TAX COURT OPINION

Case: Michael R. Kelly
Docket Number: 6225-16
Judge: Goeke
Opinion Type: bench
Filed: 10/15/2018
Pages: 5

CT UNITED STATES TAX COURT WASHINGTON, DC 20217 MICHAEL R. KELLY, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 16847-16. ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is 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 hearing in the above case before Judge Joseph Robert Goeke at San Diego, California containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, petitioner's Motion for Partial Summary Judgment, filed July 25, 2018, will be denied. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. October 15, 2018 SERVED Oct 15 2018 3 1 2 Bench Opinion by Judge Joseph Robert Goeke September 25, 2018 3 Michael R. Kelly v. Commissioner of Internal Revenue 4 5 6 7 8 9 Docket No. 16847-16 THE COURT: The Court has decided to render oral findings of fact and opinion in these cases, and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. This 10 opinion is rendered pursuant to Rule 152 of the Tax Court 11 Rules of Practice and Procedure, and rule references in 12 the remainder of this bench opinion are to the Tax Court 13 Rules of Practice and Procedure. Section 7459(b) provides 14 further support for the rendering of this bench opinion. 15 This section is in the Internal Revenue Code, and all 16 17 section references hereinafter in this bench opinion are to the Internal Revenue Code as applicable to the case 18 before us. 19 The present case involves a Notice of Deficiency 20 determination issued by the respondent to the petitioner. 21 Two Notices of Deficiency were issued, and that resulted 22 23 in the two dockets before us. We have jurisdiction over the present cases under section 6213(a). Before us are 24 petitioner's motions for partial summary judgment under 4 1 2 3 4 5 6 7 8 9 three issues: 1) whether petitioner is liable for the fraud penalty under section 6663 for 2007 through 2011; 2) whether the years 2007 and 2008 are barred by section 6501; and 3) whether the section 6662 penalties are barred by section 6751(b)(1) for 2010 and 2011. Respondent has conceded the third issue. The other two issues are contested. Rule 121(b) provides that summary judgment may lead to a decision as a matter of law. Section 121(b) is 10 only applicable if there is no genuine issue of material 11 12 fact. Petitioner makes a novel legal argument to limit respondent's factual arguments in support of the fraud 13 penalty. Petitioner asserts that the badges of fraud not 14 mentioned in the examination division analysis prepared 15 relative to section 6751 may not be used in this case. In 16 other words, petitioner would limit the arguments 17 available to respondent to those actually offered in 18 support of the fraud penalty at the time of the written 19 authorization request under section 6751. 20 21 22 We first note that this position appears to be inconsistent with this court's rules of practice and procedure. Sgg Rule 36(b). We also note that the general 23 practice of this court concerning fraud issues is that, 24 while the respondent has the burden of proof, the issues 25 are framed by the pleadings and evidence entered into the øn>4002solopemeenseerreenstlwwwmaiben a 1 2 3 4 5 6 7 8 9 10 11 record of trial; Rule 143(a) and (b). Section 6751(a) and (b) provide as follows: "(a) Computation of penalty included in notice. The Secretary shall include with each notice of penalty ... under this title information with respect to the name of the penalty, the section of this title, under which the penalty is imposed, and a computation of the penalty. (b) Approval of assessment. (1) In general, no penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such 12 determination or such higher level official as the 13 Secretary may designate." 14 15 In Graev v. Commissioner, 149 T.C. No. 23 (2017), we set forth the requirements for approval in 16 writing to comply with section 6751(b) as a matter of 17 18 respondent's burden of production under section 7491(c). we did not determine that section 6751 changed the 19 established law that penalties were subject to de novo 20 21 review in deficiency proceedings or that the issues before this Court in deficiency cases are framed by the notice of 22 deficiency, the petition and the answer. _Sm DJimelim 23 Holdings v. Commissioner, 845 F.3d 555 (4th Cir. 2017) 24 25 cert. denied, 138 S. Ct. 299 (2017). Petitioner cites no authority for the argument = Ocábers 6 1 2 3 4 5 6 7 8 9 that section 6751 changes the parameters of evidence in civil fraud cases in this court, nor has petitioner presented any compelling reason why the longstanding evidentiary and procedural practice of this court in fraud cases should be altered because of the requirements of section 6751. We find petitioner's arguments relative to the limitation on evidence in civil fraud cases to be far afield from the actual statutory language of section 6751, and we are not convinced that any change in the 10 application of the civil fraud penalty before this Court 11 is merited because of the procedural requirements 12 established by section 6751. 13 14 15 Accordingly, petitioner's motions will be denied in each docket. These dockets have been consolidated for purposes of this bench opinion only. An appropriate order 16 will be issued. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 3:30 p.m., the above-entitled matter was concluded.) 17 18 19 20 21 22 23 24 25 cobers øn>4A2250iopentmeneeserteruwelawwasaibersmet