Senter v. Commissioner, Docket No. 9404-94.
| Court | United States Tax Court |
| Writing for the Court | Ruwe |
| Citation | 70 T.C.M. 54 |
| Decision Date | 13 July 1995 |
| Docket Number | Docket No. 9404-94. |
| Parties | Charles Edward Senter v. Commissioner. |
v.
Commissioner.
Charles Edward Senter, pro se. Mary Kay McIlyar, for the respondent.
[70 T.C.M. 55]
RUWE, Judge:
Respondent determined the following deficiencies and additions to tax:
Additions to Tax
-------------------------------------------------------------------
Year Deficiency Sec. 6651 Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6654
1987 ........................ $6,403 $1,601 $320 50 percent of the $346
interest due on $6,403
Additions to Tax
------------------------------------
Year Deficiency Sec. 6651 Sec. 6653(a) Sec. 6654
1988 ........................ $6,662 $1,666 $333 $426
1989 ........................ 6,836 1,709 -- 462
Additions to Tax
---------------------
Year Deficiency Sec. 6651 Sec. 6654
1990 ........................ $6,928 $1,732 $456
1991 ........................ 7,238 1,810 416
The issues we must decide are whether these determinations are entitled to the normal presumption of correctness, and if not, who bears the burden of proof.
Petitioner resided in Dallas, Texas, at the time the petition was filed. Petitioner appeared at the time set for trial, but chose not to testify and no other witnesses were called by either party.1 As a result, the case was submitted on the following stipulated facts.
On January 31, 1992, Internal Revenue Agent Betty Ramsey wrote to petitioner stating:
We have no record of receiving your tax returns for the years 1987, 1988, 1989, and 1990. If you have filed these returns, please forward a copy of each of these returns within ten days in the enclosed envelope.
If you have not filed returns for these years, we are not soliciting the returns. We are merely trying to make a determination as to whether you were required to file these returns. Because I will need additional information to make a determination as to whether any of these returns should be filed, I am scheduling a second appointment with you at 8:30 a.m., on February 19, 1992, at 900 St. Paul, Richardson, Texas, Room 210.
Since you missed the December 5, 1991, scheduled appointment at my office, I will expect to see you on February 19, 1992.
Please direct any correspondence to the address shown above. If you have any questions please call me at (214) 655-3557.
On February 14, 1992, petitioner sent the following response to Ms. Ramsey.
I received your letter dated January 31, 1992. You have requested that I meet with you on February 19, 1992. Also, you have stated that you need "additional information".
You do not state what legal obligation I have to attend this meeting. Furthermore, I cannot give any information without the assistance of Counsel. Since, at this time, I cannot afford counsel, I will not be able to attend your meeting.
On December 8, 1992, an Internal Revenue Service Summons (Form 2039) was served on petitioner requiring him to appear before Internal Revenue Agent Prasat Visoon on January 4, 1993, to give testimony and to provide information necessary to complete his 1987 through 1991 returns. The summons specifically called for the production of the following:
1. Copies of all Forms W-2's or 1099's received in 1987, 1988, 1989, 1990, & 1991.
2. All bank statements, deposit slips and cancelled checks (both business and personal) for the inclusive periods December 1986 through January 1992.
3. All savings account passbooks or statements, certificates of deposit, money market certificates. Also information concerning other invested funds such as stock purchases or sales, or bond holdings, for the inclusive periods January 1987 through December 1991.
4. All books, journals, ledgers, and summaries concerning your income, expenses, and deductions for years 1987 through 1991.
5. Records for all loans (both business and personal) received during the years under examination. (1987 through 1991)
6. Records concerning all loan payments made during the years under examination. (1987 through 1991)
7. Purchase invoices and/or closing statements covering acquisitions of capital items acquired during the years under examination. This includes both real and personal property. (1987 through 1991)
8. Information on any nontaxable income received during the years under examination. (1987 through 1991)
On January 4, 1993, petitioner appeared before Agents Visoon and Floyd Summers and objected to the production of the information required by the summons and asserted his constitutional rights under the Fourth, Fifth, Sixth, and Fourteenth Amendments, plus any other rights that he might have. No summons enforcement action was filed in the United States District Court to require petitioner to comply with the summons.
The notices of deficiency for the years in issue were mailed to petitioner on March 7, 1994. The explanation of adjustments in the notices of deficiency contains the following information:
In the absence of adequate records, your taxable gross receipts have been computed on the basis of your prior earnings record in conjunction with the Consumer Price Index (CPI). Since you neglected-to file income tax returns for the taxable years, your taxable income is increased as computed below:
1987 1988 1989 1990 1991
Base year income-1984 ................. $ 22,710 $ 22,710 $ 22,710 $ 22,710 $ 22,710
× CPI increase ........................ 1.082454 1.11314 1.14573 1.19942 1.25407
_________ ________ ________ ________ ________
Gross income .......................... $ 24,583 $ 25,279 $ 26,020 $ 27,239 $ 28,480
From the sparse facts presented by the record, it is apparent that there was no evidence presented by either party regarding whether petitioner had taxable income during the years in issue. Indeed, the only facts before us relate to the events leading up to the notices of deficiency and respondent's method of computing the deficiencies. Under these circumstances, the presumption of correctness that normally attaches to the notice of deficiency and the proper allocation of the burden of producing evidence and the burden of proof become critical.2
When a taxpayer contests a tax that has been determined by the Commissioner, the burden of proof is ordinarily on the taxpayer to show that the Commissioner's determination is in error. Rule 142(a);3 Welch v. Helvering [3 USTC ¶ 1164], 290 U.S. 111 (1933). The party with the burden of proof will normally have the initial burden of producing evidence. Failure to produce sufficient evidence from which the trier of fact could reasonably find in favor of the party with the burden of proof would normally require judgment against that party. However, if sufficient evidence is presented to make out a prima facie case, i.e., one where the trier of fact could rationally find in favor of the party with the burden of proof, the burden of going forward with producing evidence is said to shift to the other party. If the party to whom the burden of producing evidence has shifted fails to offer additional evidence, he risks losing.4 Notwithstanding that the burden of producing evidence can shift, we have held that "the taxpayer's burden of proof generally never shifts". Borchers v. Commissioner [Dec. 46,730], 95 T.C. 82, 90 (1990) (emphasis in original), affd. [[91-2 USTC ¶ 50,416] 943 F.2d 22 (8th Cir. 1991).
Working in tandem with the burden of proof is the presumption of correctness that is generally given to the Commissioner's notice of deficiency. Thus, it has been stated:
In essence, the taxpayer's burden of proof and the presumption of correctness are for the most part merely opposite sides of a single coin; they combine to require the taxpayer to prove by a preponderance of the evidence that the Commissioner's determination was erroneous. [Portillo v. Commissioner [91-2 USTC ¶ 50,304], 932 F.2d 1128, 1133 (5th Cir. 1991), affg. in part and revg. in part [Dec. 46,373(M)] T.C. Memo. 1990-68; citations omitted.]
The Commissioner's determination is generally presumed correct, until the taxpayer produces evidence establishing that the determination is arbitrary and erroneous. This normally requires the taxpayer to produce evidence concerning the disputed transactions, because this Court generally will not look behind a notice of deficiency to examine it for the motives or methods which were used by respondent in arriving at the deficiency determination. Greenberg's Express, Inc. v. Commissioner [Dec. 32,640], 62 T.C. 324 (1974). However, an exception
to this general rule is recognized by several courts of appeals for situations where the Commissioner determines that the taxpayer received income that was not reported on the taxpayer's return. The rationale for this exception is based on the recognized difficulty that the taxpayer bears in proving the nonreceipt of income. See Sealy Power, Ltd. v. Commissioner [95-1 USTC ¶ 50,103], 46 F.3d 382, 386 (5th Cir. 1995), affg. in part, revg. in part, and remanding in part [Dec. 48,092(M)] T.C. Memo. 1992-168; Portillo v. Commissioner [91-2 USTC ¶ 50,304], 932 F.2d at 1133, 1134 (5th Cir. 1991); Anastasato v. Commissioner [86-2 USTC ¶ 9529], 794 F.2d 884 (3d Cir. 1986), vacating [Dec. 41,925(M)] T.C. Memo. 1985-101.
The instant case is appealable to the Court of Appeals for the Fifth Circuit. In Portillo, the Court of Appeals for the Fifth Circuit addressed the issue of whether the Commissioner's...
To continue reading
Request your trial
-
Comtec Systems, Inc. v. Commissioner, Docket No. 24015-91.
...should have believed Vernon and Reda Beard's statements supporting petitioner's position; and respondent should have adopted the 70 T.C.M. 54 position of petitioner's expert rather than respondent's Respondent's position was based on various facts, such as: Vernon Beard was petitioner's sol......
-
Comtec Systems, Inc. v. Commissioner, Docket No. 24015-91.
...should have believed Vernon and Reda Beard's statements supporting petitioner's position; and respondent should have adopted the 70 T.C.M. 54 position of petitioner's expert rather than respondent's Respondent's position was based on various facts, such as: Vernon Beard was petitioner's sol......