TAX COURT OPINION

Case: Christopher A. Toussaint
Docket Number: 18914-10S
Judge: Carluzzo
Opinion Type: bench
Filed: 11/30/2011
Pages: 9

CLC UNITED STATES TAX COURT WASHINGTON, DC 20217 CHRISTOPHER A. TOUSSAINT, Petitioner, Docket No. 18914-10S COMMISSIONER OF INTERNAL REVENUE, Respondent. O R D E R Pursuant to Rule 152 (b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit the transcript of herewith to petitioner and to respondent a copy of pages of Special Trial Judge Lewis R. Carluzzo at Los Angeles, California, on October 24, 2011, containing his oral fact and opinion rendered at the conclusion of trial. the the hearing of the above case before findings of In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. November 30, 2011 SERVED Nov 30 2011 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BENCH OPINION BY SPECIAL TRIAL JUDGE LEWIS R. CARLUZZO CHRISTOPHER A. TOUSSAINT V. COMMISSIONER 3 DOCKET NO.: 18914-10S OCTOBER 24, 2011 THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the JCourt's oral findings of fact and opinion. , This proceeding for the redeterminations of deficiencies is cond cted as a Small Tax Case pursuant to the provisions of section:7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax Court Rules of Practice and Procedure. This bench opinion.is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Subsequent section references made in this bench opinion are to the Internal Revenu Code of 1986, as amended, in effect for the relevant periods; Rule references are to the Tax Court Rules of Practice and Procedure. This case is before the Court on respondent's Motion to Impose a Penalty under I.R.C. Section 6673, filed October 7, 2011, and respondent's Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 oral motion to dismiss for lack of prosecution, made October 18, 2011, when the case was called from the calendar for trial in Los Angeles, California, and there was no appearance by o on behalf of petitioner. Both motions were heard in Los Angeles, California, on October 18, 2011. Cassidy B. Collins appeared on behalf of respondent and argued in support of the motions . . As. noted, there was no appearance by or on behalf of petitioner. The proced ral his ry relevant to the disposition of respondent ' s otions is easily summarized as follows·. In a notice of deficiency dated ·May 21, 2010, responde t determined deficiencies in, and imposed sec ion 6662 (a) penalties with respect to petitioner's 2006 and 2007 Federal income. tax (the notice) . Petitioner's 2006 and 2007 Federal income tax returns each include a Schedule C, Profit or Loss from Business, and except for computational adjustments, ·the deficiencies here in dispute each arise from adjustmefits made to the items reported on those Schedules C. · The case started off routinely enough. The petition filed in response to the notice complies, more or less, with Rule 34 n that assignments of Heritage Reporting Corporation (202) 628-4888 I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 error and facts in support of those assignments contained in the petition are directed to the adjustments made in the notice. Other than to allege that he owes no additional income tax for either year in issue, petitioner does not otherwise challenge the imposition of the section 6662 (a) penalties . At some point following the filing of respondent's answer, however, things did not go so routinely. Our Rules require that the parties confer in order to stipulate "to the fúllest extent to which complete or qualified agreement can or fairly should be reached, all matters not privileged, which are relevant to the pending casel, regardless of whether such matters involve fact or opinion or the application of law to fact". Rule 91(a) . At some point after respondent's answer was filed.it would appear that "informal consultation or communication", see Rule 70 (a) , between the parties was more than strained. This is no surprise when the attachments to respondent's Motion to Compel Production of Documents, filed August 31, 2011, (granted in part by Order dated September 6, 2011) are examined. Correspondence sent to respondent's counsel by petitioner clearly demonstrates his intent, at least at that point in time, to frustrate any progress towards trial Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 preparation by taking a frivolous position having something to do with a "trust entity". See exhibits, D, E, and F, to respondent ' s motion to compel . Nothing in the notice, or the petition for that matter has anything to do with any "trust entity". The communication failure between the parties caused no doubt by the positions taken by petitioner as shown in the above-referenced documents not only required respondent j to engage in formal discovery in order properly to prepare for trial, but also resulted in respondent's Rule 91(F) motion, also filed on August 31, 2011. Formal discovery and Rule 91(f) motions are less than routine in a case such as this one conducted in accordance with a taxpayer's section 7463 election. Re spondent ' s Rule 91 ( f ) mot ion required the issuance of an Order to Show Cause, which in this case was issued on September 6, 2011, and returnable at the calendar call for the Los Angeles, California, trial session scheduled to begin on October 17, 2011. See Rule 91(f) (2). The case was called as scheduled. Petitioner noted his presence in the courtroom, but refused to enter an appearance in the case. According to petitioner, he could not do so because of some Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7 "trust", or some such thing. As it turned out, he offered no response to the September 6, Order to Show Cause, and that order was made absolute; consequently the matters covered in respondent's Rule 91(f) motion are deemed admitted for purposes of this case. While petitioner was in the courtroom, respondent's motion to impose a section 6673 penalty was set for hearing, and the case was set for trial at a time and date certain of 2 P.M., on Tuesdaÿ October 18, 2011, in the same Los Angeles, California, courtroom. The case was recalled as scheduled, and as noted, petitioner failed to appear. Rule 149 provides that a "case may be dismissed" for the "unexcused absence of a party or a party's counsel when a case is called for trial". See also Rules 53 and 123. Petitioner's absence from the courtroom when the case was called for trial on October 18 was unexcused. In a deficiency case, dismissal upon a ground contemplated by the above referenced Rules requires the entry of decision. In this case respondent's oral motion requests that decision be entered showing deficiencies and penalties as determined in the notice. The facts established as a result of respondent's Rule 91(f) moti(on include copies of Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8 petitioner's Federal income tax returns for the years in issue. Reviewing those returns makes it obvious that petitioner was engaged in one or more income producing activities during each of those years. See Weimerskirch v. Commissioner 596 F.2d 358 (9th Cir. 1979). That being so, the burden of proof with respect to any issue that could arise from the adjustments made in the notice rests entirely with petitioner. Ndthing submitted by petitioner addresses, much less satisfies that burden, and respondent has not conceded any error with respect to any of the adjustments contained in the notice.' Furthermore, the manner in which the imposition of the section 6662 (a) penalties are challenged in the petitioner, in effect, relieves respondent of his burden of production under section 7491(c) with respect to those penalties. | See Swain v. Commissioner, 188 T.C. 358 (2002) . Taking into account the foregoing, and for reasons set forth more fully in the transcripts of the proceedings on October 17 and 18, 2011, respondent's oral motion to dismiss will be granted and decision will be entered showing the deficiencies and penalties determined in the notice. Lastly, we consider respondent's motion to Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9 impose a section 6673 penalty. In relevant part, that section provides that the Court may impose a penalty in an amount not to exceed $25,000 if it finds that the taxpayer has instituted or maintained a proceeding primarily for delay, or the taxpayer's position is frivolous or groundless. Given the nature of some of the adjustments made in the notice, and the manner those adjustments have been challenged in the etition, we are reluctant to find that petitioner "instituted" this case "primarily for delay". As it turns out, the case has been calendared only once for trial, and the calendering process was not delayed by his apparent refusal to cooperate with respondent during the pretrial phase. Ironically, it might be argued that his failure to appear at trial expedited the proceedings as we expect it would have taken longer to try the case than to address respondent's motion to dismiss. Nevertheless, the above-referenced attachment to respondent's motion to compel production of documents, some of which petitioner sent to the Court, and his behavior and statements made in the courtroom when the case was called from the calendar on October 17th, demonstrate his adherence to a frivolous position that section 6673 is designed to Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 deter. The documents referenced above that petitioner sent to the Court have not been filed because none complies with the Rules of the Court, but the originals will be made part of the record as attachments to the order of dismissal and decision soon to be entered in this case. Because of the frivolous position taken by petitioner, additional and unnecessary burdens were placed not.only upon respondent ' s counsel, but upon the Court as well . Consequently, and to compensate the United States, if only in part, for the costs incurred in connection with those extra and unneces ary burdens, respondent's motion to impose a section 6673 penalty upon petitioner will be granted, ând he will be held liable for a $1,000 penalty under that section. To reflect the foregoing, an appropriate order and decision will be entered. This concludes the lCourt's oral findings of fact and opinion in this case. (Whereupon, at 9:21 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // Heritage Reporting Corporation (202) 628-4888