Opinion
1719-17 1723-17
03-14-2023
PALMARINI INC., ET AL., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge.
We issued our opinion in these consolidated cases on December 7, 2022. (In this order we cite to documents by their filing numbers in Docket No. 1719-17; and in that case the opinion appears as Doc. 71.) Each of the parties has submitted proposed computations pursuant to Rule 155; but in the case of petitioners' computations, there are complications and defects that we address here.
Two days after issuing our opinion, we issued our order (Doc. 72) directing the parties to submit their computations in compliance with Rule 155. We quoted Rule 155(c) ("Limit on Argument"), which provides:
Any argument under this Rule will be confined strictly to consideration of the correct computation of the amount to be included in the decision resulting from the findings and conclusions made by the Court, and no argument will be heard upon or consideration given to the issues or matters disposed of by the Court's findings and conclusions or to any new issues. This Rule is not to be regarded as affording an opportunity for retrial or reconsideration.
The parties' deadline to file their computations was March 7, 2023.
On February 27, 2023, petitioners mailed a letter (Doc. 75) stating that they were having difficulty accessing the documents in the Court's record, but we did not receive that letter until some days later.
The Commissioner filed his computation (Doc. 73) six days early, on March 1, 2023. Not having yet received petitioners' letter (Doc. 75), we issued on March 2, 2023, an order (Doc. 74) that observed "that petitioners . . . may find it easier to critique the Commissioner's computations and to present corrected revisions thereof rather than to start from scratch and do their own." We extended petitioners' deadline to March 31, 2023, and we again quoted Rule 155(c).
On March 3, 2023, petitioners mailed a document entitled "Tax Computations for Tax Year 2013 and Tax Year 2014 under Rule 155" (Doc. 77). We assume that, by that date, petitioners had probably not yet seen the Commissioner's computations (Doc. 73) served March 1, 2023, nor our order served March 2, 2023. We did not receive petitioners' "computations" until some days later.
On March 6, 2023, we received petitioners' letter (Doc. 27) that described their difficulty in accessing the Court's record. (By that date we had not yet received petitioners' "computations".) On March 8, 2023, we therefore issued an order (Doc. 76) directing our Chambers Administrator to set up a telephone conference with the parties. Our order also noted that "under Rule 155--the parties probably do not need access to most of the documents in the record. It may in fact be sufficient that they simply have access to (a) our opinion and (b) the IRS's notices of deficiency . . . . The recomputation process under Rule 155 is not an opportunity to point out errors in the opinion but rather to compute the deficiency amounts that result from the opinion. Errors in our opinion would be subject to correction on appeal." And we again extended petitioners' deadline--this time, to April 17, 2023.
On March 9, 2023, we received petitioners' "computations" that had been mailed March 3, 2023 (probably before petitioners received the Commissioner's computations (Doc. 73) or our order of March 2, 2023 (Doc. 74). We do not know whether, after mailing their letter on February 27, 2023, petitioners had managed to access documents in the Court's docket record. In any event, we note that petitioners' submission does not comply with Rule 155:
+ Petitioners' submission does not attempt any computation at all. It simply posits, without any arithmetic, that for each of the taxable years in each of the consolidated cases, the tax deficiency "is zero dollars".
+ Petitioners' submission does not adopt (and does not attempt to implement) the outcome in our opinion. In fact, it makes no reference to our opinion at all, and instead it makes assertions flatly contrary to our opinion. For example, see Doc. 77 at 2 ("We are entitled to claim a 2013 Schedule C deduction for advertising expenses in the amount of $96,075.44"); compare opinion (Doc. 71) at 18 ("AMOLLC has . . . no deductions . . . for 2013 and 2014"); id. at 22-23 (giving zero as the "Amount allowed" for advertising expenses on Schedule C in each year). As another example, see Doc. 77 at 1, 5 (asserting a shift of the burden of proof under section 7491(a)); compare Doc. 71 (holding repeatedly throughout that petitioners bore the burden of proof).
+ Petitioners' submission is chiefly a narrative critique of the IRS's examination of their returns, not a computation of a deficiency
amount. That critique is beside the point, since the Commissioner revised his position before trial, in some instances allowing deductions that the IRS had previously disallowed, and (more important) since the Court had redetermined the adjustments, correcting the errors that it found in the Commissioner's position. According to the Commissioner's computation, the Court's opinion yields redetermined deficiencies of only 77% of the deficiencies that the IRS determined in its notice of deficiency to Palmarini Inc. and only 37% of the deficiencies that the IRS determined in its notice of deficiency to Mr. and Mrs. Pamarini. Of course, it is possible that those figures are in error; but if so, one would identify the error by a competing computation of the Court's outcome, not a critique of the audit.
+ Petitioners could also prompt corrections by noting errors in the Commissioner's computation, but they have not yet noted such errors, perhaps because petitioners had not yet seen the Commissioner's computation at the time they mailed their submission. They will now have an opportunity to do so. It is
ORDERED that, no later than March 24, 2023, petitioners shall file with the Court, in compliance with Rule 24(b)(2)(A) and (B) and 24(e), an update of their contact information--including in particular working telephone numbers. Petitioners may use Form 10 ("Notice of Change of Address") to do so. It is further
ORDERED that, as soon as possible (and in any event no later than March 24, 2023), each of the parties shall, by telephone, contact the Chambers Administrator of the judge signing this order, for the purpose of scheduling a telephone conference among the parties and the Court. It is further
ORDERED that, in addition to normal service to be made by the Clerk of the Court, the Chambers administrator shall transmit a PDF of this order to petitioners at the email address appearing in Doc. 75. It is further
ORDERED that our previous order of March 8, 2023 (Doc. 76), remains in effect, so that petitioners continue to have until April 17, 2023, to file a computation in compliance with Rule 155. In composing that computation they should note our previous repeated instructions about the "Limit on Argument" of Rule 155(c).