T.C. Summary Opinion 2004-142
UNITED STATES TAX COURT
SHARON J. FIX, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12958-99S. Filed October 14, 2004.
Sharon J. Fix, pro se.
J. Robert Cuatto, for respondent.
WOLFE, Special Trial Judge: This matter is before the Court
on petitioner’s Motion for Leave to File Motion to Vacate Out of
Time (embodying Motion to Vacate) (Motion), filed on January 21,
2004. It was heard pursuant to the provisions of section 7463 of
the Internal Revenue Code. All section references are to the
Internal Revenue Code in effect at relevant times, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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The order to be entered is not reviewable by any other court and
this opinion should not be cited as authority.
Petitioner seeks to vacate a stipulated decision of this
Court entered on February 29, 2000. Petitioner contends that the
stipulated decision was entered as a result of fraud on the
Court.
Background
By notice of deficiency, respondent determined that
petitioner was liable for an income tax deficiency for 1996 and
an addition to tax for filing her return after its due date.
Petitioner filed a small tax case petition with this Court on
July 26, 1999, and her case was calendared for the Court’s trial
session in Phoenix, Arizona, commencing on February 14, 2000.
Petitioner’s case was assigned to Erin Huss (Ms. Huss), an
attorney employed at respondent’s Phoenix office. Petitioner was
present in the courtroom prior to the scheduled calendar call in
Phoenix on February 14, 2000. Petitioner was not represented by
counsel. Henry Eide (Mr. Eide), her former accountant, who
prepared her 1996 return was present in the courtroom to provide
“moral support” for petitioner and to satisfy his curiosity about
Tax Court proceedings. Kent Ellsworth (Mr. Ellsworth),
petitioner’s accountant at the time of trial, represented
petitioner during pretrial settlement negotiations. Mr.
Ellsworth is not an attorney or otherwise authorized to represent
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clients before this Court, and he was not present in the
courthouse on the date of the Phoenix calendar call.
Prior to the Phoenix calendar call, petitioner discussed her
case with Ms. Huss, and they completed a previously negotiated
agreement to settle. The parties entered into a stipulated
decision document, signed on February 14, 2000, by petitioner and
J. Robert Cuatto, a supervising attorney with respondent’s
Phoenix office.
In relevant part, the stipulated decision document signed by
the parties states:
Pursuant to agreement of the parties in this case,
it is
ORDERED AND DECIDED: That there is a deficiency
in income tax due from the petitioner for the taxable
year 1996 in the amount of $7,121.00; and
That there is no addition to tax due from the
petitioner for the taxable year 1996, under the
provisions of I.R.C. § 6651(a)(1).
* * * * * * *
It is hereby stipulated that the Court may enter
the foregoing decision in this case.
The decision was entered by the Court on February 29, 2000, and
it became final 90 days later on May 29, 2000.
On December 30, 2003, nearly 3-1/2 years after the decision
in her case became final, petitioner wrote a letter to the Court
and asked that the decision be set aside. In the letter
petitioner alleged that she was coerced and intimidated by Ms.
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Huss into signing the stipulated decision document. Petitioner
wrote, in part:
Before I even entered the hearing, Ms. Erin Hess
[sic] confronted my accountant, who had accompanied me
to explain what happened to the documents. She
aggressively dressed him down verbally and the
character of her accusations so intimidated him that he
turned on his heel and left the building, abandoning
me. I was then coerced into signing the decision
document by Ms. Hess, who demanded that I either sign
the document immediately or she would have me jailed on
the spot.
I never went before the Judge to argue my case and
defend myself as a result of the actions of Ms. Hess.
And it was not a matter of choice. I even tried to
leave the court building when faced with this illegal
and unconscionable onslaught, but Ms. Hess had me
brought back to her by two court security guards
against my wishes. There is no way I would have signed
that decision document any other way because I KNEW I
did not owe the money. And in spite of all the denials
of irresponsible behavior by IRS counsel and their
associates, I continue to be on the target of threats
and intimidation from the district counsel’s office
over this matter.
Petitioner’s letter was filed by the Court as petitioner’s
Motion on January 21, 2004.
Discussion
Under section 7481(b), a decision of the Court in a small
tax case becomes final 90 days after the decision is entered.
Rule 162 provides that a motion to vacate or revise a decision
shall be filed within 30 days after the decision has been entered
unless the Court shall otherwise permit.
As previously noted, the decision in this case was entered
on February 29, 2000. Petitioner did not file a motion to vacate
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or revise the decision within 30 days of that date, and under
section 7481(b), the decision became final on May 29, 2000.
As a general rule, the Court lacks jurisdiction to vacate a
decision once it becomes final. Abatti v. Commissioner, 859 F.2d
115, 117-118 (9th Cir. 1988), affg. 86 T.C. 1319 (1986); Cinema
‘84 v. Commissioner, 122 T.C. 264, 270 (2004). An exception to
this general rule applies where a decision was obtained by fraud
on the Court. Drobny v. Commissioner, 113 F.3d 670, 677 (7th
Cir. 1997), affg. T.C. Memo. 1995-209; Abatti v. Commissioner,
supra at 118.
The Court of Appeals for the Ninth Circuit, whose opinions
are controlling in this case, defines fraud on the Court as “‘an
unconscionable plan or scheme which is designed to improperly
influence the court in its decision.’” Abatti v. Commissioner,
supra at 118 (quoting Toscano v. Commissioner, 441 F.2d 930, 934
(9th Cir. 1971), vacating 52 T.C. 295 (1969)). The concept of
fraud on the Court is a narrow one and should be applied in the
interest of preserving the finality of judgments. Toscano v.
Commissioner, supra.
To prove fraud on the Court, petitioner has the burden of
establishing by clear and convincing evidence that “an
intentional plan of deception designed to improperly influence
the Court in its decision has had such an effect on the Court.”
Abatti v. Commissioner, 86 T.C. at 1325. See Drobny v.
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Commissioner, supra at 677-678; Pulitzer v. Commissioner, T.C.
Memo. 1987-408. The burden of proof cannot be met by broad
assertions, and the moving party must come forward with
“‘specific facts which will pretty plainly impugn the official
record.’” Drobny v. Commissioner, supra at 677 (quoting Kenner
v. Commissioner, 387 F.2d 689, 691 (7th Cir. 1968)).
In the present case, petitioner failed to introduce any
credible evidence in support of her allegations that she was
coerced by threats and intimidation into entering into a
stipulated decision. Not only did petitioner fail to establish
that any improper conduct occurred, but her account of the
circumstances leading to and surrounding the signing of the
stipulated decision document was contradicted by several credible
witnesses, including her own former accountants, Mr. Eide and Mr.
Ellsworth.
Petitioner argues that Mr. Eide left the courtroom on the
date set for trial after a verbal altercation with Ms. Huss, but
Mr. Eide explicitly disagreed with petitioner’s statement and
testified that he did not have any contact with Ms. Huss on that
day. Mr. Eide also stated that he did not witness any
discussions petitioner had with Ms. Huss on the date of the
calendar call.
Mr. Ellsworth testified that petitioner had agreed to the
terms of a pretrial settlement that served as the basis for the
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stipulated decision. He explained that the settlement was a very
favorable one for petitioner, denied that petitioner was coerced
into the settlement, and testified that with respect to the
negotiation: “I was happy because * * * it seemed like we had
saved several thousand dollars.” He said: “I thought we’d done
a really good job.” While Mr. Ellsworth stated that petitioner
was in agreement with the favorable settlement he had negotiated
for her, he noted that she did not seem to understand fully the
taxation of her capital gains.1
Ms. Huss testified that her dealings with petitioner were
“professional” and strongly denied petitioner’s accusations that
she coerced and intimidated her into signing the stipulated
decision document. In response to petitioner’s accusatory
questions, Ms. Huss specifically denied ever threatening to have
petitioner thrown into jail or brought back into the courtroom by
security personnel against her will. Further, Ms. Huss made it
clear that she never has threatened a taxpayer with a jail
1
Mr. Ellsworth explained:
She had a hard time understanding the capital
gain law. She couldn’t understand how you
can be taxed on something when you don’t get
the cash. And I tried to explain it over and
over again that the cash is irrelevant in
calculating capital gains, it’s actually a
situation of basis versus sales price. And
we couldn’t establish basis over the numbers
that we talked about and that’s why we
settled for what we did.
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sentence and never has asked security guards to restrain a
taxpayer. Ms. Huss’s testimony was clear, explicit, and entirely
credible.
With respect to petitioner’s statements that security
personnel had refused to allow her to leave the courthouse and
had acted on Ms. Huss’s orders, Steve Borak, senior deputy for
the U.S. Marshals Service, testified that the Court’s security
officers do not take orders from respondent’s counsel and that it
would “defy intuition” for security personnel to involve
themselves in the judicial process. Further, Mr. Borak testified
that no incident reports were filed at any point during the
Court’s February 2000 Phoenix trial session. Since security
personnel must file an incident report any time they are involved
with verbal confrontations or the use of force, an incident
report would have been filed if security officers had brought
someone back into the courtroom against his or her wishes.
Petitioner has failed to show that the stipulated decision
entered in this case was the result of fraud on the Court.
Petitioner has not shown that Attorney Erin Huss or any security
personnel engaged in any improper actions in the handling of
petitioner’s case. The record establishes that petitioner’s
accusations of fraud on the Court are without merit.
For reasons set forth above, petitioner’s Motion is denied.
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Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
An appropriate order
denying petitioner’s motion for
leave to file motion to vacate
will be issued.