Originally published on Forbes.com Sept 23rd, 2013
Morgain McGovern may have lost in Tax Court, but she is a winner in my book. I think I’ll put her in for most colorful Tax Court litigant of 2013. Tax Court Summary Opinions are the reality TV of the system. Regular folks who think the IRS has done them wrong get to stand up and tell it to the judge. Ms. McGovern was in about the audit of her 2009 return.
During 2009, Ms. McGovern’s primary employment was as a “stand-in” for the character Garcia on Criminal Minds. So this is not Ms. McGovern
That was Kirsten Vangness pretending to be Penelope Garcia. When the cameras were not running and they were adjusting lights and such Morgain McGovern would be in position, I guess you would say, pretending to be Kirsten Vangness. Apparently it is a frustrating job for an aspiring actress. Ms. McGovern wrote:
Being a stand in is like being starving and having someone cook a bacon wrapped filet in front of you for three years while you watch. It’s frustrating being on set and so close to the job you dedicated everything in your life to; but everyone treats you like a ghost. They don’t see you. You are a prop for lighting.
Here is some video of Ms. McGovern herself
The video is actually relevant to one of the issues in the case.
She claims that these expenses were necessary because of the unique dress and makeup of the character Garcia. The record does not allow a finding as to whether and what amount of expenses were for items not suitable for personal use as well as business use.
I can understand that a Tax Court judge might not watch television. I’ve pretty well sworn off myself, although Criminal Minds is one of my guilty pleasures when I am travelling. Still. Clearly Garcia garb is not suitable for ordinary wear unless a woman is going to Comic Con or getting ready to accompany her brother to a Magic The Gathering Tournament. I’m getting ahead of myself here.
The Case
Ms. McGovern had claimed $20,131 of itemized deductions including $19,207 of Form 2106 employee business expenses. That does seem a bit disproportionate to her W-2 income of $24,909 (She also received $1,313 in unemployment compensation). I’m guessing that that may have been what triggered her audit, but she has another view.
I know they’re targeting actors/writers/filmmakers because my accountant told me that all of the people getting audited lately are in the business. It’s because we expose and mock the ridiculousness of the Federal Government and now they’re coming after us via the IRS.
Read superficially the case does seem to be solely about substantiation.
When the case was called for trial over three months later, petitioner appeared and produced hundreds of disorganized documents that she had not previously presented to respondent. Some of the records she produced indicated that she had been reimbursed by her employer for vehicle and travel expenses. She included medical records, but they are not relevant to any deduction claimed on the tax return. Some of the expenditures reflected in the records are inherently personal. Many were for years other than 2009. Some appear duplicative, and some directly contradict each other.
Ms. McGovern had an argument that would have been persuasive to me, but cut no ice with the Tax Court judge.
Overall petitioner argues that she should be given special leeway because she obviously incurred deductible expenses and the amount of the deficiency is small.
As it turns out, they might have been in a position to cut her something of a break.
The Travelling Roadshow Of The Countess Maritsa
So this is the part where Ms. McGovern qualifies as most colorful Tax Court litigant. During 2009 and before, she had been working on a book about her rather interesting childhood.
The book starts when I was seventeen, hiding out in a Parisian hotel room with my fugitive mother, who was wanted by the French authorities, British authorities, Interpol and the FBI.
My mother worked part-time as bookkeeper in an embroidery factory and then full-time as a clerk in the Cliffside Park school system to support us after my father died in 1965. She took to her grave the secret recipe for the greatest oatmeal chocolate chip cookies ever made. Ms. McGovern’s mom was much more exciting:
Wherever we moved, Mom would invite strange people to live with us.
She’d find them at the DMV or pick up people spare-changing for food outside of the local grocery store. We were a family like Robin Hood, doing the right thing and helping these strange drifters that Mom had found. She told us that it was the kind thing to do, people should help each other. But as I got older, I realized they were her henchmen.
I guess if I had a mother pursued by Interpol, who had henchmen, I would write a book about my childhood too. The book is what gave the Tax Court a chance to cut her a break.
In 2003, petitioner began writing a book about her experiences growing up. During 2009, she traveled to Little Rock, Arkansas, New Orleans, Louisiana, and Austin and Houston, Texas, to visit and to interview her parents and her sisters in relation to her book. Respondent concedes that petitioner’s writing activity is a business.
“Respondent” is the IRS. It was clearly a mistake for Ms. McGovern to have claimed all her expenses as employee business expense. In order to have any benefit at all, she needed to clear $5,700. Since the IRS conceded that her writing activity was a business, those expenses would be deductible from “dollar one” against adjusted gross income. She had not, however, done the work to distinguish them.
The F. Lee Bailey Error
I think it is possible that from her time on a TV crime show and her somewhat unusual upbringing, Ms. McGovern may have not understood, that in tax matters, unlike criminal proceedings, the burden of proof is on the taxpayer. She wrote to me
The whole system is rigged in the IRS’s favor. I wasn’t offered a lawyer, the lawyer suggested by the court was useless. He was from a law school in Irvine who was basically worked for the IRS and wouldn’t even make an appt. to meet me, he gave me advice over the phone. I did everything myself.
It’s understandable. F. Lee Bailey made the same mistake in his trip to Tax Court
The primary counter-evidence that Mr. Bailey produced at trial to support his position and contradict the agent on these miscellaneous adjustments was Quicken registers and cashflow reports for the 1993 through 2001 tax years. That is, he did not offer receipts or other transactional documents to substantiate the items on his return; he simply relied on his secondary Quicken records.
That was F. Lee Bailey, though, not an aspiring actress trying to work her way through college. There must have been some good substantiation among Ms. McGovern’s papers that could arguably have been allocated to her writing activity. I would have at least cut her tab in half. Just one more reason that I’ll never get to be a Tax Court judge.
You can follow me on twitter @peterreillycpa.
Afternote
Joe Kristan was a little harder on Ms. McGovern than I was.
The moral?
Unless you have to buy a uniform, it’s hard to deduct clothes, as TV anchor Anietra Hamper learned the hard way. And whatever you deduct, you need to have some way to support the deduction. The argument that your small deduction is immaterial in the big scheme of things doesn’t work well.