CARPENTIER v. COMMISSIONER

T.C. Memo. 2002-43

UNITED STATES TAX COURT

PATRICIA R. CARPENTIER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 2430-96. Filed February 12, 2002.

Douglas D. Potratz, for petitioner.

Timothy F. Salel, for respondent.

MEMORANDUM OPINION

GERBER, Judge: Respondent moved for the dismissal of this

case for lack of petitioner’s prosecution. Respondent also moved

that a penalty be awarded to the United States under section
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6673.1 In this protracted case that has extended over a 5-year

period, petitioner has done little to address the underlying

merits of respondent’s determination. On November 6, 1995,

respondent issued two notices of deficiency determining Federal

income tax deficiencies and additions to tax for failure to file

returns and failure to pay estimated taxes for petitioner’s 1989

through 1993 tax years, as follows:

Income Tax Additions to Tax
Year Deficiencies Sec. 6651(a)(1) Sec. 6654

1989 $393,505 $98,376 $26,466
1990 55,055 13,764 3,623
1991 13,284 3,321 765
1992 42,031 10,508 1,833
1993 15,416 3,854 646

In great part, respondent relied on Forms 1099 reflecting

proceeds from stock transactions and dividend and interest income

that were ostensibly attributable to petitioner. Petitioner

alleged error, claiming, in essence, that the proceeds reflected

on the Forms 1099 did not result in income taxable to her.

Without petitioner’s cooperation, respondent has been able

to obtain information that supports petitioner’s allegation that

she was not obligated to report the proceeds from stock

transactions reflected on Forms 1099. In the course of

1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended and in effect for the
taxable periods under consideration, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
 - 3 -

respondent’s efforts to develop this case for trial, however,

respondent discovered that petitioner had unreported rental

income. That rental income, together with income from interest

and dividends that respondent had determined in the above-

referenced notices of deficiency, results in the following

reduced deficiencies and additions to tax, which respondent

requests we decide are due from petitioner, if we grant

respondent’s motion to dismiss for lack of prosecution:

Income Tax Additions to Tax
Year Deficiencies Sec. 6651(a)(1) Sec. 6654

1989 $7,214 $1,491.00 $487.86
1990 2,659 664.75 174.10
1991 5,216 1,304.00 298.10
1992 3,841 960.25 167.10
1993 3,938 984.50 164.99

During the more than 5 years this case has been pending,

petitioner, who did not file returns for the periods in question,

did very little to show that she was not required to report the

proceeds from stock transactions reflected on the Forms 1099. In

addition, petitioner did nothing with respect to respondent’s

determination of interest, dividend, and rental income. Instead,

petitioner has mounted attacks on respondent’s and the Court’s

authority for the purposes of diversion and delay. After

respondent was able to develop information regarding the Form

1099 items causing a reduction in the income tax deficiencies,

petitioner continued to attack the authority, integrity, and
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actions of respondent and the Court. Finally, when required by

the Court to address respondent’s Motion to Dismiss, petitioner

agreed that the Court could enter a decision for the reduced

income tax deficiencies asserted by respondent. Petitioner,

however, did not agree to the additions to tax. In addition,

petitioner contends that a penalty should not be awarded under

section 6673.

Respondent’s motions will be granted.

Background

The following chronology of some of the significant events2

is intended to show the protracted nature of this proceeding and

petitioner’s attempts to delay.

In a petition filed on February 7, 1996, petitioner alleged

respondent’s determination was in error because of “erroneous

1099 income” from a stock brokerage firm. Petitioner made

detailed allegations concerning her former attorney, who was also

attorney for her bank and stock brokerage firm, and others who,

according to petitioner’s contentions, intended to defraud her by

means of some type of conspiracy. Petitioner inherited stock

holdings that she alleged were sold without her knowledge or

financial benefit and she further alleged that Forms 1099 were

2
The chronology set forth in the opinion represents a very
small portion of the filings and proceedings set forth in a
seven-page docket sheet maintained by the Court.
 - 5 -

improperly issued to her. Petitioner also alleged that these

same individuals caused or advised her not to file returns in the

expectation that she would die “before the truth came out” about

the conspiracy to defraud her. Respondent, in his answer,

generally denied petitioner’s allegations.

During the pendency of this case, petitioner changed

attorneys several times and on several occasions requested that

the location for trial be changed. The Court attempted to

accommodate petitioner’s needs, and this case was set for trial

on various dates and locations, including October 28, 1996, in

Washington, D.C.; April 7, 1997, in Los Angeles; May 21, 1998, in

Portland, Oregon; September 21, 1998, in Portland, Oregon; and

February 12, 2001, in Portland, Oregon.

Although petitioner sought to continue her case on several

occasions, she did not address the underlying merits of

respondent’s determination. Instead, respondent was forced to

resort to the Court’s Rules to promote pre-trial development by

means of admissions under Rule 90 and enforced stipulation of

facts under Rule 91(f). In each instance petitioner did not

respond to respondent’s requests for admissions or stipulation

and/or the Court’s orders to comply.

Throughout the history of this case petitioner failed to

cooperate and/or to communicate with respondent and provide any

information. Instead, petitioner generally accused respondent,
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of “abuses, negligence, and IRS failure to [cooperate] as to

review of erroneous payor 1099's”. But petitioner did not take

steps to either prepare for trial or to develop facts addressing

the merits of the controversy before this Court. Instead and in

an attempt to circumvent the Court’s jurisdiction, petitioner

used collateral approaches, including the seeking of

congressional assistance and the assistance of the Taxpayer

Advocate.

Petitioner also sought the recusal of one of the trial

judges alleging a “Conflict of Interest, bias and prejudice and

special interest” essentially because the trial judge was

appointed by President William Jefferson Clinton and for numerous

other related allegations.

Due to petitioner’s failure to cooperate and/or failure to

follow this Court’s Rules and procedures, respondent, on February

15, 2000, moved for summary judgment based on facts that were

deemed admitted under the Court’s Rules. Petitioner responded

after several extensions. In an April 24, 2000 Order, the Court

explained that, even though the case had an extended history,

petitioner had not produced any probative evidence regarding the

underlying issues. It was further explained that petitioner’s

sole approach was to “attack respondent’s counsel and the Court.”

The Court, in the April 24, 2000 Order, advised petitioner “that

the Court is considering imposing a penalty under section
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6673(a).” Petitioner’s response to respondent’s summary judgment

motion was to collaterally attack respondent and the Court and to

allege that petitioner was not being afforded Constitutional due

process and/or equal protection under the laws.

In a memorandum opinion (T.C. Memo. 2000-258) the Court

granted partial summary judgment for respondent. The effect of

the Court’s opinion was to preclude petitioner “from contesting

the matters set forth in respondent’s Second Request for

Admissions and respondent’s Amendment to Answer.” The admissions

and the amended answer concerned petitioner’s dividend, interest,

and rental income.3 The opinion also held that “respondent is

not entitled to full summary judgment insofar as material issues

of fact remain in dispute with respect to petitioner’s

entitlement to various deductions for the years in issue.”

Carpentier v. Commissioner, T.C. Memo. 2000-258.

The case was then set on the Portland, Oregon, trial session

beginning on February 12, 2001. On September 15, 2000,

petitioner moved for reconsideration of the above-referenced

holding. Petitioner’s reasons for reconsideration generally

concerned petitioner’s and her counsel’s failure and/or inability

to obtain records and their belief that the Court had a bias and

3
It is noted that because of the changes of the trial
cities and continuances, at least three different Judges have
been involved in petitioner’s case.
 - 8 -

prejudice towards petitioner and her counsel.4 Petitioner’s

Motion for Reconsideration was denied.

Thereafter, respondent on December 26, 2000, filed a Motion

to Dismiss on the ground that petitioner had failed to prosecute

her case. One of the alleged reasons relied upon by respondent

for seeking dismissal was that “Notwithstanding the many efforts

by respondent to secure cooperation from petitioner and/or her

counsel, petitioner has failed and refused in every respect to

cooperate to move this case toward resolution.” On January 3,

2001, petitioner moved for a fourth change of the place of trial

from Portland, Oregon to San Diego, California. Respondent

objected to petitioner’s motion and the matter was set for

hearing. After a telephone conference in which petitioner’s

counsel agreed to pursue the underlying merits of respondent’s

determination, the Court in a February 2, 2001, Order, continued

the case from the February 15, 2001, Portland, Oregon, trial

session and granted petitioner’s motion to change the place of

trial to San Diego, California.

On March 13, 2001, petitioner Moved to Stay Proceedings and

her motion was denied. Essentially, petitioner alleged that the

proceeding should be stayed until petitioner concludes her

4
In our Memorandum Opinion, Carpentier v. Commissioner,
T.C. Memo. 2000-258, the Court held that the matters deemed
admitted under Rules 37(c) and 90(c) established (1) the nature
and amounts of items of income that petitioner failed to report,
and (2) her liabilities for the additions to tax determined in
the notice of deficiency.
 - 9 -

attempt to cause the removal of Tax Court Judges5 by the

President of the United States. In an April 10, 2001, Order,

petitioner was given until June 11, 2001, to respond or object to

respondent’s Supplemental Motion to Dismiss and Motion for

Damages under I.R.C. Section 6673, both filed on April 6, 2001.

Petitioner sought and was granted an extension to July 11, 2001,

on which date her response was filed.

Petitioner’s July 11th response advised that she is no

longer seeking, through the office of the President of the United

States, to have Tax Court Judges removed. Petitioner now advises

that she would agree to the reduced amounts of income tax

deficiencies sought by respondent. Petitioner, however, without

providing any evidence or reasonable cause for relief, does not

agree that she is liable for the reduced additions to tax sought

by respondent for petitioner’s failure to file returns and/or pay

estimated tax for the taxable years 1989, 1990, 1991, 1992, and

1993. Finally, petitioner contends that no penalty should be

awarded under section 6673 because the delay in this case was

caused by respondent.

In particular, petitioner contends that it was respondent’s

refusal to correct the “erroneous Forms 1099" that caused the

delay. In light of the record in this case, we find petitioner’s

contentions to be disingenuous. Petitioner generally failed to

5
It is unclear whether petitioner was seeking to remove all
the Judges of this Court or only those who were assigned to or
acted on petitioner’s case.
 - 10 -

cooperate and to address the merits of respondent’s determination

throughout the pendency of this proceeding. At each step of the

litigation process, petitioner’s response to respondent’s or the

Court’s attempts to address the merits was to make collateral

attacks on the Court’s and respondent’s authority. Petitioner

alleged various conspiracies to defraud her, but she did not

advance evidence showing respondent’s determination was in error.

When respondent was finally able to obtain information about the

Forms 1099 (mostly from third-party sources), adjustments were

made reducing the deficiency determination. The reduced income

tax deficiencies, agreed to by petitioner, are attributable to

unreported income from rental properties and unreported income

from interest and dividends.

Discussion

A. Respondent’s Motion To Dismiss

Under Rule 123(b) the Court may dismiss a case and enter a

decision where a taxpayer fails properly to prosecute or to

comply with the Court’s Rules. We have concluded that, in

deciding whether to dismiss, we balance “rival consideration[s]

* * * [involving] the policy in favor of having cases heard on

their merits with the policy in favor of avoiding harassment to

the defending party arising from unjustifiable delay.” Freedson

v. Commissioner, 67 T.C. 931, 935 (1977), affd. 565 F.2d 954 (5th
 - 11 -

Cir. 1978)(citations omitted).

In that regard, petitioner has been given every opportunity

to litigate the merits of respondent’s determination which was

issued on November 6, 1995. This case, at petitioner’s request,

has been moved to several different trial cities and placed on

numerous trial sessions only to have petitioner seek a

continuance. In all that time, petitioner has done little to

develop the case or resolve the issues underlying the income tax

deficiencies. At this point, petitioner no longer objects to the

entry of a decision for the reduced income tax liabilities

proposed by respondent. Petitioner, however, does not agree to

the additions to tax and penalties but has not shown reasonable

cause as to why she should not be held liable for failure to file

returns and/or to pay estimated tax. As indicated in footnote 4

of this opinion, we have already held that petitioner is liable

for the additions to tax.

Accordingly, respondent’s Motion to Dismiss, filed on

December 26, 2000, and respondent’s Supplemental Motion to

Dismiss filed on April 6, 2001, will be granted and a decision

for the reduced amounts of income tax deficiencies and additions

to tax under sections 6651(a)(1) and 6654 will be entered against

petitioner.

B. Respondent’s Motion for Damages Under I.R.C. Section 6673

Under section 6673(a) a taxpayer may be required to pay the
 - 12 -

United States a penalty not in excess of $25,000, whenever it

appears to the Court that, among other reasons, the proceedings

have been instituted or maintained primarily for delay. See

Sandvall v. Commissioner, 898 F.2d 455, 459 (5th Cir. 1990),

affg. T.C. Memo. 1989-56; Larsen v. Commissioner, 765 F.2d 939,

941 (9th Cir. 1985). As already described, petitioner has done

little, during the more than 5 years this case has been pending,

to address the merits of her income tax liability. Instead,

petitioner has delayed the proceedings at each step of the way

with spurious attacks on the authority and/or integrity of

respondent’s personnel and the several Judges who have been

involved in this case.

Throughout the proceedings, petitioner and her counsel have

refused and/or failed to comply with respondent’s requests and

this Court’s Rules in connection with the exchange and

stipulation of documents and evidence. Several motions were

filed and addressed under Rule 91(f) in an attempt to cause

petitioner’s compliance with the Court’s Rules.

In an April 24, 2000 Order, the Court explained that, even

though this case had an extended history, petitioner had not

produced any probative evidence regarding the underlying issues.

It was further explained that petitioner’s sole approach was to

“attack respondent’s counsel and the Court.” The Court, in the

April 24, 2000 Order, advised petitioner “that the Court is
 - 13 -

considering imposing a penalty under section 6673(a).” In spite

of the Court’s warning, petitioner continued her collateral

attack and failed to address the underlying issues. Petitioner’s

incorrigible approach continued throughout the proceeding, even

though she was given numerous opportunities to comply in the form

of continuances, additional time, and the vacating of an order

deeming facts to be established under Rule 91(f). In each

instance, petitioner did not use the additional time to address

the underlying issues in her case.

Under these circumstances, we hold the petitioner has

maintained this proceeding primarily for delay. We therefore

award a penalty to the United States in the amount of $15,000

under section 6673(a).

To reflect the foregoing,

An appropriate order and

decision will be entered.