Opinion ID: 782888
Heading Depth: 4
Heading Rank: 2

Heading: Should the amendment have shifted the burden of proof?

Text: 64 Kanter argues next that the amendment to the pleadings was a new matter that shifted the burden of proof on this issue to the Commissioner. See Tax Court Rule 142(a)(1) (The burden of proof shall be upon the petitioner, except ... that, in respect of any new matter, ... it shall be upon the respondent.). The distribution of burdens is a question of law that we review de novo. This argument fails as well. The Commissioner is allowed the latitude to amend his pleadings and even adopt entirely new theories supporting assessed deficiencies without triggering Rule 142's shift in burden, so long as the new theory is not inconsistent with the original allegation, does not require new evidence in its support, nor increases the amount of the deficiency. See, e.g., Friedman v. Comm'r, 216 F.3d 537, 543 (6th Cir.2000) (A new position taken by Commissioner is not necessarily a `new matter' if it merely clarifies or develops Commissioner's original determination without requiring the presentation of different evidence, being inconsistent with Commissioner's original determination, or increasing the amount of the deficiency.); Abatti v. Comm'r, 644 F.2d 1385, 1390 (9th Cir.1981) (same); Achiro v. Comm'r, 77 T.C. 881, 890, 1981 WL 11333 (1981) (same). 65 The problem for Kanter is that the Commissioner's amendment did not offer a new theory for the alleged deficiency. The theory under which the Commissioner proceeded at all times was that specific transactions produced taxable income that was reported by BRT but which was properly taxable to Kanter by virtue of the grantor trust provisions of the tax code. 17 The case relied upon by Kanter here supports our conclusion. Achiro involved an amendment under which the Commissioner alleged for the first time that a deduction was improper under a section of the tax code completely different from the section originally argued. 77 T.C. at 889-90; see also Shea v. Comm'r, 112 T.C. 183, 190-92, 1999 WL 177471 (1999). The Commissioner's amendment here presented a much more modest change, more akin to a clarification of the original allegation. Nor is Kanter correct when he alleges that the amendment increased the assessed deficiency. The stated deficiency remained constant, and involved the same income from the same transactions, but was re-allocated from one disputed year to another disputed year to correct a calender error that did not prejudice Kanter's case. 18 The Commissioner did not propose additional income nor require Kanter to defend against a larger deficiency than had been assessed before the amendment. Therefore, it is incorrect to claim that the amendment resulted in an entirely new and increased deficiency in a different year.  (Pet. Br. at 46 (emphasis in original).) The Tax Court was correct in determining that the amendment did not shift the burden of proof to the Commissioner.