In Uncategorized on 06/14/2022 at 12:50

An old family joke resuscitated yet again gives me a headline for Rodney Smith, 12731-19L, filed 6/14/22. Rod petitioned a NOD from a CDP, but no hearing was held due to a miscommunication (type unspecified). Rod got remanded and Appeals confirmed the NITL. At issue were a couple Section 6702 chops (frivolous returns)(hi, Judge Holmes).

Rod then amended his petition (without asking leave, but Judge Ronald L. (“Ingenuity”) Buch lets it go) claiming the supplemental hearing was defective because IRS didn’t give him enough information in its answer.  IRS answered the amended petition, but pled no new facts. Ron moves to toss IRS’ answer per Rule 123. Both sides admit that the only issue is the Section 6702 chops.

Rule 142(a)(1) says BoP is generally on petitioner, unless statute or the Court determines otherwise. But here statute does tilt the playing field. Section 6703(a) says BoP is on Com’r (IRS) for Section 6702 chops. So if IRS’ papers are faulty, do they get tossed?

Judge Ingenuity lives up to his cognomen.

“Rule 36(b) provides more specific rules regarding the form and content of an answer. Generally, an answer is sufficient if it contains “a specific admission or denial of each material allegation in the petition.’ Rule 36(b). A statement that the Commissioner ‘lacks knowledge or information sufficient to form a belief’ as to an allegation’s truth has ‘the effect of a denial.’ Id. Again, the Commissioner’s answers to Mr. Smith’s petition and amendment to petition conform to this standard.” Order, at pp. 2-3.

So IRS is OK, right?

Not quite. Rule 36(b) says where IRS has BoP, the answer must “contain a clear and concise statement of every ground, together with the facts in support thereof on which the Commissioner relies and has the burden of proof.”

So IRS gets tossed, right?

Not while Judge Ingenuity Buch is on the case.

“Rule 123(a) provides that the Court may hold a party in default and enter a decision against that party if he or she has ‘failed to plead or otherwise proceed as provided by these Rules or as required by the Court.’ Kramer v. Commissioner, T.C. Memo. 2021-16, at *8-9. Whether to hold a party in default under Rule 123(a) is a matter of discretion. Default and dismissal are not the proper remedies in this case. Mr. Smith’s motion for default and dismissal is the 88th entry in the docket record of this case and was filed nearly three years after the petition in this case. The Commissioner’s position in this case is no mystery, and Mr. Smith has not been prejudiced or subjected to unfair surprise. Instead, a more appropriate remedy would be to order the Commissioner to amend his answer to add ‘a clear and concise statement of every ground, together with the facts in support thereof’ as to the imposition of penalties under section 6702. See Rule 51(a).” Order, at p. 3. (Citations omitted; for Don Kramer’s story, see my blogpost “Don’t Overtry Your Case,” 2/16/21).

So, IRS counsel, let it all hang out.


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