ANNA E. CHARLTON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent, UNITED STATES TAX COURT - MEMORANDUM DECISION, T.C. Memo. 2007-122, Docket No. 7987-06., Filed May 16, 2007
ANNA E. CHARLTON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
UNITED STATES TAX COURT - MEMORANDUM DECISION
T.C. Memo. 2007-122
Docket No. 7987-06.
Filed May 16, 2007.
Anna E. Charlton, pro se.
James H. Harris, Jr. , for respondent.
GALE, Judge : Respondent, by notice of deficiency issued on January 10, 2006, determined a Federal income tax deficiency of $27,595,308, an addition to tax for failure to file timely under section 6651(a)(1) 1 of $6,208,944, and an addition to tax for failure to pay estimated tax under section 6654 of $922,946 for petitioner's 2002 taxable year. In that notice, respondent also determined that petitioner is liable for the addition to tax under section 6651(a)(2) for failure to pay timely in an amount to be calculated at a later date. 2
1 ═ Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986 as in effect for the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
2 ═ Respondent has since conceded (by amended answer, discussed infra ) petitioner's liability for the addition to tax under sec. 6651(a)(2).
On May 1, 2006, petitioner commenced the present case by filing a timely petition contesting respondent's determinations set forth in the notice of deficiency. The petition alleges that respondent erred in computing petitioner's taxable gain from certain stock sales during 2002 by failing to subtract petitioner's bases in those stocks from the sale proceeds. The petition also alleges that petitioner filed a joint 2002 Federal income tax return with her husband, Gary L. Francione, although respondent has no record of receiving any return from petitioner for 2002. Petitioner resided in Newton Square, Pennsylvania at the time the petition was filed.
═ On August 18, 2006, our standing pretrial order and the notice setting case for trial, scheduling trial in this case for January 22, 2007, were served on petitioner by certified mail at the address she provided in her petition. That mailing was not returned by the U.S. Postal Service (USPS). On August 25, 2006, the Court issued an order to file a joint status report to both parties. This order was served on petitioner on August 28, 2006, by certified mail at the address she provided in her petition. That mailing was not returned by the USPS. Pursuant to the Court's order, respondent filed respondent's status report on September 25, 2006, in which he indicated he had been unsuccessful in contacting petitioner and was therefore filing a separate status report. Petitioner did not submit a status report.
This case was called from the calendar for the trial session of the Court that commenced on January 22, 2007, at Philadelphia, Pennsylvania. There was no appearance by or on behalf of petitioner. Counsel for respondent appeared and filed a motion to dismiss for lack of prosecution (motion to dismiss) and a motion for leave to file amended answer (motion to amend), and lodged an amended answer with the Court. In his proposed amended answer, respondent conceded petitioner's liability for the section 6651(a)(2) addition to tax and, because that concession removed the limitation imposed by section 6651(c)(1), respondent adjusted petitioner's liability for the addition to tax under section 6651(a)(1). On January 31, 2007, the Court issued an order to show cause directing petitioner to show cause in writing, on or before February 20, 2007, why respondent's motion to dismiss and motion to amend should not be granted.
On January 30, 2007, the Court served a copy of respondent's motion to dismiss on petitioner by certified mail at the address she provided in her petition. The copy was returned "Unclaimed" by the USPS on February 17, 2007, after notices to the addressee were given on February 2 and 7, 2007. On January 31, 2007, the order to show cause was served on petitioner by certified mail at the address she provided in her petition. The order to show cause was returned "Unclaimed" by the USPS on February 21, 2007, after notices to the addressee were given on February 5 and 14, 2007.
The Court may dismiss a case at any time and enter a decision against the taxpayer for failure properly to prosecute his or her 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); Edelson v. Commissioner , 829 F.2d 828, 831 (9th Cir. 1987), affg. T.C. Memo. 1986-223; McCoy v. Commissioner , 696 F.2d 1234, 1236 (9th Cir. 1983), affg. 76 T.C. 1027 (1981). In addition, the Court may dismiss a case for lack of prosecution if the taxpayer inexcusably fails to appear for trial and does not otherwise participate in the resolution of his or her claim. Rule 149(a); Brooks v. Commissioner , 82 T.C. 413 (1984), affd. without published opinion 772 F.2d 910 (9th Cir. 1985).
Petitioner's failure to appear for trial is unexcused. In addition, petitioner has failed to properly prosecute this case in several other respects. Petitioner disregarded several orders of this Court including: (1) Our standing pretrial order, served August 18, 2006, which required her to submit a pretrial memorandum and to participate in the stipulation process; (2) our August 25, 2006 order to file a joint status report; and (3) our January 31, 2007 order to show cause. The USPS disposition of the two certified mailings sent by the Court to petitioner in January 2007 indicates that petitioner is now refusing to claim certified mail sent to her by the Court. Petitioner has also ignored attempts by the Court to initiate telephone conference calls by leaving recorded messages with petitioner at the telephone number she provided in her petition; these calls were intended to explore some means of resolving this case besides default. In his motion to dismiss, respondent avers, and petitioner has not disputed, that petitioner: (1) Has repeatedly failed to respond to respondent's attempts to contact her; (2) has not complied with any of respondent's requests for information; and (3) has failed to work with respondent's counsel to prepare this case for trial.
In her petition, petitioner does not dispute receipt of the income determined but instead alleges that the deficiency is attributable to respondent's failure to account for petitioner's bases in connection with certain sales of stock. Petitioner, however, bears the burden of proof with respect to her averments of basis. See Waterman v. Commissioner , T.C. Memo. 1990-497. 3 Petitioner has been afforded a reasonable opportunity--indeed, multiple opportunities--to offer some proof of her claimed bases in these proceedings. She has repeatedly failed to do so, and the resulting default judgment is a consequence of her own making.
3 ═ Petitioner has not claimed, nor shown entitlement to, any shift in the burden of proof to respondent pursuant to sec. 7491(a).
In his motion to amend, respondent concedes petitioner's liability for the section 6651(a)(2) addition to tax for failure to pay timely. Consequently, the section 6651(c)(1) limitation no longer applies with respect to the addition to tax under section 6651(a)(1), resulting in a $689,883 increase in the section 6651(a)(1) addition asserted in the amended answer. Petitioner has failed to respond to respondent's motion to amend, and in any event, we conclude that petitioner will not be prejudiced if leave is granted because the amendment represents a computational adjustment only and no new issue is raised by the amended answer. We shall therefore grant respondent's motion to amend.
All of the material allegations set forth in the petition in support of assignments of error were denied in respondent's answer. Accordingly, the burden of proof rests with petitioner concerning any error in the deficiency respondent determined for the 2002 taxable year, and petitioner has adduced no evidence in support of the assignments of error made in the petition.
In his amended answer, respondent asserted additions to tax under sections 6651(a)(1) and 6654(a) for which, pursuant to section 7491(c), respondent generally bears the burden of production to show that imposition of the additions to tax is appropriate. See Higbee v. Commissioner , 116 T.C. 438, 446 (2001). Rule 34(b)(4) provides that a petition in a deficiency action shall contain clear and concise assignments of "each and every error" in the Commissioner's determination as well as statements of the facts upon which the taxpayer bases the assignments of error. Where the taxpayer has not made the foregoing specific allegations, the Commissioner incurs no burden of production with respect to the additions to tax that have been determined. Funk v. Commissioner , 123 T.C. 213, 215 (2004).
The petition in this case does not contain any specific allegations regarding the additions to tax or of facts to support any such allegations. Therefore, respondent has no burden of production under section 7491(c). Funk v. Commissioner , supra at 218; Swain v. Commissioner , 118 T.C. 358, 364-365 (2002); Carlo v. Commissioner , T.C. Memo. 2005-165; Mitchell v. Commissioner , T.C. Memo. 2005-85.
Even if it were assumed that respondent bears the burden of production with respect to the additions to tax, respondent has proffered sufficient evidence to meet that burden. Respondent submitted, as exhibits to his motion to dismiss, petitioner's transcripts of account for 2001 and 2002. Petitioner's transcript of account for 2002 indicates that a return was due from petitioner on April 15, 2003, but no return was filed. This evidence is sufficient to satisfy respondent's burden of production under section 7491(c) with respect to the section 6651(a)(1) addition to tax determined in this case, see Wheeler v. Commissioner , 127 T.C. 200, 208 (2006), and petitioner has not presented any evidence indicating reasonable cause for her failure to file a return for 2002, see sec. 6651(a)(1); Rule 142(a)(1); Higbee v. Commissioner , supra at 446-447 (noting that the taxpayer has the burden of proof regarding reasonable cause). 4
4 ═ The sec. 6651(a)(1) addition at issue consists of an amount determined in the notice of deficiency ($6,208,944) and an additional amount asserted in the amended answer ($689,883). The latter results from the elimination of the sec. 6651(c)(1) limitation occasioned by respondent's concession of the sec. 6651(a)(2) addition. Because the additional amount asserted in the amended answer is attributable solely to a computational adjustment resulting from respondent's concession of the sec. 6651(a)(2) addition, respondent has established that petitioner is liable for a sec. 6651(a)(1) addition to tax in an amount greater than respondent determined in the notice of deficiency. See Howard v. Commissioner , T.C. Memo. 2005-144; cf. Lenihan v. Commissioner , T.C. Memo. 2006-259 (Commissioner conceded he bore burden of proof with respect to increase in sec. 6651(a)(1) addition asserted in answer that was attributable to asserted increase in deficiency).
With respect to the section 6654(a) addition to tax, petitioner's transcripts of account indicate that she also failed to file a return in 2001. For 2002, petitioner made one payment of $32,000 on April 15, 2003, but had no other credits or payments. The deficiency determined for 2002 is $27,595,308. Petitioner's $32,000 single payment falls well short of the estimated tax payment petitioner was required to make for 2002. See sec. 6654(d)(1)(B)(i). In the absence of any evidence that respondent's determination is incorrect or that a section 6654(e) exception applies, we are satisfied that respondent has met his burden of production under section 7491(c) with respect to the section 6654(a) addition to tax determined in this case. See Wheeler v. Commissioner , supra at 211-212.
We accordingly conclude that respondent's motion to dismiss should be granted, and a decision in respondent's favor should be entered.
═ To reflect the foregoing, ═
An appropriate order and decision will be entered.