Court Opinion

ID: 9555085
Source: CourtListenerOpinion
Date Created: 2023-08-10 19:02:50.179735+00
Date Added: 2024-06-11T15:41:13.022906
License: Public Domain

United States Tax Court

                               T.C. Memo. 2023-102

                         KEVIN ANTHONY JENKINS,
                                Petitioner

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                     —————

Docket No. 29704-21.                                        Filed August 10, 2023.

                                     —————

Kevin Anthony Jenkins, pro se.

Ka (Matt) Tam, for respondent.

                          MEMORANDUM OPINION

       LAUBER, Judge: With respect to petitioner’s Federal income tax
for 2018, the Internal Revenue Service (IRS or respondent) determined
a deficiency of $13,645 and a penalty of $2,717 for a substantial under-
statement of income tax. 1 Petitioner does not dispute any of the adjust-
ments set forth in the notice of deficiency, all of which are attributable
to unreported income. Rather, he contends that no deficiency exists for
2018 because the IRS failed to credit his account with payments in ex-
cess of $38,000. Respondent has filed a Motion for Summary Judgment
contending that the payments to which petitioner refers were all cred-
ited against his unpaid liabilities for 2016 and 2017 and that he made
no other payments that could be applied to his 2018 account. Finding

       1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (Code), in effect at all relevant times, and Rule references are to
the Tax Court Rules of Practice and Procedure. We round all monetary amounts to
the nearest dollar.

                                 Served 08/10/23
                                           2

[*2] that there exists no genuine dispute of material fact on this point,
we will grant the Motion.

                                    Background

       The following facts are based on the parties’ pleadings and the
Declarations and Exhibits attached to respondent’s Motion. See Rule
121(c). Petitioner resided in Washington, D.C., when his Petition was
timely filed.

       During 2018 petitioner received several streams of income, in-
cluding wages from multiple employers, rental income, and retirement
distributions. For 2018 he filed a Federal income tax return reporting a
tax liability of $5,691. On that return he did not report any rental in-
come or retirement distributions.

       The IRS selected petitioner’s 2018 return for examination. On
the basis of Forms W–2, Wage and Tax Statement, the IRS determined
that petitioner had received but failed to report $7,897 of wages from
three employers. The IRS determined, on the basis of Form 1099–R,
Distributions From Pensions, Annuities, Retirement or Profit-Sharing
Plans, IRAs, Insurance Contracts, etc., that petitioner had received but
failed to report $24,924 of taxable retirement distributions. And the IRS
determined, on the basis of Form 1099–MISC, Miscellaneous Income,
that petitioner had received but failed to report $16,832 of rental real
estate income. On October 25, 2021, the IRS issued petitioner a timely
notice of deficiency for 2018 determining the deficiency and
accuracy-related penalty set forth above.

       Petitioner timely petitioned this Court. He did not assign error
to any item of unreported income determined in the notice of deficiency.
Nor did he assign error to the determination that he was liable for an
accuracy-related penalty. His sole argument was that the IRS failed to
credit his 2018 account with roughly $38,830 of payments he had made
during 2019 and 2020. 2

     On October 13, 2022, respondent filed a Motion for Summary
Judgment explaining that the payments to which petitioner refers were

        2 Questions about the proper application of tax payments typically arise in col-

lection due process cases, as opposed to deficiency cases such as this. However, the
bulk of the payments to which petitioner refers were made in March 2019, before the
due date for his 2018 return. He appears to contend that these payments eliminated
any “deficiency” for 2018.
                                    3

[*3] properly applied to his accounts for tax years 2016 and 2017 and
that he had made no other payments available for credit to his 2018
account. We directed petitioner to respond to the Motion by November
14, 2022, advising him that failure to respond could result in entry of a
judgment against him. See Rule 121(d). Petitioner did not respond to
the Motion by November 14 or subsequently.

                               Discussion

A.    Summary Judgment

       The purpose of summary judgment is to expedite litigation and
avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp.
v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant sum-
mary judgment when there is no genuine dispute as to any material fact
and a decision may be rendered as a matter of law. Rule 121(a)(2);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17
F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judg-
ment, we construe factual materials and inferences drawn from them in
the light most favorable to the nonmoving party. Sundstrand Corp., 98
T.C. at 520. However, the nonmoving party may not rest upon mere
allegations or denials in his pleadings but instead must set forth specific
facts showing that there is a genuine dispute for trial. Rule 121(d); see
Sundstrand Corp., 98 T.C. at 520.

       Because petitioner did not respond to the Motion for Summary
Judgment, we could enter a decision against him for that reason alone.
See Rule 121(d). We will nevertheless consider the Motion on its merits.
We conclude that no material facts are in genuine dispute and that this
case is appropriate for summary adjudication.

B.    Burden of Proof

       The Commissioner’s determinations in a notice of deficiency are
generally presumed correct, and the taxpayer bears the burden of prov-
ing them erroneous. Rule 142(a); see Welch v. Helvering, 290 U.S. 111,
115 (1933). In certain circumstances section 7491 may shift to the Com-
missioner the burden of proof on certain factual issues. But that section
applies only if the taxpayer (among other things) “introduces credible
evidence” with respect to those issues. See § 7491(a)(1), (2)(B). Peti-
tioner does not contend that he met these requirements.
                                    4

[*4] C.    Unreported Income

       Section 61(a) provides that “gross income means all income from
whatever source derived.” In cases involving unreported income, the
Commissioner must establish an evidentiary foundation connecting the
taxpayer to the income-producing activity or demonstrate that the tax-
payer actually received income. Walquist v. Commissioner, 152 T.C. 61,
67 (2019). “Once the Commissioner makes the required threshold show-
ing, the burden shifts to the taxpayer to prove by a preponderance of the
evidence that the Commissioner’s determinations are arbitrary or erro-
neous.” Id. at 67–68. However, the IRS may not rely solely on a third-
party report of income if the taxpayer raises a reasonable dispute con-
cerning the accuracy of the report. See § 6201(d).

       The Commissioner plainly met his burden here. Respondent has
provided Forms W–2 and Forms 1099 demonstrating that petitioner ac-
tually received the unreported income. Petitioner has not challenged
the accuracy of the third-party reports concerning his 2018 income, and
he does not dispute that he received the income shown on those reports.
Under Rule 34(b)(1)(G), “[a]ny issue not raised in the [petition’s] assign-
ments of error will be deemed conceded.” Because petitioner did not as-
sign error to the IRS’s determinations of unreported income as set forth
in the notice of deficiency, we will sustain those adjustments in full.

D.    Accuracy-Related Penalty

       The Code imposes a 20% penalty upon the portion of any under-
payment of income tax that is attributable (among other things) to any
“substantial understatement of income tax.” § 6662(a), (b)(2). Section
6662(d)(2) generally defines the term “understatement” as the excess of
the tax required to be shown on the return over the amount shown on
the return as filed. An understatement is “substantial” if it exceeds the
greater of $5,000 or 10% of the tax required to be shown on the return.
See § 6662(d)(1)(A). For 2018 petitioner reported on his return tax of
$5,691, but his correct tax was $19,335, leaving an understatement of
$13,644. This understatement was “substantial.”

       In his Petition, petitioner did not dispute the determination that
he was liable for an accuracy-related penalty of $2,717. Under Rule
34(b)(1)(G), “[a]ny issue not raised in the [petition’s] assignments of er-
ror will be deemed conceded.” Because petitioner did not assign error to
                                          5

[*5] the IRS’s penalty determination as set forth in the notice of defi-
ciency, we will sustain that determination. 3

E.     Tax Payments

       Petitioner’s sole contention is that the IRS failed to credit his 2018
account with several payments he made during 2019 and 2020. The
payments referenced in his Petition were $15,500, $9,957, and $6,003.
He also contends that he made payments in excess of $7,300 pursuant
to an installment agreement with the IRS and that these sums “were
not properly applied to [his] account.”

       In support of his Motion respondent has supplied a sworn decla-
ration of the IRS Appeals officer assigned to petitioner’s case. The Dec-
laration attaches copies of petitioner’s account transcripts for
2016–2018. In the absence of conflicting evidence, IRS account tran-
scripts are sufficient to establish certain facts. See Sherman v. Commis-
sioner, T.C. Memo. 2023-63, at *18 (finding account transcript sufficient
to establish that no return was filed); Triola v. Commissioner, T.C.
Memo. 2014-166, 108 T.C.M. (CCH) 185, 187 (finding account transcript
sufficient to establish a balance due); Lenihan v. Commissioner, T.C.
Memo. 2006-259, 92 T.C.M. (CCH) 463, 470 (finding account transcript
sufficient to establish nonpayment of estimated tax).

       The transcripts attached to the declaration show all payments
made to petitioner’s accounts for the relevant years. Those transcripts
show that (1) a payment of $15,500 was applied to petitioner’s 2016 ac-
count on March 23, 2019; (2) a payment of $6,003 was applied to peti-
tioner’s 2016 account on March 27, 2019; and (3) a payment of $9,957
was applied to petitioner’s 2017 account on March 23, 2019. The tran-
scripts also show that installment payments totaling $6,624 were posted
to petitioner’s 2016 account during 2018 and 2019 and that an install-
ment payment of $1,040 was posted to his 2017 account in November
2018. Those amounts in the aggregate exceed the installment payments
(totaling about $7,300) to which petitioner refers in his Petition.

       Under Rule 121(d), a party opposing summary judgment may not
rely on mere “allegations or denials” but “must respond, setting forth

        3 Petitioner does not dispute that the penalty for a substantial understatement

of income tax was a “penalty automatically calculated through electronic means.” See
§ 6751(b)(2)(B). Respondent therefore had no burden to show written supervisory ap-
proval of the initial determination of the penalty assessment. See Walquist, 152 T.C.
at 70.
                                           6

[*6] specific facts.” See Wilkinson v. Commissioner, 71 T.C. 633, 639
(1979). Petitioner has set forth no specific facts contradicting the infor-
mation appearing in the 2016 and 2017 account transcripts; indeed, he
did not respond to the Motion for Summary Judgment at all. Petitioner
bears the burden of proof. See Rule 142(a); Welch v. Helvering, 290 U.S.
at 115. Because he failed to introduce relevant evidence after being fully
informed of respondent’s position regarding the tax payments in ques-
tion, we infer that such evidence does not exist or would not be helpful
to his position. See Blum v. Commissioner, 59 T.C. 436, 440–41 (1972).

       In sum, petitioner’s account transcripts show that the payments
referenced in his Petition were credited to his 2016 and 2017 accounts.
He has supplied no reason to believe that those transcripts are inaccu-
rate, and he does not contend that he made any payments toward his
2018 liability apart from the amounts discussed above. Finding no gen-
uine dispute of material fact, we conclude that respondent is entitled to
summary judgment. 4

        To reflect the foregoing,

        An appropriate order and decision will be entered for respondent.

        4 Petitioner does not contend that the IRS lacked discretion to apply to his 2016

and 2017 tax years the payments discussed in the text, either because he had desig-
nated those payments toward his 2018 account or otherwise. See Dixon v. Commis-
sioner, 141 T.C. 173 (2003); Rev. Rul. 73-305, 1973-2 C.B. 43.