Opinion
24147-16L
01-04-2023
JOSE M. GARCIA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Patrick J. Urda Judge
This collection due process (CDP) case was set for trial in Miami, Florida in October 2020 until the case was continued to afford the parties more time to prepare. Before us is the Commissioner's motion to review the sufficiency of petitioner Jose M. Garcia's answers to the Commissioner's second request for admissions. [Doc. 73. We will grant the motion to review.
"Doc." references are to the docket record in this case, as compiled by the Clerk of the Court. "I.R.C." references are to sections of Internal Revenue Code (26 U.S.C.) in effect at all times at issue, and "Rule" references are to the Tax Court Rules of Practice and Procedure in effect at the times at issue.
This case involves, inter alia, Mr. Garcia's liability for penalties under I.R.C. section 6672, which imposes liability on (1) a responsible person who (2) willfully fails to collect, account for, or pay over trust fund taxes. These penalties relate to Mr. Garcia's involvement with a company called Cargo Express International, Inc.
As relevant here, the essential question when determining whether an individual is a "responsible person" is whether the person had sufficient control over corporate affairs to avoid nonpayment of the employment taxes. Scott v. United States, 825 F.3d 1275, 1279 (11th Cir. 2016). To answer this question, we have previously looked to indicia of responsibility including "the holding of corporate office, control over financial affairs, the authority to disburse corporate funds, stock ownership, and the ability to hire and fire employees." Shaffran v. Commissioner, T.C. Memo. 2017-35, at *15 (quoting Thibodeau v. United States, 828 F.2d 1499, 1503 11th Cir. 1987).
The Commissioner seeks the Court's review of the sufficiency of Mr. Garcia's denial that he is a responsible person, in light of his previous admissions that he (1) was an owner of the company, as well as its chief executive officer and operations manager, (2) had signatory authority over the company's bank accounts, and (3) had authority to hire and fire employees. [Docs. 47, 51.] The Commissioner's request plainly seeks an admission of "the application of law to fact," as contemplated by Rule 90(c), and thus our inquiry focuses on whether Mr. Garcia's denial without elaboration is proper.
We see no good faith basis for Mr. Garcia's denial. Mr. Garcia has previously admitted facts that would (1) suffice to carry the Commissioner's burden of production with respect to Mr. Garcia's status as a responsible person and (2) require Mr. Garcia to prove by a preponderance of evidence that he was not a responsible person. Mr. Garcia, however, has represented both to the Commissioner and to this Court that he will not contest this issue at trial. Given that requests for admissions are designed to narrow and clarify issues for trial, we do not believe that Mr. Garcia's denial is proper, as it seems only designed to prolong the resolution of a point he has decided not to question. We accordingly will deem admitted the Commissioner's request for admission that Mr. Garcia was a responsible person for the periods described in the request.
We note for both parties that the Court has afforded them extremely ample time to prepare this case for trial. We will direct the parties to file a joint status report, or separate reports if absolutely necessary, setting forth the expected duration of trial, number of witnesses, location, and dates of availability between June and October 2023. The parties should expect that the Court will hear the trial of this case no later than October 2023. It is therefore
ORDERED that the Commissioner's motion to review the sufficiency of Mr. Garcia's answers to the Commissioner's second request for admissions, filed October 27, 2022, is granted and the Commissioner's request is deemed admitted. It is further
ORDERED that, on or before January 25, 2023, the parties shall file a joint status report, or separate reports if necessary, detailing the expected duration of trial, number of witnesses, location, and dates of availability between June and October 2023.