t c memo united_states tax_court vivian c kerr petitioner v commissioner of internal revenue respondent docket no filed date vivian c kerr pro_se c teddy li for respondent memorandum findings_of_fact and opinion panuthos chief special_trial_judge respondent determined a deficiency in petitioner’s federal_income_tax of dollar_figure and an accuracy-related_penalty under sec_6662 of dollar_figure for the taxable_year unless otherwise indicated section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure the issues for decision are whether petitioner failed to report nonemployee compensation of dollar_figure for the taxable_year and whether petitioner is liable for the resulting accuracy-related_penalty under sec_6662 findings_of_fact some of the facts have been stipulated and are so found the stipulated facts and the related exhibits are incorporated herein by this reference at the time of filing the petition petitioner resided in baltimore maryland during the year in issue petitioner was a heavy collision technician at automotive emporium he brought his own toolbox and used his own tools to rebuild wrecks and to perform automobile bodywork automotive emporium issued petitioner a form 1099-misc miscellaneous income reporting nonemployee compensation of dollar_figure for the taxable_year the record include sec_48 checks totaling dollar_figure that were issued by automotive emporium made payable to petitioner and dated from february to date jj auto body and clarksville auto center each issued petitioner a form_w-2 wage and tax statement reflecting wages totaling dollar_figure for the taxable_year petitioner filed a federal_income_tax return for the taxable_year he reported dollar_figure of gross_income from wages petitioner however did not include in his gross_income for the year in issue any of the dollar_figure reported by automotive emporium on form 1099-misc respondent contends that during the year in issue petitioner was an independent_contractor for automotive emporium and that he failed to report nonemployee compensation of dollar_figure petitioner contends that he did not have the requisite license to perform automobile bodywork as an independent_contractor and thus he was a common_law_employee of automotive emporium petitioner further contends that although employed by automotive emporium he did not receive any compensation_for his automobile bodywork instead he testified that with respect to the checks made payable to petitioner by automotive emporium he simply cashed the checks and returned the proceeds to automotive emporium a employment status and compensation opinion generally the burden_of_proof is on the taxpayer rule a the burden_of_proof respecting a factual issue may be placed on the commissioner under sec_7491 if the taxpayer introduces credible_evidence regarding that issue and establishes that the taxpayer complied with the requirements of sec_7491 and b to substantiate items maintain required records and fully cooperate with the commissioner’s reasonable requests sec_7491 does not require the burden_of_proof to be placed on respondent in the present case petitioner has neither taken a position as to whether the burden_of_proof should be placed on respondent nor established that he complied with the requirements of sec_7491 we therefore conclude that the burden remains on petitioner to prove that respondent’s determination that petitioner received unreported nonemployee compensation of dollar_figure for the taxable_year is erroneous gross_income includes compensation_for services including fees commissions fringe_benefits and similar items sec_61 in the present case petitioner performed automobile bodywork at the automotive emporium gross_income includes the dollar_figure paid_by automotive emporium to petitioner the record include sec_48 checks totaling dollar_figure that were issued by automotive emporium made payable to petitioner and dated from february to date petitioner has not presented any credible_evidence that the dollar_figure reported on form 1099-misc does not represent income for services performed we do not accept petitioner’s testimony that he cashed checks and sec_7491 is effective with respect to court proceedings arising in connection with examinations by the commissioner commencing after date the date of enactment by the internal_revenue_service restructuring and reform act of publaw_105_206 sec a 112_stat_726 returned the proceeds to automotive emporium as an accommodation the classification of the amount reported by automotive emporium as nonemployee compensation depends upon whether petitioner is a common_law_employee or an independent_contractor for federal_income_tax purposes see weber v commissioner 103_tc_378 affd 60_f3d_1104 4th cir courts have identified a number of factors relevant in evaluating common_law employment status including the following the right of the hiring party to exercise control_over the manner and means of the work the discretion of the hiring party over the time and duration of the work the permanency of the relationship the right of the hiring party to discharge the source of and investment in the instrumentalities tools and facilities of the work the method of payment the provision of employee_benefits the opportunity of the hired party for profit or loss the right of the hiring party to assign additional projects the offering by the hired party of services to the general_public the skill required for the work whether the type of work is part of the hiring we note the discrepancy between the amounts reflected in the form 1099-misc miscellaneous income dollar_figure and the checks totaling dollar_figure petitioner has not asserted a reasonable dispute with respect to the income reported on an information_return nor fully cooperated with respondent so as to place on respondent the burden of producing reasonable and probative information in addition to the form 1099-misc see sec_6201 mcquatters v commissioner tcmemo_1998_88 given the nature of petitioner’s incredible testimony we accept the dollar_figure as the amount_paid to petitioner party’s regular business and the relationship the parties believe they are creating 503_us_318 118_tc_428 weber v commissioner supra pincite kiddie v commissioner 69_tc_1055 given petitioner’s testimony that he did not get paid for the work he performed at automotive emporium it is somewhat difficult to apply the aforementioned factors doing our best with a meager record we conclude that petitioner has failed to prove that respondent’s determination that petitioner failed to report nonemployee compensation of dollar_figure for the taxable_year should not be sustained the only information provided is that petitioner provided his own tools to perform automobile bodywork as a heavy collision technician at the automotive emporium petitioner has failed in his burden_of_proof to establish that he was a common_law_employee and not an independent_contractor of automotive emporium accordingly respondent’s determination that petitioner received dollar_figure of nonemployee compensation is sustained b accuracy-related_penalty the commissioner has the burden of production in any court_proceeding with respect to the liability of any individual for any penalty under sec_6662 sec_7491 to meet this burden the commissioner must come forward with sufficient evidence indicating that it is appropriate to impose the relevant penalty or addition_to_tax 116_tc_438 once the commissioner meets his burden of production the taxpayer must come forward with evidence sufficient to persuade a court that the commissioner’s determination is incorrect id pincite the taxpayer also bears the burden_of_proof with regard to issues of reasonable_cause substantial_authority or similar provisions id pincite respondent determined that petitioner is liable for the accuracy-related_penalty under sec_6662 for the accuracy-related_penalty is equal to percent of any portion of an underpayment_of_tax required to be shown on the return that is attributable to the taxpayer’s negligence or disregard of rules or regulations see sec_6662 and b negligence consists of any failure to make a reasonable attempt to comply with the provisions of the internal_revenue_code sec_6662 disregard consists of any careless reckless or intentional disregard id an exception applies to the accuracy-related_penalty when the taxpayer demonstrates there was reasonable_cause for the underpayment and the taxpayer acted in good_faith with respect to such underpayment see sec_6664 whether the taxpayer acted with reasonable_cause and in good_faith is determined by the relevant facts and circumstances the most important factor is the extent of the taxpayer’s efforts to assess the proper tax_liability see stubblefield v commissioner tcmemo_1996_537 sec_1_6664-4 income_tax regs sec_1_6664-4 income_tax regs specifically provides circumstances that may indicate reasonable_cause and good_faith include an honest misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances including the experience knowledge and education of the taxpayer on the basis of the record we conclude that petitioner is liable for the accuracy-related_penalty under sec_6662 respondent has met his burden of production under sec_7491 with the form 1099-misc and various checks made by automotive emporium during the taxable_year we are satisfied that petitioner omitted income from his return for the taxable_year petitioner failed to provide a reasonable or credible explanation as to why the income was not reported on his income_tax return petitioner has not established that the underpayment was due to reasonable_cause or that petitioner acted in good_faith accordingly we sustain respondent on this adjustment to reflect the foregoing decision will be entered for respondent


internal_revenue_service department of the treasury significant index no washington oc person to contact telephone number refer reply to op e ep a te da feb in re this letter constitutes notice that conditional waivers of the percent tax under sec_4971 of the internal_revenue_code have been granted for the above-named plan for the plan years ended date and and we will not consider your request for a waiver of the minimum_funding_standard for the plan_year ended october the waiver request was submitted date more than six months after the deadline of date the waivers of the percent tax have been granted in accordance with section b of the employee_retirement_income_security_act_of_1974 erisa the amounts for which the waivers have been granted are equal to percent of the accumulated_funding_deficiency in the funding_standard_account as of the end of each plan_year for which the waivers have been granted to the extent such funding deficiency has not been corrected the company has experienced temporary substantial business hardship as evidenced by a net_loss in income for the fiscal_year ended date sales of the company have generally declined from the fiscal_year ended date the company is percent owned by the plan was terminated on date the plan has an accumulated_funding_deficiency for the plan_year date it has been determined to be in the participants’ best interest in the aggregate to grant the waiver subject_to the following conditions on or before date the company will make contributions to the plan for ail participants in the plan except that contributions for be made the amount of contributions required for such participants other than are not required to is approximately dollar_figure on or before date the company will pay the ten percent excise_tax imposed under sec_4971 of the code on the accumulated_funding_deficiency as of october porn a this ten percent tax is approximately dollar_figure the enclosed form_5330 return of excise_taxes related to employee benefit plans with instructions should be used to file the required return when paying the tax if these conditions which you agreed to are not met these waivers are retroactively null and void when filing form 5500-c r for the plan_year ended date a copy of this letter should be attached a copy of this letter has been sent to the in key district_office sincerely yours heth rym wart eably ‘ y kathryn marticello chief actuarial branch enclosure