Justice Isn't Fair

My law firm strongly believes in fighting for justice and fairness—so much so that we put it right on the first page of our website. But these two concepts, “justice” and “fairness”, are confusing at times, which makes it difficult for clients when attempting to understand how to obtain justice or fairness in a lawsuit. 

Let me first explain these two terms in my view. 

Justice:  Justice is the process of presenting evidence in Court before a judge or jury and having them decide in your favor after the evidence is reviewed. When you win in court you receive a public pronouncement that you are right and the other side is wrong, and you receive a just punishment or reward against the other side in the form of damages, i.e. usually money.

Fairness:  Fairness is a financial determination—w ill you receive more from the lawsuit financially than you put into it?  If you spend $20,000 on a lawsuit, you want to receive more than $20,000 out of that suit.  Otherwise, the lawsuit was not fair—meaning financially fair.

Justice pays no attention to the financial costs of a case.  If a person wants justice they must be willing to spend as much time, emotional capital and money as necessary to achieve that result, which can often be an unfair result from a financial viewpoint. And just because a case goes to trial does not mean that justice will be served;you could lose and thereby suffer an unjust result in the process. That’s one of the risks of fighting for justice—injustice.

For example, when we prosecute killers in court for capital murder, whichcarries the death penalty, it is very expensive.  The cost of trying death penalty cases far outweighs any financial gain we (society) will get back in return.  So do we decide not to prosecute murderers because it's just too expensive?  No, because we want justice and as a society we are willing to pay the price for justice.  Plus, it is society as a whole who pays--no one person is asked to pay for a death penalty trial.  But the death penalty trial is not fair from a financial standpoint because the financial costs outweigh the financial benefits—but it is just.

In a civil lawsuit, however, whether it be personal injury, breach of contract, will or trust contest, or breach of duty case, a single person or small group of people are paying the bill. And a vast majority of people want their case to be fair--meaning they will get more out of the case financially than what they put in.  Yet, people regularly want justice. 

But justice is not easy to obtain. Rarely is it handed out willingly. It must be fought for at any cost and there is no guarantee that a just cause will prevail--losing is always a possibility. It takes time, effort and an emotional toll to pursue justice. Nelson Mandella, Martin Luther King, Jr., our Founding Fathers all fought for justice, placing their lives and freedom on the line. They paid a high price for their just causes; it was not a fair result.

Sometimes, justice and fairness are both achieved such as when a personal injury suit is won with an appropriate award for damages (although one could argue that the damages should have been paid without having to pay an attorney a fee to go to trial—so maybe it’s not so fair after all). 

The next time you find yourself in a dispute ask whether you are fighting for justice or fairness.  If you really want justice, be prepared to pay the price.  And if you really want fairness, then take the opportunity to accept a fair result when and if one is presented.   

Estate Taxes - Inadvertently Check the Wrong Box, Pay Over $120,000 in Penalties and Interest!

Shaun Maritn, in his blog entitled California Appellate Report (which I read regularly and enjoy), posts a recent Ninth Circuit Appellate Court decision penned by District Judge Timothy M. Burgess, sitting by designation with the Ninth Circuit Court of Appeals.

The case, entitled Baccei vs. United States, revolves around a request for extension of time to file an Estate Tax return and pay the dreaded Estate Tax (Form 4768).  Apparently, in Baccei, the taxpayer’s CPA filed his request for an extension of time to file a return and pay the tax.  Both the return and tax payment are due nine (9) months after the decedent’s death.  An extension of time to file an Estate Tax return six (6) months is almost always granted as a matter of course upon filing a request on Form 4768—easy.  An extension of time to pay the estimated Estate Tax is not so easily obtained.  The Government will wait for the paperwork, but not the money.  A sufficient explanation must be made before the IRS grants an extension of time to pay Estate Tax.

Unfortunately for Mr. Baccei, his CPA filled out Part II of Form 4768 requesting an extension of time to file, but did not complete Part III requesting an extension of time to pay.  As a result, the IRS imposed penalties and interest for late payment.  And since the tax came to over $1 million, the penalty was $58,954 and the interest came to $69,801, for a total hit of $128,755—all for not checking a box on Form 4768.

The taxpayer argued that he had substantially complied with the form by filing the form in the first place and completing the entire form other than Part III.  The taxpayer also argued it would be unfair to impose a penalty and that the taxpayer had “reasonable cause” to ask that the penalty and interest be abated given his reliance on the CPA to file the form properly.

The IRS disagreed with the taxpayer, the Federal District Court disagreed with the taxpayer and the Ninth Circuit Court of Appeals did the same.  Taxpayer loses for failure of his CPA to check a box on a tax form.  Shaun Martin in his blog post stated “this couldn’t be more right.”  I have to strongly disagree.  This couldn’t be more disturbing.  You don’t have to be a tax expert to know that tax forms are confusing!  Even the so-called “simplified” forms leave one puzzled at times.  And I speak from experience, having filed a good number of Estate Tax Returns and requests for extensions of time to file and pay in my career.

Luckily, I have never forgotten to request an extension of time to pay when one was required, but I can see how it could be done.  Quit easily in fact.  Primarily because payment is typically made at nine months and only the time to file is extended.  It’s true that the CPA should have filed the form correctly, but we all make mistakes (even the IRS).  What purpose is served by forcing a taxpayer to pay a hefty penalty when his CPA missed that portion of the form? 

Judge Burgess states that the unchecked box was essential to request an extension of time to pay even though the CPA’s cover letter to the IRS specifically stated that they were asking for an extension of time to pay.  While IRS forms should not be disregarded, failing to fill in all of the particulars should not lead to such a harsh and draconian penalty in every case—especially where a tax professional was retained on behalf of Mr. Baccei to file the form in the first place.  The Court reasoned that Mr. Baccei should have made certain the form was prepared correctly, but who would look over a form their CPA prepared?

The end result is that this particular decedent paid his share of Estate Tax and then some.  I don’t think the decedent would think this “couldn’t be more right.”  Apparently tax form technicalities can cost a decedent’s estate a bundle.  The lesson being that we must all submit perfectly completed tax form every time, no exceptions.  But does this "perfection" requirement equally apply to the IRS?  Hard to imagine it does.

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