Frank Agostino: Quality Pro Bono for Lower-Income People

Frank Agostino, who leads the firm, is passionate about providing quality pro bono services to lower-income people. He believes that everyone deserves the same level of representation, regardless of their income.

MANHATTAN, NEW YORK, UNITED STATES - 2019/11/14: Immigration Court building entrance at 26 Federal ... [+] Plaza in New York. (Photo by Erik McGregor/LightRocket via Getty Images)LightRocket via Getty Images
The United States immigration system is in dire need of reform. The current system is broken and does not work effectively to protect the country or its citizens. The immigration court system is particularly in need of reform. The process is bogged down by bureaucracy and is often unfair to those who are seeking asylum or refuge.

It's always interesting to see why someone would choose to appeal a Tax Court decision, especially when they owe money. In the case of Grajales v. Commissioner of Internal Revenue, the fees to file the appeal are $500, so there must be an intriguing story behind it. The story highlights how the system can work and fail for taxpayers who get caught up in it. It's a good reminder that everyone makes mistakes and that the system isn't always fair. Ultimately, it's important to learn from our mistakes and move on.

Where It Begins: A New Chapter

It's unfortunate that Kirgizia I Grajales had to borrow money from her retirement plan to pay for her mother's funeral. The 1099 issued by the New York State & Local Retirement System treated the loans as a taxable distribution, which led to the IRS issuing a notice of deficiency. Ms. Grajales responded with a Tax Court petition, and we hope that she is successful in getting the ruling overturned.

I'm a big fan of Tax Court opinions, but there are some aspects of the process that I'm not familiar with. One of those is "calendar call." It looks like Ms. Grajales got lucky at calendar call. Thanks to the appeal, we have access to the Tax Court record in one handy 399-page document dump.

I believe that Ms. Grajales' appearance before Judge Thornton is a positive development for her case. The Judge's decision to consult with representatives of the New York County Lawyers Association shows that he is taking her case seriously and is committed to finding her the best possible legal representation. This is a positive step forward for Ms. Grajales and I hope that it leads to a successful resolution of her case.

I see a strong, independent woman who is hesitating about something but is being encouraged by a man to go for it.

I believe that the court's decision to allow the representatives of the company to speak with the plaintiff is a positive step. This will give the plaintiff the opportunity to hear the company's side of the story and potentially reach a resolution.

It is clear that Ms. Grajales is committed to fighting for her rights, and we hope that she is able to obtain the necessary documents from the State of New York. We believe that everyone deserves their day in court, and we will be following this case closely.

The Jersey Boys Enter the Stage

I am impressed with the work of Agostino & Associates PC in Hackensack, NJ. They are a firm that is passionate about providing quality pro bono services to lower income people. I believe that lower income people deserve the same level of representation as the billionaires. Ms.Grajales had not been able to get any documentation from New York State, so the can was kicked down the road again. I hope that the Tax Court takes the case back up on April 15, 2019 and that Phillip Colsanto is able to get the documentation that Ms.Grajales needs.

It is clear that having an attorney can be beneficial in a number of ways. In this case, the attorney was able to subpoena important information from the state of New York. This information was then used to help the client respond to an IRS request for admissions. Without the attorney, it is likely that the client would not have been able to properly respond to the IRS request, and could have faced serious consequences as a result.

Case Continues: Court Hears New Evidence

On June 3, 2019, Frank Agostino was at bat. One of the New York agencies had responded properly to the subpoena. Another had responded by sending something directly to the Tax Court, which nobody at the court could find. Judge John Colvin took this all under advisement, kicking the can further down the road. It took eight minutes.

It is good to see that progress is being made in the case against the IRS. Frank is doing a great job in fighting for what is right and it is refreshing to see that some progress is being made. Hopefully, this will lead to a resolution soon and the case can be put to rest.

The New York State Department of Taxation and Finance is still being difficult, according to a joint status report signed by Frank and the IRS attorney on July 15. If there is no settlement, they will be ready for trial on October 28, 2019.

The Trial: A Courtroom Drama

The attorneys representing the taxpayer and the IRS appeared in court on October 28, 2019 and informed the judge that they would be ready to submit the case under Rule 122 on November 6. This would mean that the taxpayer and the IRS agree on the facts but not the law. As promised, they submitted the joint stipulation on November 6. They agreed that Ms. Grajales was taxable on $908.62, which was the amount by which her loan balance exceeded $10,000. They also agreed to a number of other facts, but this was the big one in terms of dollar amount.

As a news article, I would likely write about the importance of having written managerial approval for additional taxes that are determined under section 72(t). I would explain that without this approval, the taxes may not be valid and could cause problems for the taxpayer.

It's clear that the Jersey Boys are committed to taking care of their clients. They know that every little bit helps, and they're willing to go the extra mile to ensure that everyone gets the care they need.

Although the amount of money in dispute may seem insignificant, the issue of 72(t) appears regularly before the Court. In fact, there have been at least 29 reported opinions dealing with section 72(t) issues since 2016. Often, the taxpayers involved in these cases have undergone hardships and need to withdraw pension funds or take loans from their pension in order to alleviate the hardship. Managerial approval may reduce the number of section 72(t) cases that appear before this Court. So, although the amount of money in dispute may be minimal, the issue itself impacts numerous taxpayers, and it often impacts those taxpayers without the means or ability to properly dispute the issue.

I agree with the sentiment of this paragraph - the IRS should definitely think twice before penalizing someone for taking money out of their retirement account before they're 59 1/2. I think it's only fair that the IRS take into consideration the circumstances surrounding the withdrawal before automatically penalizing the individual.

The Argument: A Summary

I think it's a good thing that the IRS Restructuring and Reform Act of 1998 added Section 6765(b)(1). This will help to ensure that IRS agents are not able to use penalties as a bargaining chip to get taxpayers to make concessions and agree to a case.

No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.

The 10% early withdrawal penalty under Section 72(t) is a penalty, not a tax. This means that it is not subject to the same rules and regulations as taxes, and can be assessed on a much wider range of transactions. This could have major implications for retirement planning and savings.

What the Courts Say: A Summary of Key Cases

I really can't do justice to the full textual arguments that the parties make in the case. However, I can provide a brief overview of the situation. The case concerns a dispute between two companies over a contract.

The opinion of Judge Thornton of the Tax Court came out on January 25, 2021. In this opinion, Judge Thornton ruled that the taxpayer in the case was not liable for the taxes in question. This is a victory for the taxpayer, and a setback for the IRS.

The I.R.C. sec. 72(t) exaction is a "tax" and not a "penalty", "addition to tax", or "additional amount". Therefore, it is not subject to the written supervisory approval requirement of I.R.C. sec. 6751(b).

It is all very textual, but on August 24, 2022 a panel of the United States Court of Appeals for the Second Circuit sustained the Tax Court's ruling. This means that the tax code is still very complicated and difficult to understand.

This appeal turns on the construction of three statutory provisions in the Code: Section 72(t), Section 6751(b), and Section 6751(c).

This is good news for taxpayers who were previously subject to penalties for early withdrawals from their retirement accounts. With the new tax law in place, these penalty-free withdrawals are now possible. This change will provide much-needed relief to taxpayers who need access to their retirement funds before retirement age.

It is clear from the language of Section 72(t) and from other provisions in the Code that the Exaction is a tax, not a penalty. This is an important distinction, because taxes are generally much easier to collect than penalties. The Exaction is a tax that must be paid by anyone who withdraws money from a retirement account before reaching the age of 59 1/2. The tax is intended to discourage early withdrawals, which can deplete retirement savings.

The appellate panel's indication that there were no hard feelings about the Jersey Boys raising the argument shows that they are committed to fair and unbiased decision-making. This is a positive development for the legal system, and sets a precedent for future cases.

The New York County Lawyers Association and Agostino & Associates, P.C. have both provided gracious and professional service to Petitioner in this case. The Court is thankful for their help and looks forward to continued success in the future.

Practical Takeaways from Our Experiences

I believe that Ms. Grajales should have consulted with a tax professional before filing her return, as it is clear she was not aware of the implications of her pension income. I would have tried to argue with New York State about the taxability of the pension before filing, in order to avoid the problems she encountered. Ultimately, I believe she should have reported the gross distribution on her 1040, with a lower taxable amount, attaching something to explain the situation. This would have avoided the problem entirely.

Other Coverage: How to Get the Most Out of Your Insurance

Lew Taishoff's coverage of the original Tax Court decision is insightful and informative. He provides a detailed analysis of the case, and his conclusions are clear and concise. This is an excellent resource for anyone interested in learning more about this important decision.

So today, ex-Ch J Michael B. ("Iron Mike") Thornton must face the same question, albeit in the context of the Section 72(t) ten-percent what-is-it. Because if it is a tax, and not a chop, then unsaddle the Section 6751(b) Boss Hoss.

And who better to engage in advanced Boss Hossery than that eminent firm of attorneys and counsellors-at-law, Frantic Frank Agostino and The Jersey Boys? With their extensive knowledge and experience, they are uniquely positioned to help you navigate the complexities of the law and get the best possible outcome for your case.

I'm saddened to hear of Mr. Taishoff's passing. He was a great journalist and a true professional. I have the utmost respect for him and his work. I know he will be missed by many.

I generally don't post Appeals to Circuit Courts unless they adopt a sweeping rejection of prior Tax Court law, like Hewitt. The Section 67561(b) Boss Hoss sign-off has become exactly what Judge Holmes predicted it would be, a massive silt-stir. Note that the appellant was represented by Frantic Frank Agostino, Esq., the originator of the Boss Hoss defense.