even had a sense of humor. The IRS wanted to settle. Great; we wanted to settle also. For a while, I thought we would actually settle the case with a few phone calls. Ultimately, however, the IRS was unable to bring itself to accept the sovereignty of The State of Washington's Community Property laws and we (Charlie and I) weren't willing to give it up. Charlie was looking at his wallet and I got hung up on principle. I have this notion that Government should obey the law, even when it is not convenient.

Tax court was an eye opening experience. We arrived early, went through "electronic security" and had a seat. The judge "called the roll" to determine how many cases he had and retired to prepare a schedule. Within an hour he reappeared to announce dates and times for individual appearances. Our's was early afternoon the following day. When we left, I noticed that "electronic security" was nowhere in sight. Anyone could have walked in unimpeded.

We wanted to observe a few cases before going on ourselves, therefore we returned the next day well before our scheduled time. There was no "electronic security."

We had elected "Small Tax Case Designation", a supposedly informal procedure available for disputes under $10,000. According to materials provided to us by the Tax Court, the taxpayer can be represented by anyone the taxpayer chooses who is admitted to practice before the Tax Court, but that most taxpayers represent themselves. Also, the provided material stated that "The Court will try to help you develop the facts in your case through your testimony and that of other witnesses, and any receipts, papers, or documents which you bring with you to the trial."

It had sounded so "user friendly". It wasn't. One of the taxpayers ahead of us was a large white male. Despite his best efforts, he was unable to organize his material. The Court did not help him. Further, he was scolded by the judge for his lack of organization. He left, shaking and red. My own thoughts turned to rednecks, firearms and lack of security. I was a little concerned.

We were prepared. We had plan A. We also had plan B.

Plan A was out. The Judge told me in no uncertain terms that "The Law" was entirely the province of "The Court", and that CPAs were not permitted to talk about it. I could only answer the questions I was asked by Charlie, the attorney for the respondent (IRS), or the Judge himself.

Plan B was in. It worked. Charlie would have made Perry Mason proud and his best witness turned out to be his mother. If the attorney for the respondent (IRS) didn't know the importance of carefully crafted questions before the proceeding, he certainly should have afterward. He asked a couple of sloppy questions which gave Mama all the room she needed. She was wonderful. Also, I had helped Charlie prepare a short brief which was admitted.

Charlie breezed into my office and handed me the document. There was no outline at the beginning and no summary at the end. Time stood still. I had to read the whole thing - all nine pages of terse legalese. Page seven held the answer; "we hold for the petitioner". Charlie had won. The system worked. The IRS would follow the law - The State of Washington's law.
 
 

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