T.C. Mem o. 2 01 4- 24 1

UNITED STAT ES TAX COURT
PAUL NEIL FILZER, Peti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 10 43 6- 13
. Fi le d No ve m be r 25 , 20 14
.

Pau l Nei l Fi lz er, p ro se. Nan cy P. Kli ng sh irn , forres po nd en t.

MEMORANDUM OPINION CHIECHI, J ud ge : Th is cas e is be fo re u s o n re sp on de nt ’s m ot io n fo r de fau lt
an d d is m is sa l (r es po nd en t’s m ot io n)
. W e sh al l g ran t re sp on de nt ’s m ot io n. 1

Res po nd en t fi le d re sp on de nt ’s m ot io n b efo re the co m m en cem en t o n 1 Octo be r 6, 2 01 4, o f th e tr ia l s es si on of t he Co urt i n C le ve la nd , Ohi o (C le ve la nd tri al ses si on ), atwhi chth is cas e was cal en da redfor tri al
.- 2 -

[* 2] Bac kg ro un d Pet it io ne r res id edinOhi o a t the ti m e h e fi le d t he pe ti ti on . Res po nd en t i ss ue d ano ti ce o f de fic ie nc y (no ti ce) t o p et it io ne r with re sp ect to hi s t ax ab le y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09 , and20 10 . In tha t n ot ic e,
res po nd en t d et erm in edde fic ie nc ie s i n, an d a dd it io ns un de r se ct io ns 66 51 (a)( 2)
an d (f ) an d 6 65 4( a) to , pet it io ne r’s Fed eral in co m e ta x (t ax ) as fol lo ws:

2 Add it io ns to tax Year Defi ci en cy Sec. 66 51 (a)( 2) Sec.

66 51 (f) Sec.

66 54 (a) 20 05 $1 54 ,68 6 $2 8,2 21 .25 $8 1,8 41 .63 $4 ,34 1.6 9 20 06 66 ,37 0 14 ,39 7.5 0 41 ,75 2.7 5 2,6 79 .23 20 07 48 ,45 9 12 ,11 4.7 5 35 ,13 2.7 8 2,2 05 .50 20 08 17 ,70 3 * 12 ,83 4.6 8 56 8.8 9 20 09 44 ,49 0 * 34 ,80 3.5 5 1,1 74 .83 20 10 10 ,67 7 * 6,8 20 .08 19 9.6 8 *Am ou ntto be de te rm in edat alat er d at e p ur su an t t o s ec. 6 65 1( a)(2 ). Inth e p et it io n, p et it io ne r in di cat edth athe di sa gr eedwith t he de te rm in at io ns in th e n ot ic e. Insupp ort o f th atdi sa gr eem en t, p et it io ne r al le ge d t ha t fo r eac h o f th e y ears at i ss ue “ [t]he Dete rm in at io n u se d ‘m arri edfil in g s ep arat el y ’ in st eadof
All sec ti on refe ren ces are t o t he Int ern al Rev enue Co de ineffe ctforth e 2 y ears at i ss ue . All R

ul e ref eren ces are t o t he Tax C ou rt Rul es of P ract ic e an d Pro cedur e.- 3 -

[* 3] ‘ m arri edfil in g jo in tl y .’ The Det erm in at io n u se d t he in co rrec t num be r of
ex em pt io ns .” Pet it io ne r al so all eg edfortax ab le y ear 2 00 5 o nl y th at“ th e Det erm ina ti on in co rrec tl y

cal cu la te d C ap it al Gain s.” Inth e an swe r, res po nd en t ad m it te d t ha t “ res po nd en t d et erm in edth e am ou nt of tax es du e fro m

pe ti ti on er fo r th e ta xabl e y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09
an d 2 01 0 u si ng th e fi li ng st atus of ‘m arri edfil in g s ep arat el y .’ ” Res po nd en t d en ie d th e rem ai ni ng subs ta nt iv e al le ga ti on s. Res po nd en t fu rth er af

firm at iv el y

all eg edinth e an swe r: a. Sin ce 1 99 4, p et it io ne r ha s n otfil eda fed eral in co m e ta x return. b. Pe ti ti on er i s a l awy er wi th ap pr ox im at el y twen ty y ears of ex pe rie nc e in th e p ract ic e. He sp eci al iz es inNati ve Am eri canlaw. c. Inth e ta xabl e y ears 20 06 , 20 07 an d 2 00 8, p et it io ne r was a pa rtn er i n F il zer Gru tt ad au rio Str ic kl an d, LLP; pe ti ti on er was a Subc hapt er S s ha reh ol de r in Fil zer Gru tt ad aurio Str ic kl an d C o., In c., in th e ta xabl e y ear 2 00 8, an d aSubc hapt er S s ha reh ol de r in Fil zer & Stric kl an d, In c. inth e ta xabl e y ears 20 09 an d 2 01 0. d. Pe ti ti on er was als o e m pl oyed b y Nora m -AHG, LLC in t he ta xabl e y ears 20 05 an d 2 00 6. e. Pet it io ne r was anact iv e m em be r of anin ve st m en t p artne rsh ip , JJ P Hol di ng s, LLC, in th e ta xabl e y ear 2 01 0. f. The ab ov e-re fere nc edflo w-th ro ug h e nt it ie s fi le d F orm s 10 65 or F orm s 1 12 0S , andis su edSch edul es K-1 fo r pe ti ti on er’s u se in pre parin g h is in co m e ta x re tu rn s i n the y ears at i ss ue .- 4 -

[* 4] g. No ram -AHG, LLC andFil zer & Str ic kl an d, In c. is su ed Fo rm s W-2 fo r pe ti ti on er’s u se inpre pa rin g h is in co m e ta x re tu rn s i n th e y ears at i ss ue . h. Pe ti ti on er re cei ve d S ch edul e K in co m e an d wag e in co m e fro m th e ab ov e-re fere nc eden ti ti es inth e ta xabl e y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09 an d 2 01 0 i n t he am ou nt s o f $2 08 ,27 0.0 0, $2 08 ,89 8.0 0, $ 14 5,8 64 ,00 , $7 4,6 68 .00 , $1 45 ,32 7.0 0, an d $ 56 ,62 7.0 0, res pe ct iv el y . i. Pet it io ne r fai le d t o m ak e an y est im at edtax pa ym en ts with res pe ctto th e ta xabl e y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09 or 2 01 0. j. O n J anua ry

12 , 20 04 , pet it io ne r pu rch as edpro pe rty loc at ed at30 4 Eas t Gre en tre e Lan e, Lak e Mary , Flo rid a fo r $5 25 ,00 0. On Decem be r 30 , 20 05 , pet it io ne r so ldsu chpro pe rty for $ 1,1 25 ,00 0.0 0, reco gn iz in g aga in inth e ta xabl e y ear 2 00 5 o f $6 00 ,00 0.0 0. k. In 20 04 , pet it io ne r was co nt act edby the Serv ic e reg ard in g th e n on -fi li ng of h is 20 01 Fo rm 10 40 . Peti ti on er was no n- res po ns iv e; th e Servi ce as se ss edtax es inth e am ou ntof $ 12 8,8 23 .00 forth e ta xab le y ear 2 00 1. l. OnSep te m

be r 21 , 20 06 , th e Servi ce co nt act edpe ti ti on er reg ard in g t he co ll ect io n o f hi s as se ss edli ab il it y forth e ta xabl e y ear 20 01 , as wel l as hi s fa il ur e to fil e subs eque ntin co m e ta x re tu rn s. Pet it io ne r st at edto th e Servi ce tha t h e h adno go odreas on for no t fil in g h is tax returns , exc ep t tha t h e kne w he wo ul d o we a lo t o f m on ey . m . Peti ti on er fa il edto att en d s ch edul edap po in tm en ts with t he Serv ic e o n Dec em

be r, 28 , 20 11 an d J anua ry 18 , 20 12 , reg ard in g h is un fil edin co m e ta x re tu rn s fo r th e ta xabl e y ears 20 05 th ro ug h 2 01 0. n. OnMarc h 1 5, 2 01 2, p et it io ne r was su m m on edto ap pe ar be fo re the Serv ic e fo r anap po in tm en t s ch edul edon Marc h 2 8, 2 01 2. Pet it io ne r fai le d t o app ear; th e Servi ce re cei ve d ares po ns e fro m- 5 -

[* 5] pe ti ti on er’s POA st at in g t ha t d el in qu en t t ax returns wou ldbe pre pa red . Peti ti on er b ecame no n- res po ns iv e an d t o d at e, su chreturns ha ve no t b eenrece iv ed
. o. Gi ve n p et it io ne r’s educ at io n a ndpro fes si on , he kne w he h ad a dut y to fil e in co m e ta x re tu rn s an d p ay in co m e ta xe s. p. Pe ti ti on er ea rn edsubs ta nt ia l i nc om e in all of t he th e [s ic ] y ears at i ss ue . His f

ai lu re t o m ak e an y

est im at edpa ym en ts of t ax es with re sp ectto th is in co m e co up le d wi th th e fai lu re t o fi le in co m e ta x returns inth e y ears at i ss ue co ns ti tu te s fr au du le ntact iv ity with a n in te ntto ev ad e fed eral tax es . q. In th e 2 00 5 t ax ab le y ear, p et it io ne r rec og ni zedsubs ta nt ia l cap it al ga in fro m

th e sa le of p ro pe rty. H is fai lu re t o re po rt t he ga in on a ti m el y

fil edin co m e ta x c on st itut es frau du le ntact iv it y with a n in te ntto ev ad e fed eral tax es . r. Altho ug h p et it io ne r ha d a ll of t he in fo rm at io n n eces sa ry to fil e fed eral in co m e ta x re tu rn s fo r eac h o f th e ta xabl e y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09 an d 2 01 0, h e fai le d t o fi le su chreturns ; s uc h fai lu re was frau du le ntan d was do ne with t he in te ntto ev ad e ta xe s. s. Pet it io ne r’s st at em en t i nd ic at in g t ha t h e h adno go odreas on fo r no t fi li ng hi s t ax returns , exc ep t tha t h e kne w he wo ul d o we a lo t of m on ey , in di cat es th atsu chfai lu re was frau du le ntan d d on e wit h the in te ntto ev ad e ta xe s. t. Pet it io ne r’s co nt in ue d l ackof c oo pe rat io n wi th th e Servi ce in di cat es th athi s fa il ur e to fil e in co m e ta x re tu rn s fo r th e 2 00 5 t hr ou gh 20 10 tax ab le y ears was fr au du le ntan d d on e wit h t he in te ntto ev ad e ta xe s. u. Pe ti ti on er’s fraudul en t fa il ur e to fil e in co m e ta x re tu rn s fo r th e ta xabl e y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09 an d 2 01 0 i s p artof a fiv e-year pa tt ernof a n i nt en t t o e va de tax es .- 6 -

[* 6] v. A p artof t he un de rp aym en t o f ta x re qu ire d t o b y [si c] sho wn on pe ti ti on er’s i nc om e ta x re tu rn s fo r eac h o f th e ta xabl e y ears 20 05 , 20 06 , 20 07 , 20 08 , 20 09 an d 2 01 0 i s due to frau d. Res po nd en t s erv eda co py of th e an swe r on pe ti ti on er atth e ad dr es s tha t pe ti ti on er h adsh own as h is m ai li ng ad dr es s i n t he pe ti ti on . Thatservi ce co py of th e an swe r was no t re tu rn edto res po nd en t. Pet it io ne r di d n otfil e a rep ly to the an swe r. Inres po nd en t’s m ot io n, re sp on de ntrep res en ts th atres po nd en t m ad e v ari ou s at te m pt s, m os t o f whi chwere u ns uc ces sf ul , to co nt actpe ti ti on er, wh o i s an att or ne y , inanatt em

ptto pre pa re thi s ca se fortri al an d/ or to set tl e it , as re qu ire d b y cert ai n o f ou r Ru le s an d o urst an di ng pre tri al ord er d at edMay 6, 20 14 . Accor di ng to res po nd en t,

7. OnMay 27, 2 01 4, re sp on de nt ’s Offic e o f App eal s m ai le d a le tt er t o p et it io ne r’s ad dr es s as sh own on th e p et it io n a ndto anad

dr es s fo un d fo r pe ti ti on er o nl in e. Eachlet te r st at edth atth e Offi ce o f App eal s was un ab le to co nt actpe ti ti on er b y tel ep ho ni ng th e num

be r se t fo rth inth e p et it io n a ndreque st edth atpe ti ti on er co nt actth e Offi ce o f App eal s i m

m ed ia te ly. 8. Th e le tt er m ai le d t o p et it io ne r’s ad dr es s as sh own onth e pe ti ti on was n otreturne d t o re sp on de nt ’s Offic e o f App eal s; th e le tt er m ai le d t o t he ot he r ad dr es s was returne d o n M ay 30 , 20 14
. 9. OnJu ly 31, 2 01 4, re sp on de ntm ai le d alet te r to pe ti ti on er’s ad dr es s as sh own on th e p et it io n re qu es ti ng pe ti ti on er t o c on ta ct res po nd en t i m

m ed ia te ly to co m

m en ce p rep arat io n o f a s ti pu la ti on of- 7 -

[* 7] fact s i n a cco rd an ce wi thBran ert on Co rp . v. Co m m is si on er, 6 1 T.C. 6 91 (1 97 4)
. 10 . On Aug us t 4 , 20 14 , su chlet te r was returne d t o re sp on de nt
. 11 . Peti ti on er h as no t fi le d a20 11 , 20 12 or 2 01 3 fe de ral in co m e ta x re tu rn ; re sp on de nt ’s reco rd s re fle ctpe ti ti on er’s ad dr es s as th atrefl ect edon th e p et it io n. 12 . On Aug us t 1 4, 2 01 4, thr ou gh anin te rn etsea rch , res po nde ntob ta in edanad dr es s an d t el ep ho ne nu m be r of th e law firm

of Fi lz er & St ric kl an d In c. lo cat edinW il lo ug hb y , Ohi o. Onsu chda te , res po nd en t ca ll edth e te le ph on e num be r as so ci at edwith s uc h fi rm an d he arda reco rd in g s ta ti ng th atres po nd en t h adreac he d t he tel ep ho ne nu m be r of Gene ral Avi at io n P art s, LLC. 13 . On Aug us t 1 4, 2 01 4, thr ou gh anin te rn etsea rch , res po nde ntob ta in edth e n am e o f Fi lz er & Gru tt ad aurio , P.L.L., a la w firm lo cat edinFlo rid a. No fu rth er co nt actin fo rm at io n was av ai labl e. On Se pt em

be r 19 , 20 14 , res po nd en t fi le d apre tri al m em or an du m , as requi redby ourst an di ng pre tri al ord er. Pet it io ne r fai le d t o fi le a pr etria l m em oran du m . On Se pt em

be r 24 , 20 14 , we is su edanord er i n wh ic h we o rd eredpe ti ti on er to fil e a res po ns e to res po nd en t’s m ot io n tha t was to be rece iv edby the Co urt b y Octo be r 1, 2 01 4. Th e co py of th atord er tha t we s erv edon pe ti ti on er was returne d by the U.S. Pos ta l Se rv ic e m ark ed“NOT DEL IVERABLE AS ADDRESSED UNABLE TO FORWARD.” Peti ti on er d idno t fi le a res po ns e to res po nd en t’s
m ot io n.- 8 -

[* 8] Thi s ca se was c al le d fr om th e cal en dar atth e Cl ev el an d t ria l s es si on . Co un se l fo r res po nd en t ap pe ared . There was n o app eara nc e b y or o n b eh al f of pe ti ti on er. W e to okres po nd en t’s m ot io n u nd er ad vi se m en t. Dis cu ss io n Pet it io ne r be ars th e b ur de n o f pr oo f fo r eac h o f th e ta xabl e y ears at i ss ue with re sp ectto th e d efi ci en cy de te rm in at io n a ndth e d et erm in at io ns un de r se ct io ns 66 51 (a)( 2) an d 6 65 4( a) fo r eac h o f th os e y ears . See Ru le 14 2( a). Res po nd en t be ars th e b ur de n o f pr oo f fo r eac h o f th e y ears at i ss ue with re sp ectto th e fraud pe na lty un de r se ct io n 6 65 1( f) fo r eac h o f th os e y ears , andres po nd en t m us t s at is fy th atbu rd enby clearan d c on vi nc in g e vi de nc e. See s ec. 7 45 4( a); Ru le 14 2( b)
. On the reco rdbe fo re u s, we fi ndpe ti ti on er i n d efau ltun de r Ru le 12 3( a). W e fu rth er fi ndon th atreco rdth atpe ti ti on er h as fai le d t o c arry his bu rd enof
es tabl is hi ng foreach of t he y ears at i ss ue any erro r in res po nd en t’s d efi ci en cy de te rm in at io n a ndres po nd en t’s d et erm in at io ns un de r se ct io ns 66 51 (a)( 2) an d 66 54 (a) fo r eac h o f th os e y ears . W e su st ai n t ho se de te rm in at io ns inth e n ot ic e. On the reco rdbe fo re u s, we al so fin d t ha t re sp on de ntha s ca rri edres po nde nt ’s bu rd enof e st ab li sh in g fo r eac h o f th e y ears at i ss ue th ro ug h t he- 9 -

[* 9] well -p le ad edfact s i n t he an swe r th e co rrec tn es s o f res po nd en t’s d et erm in a- 3 ti onof t he frau d p en al ty und er s ect io n 6 65 1( f) fo r eac h o f th os e y ears . W e su st ai n th os e d et erm in at io ns inth e n ot ic e. To re fle ctth e fo reg oi ng , An o rd er g ran ti ng res po nd en t’s m oti on an d d eci si on forres po nd en t wi ll be
en te red
.

Ourho ld in g p et it io ne r in de fau ltha s the effe ctof h is admitti ng well

3 pl ead edfact s i n t he an swe r. See, e.g ., Sm it h v . Comm is si on er, 9 1 T.C. 1 04 9, 10 56 -1 05 7 (1 98 8) , aff’d, 9 26 F.2d14 70 (6th C ir. 1 99 1)
.