Opinion
17730-22
07-26-2024
LEO C. BOOKMAN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
James S. Halpern, Judge
On June 13, 2024, respondent filed a Motion for Leave to File First Amendment to Answer (Motion). Respondent requests leave to file an amendment to answer in order to affirmatively allege the facts supporting his determination that petitioner is liable for civil fraud penalties under I.R.C. section 6663 for taxable years 2002, 2003, 2004, 2005, 2006, 2007, 2008, and 2009. Respondent further requests leave to amend the Answer in order to allege the facts supporting his affirmative defense that the alternative penalties under I.R.C. section 6662(b)(2) are not barred by the statute of limitations for those taxable years. Finally, respondent requests leave to amend the Answer in order to allege the facts supporting his affirmative defense that the deficiencies for those taxable years are not barred by the statute of limitations. Respondent concedes that it was an oversight not to include the substance of the proposed amendments in the Answer.
Petitioner objects to the motion on the grounds that respondent has taken too long ("nearly two years") to correct errors in the Answer.
The purpose of pleadings is to give the parties and the Court fair notice of the matters in controversy and the basis for their respective positions. Rule 31(a), Tax Court Rules of Practice and Procedure. Rule 41(a), as applicable to this stage of the case, provides that "a party may amend a pleading only by leave of Court or by written consent of the adverse party, and leave will be given freely when justice so requires." Whether leave will be granted to file an amendment to an answer is a question falling within the sound discretion of the Court. See Estate of Quick v. Commissioner, 110 T.C. 172, 178 (1998). In determining whether to permit an amendment, we look to see whether there is unfair surprise or prejudice to the nonmoving party. See id. at 178- 80.
Petitioner does not allege that the amendment will cause unfair surprise or prejudice. And while we do not applaud respondent's oversight and lengthy time to attempt to correct it, trial in this case is scheduled for September 23, 2024, more than three months after petitioner became aware of the motion, and we not we do not see such prejudice to petitioner so as to cause us to deny the Motion.
Upon due consideration, it is
ORDERED that the Motion is granted, and the Court shall file respondent's First Amendment to Answer. It is further
ORDERED that, on or before September 3, 2024, petitioner may file a Reply.