1All amounts have been rounded to the nearest dollar.

2Respondent concedes that petitioner is entitled to deduct

(continued...)

T.C. Memo. 2010-155

UNITED STATES TAX COURT

ARNOLD FREEDMAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 7471-08. Filed July 21, 2010.

Arnold Freedman, pro se.

Michelle L. Maniscalco, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

WELLS, Judge: Respondent determined a deficiency of $2,0251

in petitioner’s Federal income tax for his 2005 tax year. After

concessions,2 the issues for decision are: (1) Whether the Court
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2(...continued)

$1,833 in unreimbursed employee expenses related to education

costs for taxable year 2005. 

3Unless otherwise indicated, all Rule references are to the

Tax Court Rules of Practice and Procedure, and all section

references are to the Internal Revenue Code, as amended and in

effect for the year in issue.

4Respondent reserved relevancy and materiality objections to

(continued...)

may look behind the notice of deficiency to determine whether it

is valid; (2) whether petitioner or respondent bears the burden

of proof pursuant to sections 7491(a)3 and 6201(d); (3) whether

petitioner is entitled to deductions, pursuant to section 213,

for medical and dental expenses of $9,871, subject to the 7.5-

percent-of-adjusted-gross-income limitation of section 213(a), as

itemized deductions for tax year 2005; (4) whether petitioner is

entitled to deductions, pursuant to section 170, for charitable

contributions of $3,314 as itemized deductions for tax year 2005;

and (5) whether petitioner is entitled to a deduction, pursuant

to section 67(b), for miscellaneous expenses of $3,791 as a

miscellaneous itemized deduction, subject to the 2-percent

adjusted gross income limitation of section 67(a), for tax year

2005. 

FINDINGS OF FACT

Some of the facts and certain exhibits have been stipulated.

The stipulations of fact are incorporated in this opinion by

reference and are found accordingly.4
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4(...continued)

the examining officer’s activity report and a letter sent by

petitioner to Ms. Robles, the examining officer. Fed. R. Evid.

402 provides the general rule that all relevant evidence is

admissible, while evidence which is not relevant is not

admissible. Fed. R. Evid. 401 defines relevant evidence as

“evidence having any tendency to make the existence of any fact

that is of consequence to the determination of the action more

probable or less probable than it would be without the evidence.”

We find that the examining officer’s activity report and

petitioner’s letter meet the threshold definition of relevant

evidence because they explain Ms. Robles’ investigation of

petitioner’s 2005 tax return, an issue in the instant case, and

therefore, are admissible.

Petitioner is employed by respondent as a taxpayer service

contact representative in respondent’s Brookhaven Service Center. 

At the time he filed the petition, petitioner lived in

Holtsville, New York. 

Petitioner filed his 2005 Federal income tax return and

claimed deductions on Schedule A, Itemized Deductions, totaling

$21,504. During 2007 respondent audited petitioner’s 2005

return. On September 20, 2007, Revenue Officer Robles (Ms.

Robles) requested information regarding petitioner’s deductions

for medical and dental expenses, charitable contributions, and

other itemized deductions. On September 27, 2007, petitioner

responded stating that he would need a month to gather

information from his insurance company. On October 17, 2007, Ms.

Robles sent petitioner Form 8111, Employee Notification Regarding

Union Representation. Petitioner never provided any of the
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requested documentation to Ms. Robles, and on November 20, 2007,

she closed the case. 

Petitioner worked in the same building as Ms. Robles, knew

of Ms. Robles, but did not have a personal relationship with Ms.

Robles. 

On January 11, 2008, respondent issued petitioner a notice

of deficiency disallowing petitioner’s deductions claimed on

Schedule A for medical and dental expenses of $9,871, charitable

contributions of $3,314, and miscellaneous expenses of $3,791. 

Petitioner timely filed a petition with this Court. 

OPINION

Generally, the Commissioner’s determination of a deficiency

is presumed correct, and the taxpayer has the burden of proving

it incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115

(1933).

Deductions are a matter of legislative grace, and taxpayers

bear the burden of proving their entitlement to the deductions

they claim. See Rule 142(a); INDOPCO, Inc. v. Commissioner, 503

U.S. 79 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435

(1934). Taxpayers are required to maintain records that are

sufficient to enable the Commissioner to determine their correct

tax liabilities. See sec. 6001; sec. 1.6001-1(a), Income Tax

Regs. In addition, taxpayers bear the burden of substantiating

the amounts and purposes of their claimed deductions. See
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Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam

540 F.2d 821 (5th Cir. 1976).

Petitioner argues that respondent failed to follow proper 

procedures outlined in the Internal Revenue Manual (IRM) for

Internal Revenue Service (IRS) employees and therefore that his

notice of deficiency is invalid. Petitioner also cites Scar v.

Commissioner, 814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855

(1983), for the proposition that failure to follow IRM procedures

invalidates a notice of deficiency. Finally, petitioner cites

section 7491(a) and section 6201(d), contending that respondent’s

“failure” to follow IRM procedures shifts the burden of proof on

all issues to respondent. Respondent argues that the notice of

deficiency is proper, that Scar is not applicable, and that

petitioner bears the burden of proof on all issues.

As a general rule, the Court will not look behind a notice

of deficiency to examine the evidence used, the propriety of the

Commissioner’s motives, or administrative policy or procedure

used in making the determination. Riland v. Commissioner, 79

T.C. 185, 201 (1982); Greenberg’s Express, Inc. v. Commissioner,

62 T.C. 324, 327 (1974). This Court has recognized an exception

to the general rule when there is substantial evidence of

unconstitutional conduct on the Commissioner’s part and the

integrity of the judicial process would be impugned if we were to

let the Commissioner benefit from such conduct. Greenberg’s
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5“Classification is the process of determining whether a

return should be selected for examination, what issues should be

examined, and how the examination should be conducted.” IRM pt.

4.1.5.1(2) (Oct. 24, 2006). 

Express, Inc. v. Commissioner, supra at 328. However, in the

circumstances where the exception applies, the Court will not

declare the notice of deficiency null and void. Id.; Lamport v.

Commissioner, T.C. Memo. 1983-629. 

The IRM sets forth procedures that should be followed during

audits of IRS employees. IRM pt. 4.2.6.2 (June 1, 2007). 

Standard procedures relating to examinations will apply to IRS

employees to the same extent that they apply to all other

taxpayers. Id. Additionally, IRS employees should not be given

preferential treatment, nor held to a higher standard. Id. pt.

4.2.6.2.5(1). Employee audits differ from regular audits in that

employee files are separated using an orange folder, the examiner

attaches an employee information sheet, and Form 8111 is included

with the initial letter contacting the employee. Id. pt. 

4.2.6.2.5(3). Additionally, examiners must ensure independence

and impartiality when examining an employee return, and examiners

should discuss any concerns with their immediate supervisors for

possible reassignment. Id. pt. 4.2.6.2.2(1). Finally, there is

a prohibition of the classification of employee returns by

subordinates, associates, or coworkers in the same post of duty.5

Id. pt. 1.2.13.1.7(4) (May 3, 1994). 
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Petitioner alleges that Ms. Robles’ examination of his

return violated the IRM, as she is his coworker at the Brookhaven

Service Center. Additionally, petitioner argues that Ms. Robles’

“failure” to provide Form 8111 with the notice of deficiency

voids the notice of deficiency. 

Petitioner testified that Ms. Robles “may have known me,”

but “she may not have known me.” Ms. Robles did not testify. If

Ms. Robles felt that her impartiality and independence were in

question, she should have spoken with her supervisor to determine

whether she should be removed from the case. See IRM pt.

4.2.6.2.2(1). However, a reassignment is not automatic. Id.

Moreover, the section of the IRM prohibiting subordinates,

associates, or coworkers from dealing with an employee return

goes to the classification of a return, not an examination, as

occurred in the instant case. See id.; id. pt. 1.2.13.1.7(4)

(May 3, 1994). Petitioner did have the opportunity for union

representation. While Form 8111 was not sent with Ms. Robles’

initial contact letter as required by the IRM, petitioner did

receive a Form 8111 before the case was closed. The record does

not establish that respondent’s conduct rose to the level of a

constitutional violation or impugned the integrity of the

judicial process. See Greenberg’s Express, Inc. v. Commissioner,

supra at 328. Accordingly, we will not look behind the notice of

deficiency. 
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Scar v. Commissioner, supra, is distinguishable. In Scar,

the Commissioner sent the taxpayer a notice of deficiency that

had no direct connection with the taxpayer and was not based on

an inspection of the taxpayer’s Federal income tax return. The

notice of deficiency was held to be invalid on its face because

the Commissioner did not determine a deficiency as required under

section 6212(a). Id. at 1368-1369. The facts of the instant

case are distinguishable from those of Scar. In the instant

case, the adjustments in the notice of deficiency all relate to

petitioner’s 2005 income tax return. Moreover, petitioner claims

that Ms. Robles reviewed his return but did not follow proper

procedures. Finally, Scar involved a violation of a statutory

provision, while petitioner alleges a violation of the IRM, which

does not have the force and effect of law. See Valen

Manufacturing Co. v. United States, 90 F.3d 1190, 1194 (6th Cir.

1996); United States v. Horne, 714 F.2d 206, 207 (1st Cir. 1983). 

Accordingly, Scar v. Commissioner, supra, does not apply to the

instant case. 

Section 7491(a)(1) provides that, if, in any court

proceeding, the taxpayer introduces credible evidence with

respect to factual issues relevant to ascertaining the taxpayer’s

liability for a tax (under subtitle A or B), the burden of proof

with respect to those factual issues will be placed on the

Commissioner. For the burden to be placed on the Commissioner,
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however, the taxpayer must comply with the substantiation and

recordkeeping requirements of the Internal Revenue Code. See

sec. 7491(a)(2)(A) and (B). Additionally, section 7491(a)

requires that the taxpayer cooperate with reasonable requests by

the Commissioner for “witnesses, information, documents,

meetings, and interviews”. Sec. 7491(a)(2)(B). The taxpayer has

the burden of establishing that the requirements of section

7491(a)(2) have been met. See sec. 7491(a); Higbee v.

Commissioner, 116 T.C. 438, 440-441 (2001). 

Petitioner has not offered credible evidence regarding his

claimed deductions. “Credible evidence is evidence that, after

critical analysis, a court would find constituted a sufficient

basis for a decision on the issue in favor of the taxpayer if no

contrary evidence were submitted.” Ocmulgee Fields, Inc. v.

Commissioner, 132 T.C. 105, 114 (2009). Petitioner offered only

a theory that Ms. Robles might have known him and therefore she

did not follow proper procedures. Moreover, petitioner offered

no testimony and insufficient documentation regarding his claimed

deductions, as discussed below. Because petitioner failed to

offer evidence that “a court would find constituted a sufficient

basis for a decision on the issue in favor of the taxpayer”, we

conclude that the burden has not shifted pursuant to section

7491. See Ocmulgee Fields, Inc. v. Commissioner, supra at 114. 
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6Sec. 6201(d) also does not shift the burden of proof to

respondent. Sec. 6201(d) provides: 

In any court proceeding, if a taxpayer asserts a reasonable

dispute with respect to any item of income reported on an

information return filed with the Secretary * * * by a third

party and the taxpayer has fully cooperated with the

Secretary (including providing, within a reasonable period

of time, access to and inspection of all witnesses,

information, and documents within the control of the

taxpayer as reasonably requested by the Secretary), the

Secretary shall have the burden of producing reasonable and

probative information concerning such deficiency in addition

to such information return. 

See Arberg v. Commissioner, T.C. Memo. 2007-244. The deficiency

in the instant case is based on disallowed deductions, not on

items of income reported on third-party information returns. 

Accordingly, sec. 6201(d) is not applicable. 

Consequently, petitioner bears the burden of proof on all

issues.6

As to petitioner’s claimed deductions for tax year 2005 for

medical expenses pursuant to section 213, petitioner submitted a

statement from his health insurance company. It is unclear from

that statement whether petitioner made any payments. Petitioner

offered no testimony regarding that statement and conceded at

trial that respondent’s determination was correct. Accordingly,

we sustain respondent’s deficiency determinations regarding the

medical expenses petitioner claimed for tax year 2005.

As to petitioner’s claimed deduction for charitable

contributions, section 170(a) allows a deduction for charitable

contributions made by a taxpayer. A taxpayer claiming a

charitable contribution of money is generally required to
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7Separate contributions of less than $250 are not subject to

the requirements of sec. 170(f)(8), regardless of whether the sum

of the contributions made by a taxpayer to a donee organization

during a taxable year equals $250 or more. Sec. 1.170A-13(f)(1),

Income Tax Regs. 

Pursuant to sec. 170(f)(17), as enacted in 2006, no

deduction for a contribution of money in any amount is allowed

unless the donor maintains a bank record or written communication

from the donee showing the name of the donee organization, the

date of the contribution, and the amount of the contribution. 

This provision is effective for contributions made in tax years

beginning after Aug. 17, 2006. Pension Protection Act of 2006,

Pub. L. 109-280, sec. 1217, 120 Stat. 1080.

maintain for each contribution a canceled check, a receipt from

the donee charitable organization showing the name of the

organization and the date and amount of the contribution, or

other reliable written records showing the name of the donee, the

date, and amount of the contribution. Sec. 1.170A-13(a)(1),

Income Tax Regs. Factors that indicate reliability include, but

are not limited to, the contemporaneous nature of the writing,

the regularity of the taxpayer’s recordkeeping procedures, and

the existence of any other evidence from the donee charitable

organization evidencing receipt. Sec. 1.170A-13(a)(2), Income

Tax Regs. In addition, no deduction is allowed, for any

contribution of $250 or more unless the taxpayer substantiates

the contribution by a contemporaneous written acknowledgment by a

qualified donee organization.7 Sec. 170(f)(8)(A).
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8Respondent did not stipulate the truth of petitioner’s list

of purported charitable contributions. 

Petitioner submitted a list of purported donations made

during tax year 2005.8 Petitioner offered no testimony regarding

the contemporaneous nature of the document, the regularity of his

recordkeeping activities, or other evidence from the donee

charitable organization showing receipt of funds. See sec.

1.170A-13(a)(2), Income Tax Regs. Accordingly, we do not find

petitioner’s records reliable. Moreover, petitioner conceded at

trial that respondent’s determinations were correct. 

Consequently, we sustain respondent’s deficiency determinations

regarding petitioner’s claimed charitable contributions for tax

year 2005. 

As to petitioner’s claimed deduction for tax year 2005 for

miscellaneous expenses, petitioner conceded at trial that he had

no documentation of any of his claimed expenses aside from those

respondent conceded; and petitioner offered no proof of such

expenses. Accordingly, except as conceded by respondent, we

sustain respondent’s deficiency determinations regarding the

miscellaneous itemized expenses petitioner claimed for tax year

2005.

The Court has considered all other arguments made by the

parties and, to the extent we have not addressed them herein, we

consider them moot, irrelevant, or without merit. 
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To reflect the foregoing, 

Decision will be entered

under Rule 155.