Or, Don’t Dismiss Yourself

 The Judge With a Heart, Special Trial Judge Robert N. Armen, Jr., has a rescue in hand today for Peter Dand Prescott & Rita Da Silva Vint, Docket No. 6648-13S, filed 7/23/13, a small-claimer with only about $2K in tax on the line.

The problem started when the Defense Finance and Accounting Service sent Pete a W-2 for wages; Pete said he got neither wages nor a W-2, because he was retired.

You remember that DFAS wasn’t the swiftest off the mark; see my blogpost “Sunk By The Navy?”, 9/28/11, starring Farmer Monica Kleber and her paper chase with DFAS.

So Pete claims IRS has the burden of proof, hasn’t borne it (even though there’s been no Branerton show-and-tell or anything else), and moves to dismiss.

Now it’s true that where an information return (like a W-2, 1098, or any of the 1099 progeny) is prepared by a third party, the taxpayer can challenge and the IRS has the burden of proof. See Section 6201(d).

But it’s early times yet.

STJ Armen: “Petitioners’ motion, however, suggests a possible misunderstanding of the nature and implications of a dismissal in Tax Court practice. The dismissal of a Tax Court case is not the equivalent of ‘dismissal’ of the underlying notice of deficiency or the determined deficiency in tax.” Order, at p. 1.

In fact, a dismissal of a Tax Court petition, otherwise than for want of jurisdiction, requires entry of decision in favor of IRS. Pete was timely, so if he dismisses, he’s lost.

See my blogpost “Dismissed!”, 5/8/12, in which I discuss the Settles case, which case STJ Armen quotes at length. Section 7459(d) “generally” (don’t you just love “generally”, the ultimate tax weasel-word?) requires that IRS wins when a petition is dismissed if Tax Court had jurisdiction.

So, says STJ Armen: “Here, the early stage of the litigation means that the record at present consists of little more the pleadings and the motion and response now before the Court. As a consequence, petitioners have not yet had an opportunity to appear at trial or otherwise to submit evidence that all prerequisites for a shift of burden under either section 7491(a) or 6201(d), I.R.C., have been met.” Order, at p. 1.

And as Pete didn’t bring a petition in order to lose his case on his own motion, the motion is denied.

Pete, time for show-and-tell.