T.C. Memo. 1995-565
UNITED STATES TAX COURT
DAVID CARKHUFF AND TONJA CARKHUFF, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19773-94. Filed November 28, 1995.
David Carkhuff and Tonja Carkhuff, pro sese.
Robert E. Cudlip, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
PARR, Judge: This matter is before the Court on
respondent's Motion for Summary Judgment, filed October 6, 1995,
pursuant to Rule 121.1
1
All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code in effect for the taxable years in issue, unless
otherwise indicated.
- 2 -
Respondent determined deficiencies in, an addition to, and
accuracy-related penalties on, petitioners' Federal income tax
for taxable years 1990 and 1991 as follows:
Addition to Tax Accuracy-Related
Penalty
Sec. Sec.
Year Deficiency 6651(a) 6662(a)1
1990 $7,594 $1,730.75 $1,518.80
1991 44,731 -- 8,946.20
1
The first page of the statutory notice of deficiency
mistakenly refers to the accuracy-related penalties determined in
1990 and 1991 as pursuant to sec. 6651; however, the explanation
pages of the notice of deficiency refer to the correct section,
6662(a).
For the reasons discussed below, the Court will grant
respondent's motion.
FINDINGS OF FACT
At the time the petition in this case was filed, petitioners
resided in Concord, California. Petitioners requested San
Francisco, California, as the place for trial at the time they
filed their petition.
On September 21, 1994, respondent issued a statutory notice
of deficiency to petitioners for tax years 1990 and 1991. The
deficiencies at issue are attributable to respondent's
determination that (1) petitioners failed to report gross
receipts; (2) petitioners failed to report a taxable IRA
distribution and are liable for additional tax on an early
distribution from the IRA; (3) petitioners are liable for
additional self-employment tax; (4) petitioners have not
- 3 -
substantiated certain cost of goods sold and Schedule C expenses;
and (5) petitioners failed to report earned income credit
recapture. The addition to tax at issue is attributable to
petitioners' late filing of their 1990 Federal income tax return,
and respondent asserted an accuracy-related penalty under section
6662(a), for tax years 1990 and 1991.
Petitioners invoked the jurisdiction of this Court by filing
a timely petition for redetermination. In the petition, the sole
ground for petitioners' disagreement with the adjustments in the
notice of deficiency was that their "TAX RECORDS WERE NOT
AVAILABLE WHEN REQUESTED". After filing an answer to the
petition, respondent attempted to schedule a conference for the
purpose of discussing the issues in the case. On March 17, 1995,
in accordance with Branerton Corp. v. Commissioner, 61 T.C. 691
(1974), respondent sent a letter informally requesting
petitioners to provide copies of all documents relevant to the
issues in the case by April 20, 1995. The letter was sent by
certified mail, return receipt requested, to three different
addresses: petitioners' residence, petitioners' business, and in
care of their representative, A.E. Rheinheimer, Enrolled Agent.
Respondent received the return receipts indicating that
petitioner, Tonja Carkhuff, signed for the letter addressed to
the business address, on March 18, 1995, and for the letter
addressed to the residence, on March 30, 1995. Furthermore,
respondent received a return receipt indicating that A.E.
- 4 -
Rheinheimer signed for the letter addressed to his care, on March
18, 1995. Respondent has never received a response from
petitioners or their representative.
On May 23, 1995, respondent served by certified mail, return
receipt requested, upon petitioners, at their residence address,
Respondent's Request for Admissions, Interrogatories, and
Respondent's Request for Production of Documents. Petitioners
did not file any response to the request for admissions. In her
request for admissions, respondent requested that petitioners
admit that each of the determinations in the notice of deficency
was correct. In addition, respondent requested admission that
petitioners' 1990 tax return was filed April 15, 1992, and that
they had no reasonable cause for the late filing. Petitioners
did not respond to respondent's request for admissions.
Accordingly, respondent filed a Motion for Summary Judgment
seeking judgment in her favor with respect to all disputed
issues. Respondent bases her Motion for Summary Judgment on the
matters deemed admitted pursuant to Rule 90(c) (resulting from
petitioners' failure to respond to respondent's request for
admissions). Petitioners have failed to respond to the pending
motion.
OPINION
Summary judgment is appropriate "if the pleadings, answers
to interrogatories, depositions, admissions, and any other
acceptable materials, together with the affidavits, if any, show
- 5 -
that there is no genuine issue as to any material fact and that
decision may be rendered as a matter of law." Rule 121(b);
Zaentz v. Commissioner, 90 T.C. 753, 754 (1988); Naftel v.
Commissioner, 85 T.C. 527, 529 (1985). Rule 121(d) states:
When a motion for summary judgment is made and supported as
provided in this Rule, an adverse party may not rest upon
the mere allegations or denials of such party's pleading,
but such party's response, by affidavits or as otherwise
provided in this Rule, must set forth specific facts showing
that there is a genuine issue for trial. If the adverse
party does not so respond, then a decision, if appropriate,
may be entered against such party.
See King v. Commissioner, 87 T.C. 1213, 1217 (1986). The moving
party, however, bears the burden of proving that there is no
genuine issue of material fact, and factual inferences will be
read in a manner favorable to the party opposing summary
judgment. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985),
modified by T.C. Memo. 1991-264, affd. without published opinion
(5th Cir. 1993); Jacklin v. Commissioner, 79 T.C. 340, 344
(1982).
Pursuant to Rule 90(c), each statement set forth in a
request for admissions served on a party is deemed admitted
unless a response thereto is served upon the requesting party
within 30 days after service of the request. Alexander v.
Commissioner, 926 F.2d 197, 198-199 (2d Cir. 1991), affg. per
curiam T.C. Memo. 1990-315; Dahlstrom v. Commissioner, supra at
817-818; Freedson v. Commissioner, 65 T.C. 333, 334-336 (1975),
affd. on another issue 565 F.2d 954 (5th Cir. 1978). Summary
- 6 -
judgment is appropriate where the facts deemed admitted pursuant
to Rule 90(c) support a finding that there is no genuine issue as
to any material fact. Marshall v. Commissioner, 85 T.C. 267
(1985); Morrison v. Commissioner, 81 T.C. 644, 651-652 (1983).
We agree with respondent that the issues pertaining to
petitioners' liability for the deficiencies and additions to tax
in dispute are ripe for summary adjudication. In particular,
petitioner is deemed to have admitted each of the factual
allegations set forth in respondent's request for admissions. We
note that respondent's request for admissions includes a
statement advising petitioners that the allegations set forth
therein would be deemed admitted under Rule 90(c) if not
specifically admitted or denied within 30 days of service of the
request. Based on the record presented, and particularly
petitioners' failure to communicate with the Court or to
otherwise respond to respondent's motion, we conclude that
petitioners have no intention of pursuing this matter further.
The deficiencies determined by respondent in this case arise
from petitioners' failure to report gross receipts, failure to
report a taxable IRA distribution, failure to substantiate
certain cost of goods sold and Schedule C expenses, and from
other adjustments, as set forth in the notice of deficiency. The
factual allegations deemed admitted by petitioners under Rule
90(c) establish that respondent's determinations with respect to
these items are correct. Having examined all of the materials in
- 7 -
the record, including the notice of deficiency, the pleadings,
and the admitted facts, we hold that there is no genuine issue of
material fact with respect to petitioners' liability for the
deficiencies determined by respondent. Accordingly, respondent
is entitled to summary judgment as to the income tax
deficiencies.
Respondent also determined that petitioners are liable under
section 6651(a)(1) for an addition to tax for 1990 for failure to
file a tax return. Section 6651(a)(1) imposes an addition to tax
for failure to file timely a return unless the taxpayer shows
that such failure was due to reasonable cause and not willful
neglect. The deemed admissions in this case establish that
petitioners failed to file their return for tax year 1990 until
April 15, 1992. There is nothing in the record to suggest that
petitioners' failure to file was due to reasonable cause and not
willful neglect. We conclude, therefore, that respondent is
entitled to summary judgment with respect to the addition to tax
for 1990 for failure to file under section 6651(a). Rapp v.
Commissioner, 774 F.2d 932, 936 (9th Cir. 1985), affg. an Order
of this Court.
Section 6662(a) and (b) imposes a penalty equal to 20
percent of the portion of the underpayment of taxes attributable
to negligence or disregard of rules or regulations. "Negligence"
includes any failure to make a reasonable attempt to comply with
applicable provisions of the Internal Revenue Code; "disregard"
- 8 -
includes any careless, reckless, or intentional disregard. Sec.
6662(c). The deemed admissions establish that petitioners are
liable for the penalty with regard to the entire underpayment.
The deemed admissions establish that no genuine issue of material
fact exists as to the issue of negligence and, therefore,
respondent is entitled to a decision on this issue as a matter of
law.
Accordingly, respondent's Motion for Summary Judgment will
be granted as to all issues.
To reflect the foregoing,
An appropriate order and
decision will be entered granting
respondent's motion for summary
judgment.