Designated Orders: Too Little, Too Late (3/18/19 to 3/22/19), Part One

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The five designated orders for this week presented a series of petitioner issues. Generally, they fall into categories where the petitioner either did too little, too much, or was too late. In an interesting twist, two of the cases deal with a petitioner’s filing a motion to vacate or revise a decision under Rule 162.


Too Little
Docket No. 4965-18S, Christopher J. Bard v. C.I.R., available here.

The petitioner, a Chicago police officer, was self-represented in the petition he filed with the Tax Court. The petitioner was not active in his case so the IRS filed a Motion to Dismiss for Failure to Properly Prosecute on February 12, 2019. The Court entered and served its Order of Dismissal and Decision on February 28. That order granted the IRS motion, dismissed the case, and entered a decision in favor of the IRS deficiency and penalty determinations in the notice of deficiency.

On March 19, 2019, petitioner filed a Motion To Vacate Or Revise Pursuant to Rule 162. He states he “was completely shocked when he recently discovered that his case had been dismissed” because, “based on a misunderstanding and miscommunication with his tax return preparer, an enrolled agent,” he “mistakenly believed that his only obligation with respect to this tax court case was to file the petition at the beginning of the case and to do nothing more.”

Oh, really?

The judge begins with the Notice Setting Case For Trial, which set the case for calendar call at 10:00 a.m. on Monday, February 25, 2019. Within the notice it states that “the parties are expected to be present and to be prepared to try the case” and “failure to appear may result in dismissal of the case and entry of decision against you.” Within the notice, it guides petitioners to the Tax Court website and Judge Armen describes some of the assistance available there for self-represented petitioners. At the end of the notice, it states again, that “failure to cooperate may also result in dismissal of the case and entry of decision against you” (emphasis in the original).

The Court sent another notice of trial on January 29, 2019 reminding the parties of the time, date, and place of the trial session. In that notice, there is another warning that failure to appear may lead to dismissal of the case. The remaining two paragraphs are directed to self-represented taxpayers to assist with navigating the trial process, including how to seek assistance from a tax clinic.

When the IRS filed its Motion To Dismiss For Failure To Properly Prosecute, they provided details regarding communications with the petitioner. The following are listed in the order: (a) A letter from IRS Appeals regarding substantiation of disallowed Schedule A deductions provoked an insufficient response by petitioner; (b) Petitioner did not respond to a second similar letter from IRS Appeals; (c) IRS counsel left a voicemail at petitioner’s telephone number of record on February 6, 2019, in order to ascertain petitioner’s views and warning him that failure to participate in the case may lead to its dismissal, to which petitioner did not reply; and (d) IRS counsel left the same message on February 8 with the same result. The Court refers to the language in the petitioner’s pending motion to describe his actions – that he ignored all correspondence from the Service relating to the case because he mistakenly believed that his only obligation in Tax Court was to file the petition and do nothing more.

The day after the IRS filed its motion to dismiss (February 13), the Court served an Order that calendared the motion for hearing and included another warning. The entire order is quoted and once again it states that failure to appear may result in dismissal and a decision entered again the petitioner.

When the case was called and recalled from the calendar for the Chicago trial session on February 25, 2019, the petitioner did not appear and no one appeared on his behalf at either time. By contrast, IRS counsel appeared, supported their motion, and stated in response to the Court’s inquiry that there had been no response from the petitioner since filing the motion to dismiss.

In Judge Armen’s conclusion, he summarizes the issues with the petitioner’s motion. The petitioner “received multiple warnings from the Court about the need to appear in court” and the consequences for failing to appear (emphasis in original). The petitioner was warned by the Court and the IRS regarding the consequences for failing to cooperate in preparation of the case for trial (also emphasized in the original). The notices were not in “legalese” or arcane language, but were clear, concise, written in plain English, and easily understood by a reasonable person so petitioner’s alleged belief his only obligation was to file the petition and do nothing more struck the Court as disingenuous. Also, a police officer would know what to do when a court says to a party in a judicial proceeding that the party is supposed to show up. The judge states that the petitioner did not show up and did not offer any reason to excuse his failure to do so, plus the motion fails to offer a convincing reason justifying his failure to appear. The petitioner’s motion was denied.

Takeaway: This is a thorough review of the Tax Court’s efforts to notify petitioners regarding the necessity to participate in the Tax Court process and the consequences of failure to do so. I would agree that a police officer, while not a legal expert, should know it is necessary to appear in court when the court says you need to be there.

Judge Armen did not address the elements of Rule 162 in his order because, frankly, the petitioner’s actions did not even rise to the level where that should be analyzed. Instead, he focused on how the petitioner was warned to be active in his Tax Court case and was not.

• Docket No. 12070-18 L, Janine P. Antoine v. C.I.R., available here. The petitioner did not do anything after filing Form 12153 for a Collection Due Process hearing such as accept the settlement officer’s offer of a telephone conference or submit supporting documents. Following the Notice of Determination, the petitioner filed a petition with Tax Court. The IRS filed a motion for summary judgment and the petitioner filed a one-paragraph notice of objection with a statement that “there is a dispute between the parties in regard to withholdings” without elaborating or submitting supporting documents. The Court granted the IRS motion.

• Docket No. 4472-18 L, Richard Conant Giller v. C.I.R., available here. Petitioner did not respond to the settlement officer’s document requests in the 5 letters sent to him based on his Collection Due Process hearing requests. The IRS Notice of Determination led to the petitioner filing with the Tax Court for tax years 2011, 2013 and 2015. At trial, petitioner conceded issues with respect to 2013 and 2015. Concerning 2011, petitioner asserted he filed a Form 1040 for 2011 and the substitute for return prepared by the IRS was invalid. The evidence presented by petitioner shows his Form 1040 was not processed by the IRS because it lacked his wife’s signature. Also, the TurboTax materials petitioner offered state in two different places that “you can still file electronically” so they also indicate he never completed the electronic filing of his tax return. Petitioner’s evidence and the IRS transcripts did not indicate the 2011 tax return had been filed by petitioner. Decision was entered for the IRS that there was no abuse of discretion and that they may proceed with the proposed collection action.

Too Late
Docket No. 30082-14SL, Victor M. Crown v. C.I.R., available here.

Following a trial in this case, the Tax Court issued a Summary Opinion, and on April 5, 2016, entered an Order of Dismissal and Decision. Petitioner filed a motion to vacate or revise the decision on March 18, 2019. Here, Judge Guy analyzes Rule 162 and how it applies to the petitioner’s case.

Pursuant to Tax Court Rule 162, a motion to vacate or revise a decision must be filed within 30 days after the decision is entered, unless the Court allows otherwise. The Court generally cannot consider a motion to vacate that is filed after a decision becomes final. IRC section 7481(a)(1) provides the rule that a decision of the Tax Court becomes final on expiration of the time to file a notice of appeal. Section 7483 provides a notice of appeal generally must be filed within 90 days after a decision is entered.

There are exceptions for narrowly circumscribed situations such as that the Court may vacate or revise a final decision if (1) the decision is shown to be void, or a legal nullity, for lack of jurisdiction over the subject matter or the party, (2) the decision was obtained through fraud on the Court, or (3) there is a need to correct a clerical error in the decision.

Since the petitioner did not establish any of those exceptions to the finality of the decision in the case, the Court lacked jurisdiction to vacate the Order of Dismissal and Decision entered April 5, 2016. The Court therefore denied the petitioner’s motion to vacate or revise the decision.

Takeaway: I could understand being late on filing the motion, especially for a petitioner that is ignorant of the Tax Court Rules. To wait nearly 3 years and file the motion is unreal. The Tax Court will not wait for the petitioner who needs years to respond.

William Schmidt About William Schmidt

William Schmidt joined Kansas Legal Services in 2016 to manage cases for the Kansas Low Income Taxpayer Clinic and became Clinic Director January 2017. Previously, he worked on pro bono tax cases for the 3 Kansas City metro area Low Income Taxpayer Clinics. He records and edits a tax podcast called Tax Justice Warriors and is now an adjunct professor for Washburn University School of Law.

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