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Sunday, March 02, 2003


If you have a good bit of free time and want to learn historical tax procedure law, I recommend reading the 72 page case John G. Goettee, Jr. and Marian Goettee. In September of 1981, I was a sixth grader in a working class family in the Appalachian mountains, and John Goettee invested in a limited partnership tax shelter that provided carryback losses to 1978. Today, I am a public interest attorney in a big West Coast city with a son of my own, and Tax Court has issued a ruling as to what extent the interest on additional taxes resulting from a settlement over the IRS�s disallowance of those losses should be abated. In the meantime, the laws that allowed tax shelters were repealed, new tax shelters have emerged under different laws, the laws regarding abatement have been improved from the taxpayer�s prospective, and the Goettees� original attorney died.

Most of this case involved to what extent the fourteen or so years that passed before the Goettees� were told how much interest they owed due to unreasonable IRS delay in performing �ministerial� acts, which is the old standard for interest abatement. The answer is almost none, because �ministerial� seems to mean only whatever there is left for the IRS to do after they have done anything even theoretically discretionary. The IRS conceded interest should be abated for two months, and Tax Court increased that to three. Apparently, the law changed to include delays in both �ministerial� and �managerial� acts, which is probably only a little better, but enough of a change to make most of this discussion moot to most taxpayers in 2003.

There is also discussion here about how the interest should have been calculated, including appropriate start dates under the old laws. The only section of this that I have strong any feelings about is the section where the parties disputed, by a year, the date the Goettees� made a $2.44 payment. So the argument here was over a year�s worth of interest on the $2.44, and subsequent compounding. Did it occur to any of the accounts and tax attorneys working on this case that this was not worth arguing over? By my guestimate, based on rules of thumb mentioned in this case, I figure this issue is worth well under $1.50, probably well under $1.00. How was this possibly worth some tax attorney�s billable time to dictate into the petition? Or the time of some IRS attorney answer and find the documentation that allowed them to �win� on this issue? A waste of an IRS attorney�s time is a waste of my tax money, and I am not happy about it.

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