In Uncategorized on 06/08/2017 at 16:24

It’s an old truism, but petitioners are usually unaware: the petitioner has the burden of proof, paper is everything because petitioner’s word is rarely enough.

This is true even of lawyers. Today’s story features attorney Catherine Ann Riggins, 2017 T. C. Memo. 106, filed 6/8/17.

While maybe Catherine Ann was the victim of identity theft, she didn’t argue that. Though Judge Pugh found it “a curious detail” that the notice of tax due, which followed the SFR IRS issued Catherine Ann when she didn’t file her return, was sent to the wrong address, that doesn’t change the result.

“Respondent’s records indicate that petitioner may have been the subject of identity theft, resulting in an incorrect address being used on a notice to her of taxes owed pursuant to the substitute for return.  The actual substitute for return was not sent to petitioner, and she appears to have been unaware of the possible identity theft.  Sec. 6020 and sec. 301.6020-1, Proced. & Admin. Regs., do not require respondent to provide the substitute for return, and we find that the fact that respondent used the wrong address for the earlier notice does not affect our jurisdiction or the outcome of this case although it is a curious detail.  The notice of deficiency upon which the case is based was correctly addressed to petitioner, and she does not argue that she did not receive that notice.” 2017 T. C. Memo. 106, at p. 3, footnote 2.

Catherine Ann sent in a Form 1040 post-SNOD, which IRS processed, and applied the overpayment she claimed to a nontax debt (nature unstated).

Catherine Ann timely petitioned the SNOD. She tried to bar IRS from contesting the information she claimed on her late-filed return, but put in no evidence herself at trial in support of said information.

“Section 6512(a) provides that ‘[i]f the Secretary has mailed to the taxpayer a notice of deficiency * * * and if the taxpayer files a petition with the Tax Court within the time prescribed * * *, no credit or refund of income tax for the same taxable year * * * shall be allowed or made’ other than (as relevant here) as determined in a final decision of the Tax Court or as collected in excess of the amount in our decision, or to the extent determined as part of our overpayment jurisdiction.” 2017 T. C. Memo. 106, at p. 6.

Once you petition, Tax Court takes over. Even concessions are subject to Court review.

“Petitioner has not established that respondent’s processing of her return and offset of her nontax debt was anything other than an error.  Petitioner has not presented, nor are we aware of, any cases holding that postpetition processing of a tax return and issuance of a refund or offset constitutes a binding settlement of the liability at issue in the petition. Nor does she so argue.” 2017 T. C. Memo. 106, at pp. 9-10 (Footnote omitted, but read it; it sets out the law regarding enforcement of settlements in Tax Court, and what happened here isn’t one).

There’s more, but it doesn’t help.

“Even if a taxpayer files a return after the Commissioner issues a notice of deficiency, the taxpayer still must come forward with evidence as to any deductions claimed on the return. The return itself is not considered evidence.” 2017 T. C. Memo. 106, at pp. 11-12. (Citations omitted).

Signing a return under penalty of perjury is insufficient; it’s just the taxpayer’s litigating position, and establishes nothing.

Moreover, Catherine Ann should know better.

“Petitioner took the position that she was not required to file a return until advised by respondent.  Petitioner’s legal position is expressly contradicted by section 6012(a)(1)(A), which requires that individuals file returns if their income exceeds the exemption amount plus the standard deduction. Courts long have held that ignorance of the law is no excuse, and we will not make an exception here.  United States v. Int’l Minerals & Chem. Corp., 402 U.S. 558, 563 (1971) (‘The principle that ignorance of the law is no defense applies whether the law be a statute or a duly promulgated and published regulation.’); Carlebach v. Commissioner, 139 T.C. 1, 17 (2012).  And we find petitioner’s claimed ignorance of the law particularly unappealing because she is a lawyer.  In addition, petitioner did not make any other argument to justify her failure timely to pay.  As to petitioner’s failure timely to pay, she maintained at trial and in posttrial briefing that she did not have an obligation to file a return until advised by respondent because she was due a refund, which as we note above does not establish reasonable cause for her failure to comply with the law.  She now must accept the consequences of resting her entire case on this one argument.” 2017 T. C. Memo. 106, at pp. 15-16.

And though IRS was able to recover the payment of Catherine Ann’s nontax debt, Judge Pugh finds that irrelevant.

Takeaway- Though Tax Court may be a “small court,” try your case like it was a very big court.



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