Opinion
8574-19
07-26-2022
JOSEPH A. MCDONALD, II, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Emin Toro Judge
Now before the Court is petitioner Joseph A. McDonald, II's Motion for Reconsideration of Order (Doc. 60) filed on July 13, 2022. For the reasons set forth below, the Court will deny the motion.
Mr. McDonald filed the petition in this case on May 28, 2019. The case was calendared for trial during the Court's May 18, 2020, Los Angeles, California trial session. On April 3, 2020, the trial session scheduled to begin in Los Angeles, California, on May 18, 2020, was canceled due to concerns related to COVID-19, and this case was assigned to the undersigned judge.
Following the assignment of this case, the Court held at least five telephonic status conferences with the parties, as well as a hearing on the record. The case was set for trial four more times and was continued each time, most recently on March 16, 2022.
During the course of the proceedings, Mr. McDonald's counsel maintained that Mr. McDonald was in such ill health that he essentially was unable to assist with prosecuting his case. Mr. McDonald's counsel acknowledged that it was Mr. McDonald's burden to produce evidence in support of his case, but enumerated various reasons why the evidence he wished to rely on was unavailable, including Mr. McDonald's illness and interference with his records by certain family members.
In response to these concerns, the Court suggested alternative methods of obtaining the documents, including issuing third party subpoenas. Mr. McDonald's counsel agreed with this proposal and the Court granted multiple continuances to allow him to serve and enforce the subpoenas. The Court repeatedly reminded Mr. McDonald's counsel that the burden was on Mr. McDonald to take action if he had difficulties obtaining the subpoenaed information. Two separate times-on April 16, 2021, and on September 16, 2021-the Court calendared this case for a hearing at which any third-party subpoenas would be returnable. But to the Court's knowledge, Mr. McDonald's counsel never acted to enforce any subpoena, nor did he obtain any information by subpoena.
During a status call on February 2, 2022, Mr. McDonald's counsel again reported to the Court that he needed to obtain medical records in order to support Mr. McDonald's position that he had reasonable cause for failing to file his 2016 tax return. See United States v. Boyle, 469 U.S. 241 (1985) (explaining that whether "reasonable cause" exists is a question of fact and the burden of establishing that fact is on the taxpayer). Mr. McDonald's counsel represented that 30 days should be sufficient to obtain the records. During a follow-up status call on March 15, 2022, Mr. McDonald's counsel reported that he had been unable to obtain the medical records because he did not have Mr. McDonald's signature. He further reported that the Commissioner had offered to settle the case, but that he did not have authority to accept or reject the settlement. Mr. McDonald's counsel stated that if he had more time, he thought the case would settle on the terms offered by the Commissioner. The Court agreed to provide the parties until April 11, 2022, to provide a further status update or a stipulated decision document. The Commissioner's counsel stated that if Mr. McDonald was unable to move the case forward by then, she would file a motion to dismiss the case for failure to properly prosecute.
On April 11, 2022, the Commissioner filed a Status Report (Doc. 55) with the Court stating that Commissioner's counsel had not heard from Mr. McDonald or his counsel and reiterating the Commissioner's intent to file a motion to dismiss for failure to properly prosecute. On April 13, 2022, the Commissioner filed the motion (Doc. 56). On April 15, 2022, the Court directed Mr. McDonald to respond to the motion on or before May 16, 2022. Mr. McDonald did not respond, and the Court granted the Commissioner's motion in an Order of Dismissal and Decision (Doc. 58) entered and served on June 6, 2022.
Because Mr. McDonald's counsel is not registered for electronic service, on June 6, 2022, the Order of Dismissal and Decision was mailed to his address by certified mail. That mailing was returned to the Court as "Return to Sender - Not Deliverable as Addressed - Unable to Forward" and re-mailed by regular mail on June 22, 2022. Fewer than 30 days later, on July 5, 2022, Mr. McDonald filed a Declaration of Joseph McDonald (Doc. 62) and on July 13, 2022, he filed the motion now before the Court. In his motion, Mr. McDonald contends reconsideration is warranted because of Mr. McDonald's poor health and his continuing interest in prosecuting the case.
The Court issued an Order on July 15, 2022, directing the Commissioner to file a response to Mr. McDonald's motion on or before August 15, 2022. On July 18, 2022, the Commissioner filed a Response to Petitioner's Motion for Reconsideration (Doc. 63), opposing Mr. McDonald's motion.
Rule 123(c) provides, "For reasons deemed sufficient by the Court and upon motion expeditiously made, the Court may set aside a default or dismissal or the decision rendered thereon." Granting a motion under Rule 123(c) is within the sound discretion of the Court. Kraasch v. Commissioner, 70 T.C. 623, 626 (1978).
Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure.
In addition, the disposition of a motion under Rule 162 to vacate or revise a decision rests within the Court's discretion, and such motions generally will not be granted absent a showing of unusual circumstances or substantial error, e.g., mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, fraud, or other reason justifying relief. See, e.g., Rule 1(a); Fed.R.Civ.P. 60(b); Brannon's of Shawnne, Inc. v. Commissioner, 69 T.C. 999 (1978); Brewer v. Commissioner, T.C. Memo. 2005-10; Kun v. Commissioner, T.C. Memo. 2004-273; Lowry v. Commissioner, T.C. Memo. 2004-10; Estate of Miller v. Commissioner, T.C. Memo. 1994-25.
The Court is sympathetic to Mr. McDonald's situation, but his motion offers no sufficient ground for vacating the Court's decision. Even sick people owe their taxes; the IRS is charged with the responsibility of determining and collecting the taxes even of sick people; and this Court must adjudicate the liabilities even of sick people. Mr. McDonald's counsel has had ample time to obtain the information he needed to prosecute this case, but for more than 18 months he made no progress. As the Court frequently reminded Mr. McDonald's counsel, this case could not be continued indefinitely. And even in Mr. McDonald's motion for reconsideration, there is nothing that suggests a change in approach going forward. The motion offers no explanation for Mr. McDonald's failure to respond to the Court's Order directing that he respond the Commissioner's April 13,2022, motion. Nor does the motion explain what counsel or Mr. McDonald would do differently if the Court were to vacate the Decision. The motion offers no concrete steps on how Mr. McDonald would move the case forward if he were given yet another opportunity. Rather, the motion continues to point out that Mr. McDonald is in poor health and has difficulty completing even simple tasks. In essence, the motion asks the Commissioner to take petitioner's word about the circumstances that might give rise to reasonable cause in this case. But the Commissioner is not required to accept bare assertions, with no supporting documentation, that Mr. McDonald had reasonable cause for failing to file his return. The Commissioner is entitled to ask for documentation corroborating petitioner's assertions as to his poor health at the relevant time (in April 2017) and to have an opportunity to cross examine petitioner if the documentation is unsatisfactory to determine if reasonable cause is shown. See, e.g., Jordan v. Commissioner, T.C. Memo. 2005-266 (collecting authorities holding that reasonable cause had been demonstrated and authorities holding that reasonable cause had not been demonstrated). The motion offers no explanation of how Mr. McDonald would address these issues if he were given more time or why he has not done so thus far. In view of the course of the proceedings to date and Mr. McDonald's failure to properly prosecute his case, regrettably, the Court is unable to conclude that providing more time would serve the interests of justice or change the outcome here.
The Commissioner argues in his response to Mr. McDonald's motion that we should deny the motion for untimeliness, among other reasons. See Rule 162 (requiring that motions to vacate or a revise a decision must be filed within 30 days after the decision is entered). In light of our analysis, we need not address this point.
In view of the foregoing, upon due consideration, it is hereby
ORDERED that petitioner's Motion for Reconsideration of Order (Doc. 60) filed July 13, 2022, is denied.