I am reading
a Tax Court case where the taxpayer represented himself. This is referred to as
“pro se.” Technically, it does not mean that you cannot have an attorney or
advisor with you; it rather means that the attorney or advisor is not admitted to
practice before the Tax Court. If I was your CPA, for example, I would field the
questions-and-answers on your behalf while you sat there silent and forlorn.
You would still be considered to be “pro se,” as I do not practice before the
Court. Had I practiced in the D.C. area or with the national tax office of a large
firm, I might have been more interested in pursuing admission to practice.
The
taxpayer’s name is Walter Kowsh, and he had an incredible string of misfortune.
Walter lived in New York. His wife died at age 53, leaving him with two teenage
children and an elderly parent.
Then he lost
several friends on the 9/11 attacks on the World Trade Center. Some of those friends
had gone to his wife’s funeral.
By 2002 he
could longer work because of depression and anxiety attacks.
He started
taking prescriptions, including Wellbutrin and Paxil.
His
depression became debilitating.
He started
collecting on his private disability insurance.
He did not however apply for Social Security disability. Too bad, as
there is a case (Dwyer) that accepts social security as proof of
disability.
He took an early distribution from his 401(k) or IRA in 2003. He did not however
file a tax return for 2003.
So the IRS tentatively prepared one for him.
After a string of IRS notices, he finally prepared and filed his 2003
return.
The IRS next wanted penalties for late filing as well as the 10% penalty
on the early distribution.
Walter needed an out from both penalties. Is there way to do it?
Yep.
Disability would do it. Disability is an exception to the 10% penalty and
is also reasonable cause to abate a late filing penalty.
Walter argued that he was disabled.
Question is: did Walter’s depression rise to the level of a disability?
Incredible story, said the IRS. Get us a doctor’s letter, and let’s wrap
this up.
Walter could not – or would not - get a doctor’s letter. His own doctor
refused to provide one.
This was a bad start.
How about a prescription history from the pharmacy? asked the IRS. They
might be able to print out your history for the whole year.
Nope, said Walter.
I am already collecting disability, continued Walter. What part of
“disability” do you not understand?
Walter could really have used a tax advisor at this point.
You see, collecting disability from an insurance company lends strong
credibility to Walter’s claim, but disability is a medical diagnosis. The
insurance reinforces the diagnosis but is not a substitute for it.
Rest assured the Court was curious why Walter’s doctor would not provide
a letter, or why he refused to have another doctor provide one…
… despite numerous requests from respondent.”
Respondent means the IRS.
And I am curious myself.
I do not doubt that he was depressed. I also do not doubt that he considered
himself disabled. What I don’t understand is the big pushback on what appears to
be a reasonable request.
It is not personal, Walter. Stop taking it that way.
Walter lost.
You see the downside to a true pro se.
I would have been screaming at Walter for sabotaging his own case. He
would have gotten that doctor’s letter or I would have fired him.
But Walter made the tax literature for the point that collecting private
disability insurance, by itself and without further substantiation, does not
prove disability for purposes of the tax Code.
Tax geeks will remember Walter for decades.
