Court Opinion

ID: 4484530
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:16:48.58294+00
Date Added: 2024-06-11T08:49:14.660592
License: Public Domain

Wilbur, J., concurring: The majority opinion provides an unnecessarily conservative procedure for disposing of the increasing number of cases where petitioners decline'to participate in any pretrial or trial proceeding after filing their petitions. I would go further and default the petitioner in cases like the one before us. When a taxpayer files a petition and then does no more, when he repeatedly declines to participate in pretrial preparations at any stage, when he refuses, after notice, to appear at trial or otherwise argue the merits of his case, we should uphold respondent’s determination in full without examining the merits of the controversy. That is precisely what we do with regard to the underlying deficiency, and I see no good reason for treating the fraud penalty differently. If a taxpayer persistently refuses to participate in our proceedings, then the proceedings should end — it is as simple as that. Our Rules explicitly provide for a termination of the proceeding when a taxpayer refuses to participate in the prosecution of his case. Rule 123(a) and (b). In such a case, a decision is entered in favor of respondent which "[operates] as an adjudication on the merits.” Rule 123(d) supra. While we have not hesitated to enforce this Rule with respect to respondent’s deficiency determinations, we have held that respondent must prove his entitlement to the fraud penalty even if this results in a trial in absentia. Miller-Pocahontas Coal Co. v. Commissioner, 21 B.T.A. 1360 (1931). Cf. Gilday v. Commissioner, 62 T.C. 260 (1974). Thus, we recite a litany of "deemed” admissions, "find” facts not disputed, and then "decide” the case as best we can, issuing a written opinion in every case. See, e.g., Brown v. Commissioner, T.C. Memo. 1981-294. Often we have a "trial,” the respondent putting on his case without the presence or participation of the taxpayer. These little one-act pantomimes complete with briefs and an opinion are a charade in which we can no longer indulge. The enormous growth in our caseload requires that we recognize the inconvenience these useless and futile histrionics impose on other citizens having business before this Court.1  Our reluctance to default a taxpayer stems from Miller-Pocahontas Coal Co. v. Commissioner, supra at 1361, where we held that we lacked authority to award respondent the statutory fraud penalty when w& dismissed a taxpayer’s suit for want of proper prosecution. Our decision was based on the congressional specification that "a decision of the Board [of Tax Appeals] dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the Commissioner.” See sec. 601(c), Revenue Act of 1928, Pub. L. 562, 45 Stat. 871 (emphasis added). We then observed, as the Internal Revenue Code now makes clear, that an addition to tax such as the fraud penalty is technically not part of the "deficiency.” See sec. 6211(a). . As a matter of statutory construction, our decision in Miller-Pocahontas has always been open to criticism. Our jurisdiction to determine whether a taxpayer is liable for an addition to tax was inferred from our authority to determine the correctness of respondent’s asserted deficiencies (see Gutterman Strauss Co. v. Commissioner, 1 B.T.A. 243, 247-249 (1924)), and is supported by the congressional declarations that "additions to the tax * * * shall be assessed, collected, and paid in the same manner as taxes” and that "Any reference * * * to 'tax’ * * * shall be deemed also to refer to the additions to the tax.” Sec. 6659(a); compare id. with sec. 275(b), Revenue Act of 1924, Pub. L. 176, 43 Stat. 298. Moreover, the section 6653(a) addition to tax (the "negligence penalty”) may be imposed in a default proceeding. Cf. Giles v. Commissioner, T.C. Memo. 1977-278. Miller-Pocahontas Coal Co. v. Commissioner also suggested (21 B.T.A. at 1361) that a taxpayer is protected from default and dismissal on the fraud penalty by section 7454(a), which provides that "In any proceeding involving the issue whether the petitioner has been guilty of fraud with intent to evade tax, the burden of proof’ to establish fraud by clear and convincing evidence shall be upon the Secretary. Yet, it is quite clear that the burden of proof only comes into play when there is a trial on the merits — in a default or dismissal proceeding, the burden of proof is simply irrelevant.2  Our Rule 123(a) permits a default "When any party has failed to plead dr otherwise proceed.” Similarly, Rule 123(b) permits a dismissal "For failure of a petitioner properly to prosecute or to comply with these Rules.” Both are based upon the Federal Rules of Civil Procedure, rules 55 and 41, see Notes, 60 T.C. 1129-1130 (1973), and as the Federal courts have repeatedly held, default or dismissal is fully appropriate when a party continually refuses to participate in the proceedings. See, e.g., Stanley v. Continental Oil Co., 536 F.2d 914 (10th Cir. 1976); Baez v. S. S. Kresge Co., 518 F.2d 349 (5th Cir. 1975) (per curiam), cert. denied 425 U.S. 904 (1976). Moreover, there has never been a suggestion that a taxpayer is immune to default in the many other situations where the respondent has the burden of proof — where an increase in deficiency was asserted or a new issue raised by respondent in his answer; where respondent must prove improprieties of a foundation manager by "clear and convincing evidence” (see sec. 7454(b); Rule 142(c)); where the liability is premised upon the taxpayer’s status as a transferee (sec. 6902(a); Rule 142(d)); or when the deficiency is based upon the accumulated earnings tax and the burden of proof has been shifted to respondent (sec. 534, Rule 142(e)). How can a default in these instances be distinguished from the circumstances before us? Our resources are strained to their limits, and this Court’s docket is ever burgeoning. When a taxpayer is so indifferent to the outcome of his case that he cannot be bothered to participate, we rightly should make short shrift of his suit. The majority opinion paves the way for us to do just that: I would prefer to do so more forthrightly, and overrule Miller-Pocahontas Coal Co. v. Commissioner, supra. Fay, Featherston, and Wiles, JJ., agree with this concurring opinion.  The majority states (p. 338 supra ) that the respondent "has the burden of proving the facts necessary to show an underpayment (to which the addition to tax for fraud attaches) and may not rely upon petitioner’s failure to produce evidence in order to carry his (respondent’s) burden in that respect.” As I read this language, if the petitioner is defaulted as to the basic deficiency, it may still be necessary to have a trial at which respondent must demonstrate a deficiency (underpayment) exists to which the fraud penalty attaches. These time-consuming legal anomalies must be amusing to the growing number of "protesters” who file petitions simply to throw sand in the gears of Government.   Our Rule 123(b) is adopted from rule 41(b), Fed. R. Civ. P. It has been said that "It is apparent on the face of the rule that rule 41(b) is solely a defendant’s remedy, though it may be invoked by a plaintiff who is defending against a counterclaim.” C. Wright & A. Miller, Federal Practice and Procedure: Civil, sec. 2369, p. 191 (1971). Nevertheless, our Rule 123(b) is broader than rule 41(b), providing that the Court "may dismiss a case at any time and enter a decision against the petitioner” where the petitioner fails to "properly prosecute or to comply with these Rules or any order of the Court or for other causes which the Court deems sufficient.” This language clearly appears to encompass the circumstances before us. However, even assuming arguendo our Rule 123(b) is inapplicable, it is clear that the petitioner may be defaulted under Rule 123(a) which is adopted from rule 55, Fed. R. Civ. P. See United States v. Roslyn Construction Co., 165 F. Supp. 133 (1958), vacated and remanded on other grounds sub nom. American Auto Insurance Co. v. United States, 269 F.2d 406 (1st Cir. 1959); United States v. Edgewater Dyeing & Finishing Co., 21 F.R.D. 304 (E.D. Pa. 1957).