Originally published on Passive Activities and Other Oxymorons on April 6th, 2011.
David D. Robison, Sr., et ux. v. Commissioner, TC Memo 2011-59
Every man thinks meanly of himself for not having been a soldier, or not having been at sea.
I promise to swear off that Samuel Johnson quotation for a while. It seems so apt, here, though. Perhaps it accounts for the great pride that Marines seem to have in their service and the general esteem in which they are held. If being a soldier or going to sea suffices to not think meanly of yourself, then what must the effect be of being a sea going soldier ? Mainly this story is about why I don't have the right attitude to be a Tax Court judge. Never mind that I'm lacking in numerous other qualifications.
So here is the story:
Petitioner David Daniel Robison, Sr. (hereinafter petitioner), served in the U.S. Marine Corps from 1966 until 1972. From December 1966 until February 1968 he served in Vietnam, where he sustained a variety of combat-related injuries. He spent a year in the hospital and was later discharged from the Marine Corps because of his injuries.
Petitioner worked for the U.S. Postal Service from 1980 until he was forced to retire in 1992 as a result of the injuries he had sustained while serving in Vietnam. During the years since he was forced to retire, petitioner has received a retirement annuity from OPM. During some of those years, petitioners excluded the amount of that annuity from their gross income. Respondent examined petitioners' returns for several of the years before the year in issue, and each time, respondent issued a closing letter accepting petitioners' return as filed.
There have been a couple of times where I've thought about applying to work for the IRS. There's a lot of reasons I haven't. It's not just because I'm too old for the really cool jobs, where you have a gun. What would I do if I was the revenue agent who was assigned to audit Mr. Robison, who quite reasonably believes that the lousy 14 grand he gets from the Post Office because he couldn't work anymore due to his war wounds acting up should be excludible ? I don't know. I can't knock the agents and supervisors who kind of let it slide by. Eventually though he must have caught an agent who not only didn't remember the Vietnam War, but hadn't even been born then and felt compelled to research the basis for Mr. Robison's exclusion and found that there wasn't one as the Tax Court confirmed:
In Haar v. Commissioner, 78 T.C. 864 (1982), affd. 709 F.2d 1206 [52 AFTR 2d 83-5288] (8th Cir. 1983), this Court first addressed the question of whether an individual who retires from a civilian job because of a disability resulting from military service and receives disability payments from that civilian employer may exclude those payments from his gross income. .................... We held that, because the disability payments the taxpayer received were not paid as compensation for personal injuries or sickness incurred in military service, the taxpayer was not entitled to exclude the disability payments under section 104(a)(4).
Mr. Robison did have another argument:
Petitioner also contends that, because respondent issued closing letters and accepted petitioners' returns as filed in previous years, respondent should be barred from determining a deficiency for petitioners' 2006 tax year.
It just doesn't work that way. Much as they would have liked to, the previous agents who slid this buy didn't have the autority to amend the Code to put in a David Robison exception :
However, we have held that where the Commissioner has overlooked the taxability of certain items in previous years, he is not barred from taking a different position in later years.
It's really too bad. If I'd been the Tax Court judge I would have been definitely trying to figure out a way to throw the case Mr. Robison's way. Instead he got:
In reaching these holdings, we have considered all the parties' arguments, and, to the extent not addressed herein, we conclude that they are moot, irrelevant, or without merit.
He can't work because he was wounded in Vietnam. That might be moot and irrelevant to his post office pension being excludible, but don't say "without merit".