Opinion
6036-21
06-01-2022
ERICK K. PAKKILA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge
From the petition (Doc. 1) and the IRS's notice of deficiency (Doc. 4, Ex. A), it appears that in 2017 petitioner Erick K. Pakkila received compensation that was reported to him and to the IRS on Forms W-2 and 1099-Misc, but that he did not file a tax return. The IRS issue a notice of deficiency in November 2020 determining his liability for income tax, and Mr. Pakkila filed a petition with the Tax Court in February 2021 that stated: "I am late in filing these taxes. Once I file it would reduce the amount [of tax] to very little if any after my deductions. I am working on getting this year filed asap."
However, in July 2021 (i.e., after filing his petition) Mr. Pakkila received from the Social Security Administration (not the IRS) a letter (later submitted as Doc. 12, p. 16), which stated: "Based on information provided to us from the Internal Revenue Service, we are reducing the amount of your self-employment income on your Social Security earnings record from $127,200.00 to $0.00 for tax year 2017." (Mr. Pakkila apparently thought that this SSA letter about social security benefits indicated that he no longer had a dispute with the IRS about his taxes. As we explain briefly below, that is not the case.)
This case was set for trial at the Court's Boston trial session beginning June 6, 2022. On May 23, 2022, the Commissioner submitted a motion to dismiss the petition for failure to prosecute, alleging that petitioner Erick K. Pakkila had failed to respond to attempted communications by counsel for the Commissioner and had not provided documentation to support his position (such as substantiation for the deductions to which his petition had referred).
The Court was able to hold a telephone conference with the parties on May 20, 2022, during which Mr. Pakkila apologized for his poor communication and explained that the SSA's letter had caused him to think that this dispute had been resolved. We accept his explanation as the reason for his non-communication. We instructed him to provide to counsel for the Commissioner the documentation that would prove his entitlement to deductions and we reminded the parties of the upcoming July 6 trial session.
The SSA's letter does not eliminate the need for trial of this case. Our country's social security system has parallel provisions providing for social security benefits (paid by the SSA and computed by reference income reported to the SSA) and for funding those benefits with the payment of taxes (collected by the IRS and computed by reference to income). While these two sets of provisions are parallel to each other, they operate distinctly. It appears that the SSA informed Mr. Pakkila that he was not being credited (for benefits purposes) with income from 2017; but his social security benefits are not at issue here. Rather, at issue here are his taxes, and the IRS has never disclaimed its deficiency determination. We therefore must decide what his taxable income, deductions, and tax liability were for 2017. That (and not social security benefits) will be the subject of the upcoming trial in this case.
It now appears, however, that we must postpone the upcoming trial session because of the currently high coronavirus transmission rate in Boston. But we do not want to lose whatever momentum may have developed in the preparation of this case for trial, so we will give instructions about further proceedings. It is
ORDERED that the Commissioner's motion to dismiss for failure to properly prosecute is denied. it is further
ORDERED that this case is continued from the Boston session beginning June 6, 2022; so this case will not be called at that session, and the parties need not appear; but the judge signing this order retains jurisdiction over this case. It is further
ORDERED that, no later than June 17, 2022, Mr. Pakkila shall provide to his opponent all the documentation on which he relies to prove his deductions. It is further
ORDERED that, no later than July 15, 2022, the parties shall file a joint status report (or, if that is not expedient, then separate reports) recommending a schedule for further proceedings.