Opinion
15824-19
09-08-2021
Jaymie Alexander Smith, Petitioner, v. Commissioner of Internal Revenue, Respondent
ORDER OF DISMISSAL AND DECISION
Joseph H. Gale Judge
This case was calendared for trial at the trial session commencing October 19, 2020, in San Francisco, California. On September 23, 2020, respondent filed a Status Report representing that the parties had reached a basis of settlement with respect to the deficiency determined for petitioner's taxable year 2016. The Court accordingly directed the parties to file a proposed stipulated decision or a stipulation of settled issues by October 14, 2020. Respondent thereafter sought and was granted two extensions of time to prepare and file the stipulated decision. Respondent subsequently advised the Court in a Status Report filed February 17, 2021, that although he had mailed a proposed decision document to petitioner on December 22, 2020, he had received neither a signed copy of the decision from petitioner nor any response to a voicemail message he left for petitioner. By Order served February 24, 2021, the Court directed that no later than March 19, 2021, the parties were to file a joint proposed stipulated decision or, in the alternative, respondent was to file a motion to dismiss this case for failure to properly prosecute.
By Order served April 5, 2021, the Court dismissed this case for lack of jurisdiction to the extent that the Petition purported to seek redetermination of a deficiency for petitioner's taxable year 2015.
On March 17, 2021, respondent filed a Motion to Dismiss for Failure to Properly Prosecute (Motion to Dismiss), wherein he requests that this case be dismissed for failure to properly prosecute and that a decision be entered sustaining a deficiency for petitioner's 2016 taxable year in the amount of $2, 577, as determined in the notice of deficiency, and further finding that petitioner has made an overpayment for 2016 in the amount of $295.26. The Court thereafter on April 2, 2021, issued an Order to Show Cause directing petitioner to file, on or before May 3, 2021, a response in writing showing cause why respondent's Motion to Dismiss should not be granted and this case should not be dismissed for failure to properly prosecute. The Order to Show Cause advised petitioner that he could avoid dismissal for failure to properly prosecute by signing and returning to respondent's counsel before May 3, 2021, the decision document respondent's counsel had previously provided to him. The copy of the Order to Show Cause mailed to petitioner at the address listed in the Petition was not returned. To date, petitioner has not responded to the Order to Show Cause.
Respondent's Motion to Dismiss alleges, and petitioner has not disputed, that subsequent to the filing of the Petition, petitioner reached a basis of settlement with an Internal Revenue Service Appeals Officer who was assigned to this case.Under the proposed settlement, petitioner agreed to concede the full amount of the deficiency and respondent agreed that petitioner made an overpayment for the year at issue. In the course of preparing a stipulated decision reflecting that agreement, however, respondent's counsel discovered that the Appeals Officer's calculation of petitioner's tax liability for the year at issue had erroneously double-counted petitioner's withholding credits. Counsel for respondent thereafter discussed the error with petitioner, who orally agreed to a reduced overpayment amount, and counsel then mailed a proposed stipulated decision to petitioner. On February 22, 2021, petitioner advised respondent's counsel that he had received the proposed stipulated decision, but asked counsel to send another copy via email. Respondent's counsel subsequently made several unsuccessful attempts to contact petitioner by telephone and by email, but petitioner has not responded to respondent's repeated attempts at communication. To date, the parties have not filed a proposed stipulated decision.
Respondent's specific allegations concerning the proposed settlement and petitioner's failure to cooperate in reaching a final resolution of this case are detailed in the Motion to Dismiss, which petitioner had an opportunity to dispute by responding to the Order to Show Cause. Given petitioner's failure to dispute respondent's allegations, and the absence of any contrary evidence, we treat them as established for purposes of the Motion to Dismiss.
The Court may dismiss a case at any time and enter a decision against the taxpayer for failure properly to prosecute his case, failure to comply with the Rules of this Court or any order of the Court, or for any cause which the Court deems sufficient. Rule 123(b); Stearman v. Commissioner, 436 F.3d 533, 535-537 (5th Cir. 2006), aff'g T.C. Memo. 2005-39; Bauer v. Commissioner, 97 F.3d 45, 48-49 (4th Cir. 1996); Edelson v. Commissioner, 829 F.2d 828, 831 (9th Cir. 1987), aff'g T.C. Memo. 1986-223. Although we advised petitioner that he could avoid dismissal by signing the proposed decision document and returning it to respondent, he has not done so. Petitioner has also failed to comply with the Court's Order to Show Cause directing him to file a response to respondent's Motion to Dismiss. We therefore conclude that petitioner does not wish to continue prosecuting this case or to dispute the terms of the settlement reflected in the proposed decision document that respondent sent to him (and which he acknowledged receiving). We will accordingly dismiss petitioner's case for failure to properly prosecute.
All Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code of 1986, as amended and in effect for the year at issue.
In the notice of deficiency, respondent determined a deficiency of $2, 577 in petitioner's 2016 Federal income tax. Respondent further determined therein, among other things, that petitioner received but failed to report $11, 081 of taxable retirement income.
The Commissioner's determinations in a notice of deficiency are generally entitled to a presumption of correctness. See Rule 142(a). In a case involving unreported income, as in the instant matter, the Court of Appeals for the Ninth Circuit, where appeal in this case lies absent a stipulation to the contrary, has held that the presumption of correctness applies once the Commissioner makes at least a minimal evidentiary showing connecting the taxpayer to the income-producing activity or the receipt of funds. See, e.g., Hardy v. Commissioner, 181 F.3d 1002, 1004-1005 (9th Cir. 1999), aff'g T.C. Memo. 1997-97; Weimerskirch v. Commissioner, 596 F.2d 358, 360-361 (9th Cir. 1979), rev'g 67 T.C. 672 (1977). A notice of deficiency alone may satisfy the burden of production if it indicates that a third party paid the taxpayer the amount in question and reported the payment to the Commissioner. See Banister v. Commissioner, T.C. Memo. 2008-201, 2008 WL 3925877, at *2, aff'd, 418 Fed.Appx. 637 (9th Cir. 2011). Once the Commissioner satisfies his burden of production, the burden shifts to the taxpayer to prove that the Commissioner's determinations are arbitrary or erroneous. See, e.g., Walquist v. Commissioner, 152 T.C. 61, 67-68 (2019). In this case, the notice of deficiency itself satisfies respondent's burden of production since it indicates that respondent determined the specific amount of the unreported retirement income based on an information return filed by a third-party payer. The presumption of correctness accordingly attaches to the Commissioner's determinations in the notice of deficiency.
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, we find that the provision does not apply 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. Moreover, petitioner has not disputed respondent's allegation in the Motion to Dismiss that, in reaching a basis of settlement in this case, petitioner conceded the full amount of the deficiency. We accordingly find that petitioner has abandoned any "reasonable dispute with respect to any item of income reported on an information return", as required under sec. 6201(d), that he otherwise raised in the Petition.
All of the material allegations set forth in the Petition in support of the assignments of error have been denied in respondent's Answer. Petitioner has not claimed or shown entitlement to any shift in the burden of proof under section 7491(a). See sec. 7491(a)(2)(B). Accordingly, the burden of proof rests with petitioner concerning any error in the deficiency determination. As petitioner has adduced no evidence in support of the assignments of error in the Petition, he has failed to satisfy his burden of proof. We thus sustain the deficiency in full.
The foregoing considered, it is
ORDERED that the Court's Order to Show Cause served April 2, 2021, is hereby made absolute. It is further
ORDERED that respondent's Motion to Dismiss for Failure to Properly Prosecute, filed March 17, 2021, is granted, and this case is hereby dismissed for failure to properly prosecute. It is further
ORDERED and DECIDED that there is a deficiency in petitioner's 2016 Federal income tax due in the amount of $2, 577, and an overpayment due to petitioner in the amount of $295.26.