Opinion
6709-19L
04-25-2023
ROBERT L. STEPHENSON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge.
This case will be tried at the Tax Court's session in Washington, D.C., beginning May 8, 2023. Now before the Court is the response (Doc. 45) of petitioner Robert L. Stephenson to our "Order to Show Cause" (Doc. 44). We will make that order absolute.
Background
Our standing pretrial order ("SPTO"; Doc. 40) instructed the parties to file their joint stipulation of facts by April 24, 2023--a process that, of course, requires cooperation of the parties in advance of that date. On February 17, 2023, the Commissioner sent to Mr. Stephenson a proposed stipulation of facts, but Mr. Stephenson did not respond. On March 17, 2023, the Commissioner filed a motion (Doc. 42) asking the Court to issue an Order to Show Cause. We granted the Commissioner's motion and issued an Order to Show Cause (Doc. 44), which stated:
Under this Court's Rule 91, the parties have a duty to cooperate in preparing a joint stipulation (i.e., a written statement signed by both parties) setting out the agreed facts in the case. . . . Without prejudging the truth or falsehood of the alleged facts stated in the proposed stipulation, we can say that the alleged facts are plausible, and that they are verifiable propositions that we can fairly require Mr. Stephenson to admit, deny, or correct (including the State of Mr. Stephenson's residence, facts about the audit of his 2012 return, and the authenticity of documents).
On the apparent facts, it would seem that Mr. Stephenson may be unreasonably refusing to stipulate facts to which he may not object. It is therefore
ORDERED that the Commissioner's motion for order to show cause why proposed facts and evidence should not be accepted as established, as provided in Rule 91(f) of the Court's Rules of Practice and Procedure, is granted. It is further
ORDERED that Mr. Stephenson shall, on or before April 3, 2023, file and serve a response in compliance with the provisions of Rule 91(f)(2), showing why the matters set forth in the Commissioner's proposed eleventh stipulation of facts should not be deemed admitted for purposes of the pending case. For the matters that Mr. Stephenson does admit, his response should so indicate; for the matters he does not admit, his response should explain why and should state what he believes the actual facts to be. If by April 3 no response is filed with respect to any matter or portion thereof, or if the response is evasive or not fairly directed to the proposed stipulation or portion thereof, then that matter or portion thereof will be deemed stipulated for purposes of the pending case, and an order will be entered accordingly, pursuant to Rule 91(f)(3).
Mr. Stephenson filed a response (Doc. 45) to the Order to Show Cause (combined with his response to a motion to compel), in which he commented on some of the Commissioner's proposed stipulations.
Discussion
I. Proposed Stipulation No. 1.
The Commissioner's proposed stipulation No. 1 states:
1. At the time of the filing of the petition in this case, petitioner resided at [a particular address in Maryland].
Mr. Stephenson's response states:
(This statement above is confoundedly false because the petitioner never in life had any association with this address whatsoever).
Because he denies the allegation, we will not deem it stipulated.
II. Proposed Stipulations Nos. 2-5.
The Commissioner's proposed stipulations Nos. 2-5 state as follows:
2. On July 9, 2013, petitioner filed electronically a Form 1040, U.S. Individual Income Tax Return, for the taxable year 2012. Attached hereto as Exhibit 1-R is a copy of respondent's reprint of petitioner's 2012 Form 1040 return.
3. Respondent examined petitioner's 2012 Form 1040 return.
4. Based upon that examination, respondent disallowed certain deductions for lack of substantiation or otherwise not allowable that were claimed on the Schedule C, Profit or Loss From Business, for Research Development LLC attached to the 2012 Form 1040 return. The effect of the adjustments was to disallow the net loss claimed from that Schedule C.
5. Respondent's examination also resulted in having disallowed certain deductions for lack of substantiation or otherwise not allowable certain items to a were claimed on a separate Schedule C for Research Development Services LLC attached to the 2012 Form 1040 return. Respondent's examination also reclassified certain items on that Schedule C to Schedule E, Supplemental Income and Loss attached to the 2012 Form 1040 return. The effect of the adjustments was to disallow the net loss claimed from that separate Schedule C.
Mr. Stephenson made no response to proposed stipulations Nos. 2-5, and we will therefore deem them stipulated.
III. Proposed Stipulations Nos. 6-8.
The Commissioner's proposed stipulations Nos. 6-8 state as follows:
6. Respondent's examination of petitioner's 2012 Form 1040 return resulted in a determination that petitioner was liable for a deficiency in income tax in the total amount of $21,645.00 after proposed adjustments to taxable income described in 5 above.
7. Respondent also determined that petitioner was liable for a late filing penalty in the amount of $3,246.75 under Internal Revenue Code section 6651(a)(1) and the accuracy-related penalty in the amount of $4,329.00 under Code section 6662(a) for negligence and for substantial understatement of income tax.
8. On October 14, 2015, respondent issued to petitioner a statutory notice of deficiency for the taxable year 2012 reciting the determinations described in paragraphs 6 and 7 above. Attached hereto as Exhibit 2-R is a copy of the deficiency notice.
Mr. Stephenson made no response to the accuracy of these assertions. Rather, because the IRS's notice of deficiency ("NOD") that determined the 2012 deficiency also determined a deficiency for the year 2013, and because we dismissed 2013 from this case for lack of jurisdiction by our order of November 4, 2019 (Doc. 6), Mr. Stephenson argues that we should not allow 2012 to proceed without 2013. This is legally incorrect; but more to the point, it does not suggest any factual inaccuracy with the Commissioner's proposed stipulations of fact Nos. 6-8, so we will deem them stipulated.
IV. Proposed Stipulation No. 9.
The Commissioner's proposed stipulation No. 9 states as follows:
9. Petitioner did not file a petition with this Court in reply to the amounts described in paragraphs 6 and 7 above, and respondent assessed those amounts on March 6, 2016. Attached hereto as Exhibit 3-R is a copy of respondent's literal account transcript, generated October 6, 2021, for petitioner's taxable year 2012.
Mr. Stephenson asserts that this is a "false statement", so we will not deem it stipulated.
V. Proposed Stipulations Nos. 10-11 .
The Commissioner's proposed stipulations Nos. 10-11 state as follows:
10. The March 6, 2016, assessments were not paid and respondent attempted to collect those amounts.
11 On September 11, 2017, respondent received from petitioner a Form 1040X, Amended U.S. Individual Income Tax Return, for the taxable year 2012. Attached hereto as Exhibit 4-P is a copy of that amended return.
Mr. Stephenson made no response to proposed stipulations Nos. 10-11, and we will therefore deem them stipulated.
VI. Proposed Stipulations Nos. 12-13 .
The Commissioner's proposed stipulations Nos. 12-13 state as follows:
12. On March 26, 2019, respondent issued to petitioner a notice of determination sustaining the proposed levy collection action for the taxable year 2012 income tax liabilities asserted against petitioner. Attached hereto as Exhibit 5-R is a copy of the determination notice.
13. On February 7, 2023, respondent's counsel received from petitioner an undated Form 1040X return for the taxable year 2012. Attached hereto as Exhibit 6-P is a copy of that return.
Mr. Stephenson's response disputes the accuracy of certain statements in the notice of determination (Exhibit 5-R), but he does not dispute the accuracy of the assertions in Nos. 12 and 13. We will therefore deem them stipulated.
It is
ORDERED that our Order to Show Cause (Doc. 44) is discharged in part as to the Commissioner's proposed stipulations Nos. 1 and 9, and is made absolute in part as to his proposed stipulations Nos. 2-8 and 10-13. It is further
ORDERED, pursuant to Rule 91(f)(3), that the Commissioner's proposed stipulations Nos. 2-8 and 10-13 are deemed stipulated for purposes of the pending case.