Opinion
9536-22
05-08-2024
ILYA ZLOBIN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL AND DECISION
Mary Ann Cohen, Judge.
The Petition in this case was filed on April 20, 2022, in response to a Notice of Deficiency that determined petitioner failed to file a federal income tax return for the taxable year 2017, thus failing to report income in the amount of $501,299. The Notice determined a deficiency of $177,602 and related additions to tax under I.R.C. §§ 6651(a)(1), 6651(a)(2), and 6654. The case is currently before the Court for ruling on respondent's Motion to Dismiss for Failure to Properly Prosecute, which includes a request that the Court impose a penalty on petitioner under I.R.C. § 6673.
The Petition consisted primarily of frivolous arguments. Respondent first moved to dismiss the case for failure to state a claim. Petitioner was directed to respond and invited to file an amended petition. The Court filed his response as a First Amendment to Petition and gave him the benefit of the doubt that certain parts of that Amendment stated a claim. The Court on November 8, 2022, struck from petitioner's Petition and Amendment most of the frivolous contentions and warned petitioner about the applicability of I.R.C. § 6673 if he continued to pursue frivolous contentions. Respondent's Motion was denied, and respondent was directed to answer the sections of petitioner's Petition and Amendment that had not been stricken.
The record reveals that petitioner has sent to the Court no fewer than nine frivolous documents, including his response to the current Motion filed on September 28, 2023. Those filings are essentially gibberish, so unintelligible that they are impossible to describe and rule on. His latest response fails to address the specific representations in the current Motion to Dismiss. That Motion describes in detail the attempts to secure petitioner's cooperation and his failure to do anything other than send more frivolous letters. Most significantly, in a letter from respondent's counsel dated May 18, 2023, Exhibit F to the Motion to Dismiss for Failure to Prosecute Properly, respondent's counsel explains that the deficiency relates to petitioner's dealings in coins. Petitioner was invited to address that determination, to discuss related expenses, and to explain his position with respect to the additions to tax. Any related expenses that petitioner incurred and can substantiate for the 2017 tax year would probably reduce the deficiency and would reduce proportionately the additions to tax. Petitioner has the burden of proof as to any deductions. Yet petitioner has persisted in his intractable position.
Petitioner's attention is directed to Rule 123(c), Tax Court Rules of Practice and Procedure, which provides for Setting Aside Default or Dismissal "[f]or reasons deemed sufficient by the Court and upon motion expeditiously made . . ." In this case reasons deemed sufficient would include an express abandonment of all previous frivolous assertions and an offer of proof explaining petitioner's business activities during the 2017 tax year and, in detail, the manner in which he would prove costs or expenses that offset the income determined by respondent.
On the current record, however, there is no reasonable alternative to granting respondent's Motion. Upon due consideration and for cause, it is hereby
ORDERED that respondent's Motion to Dismiss for Failure to Properly Prosecute filed September 1, 2023, is granted, and the Petition is dismissed by reason of petitioner's failure to follow Court Orders and Rules and failure to properly prosecute the case. It is further
ORDERED that because of his persistence in frivolous and groundless arguments after warnings by the Court and respondent, and our conclusion that this case was commenced and maintained primarily for delay, petitioner shall pay to the United States a penalty under I.R.C. § 6673(a) in the amount of $20,000. It is further
ORDERED AND DECIDED that there is a deficiency in income tax due from petitioner for the taxable year 2017 in the amount of $177,602.00;
That there is an addition to tax due from petitioner for the taxable year 2017, under the provisions of I.R.C. § 6651(a)(1), in the amount of $39,960.45; and
That there is an addition to tax due from petitioner for the taxable year 2017, under the provisions of I.R.C. § 6651(a)(2), in the amount of $35,520.40; and
That there is an addition to tax due from petitioner for the taxable year 2017, under the provisions of I.R.C. § 6654, in the amount of $4,252.54.