Opinion
6374-24S
06-04-2024
ROBERT SHAVER & LINDA SHAVER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Kathleen Kerrigan Chief Judge
By Order to Show Cause served April 23, 2024, the Court directed petitioners to show cause in writing why the Court should not issue an order directing that the small tax case designation be removed in this case and that the proceedings not be conducted as a small tax case. On June 3, 2024, the Court received and filed petitioners' Response.
In their Response, petitioners state that they "do not think that the [I.R.C. section 6662(a)] penalty [asserted in the notice of deficiency for the taxable year 2021] should be included when determining whether the case should be conducted under the small tax case procedures." However, the Internal Revenue Code specifically provides that the amount of any deficiency placed in dispute includes such penalties. See I.R.C. § 7463(a), (e). Consequently, the penalty asserted in the notice must be included when determining the amount of the deficiency placed in dispute for 2021.
Additionally, petitioners state that, after a recent payment of $14,664 is credited to their income tax for 2021, "the total balance due, including penalties," for that year would be less than $50,000. But whether a case is eligible for the small tax case procedures is based on "the amount of the deficiency placed in dispute" rather than the current balance owed for each taxable year. I.R.C. § 7463(a)(1). The notice in this case determined a deficiency of $49,587 and a penalty of $9,866 in petitioners' income tax for 2021; accordingly, absent a concession by petitioners, the amount of the deficiency placed in dispute for that year is $59,453. It is not clear to the Court whether petitioners' Response indicates that they no longer dispute $14,664 of the (total) amount of the deficiency (i.e., including the penalty) set forth in the notice of deficiency for 2021. In the absence of any clear concession by petitioners, we will direct them to file a supplement as set forth below.
Upon due consideration of the foregoing, it is
ORDERED that, on or before June 26, 2024, petitioners shall file a supplement to their above-referenced Response and in such supplement shall state the amount of the deficiency (including the I.R.C. section 6662(a) penalty) for the taxable year 2021 that they dispute in this case.