Opinion
6143-21S
02-08-2024
TYESHEIA TODD, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Adjustments in Deficiency Notice Taxpayer's Position IRS Position Date Purpose of Contact C D
ASHLEIGH E. EDWARDS
ASHLEIGH E. EDWARDS
ORDER TO SHOW CAUSE
LEWIS R. CARLUZZO CHIEF SPECIAL TRIAL JUDGE
This case for the redetermination of a deficiency is before the Court on respondent's motion to dismiss, filed January 12, 2024, and heard in Atlanta, Georgia, on February 5, 2024. Counsel for respondent appeared and argued in support of the motion. There was no appearance by or on behalf of petitioner.
Premises considered, and for cause set forth more fully in the transcript of the above-referenced proceeding, it is
ORDERED that the Clerk of the Court attach a copy of respondent's motion to the copy of this Order to Show Cause served upon petitioner. It is further
ORDERED that the respondent's motion is taken under advisement. It is further
ORDERED that on or before March 8, 2024, petitioner show cause in writing why respondent's motion should not be granted.
Petitioner is advised that the failure to respond to this Order to Show Cause could result in the entry of decision against him as requested in the motion.
Motion to Dismiss for Failure to Properly Prosecute
MOTION TO DISMISS FOR FAILURE TO PROPERLY PROSECUTE
RESPONDENT MOVES, pursuant to Tax Court Rule 123, that the Court dismiss this case for failure to properly prosecute, or in the alternative pursuant to Tax Court Rule 50, enter a decision in this case and find in its order that there is a deficiency in tax due from petitioner as follows:
Tax Year
Deficiency
Penalty / Addition to Tax I.R.C. § 6662(a
2017
$8,010.00
$1,582.00
2018
$6,718.00
$1,318.20
IN SUPPORT THEREOF, respondent respectfully states:
1. This case currently is set for trial on the Atlanta, Georgia trial session beginning February 5, 2024. Respondent's Counsel does not expect that an appearance will be made by or on behalf of petitioner.
I. Adjustments asserted in the notice of deficiency
2. Petitioner is challenging the adjustments set forth in the notice of deficiency dated February 4, 2021, attached as Exhibit A. This notice of deficiency was mailed from respondent's Baltimore, Maryland office. The notice of deficiency sets forth the following adjustments petitioner disputes, as noted below:
Year
Adjustments in Deficiency Notice
Amount
Taxpayer's
Position
IRS Position
2017
Schedule C Rent/Lease
$2,974.00
May dispute entitlement.
Expenses not substantiated.
2017
Schedule C Contract Labor
$2,940.00
May dispute entitlement.
Expenses not substantiated.
2017
Schedule C Returns/ Allowan ces
$3,001.00
May dispute entitlement.
Expenses not substantiated.
2017
Schedule C Gross Receipts or Sales
$9,793.00
Did not dispute income in petition.
Not in dispute.
2017
Thrift Savings Plan
$1,000.00
Did not dispute income in petition.
Not in dispute.
2017
Unemployment Compensation
$3,960.00
Did not dispute income in petition.
Not in dispute.
2017
Schedule C Supplies
$1,000.00
May dispute entitlement.
Expenses not substantiated.
2017
SelfEmployment Adjustment
($542.00)
Did not dispute in petition.
Computational adjustment.
2018
Schedule C Contract Labor
$4,400.00
May dispute entitlement.
Expenses not substantiated.
2018
Schedule C Returns/ Allowances
$6,793.00
May dispute entitlement.
Expenses not substantiated.
2018
Schedule C Gross Receipts or Sales
$9,755.00
Did not dispute income in petition.
Not in dispute.
2018
Unemployment Compensation
$660.00
Did not dispute income in petition.
Not in dispute.
2018
Schedule C Supplies
($1,730.00)
May dispute entitlement.
Expenses not substantiated.
2018
SelfEmployment Adjustment
($404.00)
Did not dispute in petition.
Computational adjustment.
2018
Schedule C Office Expenses
$2,900.00
May dispute entitlement.
Expenses not substantiated.
2018
Other Income
$50.00
Did not dispute income in petition.
Not in dispute.
2018
Schedule C Repairs and Maintenance
$4,597.00
May dispute entitlement.
Expenses not substantiated.
2018
Schedule C Advertising
$1,717.00
May dispute entitlement.
Expenses not substantiated.
2018
Qualified Business Income Deduction
($1,063.00)
Did not dispute adjustment in petition.
Computational adjustment.
3. In addition, petitioner is liable for accuracy-related penalties under I.R.C. § 6662(a), in the amount of $1,582.00 for taxable year 2017 and $1,318.00 for taxable year 2018. The penalty was approved by the supervisor on February 14, 2020, which was before the penalty was assessed and was before the notice of deficiency was issued. The penalty approval is attached as Exhibit B.
II. Positions of the parties
4. Petitioner does not dispute receiving, for taxable year 2017, $9,793.00 in additional gross receipts, $1,000.00 from a retirement distribution, and $3,960.00 in unemployment income. Petitioner does not dispute receiving, for taxable year 2018, $9,755.00 in additional gross receipts, $660.00 in unemployment income, and $50.00 in other income.
5. Despite numerous requests, petitioner has failed to provide any documentation substantiating the expenses petitioner claimed on Schedule C.
III. Contacts and Attempts to Contact Petitioner
6. The table below sets out the attempts of respondent's counsel to contact petitioner.
Date
Letter/ Phone
Purpose of Contact
Attached Exhibits
December 6, 2023
Phone
Phone call to petitioner (number from petition) to setup a time for a conference to discuss case. Left voicemail asking for a call back.
December 7, 2023
Phone
Phone call to alternate phone number for petitioner obtained from an Accurint search. Person answering stated wrong number.
December 7, 2023
Phone
Phone call to a second alternate phone number for petitioner obtained from an
Accurint search. Left voicemail asking for a call back.
December 8, 2023
Phone
Phone call to a second alternate phone number for petitioner obtained from an Accurint search. Left voicemail asking for a call back.
December 8, 2023
Phone
Phone call to a phone number petitioner listed in petition. Person answering disconnected call after counsel's introduction.
December 8, 2023
Letter
Letter requesting case conference on December 21, 2023 and for petitioner to provide records.
C
December 21, 2023
Phone
Phone call to petitioner at number listed in the petition for case conference. Left voicemail asking for a callback.
December 21, 2023
Phone
Phone call to petitioner at second alternate phone number for case conference. Left voicemail asking for a callback.
December 21, 2023
Phone
Received phone call from phone number listed in petition. Verified phone number. Person calling was not the taxpayer and stated no one else uses the phone and speaker had phone number for over a decade.
January 11, 2024
Phone
Phone call to petitioner's second alternate phone number. Left message for a call back.
January 11, 2024
Generic email to petitioner's email listed on petition requesting petitioner contact counsel.
D
IV. Burden of Proof
7. All the material allegations of fact set forth in the petition have been denied by respondent's answer. No issues have been raised upon which the ultimate burden of proof is upon respondent and respondent has not conceded any error assigned in the petition other than conceding the penalty.
8. Petitioner does not dispute the receipt of the unreported Schedule C business income, unemployment compensation, or other income asserted in the notice of deficiency. Under I.R.C. § 6201(d), the burden of production on income adjustments based on third-party information returns only shifts to respondent if a taxpayer asserts a reasonable dispute with respect to the income reported on an information return and the taxpayer has fully cooperated with the respondent. See McQuatters v. Commissioner, T.C. Memo. 1998-88.
9. Accordingly, respondent has met its burden connecting petitioner with the unreported income and respondent's determination is presumptively correct. I.R.C. § 6201(d); Rapp v. Commissioner, 774 F.2d 932, 935 (9th Cir. 1985); Edwards v. Commissioner, 680 F.2d 1268, 1270-71 (9th Cir. 1982); Weimerskirch v. Commissioner, 596 F.2d 358, 360-62 (9th Cir. 1979), rev'g 67 T.C. 672 (1977); Del Monico v. Commissioner, T.C. Memo. 2004-92; McQuatters v. Commissioner, T.C. Memo. 1998-88.
10. Deductions are allowed solely as a matter of legislative grace and taxpayers bears the burden of proving entitlement to them. Tax Court Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). The taxpayer also bears the burden of substantiating claimed deductions. I.R.C. § 6001; Hradesky v. Commissioner, 65 T.C. 87, 89 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).
11. Petitioner has not asserted, and the burden of proof has not shifted to respondent, under I.R.C. § 7491(a) in this case where petitioner has failed to cooperate with reasonable requests of respondent for information and documents. See I.R.C. § 7491(a)(2)(B); Creen v. Commissioner, T.C. Memo. 2003-27.
V. Discussion
12. Gross income is broadly defined as all income from whatever source derived, and statutory exclusions from income are to be narrowly construed. I.R.C. § 61; e.g., Commissioner v. Schleier, 515 U.S. 323, 328 (1995). Petitioner does not dispute receipt of the unreported business income.
13. The Court may dismiss a petition "[f]or failure of a petitioner properly to prosecute or to comply with these Rules or any order of the Court…" Tax Court Rule 123(b).
14. Counsel for respondent has been unable to speak with petitioner after multiple attempts. Counsel for respondent informed petitioner via letter of petitioner's obligations and opportunity to substantiate the claims made in the petition, but petitioner continuously failed to provide any substantiation.
15. Petitioner did respond to some extent to the Appeals Officer assigned to consider settlement of the case, but the case was not able to be resolved.
16. Respondent's counsel has reached out to petitioner multiple times in order to resolve this case or prepare it for trial, but petitioner has not responded.
VI. Conclusion
17. Respondent's counsel does not anticipate that petitioner will appear when the case is called from the calendar on February 5, 2023, due to ignoring prior attempts at contact to work to resolve the case.
18. This motion to dismiss is being filed in lieu of a pretrial memorandum.
19. Despite repeated attempts at contact, respondent's counsel was not able to reach petitioner and thus was not able to obtain petitioner's position on this motion.
WHEREFORE, it is prayed that this motion be granted.
WILLIAM M. PAUL Acting Chief Counsel Internal Revenue Service
OF COUNSEL:
JOSEPH W. SPIRES
Division Counsel (SB/SE)
KATHRYN A. MEYER
Area Counsel, Area 7 (SB/SE)
JANICE B. GEIER
Associate Area Counsel, Portland (SB/SE)
(Exhibit A Omitted)