1 Unless otherwise indicated, all section references are to

the Internal Revenue Code of 1986 as in effect for the year in

issue, and all Rule references are to the Tax Court Rules of

(continued...)

T.C. Memo. 2007-270

UNITED STATES TAX COURT

STEPHANIE K. MILLS, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8631-04. Filed September 10, 2007.

Stephanie K. Mills, pro se.

Marshall R. Jones, for respondent.

MEMORANDUM OPINION

GALE, Judge: This case is before the Court on respondent's

motion to dismiss for lack of prosecution and to impose a penalty

under section 6673.1
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1(...continued)

Practice and Procedure. 

2 The record demonstrates that petitioner has failed to file

returns since 1993.

Background

Respondent determined a deficiency in income tax of $17,380

and additions to tax under sections 6651(a)(1) and 6654 of $4,345

and $694.58, respectively, with respect to petitioner's 2001

taxable year. The notice of deficiency specifies that the

adjustments to petitioner’s taxable income are attributable to

petitioner’s failure to file a 2001 tax return2 reporting various

items of income including nonemployee compensation paid by

"Accumen Realty Inc." and "Royal Foridian [sic] by Spinnaker

LLC", and interest paid by First Union National Bank. These

items of income were reported to respondent on Forms 1099 or

other information returns submitted by the payors. 

When she filed the petition in this case, petitioner resided

in Florida. Petitioner, acting without counsel, requested a date

and time certain for the trial, and the Court granted her

request. At the appointed time and place for trial, however,

petitioner failed to appear. Instead, counsel retained by

petitioner appeared on her behalf. Upon questioning,

petitioner's counsel represented that he had no witnesses to call

or other evidence to present and, indeed, lacked even authority
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3 Petitioner subsequently executed a stipulation of facts,

which comprises part of the evidentiary record in this case.

to execute a stipulation of facts on petitioner's behalf for

purposes of trial.3

Respondent thereupon moved to dismiss the case for lack of

prosecution and to impose a penalty pursuant to section 6673. 

The Court conducted an evidentiary hearing at which respondent

called a witness to provide testimony and to authenticate

documents to be received as evidence. Respondent's witness, Mr.

Richard Meadows, former project director and custodian of

bookkeeping and payroll records for Royal Floridian by Spinnaker,

L.L.C., testified that petitioner was hired by Royal Floridian in

early 2000 as a licensed real estate agent to sell time-shares in

the Royal Floridian Resort. As project director for Royal

Floridian in 2001, Mr. Meadows prepared and filed an information

return reporting that petitioner was paid $56,718.99 in

commission income by Royal Floridian in 2001. 

Shortly after the evidentiary hearing, petitioner's

counsel's motion to withdraw as counsel was granted. Pursuant to

the Court's order, respondent filed a written motion to dismiss

for lack of prosecution and to impose a penalty pursuant to

section 6673 as a substitute for his earlier oral motion. 

Petitioner was afforded an opportunity to respond to the motion

and did so.
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Discussion

Validity of the Notice of Deficiency

At the evidentiary hearing, petitioner's counsel suggested

that the notice of deficiency was unsupported by any "ligaments

of fact" connecting petitioner to the income determined to have

been received by her. In a similar vein, petitioner's response

to respondent's motion to dismiss cites Weimerskirch v.

Commissioner, 596 F.2d 358 (9th Cir. 1979), revg. 67 T.C. 672

(1977), and Portillo v. Commissioner, 932 F.2d 1128 (5th Cir.

1991), affg. in part and revg. in part T.C. Memo. 1990-68, which

hold that a deficiency determination that is unsupported by some

evidentiary foundation linking the taxpayer to the alleged

income-producing activity is arbitrary and erroneous. The Court

of Appeals for the Eleventh Circuit, to which an appeal in this

case would ordinarily lie, adheres to this doctrine, including

the principle that the evidentiary foundation need only be

"minimal". Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th Cir.

1993), affg. T.C. Memo. 1991-636. 

In the notice of deficiency, respondent determined that

petitioner had unreported nonemployee compensation from Royal

Floridian and Accumen Realty. Petitioner failed to file a return

for 2001, and she has not submitted any other sworn statement

denying receipt of the alleged income. In fact, petitioner

averred in her petition that she is entitled to "personal and
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business deductions" (emphasis added) for 2001, which constitutes

an admission that she was engaged in income-producing activities

for that year. In light of petitioner's admission and her

failure to deny receipt of the alleged income in 2001, it is

doubtful respondent has an evidentiary burden. See Parker v.

Commissioner, 117 F.3d 785, 786-787 (5th Cir. 1997); White v.

Commissioner, T.C. Memo. 1997-459. 

Even if respondent had a burden, he has adduced evidence

linking petitioner to the income alleged in the notice. Mr.

Meadows's uncontradicted testimony was that petitioner provided

real estate sales services to Royal Floridian by Spinnaker, LLC,

during 2001 in connection with the marketing of time-shares, and

was compensated by Royal Floridian on a commission basis (in the

amount determined in the notice). We are likewise satisfied that

a minimal evidentiary foundation has been laid with respect to

the alleged income from Accumen Realty Inc., since respondent's

evidence links petitioner to income-producing activity as a real

estate agent in 2001. We accordingly reject petitioner's

challenge to the notice of deficiency. 

Respondent's Motion To Dismiss

The Court may dismiss a case at any time and enter a

decision against the taxpayer for failure properly to prosecute

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
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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 at

trial or does not otherwise participate in the resolution of her

claim. Rule 149(a); Brooks v. Commissioner, 82 T.C. 413 (1984),

affd. without published opinion 772 F.2d 910 (9th Cir. 1985).

By failing to appear for trial, and instead sending counsel

to represent her without any evidence to present or any authority

to execute a stipulation on her behalf, petitioner has failed to

prosecute her case properly. Such actions would be sufficient to

warrant dismissal without trial. In addition, however,

petitioner refused to cooperate in preparing the case for trial. 

Correspondence in the record demonstrates that petitioner

rebuffed respondent's pretrial requests for information. 

Petitioner failed to comply with the Court's standing pretrial

order by failing to file a pretrial memorandum and by failing,

prior to trial, to stipulate to all matters about which there

should not be reasonable dispute. Finally, respondent asserts in

his motion, and petitioner has not disputed, that petitioner
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4 We also note that repeated efforts by the Court to contact

petitioner prior to trial were unsuccessful.

ignored respondent's attempts to establish contact to prepare for

trial.4

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 entitlement to a

shift in the burden of proof under section 7491(a); she would in

any event not be eligible for the benefits of that section in

light of her failure to cooperate with reasonable requests of

respondent for information and other matters respecting this

case. See sec. 7491(a)(2)(B). Accordingly, the burden of proof

rests with petitioner concerning the deficiency in her income tax

as determined in the notice of deficiency, and petitioner has

adduced no evidence in support of the assignments of error raised

in the petition.

Additions to Tax

Respondent determined additions to tax under sections

6651(a)(1) and 6654. Although petitioner has offered no

substantive evidence in this case, under section 7491(c)

respondent generally bears the burden of production to show that

imposition of the additions is appropriate. See Higbee v.

Commissioner, 116 T.C. 438, 446 (2001). 
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With respect to the section 6651(a)(1) addition to tax for

failure to file timely, we find that respondent has satisfied his 

burden of production. Respondent adduced a certified transcript

of account for petitioner's 2001 taxable year, which shows that

petitioner failed to file a return for that year. An information

return, corroborated by Mr. Meadows's testimony, indicates

petitioner received income of $56,718.99 in 2001, an amount that

is sufficient to impose a return-filing obligation on petitioner. 

Sec. 6012. Petitioner has offered no evidence of reasonable

cause or any other basis on which she would not be liable for the

section 6651(a)(1) addition to tax. See Higbee v. Commissioner,

supra. 

Respondent has also met his burden of production with

respect to the section 6654 addition to tax for failure to pay

estimated taxes. Petitioner's income tax deficiency for 2001 is

sufficient to obligate her to make estimated tax payments. A

certified transcript of account for petitioner's 2000 taxable

year indicates that she also failed to file a return in that

year. The certified transcript of account for 2001 indicates

that petitioner had no withholding, made no estimated tax

payments, and had no other credits or payments for 2001. The

foregoing is sufficient evidence to satisfy respondent's burden

of production under section 7491(c) with respect to the section
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6654 addition determined in this case. See Wheeler v.

Commissioner, 127 T.C. 200, 211-212 (2006). 

Conclusion Regarding Deficiency Determinations

On the basis of the foregoing, we conclude that respondent's

motion to dismiss should be granted, and that a decision

sustaining respondent's determinations of an income tax

deficiency and additions to tax for 2001 should be entered. 

Section 6673(a)(1) Penalty

Section 6673(a)(1) authorizes the Court to award a penalty

not in excess of $25,000 when proceedings have been instituted or

maintained primarily for delay, or where the taxpayer's position

is frivolous or groundless. See, e.g., Coleman v. Commissioner,

791 F.2d 68, 71 (7th Cir. 1986); Kish v. Commissioner, T.C. Memo.

1998-16; Talmage v. Commissioner, T.C. Memo. 1996-114, affd.

without published opinion 101 F.3d 695 (4th Cir. 1996). 

Respondent has moved for imposition of such a penalty.

The nature of petitioner's conduct in this case strongly

suggests that she instituted this proceeding primarily for the

purpose of delay. She presented no evidence to support her

general and vague allegations that she had no taxable income in

2001. Her conduct in arranging with the Court for a date and

time certain for her trial and then failing to appear, sending

instead counsel with no evidence to proffer and no effective

authority to prosecute the case, was misleading and particularly
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egregious in wasting both the Court's and respondent's time and 

resources. Other positions advanced by petitioner were

groundless, such as her claim that the notice of deficiency was

invalid due to respondent's failure to prepare a return under

section 6020(b), see Geiselman v. United States, 961 F.2d 1, 5

(1st Cir. 1992); Schiff v. United States, 919 F.2d 830, 831 (2d

Cir. 1990); Brenner v. Commissioner, T.C. Memo. 2004-202, affd.

164 Fed. Appx. 848 (11th Cir. 2006), and her claim of a lack of

an evidentiary foundation for respondent's income determination. 

Accordingly, we shall impose a penalty on petitioner under

section 6673(a)(1) in the full amount sought by respondent;

namely, $5,000.

To reflect the foregoing,

An appropriate order and

decision will be entered.