t c memo united_states tax_court trans world travel petitioner v commissioner of internal revenue respondent docket no filed january steven s brown and daniel t hartnett for petitioner patricia pierce davis for respondent memorandum findings_of_fact and opinion gerber judge this case was assigned to special_trial_judge robert n armen jr pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_183 the court agrees with and adopts the opinion of the special_trial_judge which is set forth below unless otherwise indicated all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure - - opinion of the special_trial_judge armen special_trial_judge this matter is before the court on petitioner’s motion for leave to file a motion to vacate the stipulated decision of this court entered on date at issue is whether the court lacked jurisdiction to enter the stipulated decision because petitioner neither authorized nor ratified the filing of the petition by its accountant as explained in detail below we shall deny petitioner’s motion for leave findings_of_fact some of the facts have been stipulated and they are so found the stipulated facts and attached exhibits are incorporated herein by this reference petitioner’s sole office was located in highland park illinois at the time that its petition was filed with the court a trans world travel inc trans world travel petitioner is a c_corporation that was formed in since it has maintained a single office located pincite central avenue highland park illinois the highland park office petitioner is engaged in the group tour travel business its clientele consists of approximately churches of different denominations located throughout the united_states petitioner’s officers and shareholders are two brothers james m gibbs james and john w gibbs john james and john each own percent of petitioner’s stock james is petitioner’s vice president and secretary and john is petitioner’s president and treasurer james is primarily responsible for administrative financial and tax matters and his duties include running the office and dealing with the accountants in contrast john is primarily responsible for sales and promotion james and john each attended college for years other than james and john petitioner employs approximately to individuals none of these individuals exercises any managerial responsibility rather these individuals perform only clerical and sales-related duties both james and john spend much of their time traveling on business john in particular spends between to percent of his time traveling both domestically and internationally although james travels less frequently than john some of his destinations are also outside of the united_states b steven jaffe and the firm of coleman joseph jaffe neither james nor john nor any of petitioner’s other employees possessed any expertise in either accounting or federal tax matters accordingly from through petitioner retained the accounting and consulting firm of coleman joseph jaffe cj j to provide both accounting and tax q4e- services specifically including the preparation of periodic financial statements and various tax returns steven jaffe jaffe was one of the named partners of cj j jaffe is a graduate of the university of illinois where he earned a bachelor of science degree in communications and political science jaffe also attended depaul university for years where he studied accounting jaffe is neither a certified_public_accountant nor a licensed public accountant nor is he enrolled to practice before the internal_revenue_service or admitted to practice before this court from through date jaffe was the cj j partner who was responsible for servicing the trans world travel account jaffe prepared periodic financial statements as well as various tax returns specifically including federal corporate_income_tax returns forms jaffe also represented petitioner before the internal_revenue_service ’ seymour coleman coleman was another of the named partners in cj j coleman is a graduate of the university of illinois where he earned a bachelor of science degree in accounting anda graduate of depaul university where he earned a master of science degree in tax coleman is a certified_public_accountant he 1s not admitted to practice before this court from jaffe also prepared individual income_tax returns for james and john and represented them before the internal_revenue_service - - through date coleman devoted relatively little time to the trans world travel account james and john relied on cj j and particularly on jaffe to handle all of petitioner’s accounting and tax matters and james and john had confidence that cj j and particularly jaffe would do so in a professional competent and timely manner james and john placed a very high level of trust in jaffe and they also regarded him as their friend james and john gave jaffe full and unfettered access to petitioner’s books_and_records and they authorized him to contact directly the vice president of the financial_institution with which petitioner banked because of their trust in and reliance on jaffe neither james nor john paid close attention to petitioner’s tax matters rather james and john adopted a hands-off approach essentially delegating responsibility for petitioner’s tax matters to jaffe both james and john frequently signed without scrutiny or inguiry tax-related documents that were presented to them by jaffe for their signature c petitioner’s office procedures related to mail mail addressed to petitioner at its highland park office was received and sorted by petitioner’s receptionists mail routed to john was opened and read by him tax-related mail was routed to james’ office where it was placed in a box reserved for -- - jaffe’s use such mail was on occasion opened by james generally however it was left unopened until it was picked up by jaffe who regularly visited petitioner’s office often as frequently as two or three times per week any legal mail that might be received was routed to james and opened by him d the irs examination in respondent commenced an examination of one of petitioner’s corporate_income_tax returns the examination was subsegquently expanded to specifically include petitioner’s income_tax returns for the fiscal years ended date through jaffe represented petitioner during the course of the irs examination with some participation by coleman although james was aware of the examination he did not participate in it other than to attend the brief initial meeting between jaffe and the revenue_agent in and to execute the written protest to the agent’s report see infra that was prepared by cj j and submitted to irs appeals_office in date the record in this case includes a copy of a power_of_attorney and declaration of representative form naming jaffe and coleman as petitioner’s representatives this document which was executed by james in date is limited to the fiscal years ended date through we are satisfied however that petitioner also named jaffe and coleman as its representatives for the fiscal_year ended date as well as for the initial year of the examination - in jaffe complained to james about the revenue_agent in or about or jaffe told james that the examination had been resolved and that petitioner would be liable for additional taxes jaffe also told james that any amounts paid_by petitioner would be refunded by the irs or reimbursed by cujéj james apparently accepted these statements at face value and did not question jaffe about them john was also aware of the examination of petitioner’s income_tax returns john would periodically ask jaffe typically at a social occasion such as during a round of golf how the examination was going jaffe would assure him that there was nothing to worry about and john would not inquire further in date cj j filed a protest on petitioner’s behalf with the internal_revenue_service the protest served to administratively appeal the determination of the revenue_agent as set forth in his report the taxable years covered by the protest were the fiscal years ended date through the protest was signed first by coleman and then by james under penalties of perjury in or about jaffe and coleman met with an irs appeals officer in milwaukee to discuss petitioner’s protest of the revenue agent’s report be the tax_court proceeding on date respondent’s milwaukee appeals_office mailed a notice_of_deficiency to petitioner the notice was addressed to petitioner at its highland park office the notice determined deficiencies in petitioner’s federal income taxes and accuracy-related_penalties under sec_6662 as follows accuracy-related_penalty i r c year deficiency sec_6662 dollar_figure dollar_figure big_number big_number big_number big_number on date a petition was filed with this court disputing the deficiencies and penalties determined by respondent in the notice_of_deficiency the petition was purportedly signed by john in his capacity as petitioner’s president however the petition was actually signed by jaffe jaffe had not been expressly authorized by john to sign john’s name on the petition on date the court sent petitioner a notification of receipt of petition notification the notification was mailed to petitioner at its highland park office the notification served to confirm the receipt of a petition its filing_date and the payment of the filing fee the notification also disclosed the docket number that had been assigned by the court to the petition finally the notification advised that a --- - designation of place of trial had not been received see rule on date the court received and filed a designation of place of trial dpt a simple one-page document that designated chicago illinois as the place of trial the dpt was signed and dated by james the court served the dpt on petitioner at its highland park office in order to confirm the receipt and filing of the document on date respondent served his answer to the petition see rule by mailing a copy to petitioner at its highland park office the envelope containing the answer was delivered to petitioner and opened by james james printed attn steve jaffe in the upper right corner of the answer and placed it in the box in his office reserved for jaffe’s use on date the court sent petitioner a notice setting case for trial the trial notice the trial notice was mailed to petitioner at its highland park office by certified mail the trial notice served to notify petitioner that its tax_court case had been calendared for trial at the trial session consistent with its regular practice the court enclosed with the notification for petitioner’s use the form designed to designate a place of trial see form_5 in appendix i to the tax_court rules_of_practice and procedure it was jaffe however and not james who printed chicago illinois on the dpt and added vice president immediately to the right of james’ signature -- - beginning on date in chicago illinois in date at or about the time that the trial notice was sent to petitioner jaffe and coleman met with respondent’s district_counsel attorney in chicago to discuss the issues raised by the notice_of_deficiency on date shortly before the scheduled trial session john signed and dated a stipulated decision the stipulated decision reflected a complete concession of the deficiencies and penalties determined by respondent in the notice_of_deficiency the court entered the stipulated decision on date and so notified petitioner by mailing a conformed copy on that date to petitioner at its highland park office f post--decision developments in date cj j terminated jaffe’s status as a partner in the firm in date cj j commenced a civil_action against jaffe in the circuit_court for cook county illinois the complaint included counts for fraud embezzlement and forgery this action was apparently still pending at the time of the evidentiary hearing in the present case in or about july or date petitioner retained an attorney for the purpose of addressing its tax_liabilities for fiscal years for which jaffe as well as coleman and cj j had actually the successor firm to cj j provided representation in date the attorney filed an application with the irs for audit_reconsideration of the taxable years that were the subject of the tax_court proceeding and the stipulated decision entered on date in date the attorney was advised by representatives of the irs district director’s office in chicago illinois that audit_reconsideration could not be granted on date petitioner filed its motion for leave to file petitioner’s motion to vacate in respect of the stipulated decision entered on date and lodged its motion to vacate in date petitioner james and john filed a civil_action against inter alia jaffe coleman and cj j see supra note in the circuit_court for lake county illinois the complaint includes counts for breach of contract breach of fiduciary duty and malpractice the complaint’s statement of facts includes the following allegations on march sic the irs sent trans world a notice_of_deficiency of income_tax for tax years ended date date and date claiming an increase in tax to be paid_by trans world for such years of dollar_figure and penalties of dollar_figure a copy of which notice is attached hereto as exhibit a upon plaintiffs’ receipt of exhibit a they immediately gave the same to jaffe who advised them that the notice was not a problem and that the audit would eventually be resolved in plaintiffs’ favor emphasis added - - this action was still pending at the time of the evidentiary hearing in the present case opinion the question presented is whether grounds exist in this case for vacating what is otherwise a final_decision as explained in greater detail below we shall deny petitioner’s motion for leave to file petitioner’s motion to vacate decision the decision in this case was entered on date see sec_7459 a decision of this court becomes final upon expiration of the time to file a notice of appeal with respect to such decision see sec_7481 generally a notice of appeal must be filed within days after the decision is entered by this court see sec_7483 fed r app p a the 90-day appeal period may be extended with the timely filing of a motion to vacate or revise the decision see fed r app p a absent special leave of the court such a motion must be filed within days after the decision has been entered see rule the disposition of a motion for leave to file a motion to vacate or revise a decision lies within the sound discretion of the court see 872_f2d_245 cir affg tcmemo_1987_1 in the present case petitioner did not file a notice of appeal or a timely motion to vacate or revise the decision entered on date thus the decision became final on - - tuesday date days after the decision was entered see sec_7481 once a decision of this court becomes final we may vacate the decision only in certain narrowly circumscribed situations see 293_us_191 113_f3d_670 cir affg tcmemo_1995_209 curtis v commissioner tcmemo_1996_371 the court_of_appeals for the seventh circuit the court to which this case is appealable has held that the tax_court lacks general equitable powers and therefore lacks the authority to vacate or revise an otherwise final_decision on grounds such as mistake newly discovered evidence and the like 387_f2d_689 7' cir indeed the court_of_appeals has recently stated that this circuit has continued to recognize only a single narrow exception to the general_rule of finality prescribed by congress in u s c dollar_figure namely that the decision resulted from fraud on the court drobny v commissioner supra other courts have ruled that this court may vacate a final_decision if that decision is shown to be void or a legal nullity for lack of jurisdiction over either the subject matter or the party see 868_f2d_1081 cir 90_tc_103 71_tc_108 or if the decision was obtained through fraud on the court see 859_f2d_115 cir affg 86_tc_1319 511_f2d_929 2d cir 464_f2d_368 3d cir casey v commissioner tcmemo_1992_672 in addition some courts have indicated that the tax_court has the power in its discretion in extraordinary circumstances to vacate and correct a final_decision where it is based on a mutual mistake of fact see 63_f2d_630 5th cir ’ in the present case petitioner contends that the decision entered on date is a legal nullity and is therefore not final because the tax_court lacked jurisdiction over petitioner in support of its contention petitioner cites and relies on billingsley v commissioner supra abeles v commissioner supra and brannon's of shawnee inc v commissioner supra notably petitioner does not contend that fraud on the court was committed and provides an exception to the general_rule of finality ’ although the u s court_of_appeals for the sixth circuit cited mutual mistake of fact as a grounds for vacating a final_decision of this court in 219_f2d_610 cir that court_of_appeals more recently concluded that reo motors inc was effectively overruled by virtue of the supreme court's affirmance of 235_f2d_97 cir affd per curiam 352_us_1027 see 51_f3d_618 cir -- - if we were to construe literally the statement of the court_of_appeals that fraud on the court is the only exception to the general_rule of finality in the seventh circuit then we could dispose_of petitioner’s motion for leave in short order after all petitioner has not alleged much less demonstrated any fraud on the court however the statement of the court_of_appeals was made in the context of the tax court’s lack of general equitable powers and one might question whether vacating an otherwise final_decision for lack of jurisdiction is equivalent to vacating such a decision on grounds such as mistake newly discovered evidence and the like kenner v commissioner supra in the present case the parties have proceeded as if lack of jurisdiction is an exception to the general_rule of finality in the seventh circuit because such an approach is not flatly inconsistent with drobny v commissioner supra we have chosen to address petitioner’s contentions on their merits petitioner contends that this court lacks jurisdiction to bind petitioner because the petition was filed without proper authorization from petitioner see 26_tc_1074 whether the filing of the petition was authorized or later ratified by petitioner is a question of fact to be determined based on principles of the law of agency as applicable under illinois law see mishawaka properties co -- - t c 85_tc_359 70_tc_623 john arnold executrak sys inc v commissioner tcmemo_1990_6 petitioner bears the burden_of_proof see kenner v commissioner supra pincite kraasch v commissioner supra pincite a jaffe’s authority to file a tax_court petition under the common_law of agency authority may be granted by an express statement or may be derived from implication of the principal’s words or deeds see john arnold executrak sys inc v commissioner supra citing restatement agency 2d sec_26 therefore it is the principal who is the source of the agent’s power and the agent’s authority is traced back to the word or act of the principal see yugoslav-am cultural ctr v parkway bank and co ill app 3d moreover the scope of an agent’s authority is evaluated in an objective manner taking into consideration what a reasonable person in the agent’s position would conclude that the principal intended regardless of whether that is what the principal actually intended see john arnold executrak sys inc v commissioner supra citing restatement supra in order to bind the principal the agent must either have actual or apparent authority or the principal must ratify the agent’s acts authority is examined taking into account all the circumstances including the relationship of the parties the common business practices the nature of the subject matter and the facts of which the agent has notice concerning objects the principal desires to accomplish see id citing restatement supra sec_34 the existence and scope of an agency relationship are guestions of fact unless the relationship is so clear as to be undisputed see 14_f3d_1226 cir as the trier of fact it is our duty to listen to the testimony observe the demeanor of the witnesses weigh the evidence and determine what we believe kropp v commissioner tcmemo_2000_148 cf 58_tc_560 petitioner first contends that the court lacked jurisdiction to enter the stipulated decision because petitioner never authorized jaffe to file a petition on its behalf we disagree in our view the record demonstrates that jaffe acted as petitioner’s authorized agent in filing the petition and that jaffe acted within the general scope of his employment when he signed the petition in this regard two prior cases of this court are particularly instructive see kraasch v commissioner supra shopsin v commissioner tcmemo_1984_151 affd without published opinion 751_f2d_371 2d cir in kraasch v commissioner supra a petition was filed and -- - signed in the taxpayers’ names by the taxpayers’ accountant and tax consultant an individual who was neither an attorney nor admitted to practice before this court the commissioner filed a motion to dismiss for failure to state a claim upon which relief could be granted after the taxpayers failed to file a proper amended petition the court entered an order of dismissal and decision thereafter the taxpayers filed a motion to modify the order alleging that the court lacked jurisdiction because the taxpayers neither signed the petition nor authorized anyone to file a petition on their behalf after an evidentiary hearing the court found that the taxpayers’ accountant had acted within the scope of his employment when he filed the petition and signed it in the taxpayers’ names among the facts and circumstances that the court found particularly relevant in reaching its conclusion were the following the taxpayers permitted their accountant to handle their tax affairs generally and they had knowledge that he did so over a period of years the taxpayers routinely forwarded any_tax information that they received to their accountant and relied on him to handle such material and the conduct of petitioners’ accountant and tax consultant in signing and filing the petition was of the same general nature as or incident to that which he was employed to perform in shopsin v commissioner supra a petition was filed and signed in the taxpayers’ names by the taxpayers’ accountant and bookkeeper an individual who was neither an attorney nor admitted to practice before this court there was no evidence that the taxpayers ever saw the contents of the petition in any event after it was filed the accountant engaged in negotiations with the commissioner’s appeals_office and was successful in reaching a settlement that reduced the deficiency a stipulated decision was signed by the taxpayers and the commissioner and then entered by the court thereafter petitioners filed a motion to vacate the decision on the ground that the taxpayers neither authorized nor ratified the filing of the petition on their behalf by their accountant after an evidentiary hearing the court found that the taxpayers’ accountant had acted within the general scope of his employment in signing the petition and as petitioners’ authorized agent in filing the petition in so finding the court stated as follows tt is clear from the record in this case that petitioners routinely and without question placed their tax affairs in the hands of levy petitioners’ accountant time and again at the hearing petitioners testified that when they received tax-related documents their practice was to forward them to levy or telephone levy for his instructions with respect to what to do with the documents further petitioners invariably deferred to levy’s judgment signing without necessarily reading or certainly understanding whatever document levy advised that they sign in other words petitioners permitted levy to handle their tax affairs generally and knew that he did so in essence levy was petitioners’ general agent authorized - - to perform on a continuing basis all necessary acts with respect to petitioners’ tax affairs levy’s conduct in filing the petition was of the same general nature as and incident to those functions that he was employed to perform ld in the present case the record clearly demonstrates that neither james nor john nor any of petitioner’s other employees possessed any expertise in federal tax matters and that as a consequence james and john retained and relied on for a period of or years cj j and particularly jaffe to provide tax services including the representation of petitioner before the internal_revenue_service the record also clearly demonstrates that james and john trusted jaffe and had confidence in him indeed they regarded jaffe as their friend and they gave him full and unfettered access to petitioner’s books_and_records jaffe was even authorized to deal directly with the vice president of petitioner’s bank because james and john trusted and relied on jaffe neither brother paid close attention to petitioner’s tax matters rather they adopted a hands-off approach and essentially delegated responsibility for petitioner’s tax matters to jaffe they also instituted or acquiesced in an office procedure whereby tax-related mail was routed to james’ office where it was placed generally unopened and unread by james in a box reserved for jaffe’s use they also frequently signed without scrutiny or inguiry tax-related documents that were presented to - them by jaffe for their signature the lack of involvement by james and john in the tax affairs of their corporation and the degree to which james and john relied on jaffe to handle those affairs is aptly demonstrated by the following colloquies between counsel and john and then james petitioner’s counsel and why would you sign these documents john gibbs i just totally trusted steve i would sign the papers he’d put them down i wouldn’t look at them petitioner’ s counsel before july ‘98 did you ever execute any_tax document returns or financial statements for trans world at the direction of jaffe james gibbs yes i did petitioner’s counsel would you review these documents james gibbs no basically again he would just present them to me for my signature petitioner’ s counsel now why would you just execute documents james gibbs one again he was a friend we trusted him and for the most part i wouldn’t have understood the documents that are given to me pertaining to the taxes respondent’ s counsel did you ask steve jaffe what this document the designation of place of trial was james gibbs no i did not respondent’s counsel you didn’t ask him what it meant james gibbs i didn’t read it as i didn’t ask him no respondent’ s counsel you didn’t even read the part under your signature that says signature of petitioner or counsel james gibbs i’m sorry i didn’t respondent’ s counsel the fact is you didn’t pay close attention to your tax matters did you sir james gibbs no i relied on steve jaffe in sum james and john abdicated their responsibility as petitioner’s sole corporate officers and shareholders for making any tax-related decisions for petitioner and instead placed that responsibility squarely on jaffe the message from james and john was clear we are not interested in tax matters the mandate to jaffe was equally clear you handle those matters for us petitioner argues that neither james nor john was knowledgeable about tax matters and that neither would have understood what they were signing even if they had bothered to read the particular document that was presented for their signature petitioner apparently thinks that corporate officers have no duty to read any document before signing it nor any duty to educate themselves about matters of consequence to the corporation nor even any duty to ask fundamental questions about - - actions being taken by their agents we categorically reject any such view see shopsin v commissioner tcmemo_1984_151 wherein we stated had petitioners attempted to ascertain the precise status of their case at any particular point in time we believe petitioners had the wherewithal to do so petitioners cannot avoid their responsibility on the basis of their failure to press the matter see also kraasch v commissioner t c pincite wherein we stated that the taxpayers might not have understood the contents or chose at times not to read their mail before sending it to their accountant in no way absolves them of responsibility or knowledge in this matter petitioner also argues that jaffe made it difficult for james and john to appreciate what they were signing because he typically presented them with a stack of documents pointed to where they were expected to sign and stood over them while they signed each document however any suggestion of undue influence is belied by the following colloquy between the court and james the court x now you said that steve jaffe typically would present you with documents to sign and basically say sign here james gibbs that’s correct the court if you had expressed an interest ina document would he have precluded you from examining it james gibbs i don’t think so the court did you feel free to examine the document should you have so chosen to do so -- - james gibbs i would say yes the truth of the matter is that james and john simply had no interest in what they were signing when it came to tax-related matters for all intents and purposes they had even delegated their signature_authority to jaffe b ratification if on the other hand jaffe acted without authority in signing and filing the petition petitioner contends that the court lacked jurisdiction to enter the stipulated decision because petitioner never ratified such unauthorized act again we disagree a finding of ratification under illinois agency law is a complex fact-intensive inquiry a wholly unauthorized act may nevertheless be made valid by a subsequent ratification in that such subsequent assent would confirm what was originally an unauthorized and illegal act see hefner v vandolah i1l see also middle w tel co v u s fire ins co ill app as applicable herein ratification means retroactive adoption of an unauthorized signature by the person whose name is signed ratification may be found from express statements or it may be inferred from the surrounding circumstances for example where the principal takes a position inconsistent with nonaffirmation of the transaction see hofner v glenn ingram - - co ill app 3d dist or fails to repudiate the agent’s acts see chalet ford inc v red top parking inc ill app 3d dist or retains the benefits of the unauthorized transaction see stathis v geldermann inc ill app 3d george f mueller sons inc v northern ill gas co ill app 3d dist in contrast ratification will not be implied from acts or conduct that clearly evidences an intent not to ratify see 623_fsupp_1014 n d ill our analysis continues with the specific circumstances that support our conclusion that petitioner ratified the filing of the petition by jaffe on its behalf although not familiar with tax_procedure james and john were aware or should have been aware that petitioner’s case was before the tax_court evidence of this is found from various events that occurred after the filing of the petition first the designation of place of trial dpt was mailed to petitioner at its highland park office by the court more importantly james admitted that he signed and dated the dpt james testified that he did not review the dpt before signing it but that if he had noticed it was a tax_court document he would have questioned jaffe about it we do not find this testimony particularly convincing however given the - - fact that the dpt is a simple one-page document with the words united_states tax_court washington d c prominently displayed in capital letters at the very top of the page surely too even a cursory glance at the document’s heading designation of place of trial only a few lines above the signature line would have revealed the document’s nature and origin moreover immediately below the signature line and immediately above the dated line was the preprinted designation signature of petitioner or counsel this should have alerted james to the fact that he was signing a document related to a legal proceeding thus at this early juncture james either knew or should have known that a petition had been filed in the tax_court see kraasch v commissioner supra pincite concluding that ratification occurred where the taxpayers had or reasonably should have had knowledge of the material facts of the case at all times moreover james’ act in signing the designation of place of trial constituted a ratification of jaffe’s prior act in filing the petition in the first instance second when petitioner received respondent’s answer to the petition petitioner either knew or reasonably should have known that it had a case pending before this court see id in fact james opened the envelope containing the copy of respondent’s answer and wrote attn steve jaffe in the upper - - right corner of the document immediately opposite united_states tax_court and immediately above docket no at trial james admitted that he bears responsibility for reading his mail he also bears responsibility for reading his mail with reasonable care by placing respondent’s answer in the box in his office reserved for jaffe’s use james obviously knew that the document was tax related at the very least james saw or should have seen the tax_court designation and knew or should have known that the case had escalated beyond the audit phase see id james’ act of opening the envelope annotating respondent’s answer and then forwarding it to jaffe constituted a ratification of the filing of the petition third john signed and dated the stipulated decision the decision is a relatively straightforward two-page document that sets forth the amount of the tax deficiencies and accuracy- related penalties for which petitioner is liable the words united_states tax_court appear prominently at the top of the first page followed by the caption and docket number which together clearly indicate that the document pertains to a court case immediately below the signature line on the second page of the decision was the typewritten designation john w gibbs president trans world travel petitioner which also indicated that the document pertained to a court case - - thus john either knew or should have known that he was concluding a case that was in litigation see id by signing and dating the stipulated decision without even asking for clarification about the nature of the document john ratified the filing of the petition see eg chalet ford inc v red top parking inc supra c conclusion in summary we hold that petitioner failed to satisfy its burden of proving that the filing of the petition by jaffe was unauthorized we also hold that in any event subsequent conduct by james and john ratified jaffe’s action in filing the petition accordingly the court had jurisdiction and it properly entered the stipulated decision on date in order to give effect to our holdings an appropriate order denying petitioner’s motion for leave to file a motion to vacate will be issued


chief_counsel department of the treasury internal_revenue_service washington d c date number info release date conex-143658-08 uil --------------------------- -------------------- ------------------------------------ dear ------------- i am responding to your inquiry dated date in your letter you asked why the standard mileage for operating a vehicle for a charitable purpose was less than the standard mileage rates for business moving or medical purposes i hope the following information is helpful in responding to your question in the case of vehicle expenses generated in connection with medical moving or business activities the standard mileage rates are issued at least annually the internal_revenue_service employs an independent_contractor who determines the business medical and moving standard mileage rates based on an annual study of the fixed and variable costs of operating an automobile prospective annual adjustments are made based on this study and are then published by the irs the standard mileage rates for charitable vehicle expenses however are set by statute under sec_170 of the internal_revenue_code in order to change or update this rate it would require congressional action in short the reason that the standard mileage rates for medical moving and business_expense are more reflective of today’s economy is that agency action is only required to update these rates while a congressional bill or amendment would be required to update the charitable mileage rate please note however that the dollar_figure per mile rate as set by sec_170 is only a safe_harbor rate that a person can claim if they do not want to keep reliable written records a person who keeps reliable written records of vehicle usage in connection with charitable volunteer work can claim the actual amount that they spend out-of-pocket these expenses can include cost of gas and oil parking fees and tolls for a further conex-143658-08 explanation of the written record requirement i have enclosed a copy of irs publication charitable_contributions which provides instruction on maintaining these records i have tagged and highlighted the pages that will further explain what i have briefly mentioned here of final interest senator chuck grassley plans to co-sponsored the fair deal for volunteers act of s this bill if passed would restore the irs’s ability to set the mileage rate for charitable purposes again i hope this information is helpful please call me or -------------------- ---------------- -------------------------- at --------------------- if you have any questions enclosure publication susan j kassell senior counsel income_tax accounting sincerely


uniform issue list internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to op e ep t date may attn legend state a employer m plan x group b employees ordinance r ladies and gentlemen this letter is in response to a request for a private_letter_ruling dated date submitted on your behalf by your authorized representative regarding the federal_income_tax treatment of certain contributions to plan x under sec_414 of the internal_revenue_code the code the following facts and representations have been submitted employer m a political_subdivision of state a has established plan x plan x is a defined_benefit_plan that -2- provides for mandatory employee contributions previously received a favorable determination_letter from the internal_revenue_service with respect to its qualified status under sec_401 of the code plan x has pursuant to ordinance r which was adopted by employer employer m will pick up assume and the mandatory employee contributions of group b m on january pay employees to plan x contributions the option of receiving the contributed amounts directly instead of having such contributions paid_by employer m to plan x in lieu of group b employees paying such in addition group b employees will not have based on the aforementioned facts and representations you have requested the following rulings that no part of the mandatory_contributions picked up by employer m as the employer of group b employees will constitute gross_income to group b employees for federal_income_tax purposes that the contributions that are picked up will be treated as employer contributions for federal_income_tax purposes that the contributions picked up by employer m will not constitute wages from which taxes must be withheld sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan described in sec_401 established by a state government or a political_subdivision thereof and are picked up by the employing unit the federal_income_tax treatment to be accorded c b contributions which are picked up by the employer within the meaning of sec_414 of the code is specified in revrul_77_462 in that revenue_ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to concluded that the school district's picked-up contributions to the plan are excluded from the employees' gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 a of the code contributions to the plan are excluded from wages for the school district's revrul_77_462 a state pension_plan ags purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees' salaries with respect to such picked-up contributions the issue of whether contributions have been picked up the employer must specify that the and revrul_81_36 c b of by an employer within the meaning of sec_414 h the code is addressed in revrul_81_35 1981_1_cb_255 revenue rulings established that the following two criteria must be met contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both the employee must not is immaterial whether furthermore it these ordinance r satisfies the criteria set forth in revrul_81_35 and revrul_81_36 because it specifies that employer m will assume and pay mandatory employee contributions to plan x employees and that group b employees may not elect to receive such contributions directly instead of having such contributions paid_by employer m to plan xx in lieu of contributions by group b accordingly we conclude that the amounts picked up by employer m on behalf of group b employees shall be treated as employer contributions and will not be includible in group b employees' gross_income in the year which such amounts are contributed in the gross_income of group b employees or their beneficiaries only in the taxable_year in which they are distributed to the extent that the amounts represent contributions made by employer m these amounts will be includible because we have determined that the picked-up amounts are to be treated as employer contributions such amounts are excepted from wages as defined in sec_3401 a of the code for federal_income_tax withholding purposes therefore no withholding of federal_income_tax is required from group b employees salaries with respect to such picked-up contributions sec_414 of the code employer m picks up contributions through a reduction in salary an offset against future salary increases or a combination of both for purposes of the application of is immaterial whether it odo the effective date for the commencement of the pick-up as specified in the ordinance cannot be any earlier than the is later of the date the ordinance is signed or the date it put into effect these rulings are based on the assumption that plan xx satisfies the requirements for qualification under sec_401 and distributions of the code at the time of the proposed contributions to whether the amounts in no opinion is expressed as question are subject_to tax under the federal_insurance_contributions_act the amounts in question are paid pursuant to a salary reduction agreement within the meaning of sec_3121 no opinion is expressed as to whether v b of the code a copy of this letter is being sent to your authorized representative in accordance with a power_of_attorney on file in this office sincerely yours tet loth i john g riddle sr chief employee_plans technical branch enclosures deleted copy of letter_ruling notice ce gt


internal_revenue_service number release date index number --------------------------- --------------------------- ------------------------------------------------------------ ------------------------------------------------------------ -------- ---------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------ ---------------------------------------------------- telephone number ---------------------- refer reply to cc fip b2 plr-131671-16 date date legend fund -------------------------------------------------------------------------------- ------------------------------------------- ------------------------------------------------------------ ----------------------------------------------------------------------------------- ---------------------------------------------------------- dear ------------------ this letter revokes a part of plr plr-125782-06 issued to fund on date and in response to your request dated date limits the retroactive effect of such revocation pursuant to sec_7805 of the internal_revenue_code in plr the internal_revenue_service the service issued rulings that i income and gain from certain commodity-linked notes constitute qualifying_income under sec_851 the cln ruling and ii income derived by fund from its investment in the subsidiary whether or not attributable to subpart_f_income is income derived from the fund’s business of investing in stock securities or currencies and therefore constitutes qualifying_income under sec_851 the subsidiary ruling in a letter dated date the service notified fund that it was considering revoking the cln ruling on date fund requested that the service exercise its discretionary authority under sec_7805 to limit the retroactive effect of any revocation plr-131671-16 since issuing plr the service has determined that having provided a private_letter_ruling on the issue in the cln ruling is not in accord with the current views of the service see revproc_2016_50 2016_43_irb_522 superseded by revproc_2017_3 i r b sec_4 see also reg-123600-16 fed reg date section dollar_figure of revproc_2017_1 2017_1_irb_1 provides in part that unless it was part of a closing_agreement a letter_ruling found to be in error or not in accordance with the current views of the service may be revoked or modified accordingly the cln ruling in plr is revoked the subsidiary ruling is not revoked and that portion of plr remains in effect at this time section dollar_figure of revproc_2017_1 also provides that if a letter_ruling is revoked the revocation applies to all years open under the statute_of_limitations on assessment unless the service uses its discretionary authority under sec_7805 to limit the retroactive effect of the revocation in accordance with fund’s request the service has decided to grant relief under sec_7805 the revocation of the cln ruling in plr will apply prospectively only to commodity-linked notes acquired by fund after date we are sending a copy of this letter to the appropriate operating division sincerely andrea m hoffenson andrea m hoffenson branch chief branch office of associate chief_counsel financial institutions and products


id office uilc cca-341557-13 01a number release date from ------------------- sent monday date pm to ------------------ cc subject re follow-up on rev_proc ----------------- you asked whether it was permissible for counsel to participate in a post appeals mediation the short answer is yes it is permissible both revproc_2009_44 2009_2_cb_462 which provides procedures for post appeals mediation and revproc_2012_18 2012_10_irb_455 which clarifies the rules for ex-parte communications between appeals and other functions provide that the ex_parte_communication rules do not apply to communications in connection with the optional mediation process that may be requested after traditional appeals settlement discussions are unsuccessful appeals is expected to independently decide whether to engage in post appeals mediation and whether to accept or reject a settlement proposal that is made as a result of the mediation however appeals has the discretion to communicate with both counsel and the origination function to prepare for the mediation session in addition appeals may ask counsel or the originating function to observe or participate during the mediation session


internal_revenue_service number release date index number ------------------------------- ------------------------------ ----------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number ---------------------- refer reply to cc psi b01 plr-126289-14 date date legend x ----------------------------------------------------- ------------------------------- trust trust state ------------------------------- -------------------------- ------------------------ ----------- date ---------------------------- date ------------------------ date date date date date a b ------------------------ ------------------- ------------------------ ------------------------ -------------------------- --------------------- -------------------------------- -------------------------- plr-126289-14 dear -------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by its authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was formed in state on date and made an election to be treated as an s_corporation effective date on date a and a’s spouse b created trust a revocable_trust treated as a wholly-owned grantor_trust under sec_671 and sec_676 on date a died pursuant to the terms of a’s will and trust shares of x were transferred to trust on date trust continued to qualify as an s_corporation shareholder under sec_1361 until date two years after date trust however continued to hold x stock as such x's s_corporation_election terminated on date when trust ceased to be an eligible s_corporation shareholder b_trust 2’s sole beneficiary died on date and trust terminated x represents that x and each of its shareholders have filed consistently with the treatment of x as an s_corporation since date x further represents that the failure to properly file the qsst election for trust was not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make any adjustments that the commissioner may require consistent with the treatment of x as an s_corporation sec_1361 of the code provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which does not have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1361 provides that a_trust may be an s_corporation shareholder with respect to stock transferred to it pursuant to the terms of a will but only for the 2-year period beginning on the day on which such stock is transferred to it sec_1361 provides that in the case of a qsst for which a beneficiary makes an election under sec_1361 the trust is treated as a_trust described in sec_1361 and for purposes of sec_678 the beneficiary of the trust shall be treated as the owner of that portion of the trust that consists of stock in an s_corporation with respect to which the election under sec_1361 is made sec_1361 provides that a beneficiary of a qsst may elect to have sec_1361 apply sec_1_1361-1 provides that the current income_beneficiary plr-126289-14 of a qsst must make the election under sec_1361 by signing and filing with the service_center with which the corporation files its income_tax returns the applicable form or a statement including the information listed in sec_1_1361-1 sec_1362 provides that a in general an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation and b any termination under sec_1362 shall be effective on and after the date of cessation sec_1362 provides that if an election under sec_1362 by any corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consents or b was terminated under sec_1362 or the secretary determines that the circumstances resulting in the ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken a so that the corporation is a small_business_corporation or b to acquire the shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the ineffectiveness or termination the corporation will be treated as an s_corporation during the period specified by the secretary based solely on the facts submitted and the representations made we conclude that x's election to be treated as an s_corporation terminated on date and that this termination was inadvertent within the meaning of sec_1362 we further conclude that pursuant to the provisions of sec_1362 x will continue to be treated as being an s_corporation from date and thereafter provided that x is otherwise eligible to be an s_corporation and provided that the election was not otherwise terminated under sec_1362 this ruling is conditioned upon the trustee of trust filing with the appropriate service_center a qsst election effective date for trust the qsst election must be filed within days following the date of this letter and a copy of this letter should be attached to the election except as specifically ruled above we express no opinion concerning the federal tax consequences of the transactions described above under any other provisions of the code specifically we express no opinion regarding x’s eligibility to be an s_corporation further we express no opinion on whether trust is otherwise eligible to be a qsst plr-126289-14 this ruling is directed only to the taxpayer that requested it sec_6110 provides that it may not be used or cited as precedent sincerely joy c spies joy c spies senior technician reviewer branch office of the associate chief_counsel passthroughs special industries


department of the treasury internal_revenue_service washington d c government entities owwision number release date date date vil code dear contact person identification_number contact number employer_identification_number form required to be filed tax years this is our final_determination that you do not qualify for exemption from federal_income_tax under sec_501 a of the internal_revenue_code as an organization described in sec_501 c because you are not organized and operated exclusively for one or more exempt purposes within the meaning of sec_504 and sec_1_501_c_3_-1 of the income_tax regulations in addition you do not qualify for exemption from federal_income_tax under sec_501 of the code as an organization organized and operated exclusively for charitable purposes under sec_501 because you da not meet all the requirements for a charitable risk_pool described in sec_501 of the code in addition you are precluded from qualifying as an organization described in section c of the code because more than a substantial part of your activities consists of providing commercial-type_insurance within the meaning of sec_501 because you do not qualify for exemption as an organization described in sec_501 of the code donors may not deduct contributions to you under sec_170 you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file and do not send them to this office ifyou decide to contest this determination under the dectaratory judgment provisions of sec_7428 of the code you must initiate a suit in the united_states tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia before the day after the date that we mailed this letter to you contact the clerk of the appropriate court for rules for initiating suits for declaratory_judgment filing a dectaratory judgment suit under sec_7428 does not stay the requirement to file returns and pay taxes failure_to_file the returns timely may result in a penalty file the retums in accordance with their instructions ‘we will make this letter and our proposed adverse determination_letter available for public inspection under sec_6110 of the code after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with aur proposed deletions you should follow the instructions in notice if you agree with our deletions you do not need to take any further action in accordance with sec_6104 of the code we will notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed adverse letter you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements ifyou have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact rs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your we have sent a copy of this letter to your representative as indicated in your power_of_attorney sincerely robert choi director exempt_organizations rulings agreements enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter tax exempt and overmment entities division department of the treasury internal_revenue_service washington d c date date uil code contact person identification_number contact number fax number employer_identification_number dear we have considered your application_for recogrition af exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code section c the basis for our conclusion is set forth below you are a corporation organized under the nonprofit laws of the state of l for the purpose of seeking the prevention or lessening of casualty and property losses for your members and injuries to persons and employees which might result in claims being made against your members you will operate for the benefit of institutions of higher learning or educational organizations in the state of according to your articles of incorporation you are a not-for-profit corporation organized pursuant to m the statute which states your members consist of a l colleges and universities that are tax-exempt as organizations described in sec_501 of the code your activities consist of establishing a risk management pool for your members and utilizing the funds you receive from your members to defend and protect any member of the pool against liability for a covered loss such as property casualty workers compensation and fleet automobiles thus you will provide insurance for your members by assuming some insurance risk yourself you will also purchase insurance from third party insurance_companies on behalf of your members which you can de more economically for your members than each member can do for itself you received all of your initial funding directly from your members not from any party outside of your membership ‘you have entered into an agreement the cooperative agreement with your members that describes the services you provide to them under this agreement you administer group_insurance policies for your members and supervise the claims adjustment processes and activities of your third party administrator you also provide to or arrange for your members various risk management services such as property appraisals risk analysis studies mitigation projects investment management services proofs of insurance and you generally act as the group's risk management office where no such office exists or augment the activities of a member institution's risk management office bylaws the cooperative agreement also constitutes your law sec_501 c of the code provides for the exemption from federal_income_tax for corporations organized and operated exclusively for charitable scientific or educational_purposes provided no part of the corporation's net_earnings inures to the benefit of any private_shareholder_or_individual sec_501 m of the code states that an organization described in sec_501 or shall be exempt only if no substantial part ofits activities consists of providing commercial-type_insurance sec_501 n of the code states that a qualified_charitable_risk_pool shall be treated as an organization operated exclusively for charitable purposes and not subject_to sec_501 m sec_501 n code states that the term qualified charitable risk poof means any organization comprised of sec_501 members which is organized and operated solely to pool insurance risks of its members other than risks related to medical malpractice and to provide information to its members with respect to loss control and risk management and satisfies the organizational requirements of section n sec_804 n of the code states that an organization will be organized as a qualified_charitable_risk_pool if the risk_pool is organized as a non-profit organization under state aw provisions authorizing risk pooling arrangements for charitable organizations the risk_pool is exempt from any state_income_tax or will be so exempt after such pool qualifies as an organization exempt from federal incame tax the risk_pool receives at least dollar_figure in startup_capital from nonmember charitable organizations such risk_pool is controlled by a board_of directors elected by its members member of the risk_pool be described in sec_601 any member no longer described in sec_501 shall notify the pool of its determination and each policy of insurance issued by the risk poo will not cover the insured with respect to events occurring after the effective date of the determination and the organizational documents require that each section big_number -1 of the income_tax regulations states that that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 of the code insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1 c -1 d of the regulations states in part that the term charitable in sec_501 of the code includes lessening the burdens of government an organization will not be so regarded if more than an revrul_54_306 c b provides that a corporation organized and operated for the primary purpose of operating and maintaining a purchasing agency for the banefit of its otherwise unrelated members who are exempt from federal_income_tax as charitable organizations is ‘engaged in business activities which would be unrelated activities if carried on by any one of the tax-exempt organizations served therefore the corporation is not entitled to exemption under sec_501 of the code rev_rul 1972_3_cb_245 involves an organization formed to provide managerial and consulting services at cost to unrelated tax-exempt organizations the revenue_ruling states that providing managerial and consulting services on a regular basis for a fee is a trade_or_business ordinarily cartied on for profit the fact that the services in this case are provided at cost and solely for tax-exempt organizations is not sufficient to characterize this activity as charitable within the meaning of sec_501 of the code revrul_81_276 1981_2_cb_128 describes a professional standards review organization 'psro’ established pursuant to a federal statute to review health care practitioners’ and institutions’ provision of health care services and items for which payment is mada under medicare and medicaid and determine whether the quality of services met professionally recognized standards of care no payments under medicare or medicaid could be made before the services were reviewed and approved by the organization by taking on the government's burden of reviewing the quality of services provided under medicare and medicaid the organization lessened the burdens of government and promoted health in a charitable manner any benefit to members of the medical profession from such activities was incidental to the benefit the organization provided in promoting health and lessening the burdens of government therefore the organization qualified for exemption under sec_601 of the code rul infra for applied the criteria set out in rev rey rul c b determining whether an organization's activities are lessening the burdens of government in this ruling the organization was created to assist a county's law enforcement agencies in policing illegal narcotics traffic more effectively the organization provides funds that allowed the county’s agents to engage in cartain activities for which funds were not otherwise available this ruling concluded that by funding activities that the county treats as an integral part of its program to prevent the trafficking of illegal narcotics the county demonstrates that these activities are a part of its burden thus the organization is lessening the burdens of the county by enabling it to augment its taw enforcement activities rev_rul c b government the question is whether there is an objective manifestation by the government that it considers such activity to be part of its burden the fact an organization is engaged in an activity that is sometimes undertaken by the government is insufficient to establish a burden of goverment similarly the fact that the government or an official of the government expresses approval of an organization and its activities is also not sufficient to establish that the organization is lessening the burdens of government the interrelationship between the organization and the government may provide evidence that the government considers the organization's activities to be its burden to determina whether the organization is actually lessening the burdens of government all the relevant facts and circumstances must be states that to determine whether an activity is a burden of considered a favorable working relationship betwesn the goverment and the organization is strong evidence that the organization is actually lessening the burdens of the government in 326_us_279 the court stated that the presence of a single nonexempt purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly lexempt purposes n 466_fsupp_1164 d c d c virginia psro two organizations were formed to pursuant to a federal_law that provided for the establishment of professional standards review organizations to ensure the effective efficient and economic delivery of health care services to medicare and medicaid beneficiaries the district_court concluded that these organizations operated exclusively for charitable purposes under sec_501 of the code in professional standards review organization of queens county inc v commissioner t c aca 1980_2_cb_2 ‘queens county psro the tax_court held that an organization created pursuant to a federal statute that reviewed the appropriateness and quality of healthcare services provided to medicare and medicaid recipients was exempt under sec_501 of the code because it lessened the burdens of government and promated the health of persons eligible for medicare and medicaid in 88_tc_1 aff'd without published opinion 838_f2d_466 cir columbia park the court_of_appeals upheld the decision of the tax_court that the organization did not lessen any burden of goverment and thus was not exempt under sec_501 of the code the organization provided a wide range of services and facilities to the residents of columbia maryland contended that if it did not provide these services and facilities the local or state government would have to provide them the tax_court stated that thie assertion daes not mean that the organization’s activities are in fact a burden of government instead the organization must demonstrate that the state of maryland and or the county accept the organization's activities as their responsibility and recognize the organization as acting on their behaif in addition the organization must further establish that its activities actually lessen the burden of the state_or_local_government the organization in 102_tc_745 ‘paratransit the tax_court held that an organization formed under a state statute by unrelated section '501 c organizations to provide them with automobile insurance for the paratransit vehicles they operate as part of their charitable activities consfituted insurartce for purposes of sec_501 of the cade because its purpose was to shift the risk of potential liability of each member to the organization and the organization diversified these assumed risks by collecting premiums from multiple members the tax_court further held in paratransit that commercial-type_insurance ’ as used in sec_501 of the code encompasses every type of insurance that can be purchased in the commercial market the tax_court concluded that the organization's insurance was commercial-type_insurance because it was of the same type that commercial insurance carriers offered it was not offered to members based on need or a uniform charge and premiums were determined using the same risk and actuarial factors as commercial insurers the fact that the organization insured its members only up to dollar_figure and effected coverage abave that amount through reinsurance or stop-loss policies it obtained in the commercial market was a further indication to the court of the commercial hue of its insurance arrangements ‘the fact that the insurance was not available to the general_public did not affect the commercial nature of the insurance offered in nonprofits' insurance alliance of california v although the court did not expressly address whether the organization was engaged in commercial-type_insurance under sec_501 it concluded that the organization which was formed under a state statute did not qualify for exemption under sec_501 because of the existence of a substantial non-exempt commercial purpose principally because its insurance activities resembled closely the insurance activities carried on by commercial insurance_companies u s 32_fedclaims_277 ct of fed cl rationale lessening the burdens of goverment it is organized and operated an organization is described in sec_501 of tha code if exclusively for one of more charitable scientific or educational_purposes and no part of its net_earnings inuras to the benefit of any private person the term charitable includes lessening the burdens of government sec_801 c -1 d of the regulations n rev_rul supra and in revrul_85_2 supra an organization's activities lessen the burdens of government within the meaning of sec_1_501_c_3_-1 of the regulations if the government considers the activities to be its burdens and the activities actually lessen the government's burden an activity is a burden of the government if there is an objective manifestation by a government unit that it considers the activities of the organization to be its burden such consideration may be evidenced by the interrelationship between the government unit and the organization an organization’s performance of activities that a government unit treats as an integral part of its programs is evidence that the organization is lessening the burdens of government sse also revrul_81_276 supra organization took on the government's burden of reviewing the quality of services provided under medicare and medicaid and thus lessened the government's burden of performing this task queens county psro supra organization that reviewed the propriety of hospital treatment provided to medicare and medicaid recipients lessened the burdens of government columbia park supra civic organization that operates utilities systems services and facilities for a development did not lessen the burdens of government because no government unit accepted the organization's activities as its responsibility ‘you were formed on a voluntary basis to operate a self-insurance fund to pao and spread liabilities of your college and university members in any property or casualty risk or surety risk ‘you were formed to comply with the requirements of the statute and you operate in compliance with the requirements of the statute however the statute merely permits your formation it does nat mandate it the statute does not require the state of l to be represented on your goveming body nor does the state provide you with any funding the only state oversight the statute requires is that you must annually submit audited financial statements therafore you private raal estate have demonstrated no objective manifestation by the state recognizing that your activities are its burden or its responsibility as required by revrul_85_1 and supra columbia park supra in addition unlike the organizations described in rev supra virginia psro supra and queens county psro supra which were created pursuant to a federal statute to take on some of the federal government's burden relating to medicare and medicaid you have not established that your activities constitute a burden of the state that you have assumed and that the state has acknowledged therefore you do not lessen governmental burdens within the meaning of sec_1 - d of the regulations see also rul operating for exempt purposes an organization is operated exclusively for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of the exempt purposes specified in sec_501 of the code f more than an insubstantial part of an organization’s activities is not in furtherance of an exempt_purpose it does not satisfy this requirement sec_1 - of the regulations your acti dollar_figure are similar to the organizations described in rev ruls supra and supra and nonprofits’ ‘nsurance alliance of california supra in that a substantial part of your activities consists of purchasing insurance for an unrelated group of sec_501 organizations providing these services far section c organizations does not convert otherwise commercial activities to tax-exempt activities see better business bureau of washington dc supra therefore you are not operated exclusively for one or more exempt purposes within the meaning of sec_601 of the code commercial_type_insurance sec_501 of the code states that an organization that otherwise qualifies for exemption under sec_501 of the code is precluded from qualifying for exemption if a substantial part of its activities consists of providing commercial-type_insurance even if you otherwise qualified for exemption under sec_501 of the cada you would be precluded from qualifying for exemption as an organization described in sec_601 c because you are providing for your sec_501 members as a substantial part of your activities commercial-type_insurance within the meaning of sec_501 m you operate similar to the organization described in paratransit supra because this organization was also formed to provide insurance under a state law for its exempt members paratransit held that even though this activity was for the benefit of sec_501 c organizations the activity consisted of providing commercial-type_insurance within the meaning of sec_501 charitable risk_pool an organization may be described in sec_601 of the code if itis a ‘qualified charitable risk_pool as described in sec_501 to qualify as a charitable risk_pool an organization must meet all the organizational requirements specified in sec_501 _ one requirement in sec_501 c states that the organization must receive at least dollar_figure in startup_capital from nonmember charitable organizations you received startup funding only from your members and did not receive at least dollar_figure in startup_capital from nonmember charitable organizations requirement of sec_501 n c of the code you do not satisfy all of the organizational requirements in sec_501 n consequently you are not a charitable risk_pool within the meaning of sec_501 and thus are not described in sec_501 of the code accordingly you do not qualify for exemption as an organization described in sec_501 of the code and you must file federal_income_tax retums thus because you do not mest the contributions to you are not deductible under sec_170 of the code to protest you ‘you have the right to file a protest if you believe this determination is incorrect must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination your protest statement should be accompanied by the following declaration under penaities of perjury declare that have examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains aif the relevant facts and such facts are true correct and complete this request should be an attomey certified_public_accountant or an you also have a right to request a conference to discuss your protest made when you file your protest statement individual enrolled to practice before the intemal revenue service may represent you want representation during the conference procedures you must file a proper power of attomey form_2848 power_of_attorney and declaration of representative if you have not already done for more information about representation see publication practice_before_the_irs and power of attomey all forms and publications mentioned in this letter can be found at yeww irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to protest a8 a failure to exhaust available administrative remedies code sec_7426 bj provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the rs if you if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax retums and other matters please send your protest statement form_2848 and any supporting documents to this address internal_revenue_service constitution ave n w washington dc you may also fax your statement using the fax number shown in the heading of this letter if you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this fetter sincerely robert choi director exempt_organizations rulings agreements


t c memo united_states tax_court chester e davis petitioner v commissioner of internal revenue respondent docket no 4284-06l filed date chester e davis pro_se kelley a blaine for respondent memorandum opinion gerber judge on date respondent advised petitioner that a notice_of_federal_tax_lien nftl had been filed and of petitioner’s right to a hearing petitioner sought a hearing and ultimately petitioned this court on date contesting respondent’s date notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination advising that the filing of the nftl and proposed levy action for petitioner’ sec_2001 tax_liability was sustained the parties filed cross-motions for summary_judgment and the issues presented for our consideration are whether there was an abuse_of_discretion in respondent’s determination to sustain the filing of an nftl relating to petitioner’ sec_2001 tax_liability and to proceed with collection or levy action and whether a penalty under section should be imposed against petitioner for advancing frivolous positions in this case background petitioner failed to file a federal_income_tax return and respondent sent petitioner a notice_of_deficiency determining an income_tax deficiency and additions to tax petitioner received the deficiency_notice but took no action in response to respondent’s determination and respondent assessed the income_tax deficiency and additions to tax thereafter respondent sent petitioner an nftl on date in response petitioner submitted a form request for a collection_due_process_hearing hearing request dated date unless otherwise indicated all section references are to the internal_revenue_code in effect for the period under consideration and all rule references are to the tax_court rules_of_practice and procedure in his date hearing request petitioner stated that he did not receive a valid notice_of_deficiency but he did not specifically explain why what he did receive was invalid petitioner also advanced queries normally posed by tax protesters such as that the appeals officer did not identify the statute that makes him ‘liable to pay’ petitioner did not accept respondent’s certification of assessment and payment and instead wished to see the original assessment records and related documents in addition to his response petitioner also sent the appeals officer a package of materials including income_tax forms on which zeros were placed in the income and tax boxes respondent’s appeals officer declined to work or meet with jeffrey hubacek petitioner’s representative because mr hubacek had been barred from practicing before the internal_revenue_service irs the appeals officer advised petitioner that she would not offer him a face-to-face hearing because she found that his arguments were either frivolous or involved issues which could not be considered by the appeals_office such as objections on moral or political grounds instead of a face-to-face meeting petitioner and the appeals officer engaged in a telephone conference on date prior to that conference petitioner was sent a copy of a form_4340 certificate of assessments payments and other specified matters for hi sec_2001 tax_year during the conference petitioner renewed his requests for the underlying assessment documents and that the appeals officer provide petitioner with a copy of the statute that made him liable to pay any income taxes on date the appeals_office issued the notice_of_determination from which petitioner petitioned to this court in petitioner’s hearing request and in addition to hi sec_2001 tax_year petitioner included numerous taxable years that were not the subject of timely requests for a hearing in that regard petitioner requested a hearing with respect to his and tax years but the notices of intent to levy and federal_tax_lien filing for those years were sent to petitioner in more than year prior to petitioner’s hearing request petitioner also requested a hearing with respect to his and tax years but there was no balance of tax then due and no pending collection or proposed collection action with respect to the and tax years the appeals officer advised petitioner that they would be handled as equivalent hearings hearings without a right of appeal or review by this court issues for consideration discussion the petition and amended petition in this case in essence contain the following allegations issues respondent’s determination should be declared invalid the appeals officer did not conduct a hearing that was in accord with the statute petitioner was not provided with information and documentation that he is entitled to as a matter of law and the appeals officer was not authorized to represent the secretary_of_the_treasury the specifics underlying these allegations issues as far as the court is able to follow petitioner’s logic and explanations are the appeals officer wrongfully refused to allow petitioner’s representative to represent his interests the appeals officer wrongfully refused petitioner a face-to-face meeting the appeals officer did not show petitioner a delegation_order from the secretary_of_the_treasury entitling the appeals officer to act on the secretary’s behalf the appeals officer did not show petitioner the underlying assessment documents with respect to the form_4340 provided to petitioner and the appeals officer did not provide petitioner with the statute or law that would make petitioner subject_to and or liable for federal_income_tax these in essence are the matters raised by petitioner in his pleadings and accordingly are the matters that we must address 117_tc_183 114_tc_176 summary_judgment both parties have filed motions for summary_judgment so that each ostensibly believes that this matter is ripe for resolution as a matter of law summary_judgment is appropriate if there is no genuine issue of a material fact and a decision may be rendered as a matter of law rule b fla peach corp v commissioner 90_tc_678 in this case there is no apparent disagreement about the material facts and circumstances in the controversy accordingly this case is ripe for resolution by means of summary_judgment petitioner’s representative petitioner complains that his representative mr hubacek was not allowed to represent petitioner before the irs or to receive copies of any correspondence from respondent to petitioner in that regard respondent’s representative in her affidavit attached to the summary_judgment motion stated that mr hubacek had been permanently barred from providing tax services and or representing taxpayers before the irs in that regard petitioner was not prevented from either finding another representative or representing himself as he did under these circumstances it was not an abuse_of_discretion to exclude mr hubacek from representing petitioner or receiving copies or correspondence under a proffered power_of_attorney face-to-face meeting sec_6320 requires the secretary to give persons liable to pay taxes a written notice of the filing of an nftl sec_6320 and b provides that the notice shall inform such persons of the right to request a hearing in respondent's appeals_office sec_6320 provides that an appeals_office hearing generally shall be conducted consistently with the procedures set forth in sec_6330 d and e the appeals officer must verify at the hearing that the applicable laws and administrative procedures have been followed sec_6330 at the hearing the person against whom the lien is filed may raise any relevant issues relating to the unpaid tax or the lien including appropriate spousal defenses challenges to the appropriateness of collection actions and collection alternatives sec_6330 the person may challenge the existence or amount of the underlying tax however only if he did not receive any statutory_notice_of_deficiency for the tax_liability or did not otherwise have an opportunity to dispute the tax_liability sec_6330 in the instant case the record indicates that the only issues petitioner raised throughout the sec_6320 administrative process and in his petition to this court were frivolous and or tax_protester type arguments we do not address petitioner's frivolous arguments with somber reasoning and copious citations of precedent as to do so might suggest that these arguments possess some degree of colorable merit see 737_f2d_1417 5th cir for example petitioner contended that the nftls are counterfeited securities likewise he contended that the notice_of_determination was fraudulent because it does not carry a proper number from the office of management and budget amongst others he has also raised the well-worn argument that he is not subject_to or required to pay any income_tax unless the commissioner or his agents can show him a statute that expressly states that he is subject_to tax to the extent petitioner complains that he did not receive a face-to-face hearing this court has held that it is neither necessary nor productive to remand cases to an appeals_office for face-to-face hearings when a taxpayer raises only frivolous arguments lunsford v commissioner supra pincite the arguments or information expressed by petitioner in the telephonic conference were at best superficial and did not go to the merits of the underlying tax_liability instead and true to form petitioner posed the well-worn protester sophistry that he would gladly pay the tax if someone could identify the statute that makes him liable to pay the only other matter raised by petitioner was his request that the appeals officer provide him with the underlying assessment document s referenced in the form_4340 certification that had been sent to him the court has also reviewed all of the materials forwarded to respondent by petitioner in connection with the administrative_proceeding and likewise found them to contain protester type and frivolous arguments petitioner did not make any justiciable arguments or present any information that properly addressed the merits of the underlying tax_liability the validity of the assessment or the conduct of the proceeding or compliance with sec_6330 requirements accordingly the fact that petitioner was not offered a face-to-face hearing was in this instance not an abuse_of_discretion appeals officer’s authority there is little need to dwell on petitioner’s argument that the administrative_proceeding was flawed because respondent’s representatives did not show that they were properly authorized to represent the interests of the secretary_of_the_treasury to the extent that petitioner’s argument implies that only the secretary_of_the_treasury could conduct a proper proceeding it is frivolous in the context of whether there was an abuse of with respect to the tax_year petitioner supplied the appeals officer with an income_tax return that had zeros in all pertinent boxes he did not show or explain why respondent’s determination with respect to that year for which petitioner had not previously filed a return was in error discretion or any meaningful procedural flaw attributable to any failure of respondent’s representative to prove to petitioner that they were authorized we find that factor to be irrelevant see 118_tc_162 this is especially true in this case where petitioner’s arguments are without substance and where he failed to present any meaningful arguments or information bearing on the merits of the underlying tax_liability or respondent’s collection efforts form_4340 petitioner argues that under sec_6330 he is entitled to the underlying assessment documents and ostensibly that the form_4340 certification does not meet the statutory requirements the appeals officer used forms to verify the assessments we have held that it was not an abuse_of_discretion for the appeals officer to use forms for purposes of complying with sec_6330 nestor v commissioner supra pincite see also 115_tc_35 lindsay v commissioner tcmemo_2001_285 affd 56_fedappx_800 9th cir sec_6330 does not require the appeals officer to provide taxpayers with a copy of a document verifying that the requirements of any applicable law or administrative procedure have been met sec_301_6330-1 proced admin regs requires that the appeals officer obtain verification before issuing the determination not that he or she provide it to the taxpayer further there is no legal requirement that the appeals officer provide a taxpayer with copies of the delegations of authority assessment records or other underlying documents maintained by respondent with respect to a taxpayer’s account nestor v commissioner supra pincite accordingly the appeals officer in this case sufficiently verified the tax assessments and was not required to provide more the tax_liability a taxpayer may challenge the existence or amount of the underlying tax however only if he did not receive any statutory_notice_of_deficiency for the tax_liability or did not otherwise have an opportunity to dispute the tax_liability sec_6330 where the validity of the underlying tax_liability is properly in issue the court will review the matter de novo where the validity of the underlying tax is not properly in issue however the court will review the commissioner's administrative determination for abuse_of_discretion 114_tc_604 goza v commissioner t c pincite in this case petitioner was not entitled to contest the underlying tax_liability for the only year that this court has jurisdiction to consider even if petitioner had been entitled to contest the underlying tax_liability other than protester arguments he presented nothing more than an income_tax return with a zero in each pertinent box accordingly respondent’s motion for summary_judgment will be granted and petitioner’s cross-motion for summary_judgment will be denied sec_6673 penalty respondent has requested that the court impose a penalty under sec_6673 on the ground that the arguments advanced by petitioner to respondent and the court are frivolous sec_6673 authorizes the court to impose a penalty not in excess of dollar_figure when it appears to the court that inter alia proceedings have been instituted or maintained by the taxpayer primarily for delay or that the position of the taxpayer in such proceeding is frivolous or groundless in 115_tc_576 we issued a warning concerning the imposition of a penalty under sec_6673 on those taxpayers abusing the protections afforded by sec_6320 and sec_6330 through the bringing of dilatory or frivolous lien or levy actions the court has since repeatedly disposed of cases premised on arguments akin to those raised herein summarily and with imposition of the sec_6673 penalty see eg 119_tc_252 and cases cited therein petitioner’s arguments in this case are frivolous and without substance he has taken numerous unrelated legal concepts most of which have been rejected by the courts and posed them as reasons why he is not compelled to report or pay federal_income_tax he has wasted the time and tied up the resources of the government with matters that are without substance or merit accordingly a dollar_figure penalty under sec_6673 will be imposed against petitioner to reflect the foregoing an appropriate order and decision will be entered petitioner is also involved in some manner in two other cases now pending before this court he is admonished not to continue presenting the same frivolous arguments in those cases or he may subject himself to additional penalties under sec_6673


internal_revenue_service index no number release date cc dom p si - plr-113165-99 date x a b d1 year year dear this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year with the intent to be an s_corporation x’s shareholders a and b represent that they signed a form_2553 election by a small_business_corporation for x to be an s_corporation effective for year the shareholders provided the form_2553 to x’s attorney who was to file the form_2553 however the internal_revenue_service has no record of a form_2553 for x x filed form_1120s u s income_tax return for an s_corporation for year and year x's shareholders filed their tax returns for those years consistent with x being an s_corporation sec_1362 of the code provides that if-- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s year taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x sincerely yours h grace kim assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purpose