T .C. Su m m ary Op i n io n 2 01 8 -5 0

UNITED STATES TAX COURT

ROLANDA M ICHELLE CURTIS AND BRYON CURTIS, Pet i t i o n ers v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 6 9 10 -1 7 S. Fi l edNo vem b er 1 , 2 0 18
. Bry o n Cu rt i s , p ro s e. Bro o k e S. Lau ri e an dSh ei l a R. Pat t i s o n , fo r res p o n d en t.

SUM M ARY OPINION PUGH, J u d g e: Th i s cas e was h eard p u rs uan tt o t h e p ro v i s i o n s o f s ect i o n 7 4 6 3 o f t h e In t ern al Rev en u e Co d e i n effect wh en th e p et i t i o n was fi l ed
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1 Un l es s o t h erwi s e i n d i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev en u e Co de o f 1 98 6 , as am en d edan di n effect fo r th e y ear at i s s u e. Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re. Al l m o net ary (co n ti n u ed ...)- 2
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Pu rs u an t t o s ect i o n 7 4 6 3(b ), th e d eci s i o n t o b e en t ered i s n o trev i ewab le b y an y
o t h er co u rt , an dth i s o p i ni o n s h al l n o t b e t reat ed as p reced en tfo r an y o th er cas e. In a n o ti ce o f d efi ci en cy d at edSep t em b er 1 1, 2 0 1 7 , res po n d en td et erm i n eda d efi ci en cy

o f $ 1 2 , 0 7 1 i n p et i t i o n ers ’ Fed eral i n co m e t ax fo r 2 0 1 5 an da s ect i o n 6 6 6 2 (a) accu racy -rel at edp en al t y o f $ 9 5 0
. Back gro u n d Pet i t i o ners l i v edi n Tex as wh en th ey t i m el y fi ledth ei r p et i t io n . In2 0 1 5 M r. Cu rt i s recei v ed a d is t ri b u t i on o f $ 3 7 ,4 1 4 fro m Great -W es tRet i rem en tServ i ces (Great -W es t ). Pet i t i o n ers d i dn o t recei v e a Fo rm 1 0 9 9-R, Di st ri bu t i o n s Fro m Pen si o n , An n u i t ies , Ret i rem en to r Pro fi t -Sh ari n g Pl an s , IRAs , In s u ran ce Co n t ract s , et c., fro m Great -W es tb efo re t hey p rep ared an dfi l edth ei r jo i n t2 0 1 5 Fo rm 1 0 4 0 , U.S. In d i v i du al In co m e Tax Return , an d d i dn o trep ortth e d i s t ri b u t i o n
as i n co m e o n t h ei r ret u rn . Aft er res p o n d en tco n tact edp et it i on ers ab o u tth e
o m is s i o n o f t h e Great -W es t d i s t ri b u t i o n , th ey req u es t edan d recei v ed a Fo rm 1 0 9 9
- R fro m Great -W es t s ho wi n g a g ro s s d i s t ri b u ti o n o f $ 37 ,4 1 4 an d Fed eral i n co m e t ax wi t h h el do f $ 7 ,3 2 3
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1 (...co n t in u ed ) am ou n t s are ro u n dedt o t h e n eares td o l l ar.- 3
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Attri al th e p art i es 2 o ral l y s t i p u l at edth at“ t h ere i s a d efi ci en cy i n i n co m e t ax du e fro m p et i t io n ers fo r t h e t ax ab l e y ear 2 0 1 5 i n th e am o u n t o f $ 12 ,0 7 1 , * * * t h ere i s a p rep aym en t cred i tfo r th e t ax ab l e y ear 2 0 1 5 i n th e am o u n to f $ 7 ,3 2 3 , * * * [an d ] th e d efi ci en cy fo r t h e t ax ab l e y ear 2 0 1 5 i s co m p u t edwi t h o u t
co n si d eri n g th e p rep aym en tcred i to f $ 7 ,3 2 3 ”. Th e o n l y i s s u e t h atrem ai n s i n d i s p u t e i s wh et h er p et i t i on ers are l i ab l e fo r t h e $ 9 5 0 accu racy -rel at edp en al t y
u n d er s ect i o n 6 6 6 2 (a). Di s cu ss i o n Sect io n 6 6 6 2 (a) an d(b )(1 ) an d(2 ) i m p o s es an accu racy -rel at edp en al t y eq u al t o 2 0 % o f t he p o rt i o n o f an u n d erp aym en t o f t ax req u i redt o b e s h o wn o n th e ret u rn th ati s at t ri bu t ab l e t o “ [n ] eg l i g en ce o r d is reg ard o f ru l es o r reg u lat i o n s ”
an d/o r a “ s ub s tan t i al u n d ers t at em en t o f i n co m e t ax .” Wh il e t h e n o t i ce o f d efi ci en cy

l i s t s o n l y th e s ubs t an t i al u n d ers t at em en tp en al t y u n d er s ect i o n 6 6 6 2 (a),

2 M rs . Cu rt i s d i dn otap pear at tri al an dth erefo re i s i n d efau l t , b u t , as we ex p lai n edattri al , we h o l d t h ats h e i s b o u n d b y the o u t co m e o f t h i s cas e. See Ru l e 1 2 3 (a) (s t at i n g t h at an y

p art y fai l i n g “ t o p l eado r o t herwi s e p ro ceed as p ro v i d edb y t h es e Ru l es o r as req u i redb y the Co u rt * * * m ay

b e h el d i n d efau l tb y

th e Co u rt ”); Ru l e 1 4 9(a) (“ Th e u n ex cu s ed ab s en ce o f a p art y o r a p art y ’ s co u n s el wh en a cas e i s cal ledfo r t ri al wi l l n o tb e g ro u n d fo r d el ay . Th e cas e m ay b e d i s m i s s edfo r fai l u re p ro p erl y t o p ro s ecu t e, o r t h e t ri al m ay p ro ceed an d t h e cas e b e reg ard edas s ub m i t t edo n th e p arto f t he ab s en tp art y o r p art i es .”).- 4
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res p o n d en t’ s p ret ri al m em o ran du m arg u es th atp et i t i o ners al so were n eg l i g en t . W e wi l l ad d res s b o t h t o g et her as accu racy -rel at edp en al t i es . Th e Co m m is s i o n er b ears th e b u rd en o f p ro du ct i o n wi t h res p ectt o an i n d i v i du al t ax pay er’ s l i ab il i t y fo r an accu racy -rel at edp en al t y an di s req u iredt o p res en ts u ffi ci en t ev i d en ce s h o wi n g th atth e p en al t y i s ap p ro p ri at e. Sec. 7 4 9 1 (c); Hi g bee v . Co m

m i ss i o n er, 1 1 6 T.C. 4 3 8 , 4 4 6 -4 47 (2 0 01 ). To m eetth at b urd en , th e Co m m i s s i o n er fi rs t m

u s ts h o w th ath e co m

p li edwi t h th e p ro cedural req ui rem en t s
o f s ect i o n 6 7 51 (b )(1 ). See s ec. 7 4 9 1 (c); Graev v . Co m m is s i o n er, 1 49 T.C. _

_ , _

_ (s l i p o p. at1 3 -1 4 ) (Dec. 2 0 , 2 0 1 7 ), s up pl em en t i n g an do v erru li n g i n p art1 4 7 T.C. 4 6 0 (2 01 6 ). Sect io n 6 7 51 (b ) req u i res th e Co m m i s s i o ner t o s h o wthata p en al t y
as s es s edu n d er s ect io n 6 6 6 2 was “p ers o n al ly ap p ro v ed(i n wri t i n g ) b y th e i m m ed i at e s up erv i s o r o f t he i n di v i du al m ak i n g s u ch d et erm i n at i o n”. See Graev v . Co m m i s s i o n er, 1 4 9 T.C. at_

_ (s l i p o p . at1 3-1 4 ). On ce t h e Co m m i s s i o n er
s at i s fi es h i s b u rd en o f p ro du ct io n , th e t ax p ay er b ears t h e b u rd en o f p ro v i n g th at t h e Co m m i s s i o n er’ s d et erm i n at i o n o f t h e p en al ty i s i n co rrect . Hi gb ee v . Co m m i s s i o n er, 1 1 6 T.C. at4 4 6-4 4 7
. Attri al res po n d en t i n t ro du cedi n t o ev id en ce o nl y two d o cu m en t s : p et i t i o n ers ’ 2 0 15 jo i n t Fo rm 1 0 4 0 an dthe Fo rm 1 0 99 -R fro m

Great -W es t . Res po n d en td i dn o ti nt ro du ce an y ev i d en ce o f m an ag eri al ap p ro v al . Co u n sel fo r- 5
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res p o n d en t d i dn o t arg u e t h atev i d en ce o f ap p ro v al was n o treq u i redan dd i dn o t ad d res s res p on d en t ’ s b u rd en u n d er s ect i on 6 7 5 1(b ) o t h erwi s e, ei th er at tri al o r i n
an y p ret ri al s ubm is s i o n . W e t h erefo re h o l dth atres p o n d en th as n o tm eth i s t h res ho l db u rd en fo r t h e Co u rtt o s u s t ai n th e p en al t y an d n eedn o t reach M r. Cu rt i s ’ arg u m en tth ath e h adreas o n ab l e cau s e fo r t he o m i s s io n o f i n co m e fro m Great -W es t . See Hag o s v . Co m m i ss i o ner, T.C. M em o. 2 0 1 8 -1 6 6
. To refl ectthe fo reg o i n g , An ap p ro p ri at e d eci s i o n wi l l b e
en t ered
.