Opinion
36828-21L
09-13-2022
LARNELL NOLAN & NATASHA NOLAN, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
L. Paige Marvel, Judge
On August 9, 2022, petitioners filed a Motion for Leave to File First Amendment to First Amended Petition. The Court directed respondent to file a response to petitioners' motion by August 30, 2022. On August 30, 2022, respondent filed his Response to Motion for Leave to File First Amendment to First Amended Petition. Petitioners now seek leave to amend their First Amended Petition. Rule 34(b)(4) and (b)(5) provides that petitions shall contain "[c]lear and concise assignments of each and every error which the petitioner alleges to have been committed by the Commissioner in the determination of the deficiency or liability" and "[c]lear and concise lettered statements of the facts on which petitioner bases the assignments of error, except with respect to those assignments of error as to which the burden of proof is on the Commissioner."
All Rule references are to the Tax Court Rules of Practice and Procedure.
Rule 41(a) generally provides that leave to amend shall be given freely when justice so requires. Although the proposed amendment that petitioners have lodged with the Court is arguably more specific, clear and concise than the First Amended Petition, the Court is not convinced that justice requires that petitioners be granted leave to amend their First Amended Petition. Our reasons are twofold:
First, part of petitioners' proposed amendment contains an assignment of error relating to petitioners' alleged liability for a frivolous return penalty. As explained in the Court's Order denying petitioners' Motion to Dismiss that is being filed concurrently herewith, the Court lacks jurisdiction in this case to consider petitioners' claims relating to their alleged liability for a frivolous return penalty because the notice of determination at issue in this case does not contain any determination with respect to the frivolous return penalty. Permitting an amendment to assert an assignment of error related to the frivolous tax return penalty that the Court cannot decide in this case would therefore be futile. See Foman v. Davis, 371 U.S. 178, 182 (1962).
Second, as to the portion of the proposed amendment that concerns petitioners' income tax liabilities, the Court finds that petitioners' Motion for Leave to File First Amendment to First Amended Petition is attended by undue delay, and prejudice to respondent. See id. The Court's trial session in Philadelphia, Pennsylvania, at which petitioners' case will be called, is scheduled to begin on October 31, 2022. The Court's Standing Pretrial Order, issued on July 1, 2022, advised petitioners that the deadline for filing a motion for summary judgment is 60 days before the trial session (a deadline that has already passed) and that the deadline for motions related to discovery or stipulations is 45 days before the trial session (a deadline which is imminently approaching). Respondent would be prejudiced by the acceptance of petitioners' proposed amendment as it relates to income tax liabilities, which asserts three grounds under "Assignment of Error 2 - Erroneous Income Assessment" and eight "Facts in Support of Error 2" that seem to be more akin to additional assignments of error rather than supporting facts, this close to the beginning of trial since additional discovery may be necessary. In addition, these grounds for challenging respondent's notice of determination, whether denominated as assignments of error or "Facts in Support," were not fairly deducible from petitioners' First Amended Petition, which primarily seems to address the events surrounding petitioners' liability for a frivolous tax return penalty and only obliquely addresses petitioners' income tax liabilities. The obligation to plead assignments of error and the facts supporting them clearly and concisely is a basic obligation with which petitioners were required to comply from the time they first filed their case over nine months ago. Especially given that petitioners have already been granted leave to amend their Petition once, any delay in complying with Rule 34(b)(4) and (b)(5) is unjustified and precludes additional amendment so close to trial. Therefore, it is
ORDERED that petitioners' Motion for Leave to File First Amendment to First Amended Petition is denied.