TAX COURT OPINION

Case: Mark C. Garlington
Docket Number: 8801-05S
Judge: Colvin
Opinion Type: bench
Filed: 06/09/2008
Pages: 6

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 MARK C . GARLINGTO N Petitioner, * V. Docket No . * COMMISSIONER OF INTERNAL REVENU E 8801-05S FILE S Respondent . * ORDE R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the',' Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the '!above case before Judge Joseph R . Goeke at New Orleans, Louisiana, on May 21, 2008, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed) Joseph Robert Goeke Judge DATED : Washington, D .C . June 9, 2008 SERVED JUN 13 2008 1 Bench Opinion of Judge Joseph Robert Goeke May 21, 200 8 2 Mark C . Garlington v . Commissioner Docket No . 8801-05S 3 THE COURT : The Court has decided to render ora l 4 findings of fact and opinion in this case and the following 5 represents the Court's oral findings of fact and opinion . 6 The oral findings of fact . and opinion shall not be relied 7 upon as precedent in any other case . 8 This bench opinion is made pursuant to th e 9 authority granted by section 7459(b) of the Internal Revenue 10 Code and Rule 152 of the Tax Court Rules of Practice an d 11 Procedure . Hereinafter references to sections are to the 12 Internal Revenue Code . And references to rules are to the 13 Tax Court Rules of Practice and Procedure . 14 This case was heard pursuant to the provisions of 15 section 7463 in effect when the petition was filed . 16 Pursuant to section 7463(b) the decision to be entered is 17 not reviewable by any other court . 18 Respondent made deficiency determinations against 19 the Petitioner for the years 2001, 2002 and 2003 . Th e 20 deficiencies are in income tax in the amounts of $7,584 ; 21 $4,141 ; and $2,774 respectively . Respondent also determined 22 that Petitioner was liable for additions to tax for the year 23 2001 under section 6663 and for the years 2002 and 200 3 24 under section 6651(f) and 6654 . In Respondent's Answer , 25 Respondents also asserted in the alternative other additions Heritage Reporting Corporatio n (202) 628-4888 3 1 to tax should the Court determine that the additions to tax 2 related to fraud were inapplicable . 3 Respondent was represented at the trial of this 4 case by Mr . Emile L . Hebert, III . Petitioner failed t o 5 appear, although attempts were made to contact the 6 Petitioner by both Respondent and the Court . 7 Petitioner filed a joint return for the taxabl e 8 year 2001 with his wife , who is now deceased . He also filed 9 two amended returns for 2001 . Petitioner filed a document 10 he purported to be a joint return with his wife for 2002 but 11 this document was rejected by the Internal Revenue Service 12 as frivolous as it showed no income , which was inconsistent 13 with other information contained in the document reflecting 14 that Petitioner had received wage income in 2002 . 15 Petitioner did not file a federal income tax return for 16 2003. 17 For 2001 the section 6663 addition to tax 18 determined by Respondent is $9,448 .50 . The Notice o f 19 Deficiency reflects that this amount was computed based upon 20 unreported wages of the Petitioner and his wife, a short- 21 term capital gain , and a claim for over - withholding in the 22 amount of $5,014 resulting from one of the amended returns 23 filed by the Petitioner and his wife . 24 We first examined the question of who bears th e 25 burden of proof in this case, given the Petitioner's failure Heritage Reporting Corporation (202) 628-4888 4 1 to appear . The Court finds that section 7491(a) is not 2 applicable to shift the burden of going forward wit h 3 evidence relative to the deficiency to the Respondent 4 because the Petitioner has presented no credible evidence t o 5 support hi s .10 -_=Y , and Petitioner obviously did not 6 cooperate with the audit of this case . Therefore, th e 7 Petitioner bears the burden of proof with respect to th e 8 underlying deficiencies . And the Petitioner having faile d 9 to present any evidence or to appear in this case, the Court 10 finds for the Respondent relative to those deficiencies . 11 This is also in accord with Rule 142(a)(2) . 12 With respect to the burden of proof concerning the 13 additions to tax for fraud, Respondent bears the burden to 14 establish the additions to tax for fraud are applicable for 15 the years in question under section 7454(a) and Rule 142(b) . 16 This burden is to establish the application of fraud b y 17 clear and convincing evidence . 18 Respondent also has the burden of production 19 relative to any additions to tax under section 7491(c) . 20 Pursuant to section 6663(b), if Respondent 21 establishes that any portion of the underpayment i s 22 attributable to fraud, the entire underpayment shall b e 23 treated as attributable to fraud, except with respect to any 24 portion of the underpayment which the Petitioner woul d 25 establish is not attributable to fraud by a preponderance of Heritage Reporting Corporatio n (202) 628-4888 5 1 the evidence . So the question before the Court is whether 2 Respondent has established that any portion of the 3 underpayment of tax for the years 2001 through 2003 dealing (cid:127)4 with each year individually is due to fraud . 5 The facts of this case establish that th e 6 Petitioner has taken the position that wages are not subject 7 to income tax, beginning with his 2001 return . This in 8 itself would not establish fraud . However, the facts also 9 establish that Petitioner did take affirmative steps t o 10 avoid the collection of federal income tax . 11 The facts of this case are similar to those of 12 Rowlee v . Commissioner , 80 T .C . 1111, 1125 (1983) . The 13 Court stated in that case as follows : 14 "Filing of false certificates claiming a n 15 excessive number of exemptions or claiming that the taxpayer 16 is exempt from income tax is evidence of fraud . " 17 Petitioner did in fact claim excessive exemptions 18 in June of 2001 for the 2001 year and he also attempted to 19 claim exemption from federal income tax in the later years, 20 but continued to have his withholding done based upon th e 21 erroneous claim for excess exemptions . Accordingly, we find 22 that Respondent's evidence establishes that Petitioner' s 23 underpayment of tax for 2001, 2002 and 2003 was a result of 24 fraud regarding the wage income in question . 25 This having been established, and Petitioner Heritage Reporting Corporation (202) 628-488 8 I 6 1 producing no evidence as to why the fraud addition to tax 2 should not apply to the other amounts generating 3 underpayments in question , we sustain Respondent ' s position 4 relative to the additions to tax related to fraud for al l 5 the years in question and, as previously stated, having 6 sustained Respondent ' s determinations relative to th e 7 deficiencies in question this results in a case where the 8 decision will be entered for the Respondent . 9 This concludes the Court ' s oral findings of fact 10 and opinion in this case . 11 (Whereupon , at 12 :26 p . m ., the bench opinion in 12 the above - entitled matter was concluded . ) 13 // // 1 4 15 1 6 17 18 19 20 21 2 2 23 2 4 25 Heritage Reporting Corporation (202) 628-4888