Opinion
9275-21S
09-12-2022
LUCAS SEAN GOULDY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL AND DECISION
JOSEPH W. NEGA, JUDGE
On August 15, 2022, respondent filed a Motion to Dismiss for Lack of Prosecution (respondent's motion to dismiss). We find that petitioner has failed to properly prosecute this case, and therefore this case shall be dismissed pursuant to Rule 123.
All Rule references are to the Tax Court Rules of Practice and Procedure and, unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect for the year at issue.
I. Background
By Notice of Trial issued May 4, 2022, this case was previously set for trial on September 6, 2022, in Fresno, California. The Court's notice of that date warned: "Your failure to appear may result in dismissal of the case and entry of decision against you."
That warning was based on Rule 123, which provides:
(a) Default: If any party has failed to plead or otherwise proceed as provided by these Rules or as required by the Court, then such party may be held in default by the Court either on motion of another party or on the initiative of the Court. Thereafter, the Court may enter a decision against the defaulting party, upon such terms and conditions as the Court may deem proper, or may impose such sanctions (see, e.g., Rule 104) as the Court may deem appropriate. . . .
(b) Dismissal: For failure of a petitioner to properly prosecute or to comply with these Rules or any order of the Court or for other cause which the Court deems sufficient, the Court may dismiss a case at any
time and enter a decision against the petitioner. . . .
Served with the notice setting case for trial was a Standing Pretrial Order for Small Case, which set forth the steps required of the parties in preparation for trial or other resolution. The Standing Pretrial Order directed petitioner, inter alia: (1) to communicate and cooperate with respondent's counsel regarding settlement or, if the case could not be settled, the preparation of a stipulation of facts; (2) to serve on respondent's counsel and file with the Court a pretrial memorandum no later than 21 days before the first day of the trial session; (3) unless otherwise excused, to appear at the calendar call; and (4) to be prepared to try the case during the trial session of the Court. The Standing Pretrial Order warned: "If you do not follow this Order, the Judge may dismiss your case and enter a Decision against you." The copies of the notice setting case for trial and Standing Pretrial Order mailed to petitioner at the address listed on the Petition were not returned as undeliverable.
On December 7, 2020, respondent issued to petitioner a notice of deficiency, determining a deficiency of $7,497 for the 2017 taxable year, an addition to tax in the amount of $1,269.67 for failure to file, an addition to tax in the amount of $1,015.74 for failure to pay, and an addition to tax in the amount of $130.15 for failure to pay estimated tax. The notice of deficiency also indicated $1,854 of income tax withholding. The notice of deficiency indicated that petitioner failed to report $57,434 of wage income. The notice of deficiency also indicated that the unreported income was reported on a Form W-2, submitted to respondent by a third party.
On March 13, 2021, petitioner filed a Petition with this Court. In the Petition, petitioner made the unsupported allegations that he has "now filed [Form 1040] for year 2017" and that his "actual taxes due are lower than what the 'Notice of Deficiency' has listed." However, in the motion to dismiss, respondent represents that he "cannot find any record that he received a Form 1040 from petitioner for 2017 in any of his records." Respondent represents that he prepared a substitute for return (SFR) for petitioner based upon third-party reporting information.
On August 15, 2022, respondent filed respondent's motion to dismiss. Respondent represents that eight separate attempts were made to contact petitioner, by letter and phone, both through respondent's counsel and through the Internal Revenue Service Independent Office of Appeals. None of these attempts received any response.
By Order issued August 22, 2022, the Court directed petitioner to file a response to respondent's motion to dismiss on or before September 1, 2022, and set the motion for hearing during the Court's September 6, 2022, trial session. To date, no response has been received from or on behalf of petitioner.
On September 6, 2022, this case was called and recalled from the calendar during the Court's trial session. There was no appearance by or on behalf of petitioner. Counsel for respondent appeared and was heard on the motion to dismiss. Respondent's motion to dismiss was taken under advisement by the undersigned.
II. Discussion
The Court may dismiss a case at any time and enter a decision against the taxpayer for failure to properly prosecute his or her case, failure to comply with the Rules of the Court or any order of the Court, or for any cause which the Court deems sufficient. Rule 123(b); Edelson v. Commissioner, 829 F.2d 828, 831 (9th Cir. 1987), aff'g, T.C. Memo. 1986-223. The Court may also dismiss a case for lack of prosecution if the taxpayer inexcusably fails to appear at trial and does not otherwise participate in the resolution of the taxpayer's case. Rule 149(a); Harper v. Commissioner, 99 T.C. 533, 540 (1992); see also Brooks v. Commissioner, 82 T.C. 413, 429-30 (1984), aff'd without published opinion, 772 F.2d 910 (9th Cir. 1985).
Petitioner has failed to properly prosecute this case. Petitioner did not appear for trial on September 6, 2022, despite being warned by the Notice of Trial and Standing Pretrial Order that failure to appear could result in dismissal of the case and entry of decision against him. Petitioner has failed to communicate and cooperate with respondent's counsel to prepare for trial or otherwise resolve this case as directed by the Standing Pretrial Order. Additionally, petitioner failed to file a pretrial memorandum as directed by the Standing Pretrial Order. Accordingly, we conclude that it is appropriate to dismiss petitioner's case for lack of prosecution.
In general, the Commissioner's determinations in a notice of deficiency are presumed correct, and the petitioner bears the burden of proving them erroneous by a preponderance of the evidence. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). In order for the presumption of correctness to attach to the deficiency determination in unreported income cases, the Commissioner must at least establish "some evidentiary foundation" connecting the taxpayer with an income-producing activity. See Nelson v. Commissioner, T.C. Memo. 2018-95, at *5). Once the Commissioner introduces some evidence linking the taxpayer to an income-generating activity, the burden shifts to the taxpayer to show by a preponderance of the evidence that the Commissioner's determinations are arbitrary or erroneous. Nelson, T.C. Memo. 2018-95, at *5.
Pursuant to sec. 7463(b), the decision entered in this case is not reviewable in any other court. We nevertheless generally follow the precedent of the Court of Appeals to which an appeal would otherwise lie. See Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971).
In the present case, petitioner did not deny the receipt of wage income in his Petition. Rather, petitioner contends that, by his own unsupported calculations, his tax liability is lower than the amount of the deficiency as calculated by respondent. Even if petitioner's pleadings could be construed to assign error to respondent's unreported income determination, the notice of deficiency itself would satisfy respondent's burden of production since it indicates that respondent determined the specific amount of the unreported income item based on information returns filed by third-party payers. Nelson, T.C. Memo. 2018-95, at *6 (citing Banister v. Commissioner, T.C. Memo. 2008-201, 2008 WL 3925877, at *2 (finding that a notice of deficiency indicating third parties paid the taxpayer the specific amounts in question satisfied the minimal evidentiary burden, even though direct evidence was not in the record, where the taxpayer implicitly acknowledged that he received at least some income during the year at issue), aff'd, 418 Fed.Appx. 637 (9th Cir. 2011)). Respondent's deficiency determination is accordingly entitled to the presumption of correctness, which petitioner has failed to rebut.
Although sec. 6201(d) may in certain circumstances shift the burden of production to the Commissioner when a disputed information return forms the basis for his deficiency determination, such circumstances are not present here. Petitioner has failed to cooperate with respondent's counsel in reaching a final resolution of this case, and sec. 6201(d) applies only where "the taxpayer has fully cooperated with the Secretary" in a court proceeding.
Similarly, respondent has satisfied his burden of production with respect to the additions to tax under section 6651(a)(1) and 6654. See § 7491(c). In the Petition, petitioner failed to assign error to respondent's determination of additions to tax. See Wheeler v. Commissioner, 127 T.C. 200, 206 (2006) ("[T]he Commissioner's obligation under section 7491(c) initially to come forward with evidence that it is appropriate to apply a particular penalty to a taxpayer is conditioned upon the taxpayer's assigning error to the Commissioner's penalty determination."), aff'd, 521 F.3d 1289 (10th Cir. 2008); see also Swain v. Commissioner, 118 T.C. 358, 363 (2002). We thus sustain respondent's determinations of the additions to tax.
In respondent's motion to dismiss, respondent conceded the section 6651(a)(2) addition to tax.
Upon due consideration and for cause more fully appearing in the transcript of the proceedings, it is
ORDERED that respondent's Motion to Dismiss for Lack of Prosecution, filed May 2, 2022, is granted and this case is dismissed for lack of prosecution. It is further
ORDERED AND DECIDED that there is a deficiency in Federal income tax due from petitioner in the amount of $7,497 for the 2017 taxable year. It is further
ORDERED AND DECIDED that there is a penalty for failure to file addition to tax due from petitioner under the provisions of section 6651(a)(1) in the amount of $1,269.67 for the 2017 taxable year. It is further
ORDERED AND DECIDED that there is a penalty for failure to estimate addition to tax due from petitioner under the provisions of section 6654 in the amount of $130.15 for the 2017 taxable year.