Opinion
17525-22 17584-22
05-30-2024
PETER G. MACKENZIE, ET AL., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Emin Toro Judge
These cases were scheduled for trial during the Court's May 20, 2024, Helena, Montana, trial session.
On April 15, 2024, the Commissioner filed a Motion for Continuance of Trial. At the time the Motion for Continuance was filed, petitioner Peter G. MacKenzie was represented by W. Bradley Russell. Based on representations made by Mr. MacKenzie's counsel, the Commissioner's Motion stated that petitioner Peter G. MacKenzie had no objection to the granting of the Motion. The Motion also stated that petitioner Anne L. MacKenzie objected to the granting of the Motion.
On April 19, 2024, Mr. Russell filed a Motion to Withdraw as Counsel. The Motion stated that Mr. MacKenzie "no longer wishes to be represented by the undersigned and has directed the undersigned to seek to withdraw."
On April 24, 2024, the Court held a remote hearing in these cases. Counsel for all parties appeared and were heard. After the hearing, on April 29, 2024, the Court granted Mr. Russell's Motion to Withdraw. This meant that Mr. MacKenzie was left to represent himself in the case.
On May 15, 2024, petitioner Anne L. MacKenzie and the Commissioner filed in Docket No. 17584-22, a Stipulation of Settled Issues that resolved all issues in that case.
On May 20, 2024, these cases were called from the Court's Helena, Montana, trial session. Counsel for the Commissioner appeared and was heard. There was no appearance by or on behalf of Mr. MacKenzie.
At the hearing, the Commissioner's counsel reported that Mr. MacKenzie has not communicated with the Commissioner since Mr. Russell's withdrawal as counsel. The Commissioner's counsel also indicated that the Commissioner was not opposed to offering Mr. MacKenzie the opportunity to settle the case on the same basis as Mrs. MacKenzie. Therefore, rather than moving to dismiss the case for lack of prosecution, the Commissioner requested that the Court consider granting the Motion for Continuance. The Court took the Motion for Continuance under advisement.
On the same day (May 20) that the Court held the hearing in these cases in Helena, Montana, the Court received in Washington, DC, a document styled "Withdrawal of Petition," which was filed as a "Motion to Withdraw Case." The document appears to have been mailed from Livingston, Montana, on May 15, 2024. The Motion to Withdraw Case states, in relevant part, I, Peter G. MacKenzie, Petitioner herein, "withdraw" said Petition immediately. I have been informed that the continuation of [this] proceeding is dependent upon my "voluntary" participation which I do hereby "withdraw".
It is my further understanding that the initiation of the Petition from a jurisdictional viewpoint is "only" granted by statute to the citizen and not to the Internal Revenue Service Commissioner.
It is my further understanding that the advice of counsel I have received is malpractice and fraud and the administrative process of the United States Tax Court is inconsistent with the statutory law of Title 26 of the Internal Revenue Code.
I also respectfully draw the Court's attention to the Commissioner's annual acknowledgment that the Service is promoting the "voluntary" compliance by Americans. The [Commissioner's] use of the word compliance is specifically designed to mislead Americans.
What Mr. MacKenzie seeks to achieve through his Motion to Withdraw Case is not entirely clear to the Court.
On the one hand, the filing of a petition to initiate a case in this Court is indeed voluntary on the part of the taxpayer. That is to say, a taxpayer is not required to file a petition, and the Commissioner cannot force the taxpayer to come to this Court. If the taxpayer does not wish to contest the Commissioner's determination of a deficiency in this Court, the taxpayer remains free to pay the deficiency amount and seek a refund. And, if the Commissioner fails to pay the refund within an appropriate period, the taxpayer can sue for a refund in an appropriate district court or the United States Court of Federal Claims. See I.R.C. §§ 6511, 6532, and 7422; see also Sorenson v. Sec'y of Treas., 752 F.2d 1433, 1438-40 (9th Cir. 1985); Naftel v. Commissioner, 85 T.C. 527, 533 (1985).
On the other hand, when (as here), the taxpayer does file a timely petition in this Court and properly invokes the jurisdiction of the Court, the taxpayer may not simply "withdraw" the case. By law, the Court cannot dismiss a deficiency case over which it has jurisdiction without entering a decision to the amount due, if any, for the taxable year at issue. I.R.C. § 7459(d); Estate of Ming v. Commissioner, 62 T.C. 519, 522 (1974).
So, if we were to grant Mr. MacKenzie's request to have his petition "withdrawn," his liability for the relevant years would be judicially determined and his opportunity to challenge it further would be quite limited.
Moreover, Mr. MacKenzie's reference to "the Commissioner's annual acknowledgment that the Service is promoting the 'voluntary' compliance by Americans" appears to show a misunderstanding of what the Commissioner is saying. Taxpayers take the first step in complying with their obligations under United States tax law by filing their returns and self-reporting the relevant economic activity on those returns. And, for the vast majority of taxpayers, the Commissioner is willing to accept that reporting and takes no further action. But that does not mean that compliance with the United States tax law is optional. To the contrary, failure to comply with the obligations imposed by law exposes taxpayers to significant sanctions (including, in certain circumstances, imprisonment). See, e.g., Helvering v. Mitchell, 303 U.S. 391, 399 (1938) ("In assessing income taxes the Government relies primarily upon the disclosure by the taxpayer of the relevant facts. This disclosure it requires him to make in his annual return. To ensure full and honest disclosure, to discourage fraudulent attempts to evade the tax, Congress imposes sanctions. Such sanctions may confessedly be either criminal or civil."). Mr. MacKenzie is not free to ignore the law's demands, and he is mistaken if he reads the Commissioner's references to voluntary compliance to say otherwise. See Waltner v. Commissioner, T.C. Memo. 2014-35, at *56-57 (explaining what voluntary compliance means and does not mean and collecting authorities), aff'd 659 Fed.Appx. 440 (9th Cir. 2016).
In view of the foregoing, we will direct Mr. MacKenzie to file a response to this Order. In that response, we expect Mr. MacKenzie to explain whether (1) he wishes to proceed with this litigation, engage in discussions with the Commissioner to settle the case, and, if those discussions fail to bear fruit, have a trial, or (2) he wishes to have the Court dismiss the case with prejudice thereby approving the deficiencies and additions to tax the Commissioner determined for the relevant years.
Upon due consideration, it is hereby
ORDERED that, on or before June 28, 2024, petitioner Peter G. MacKenzie shall file a response to this Order setting forth his views on the matters outlined above. It is further
ORDERED that respondent's Motion for Continuance of Trial filed April 15, 2024, is held in abeyance. It is further
ORDERED that jurisdiction of these cases is retained by the undersigned judge.
Petitioner Anne L. MacKenzie is advised that no response is required from her with respect to this Order.
Failure to respond as required by this Order may be deemed consent to the relief sought in the Motion.