T.C. Memo. 2005-117
UNITED STATES TAX COURT
SYLWESTER A. SLOJEWSKI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2761-04. Filed May 19, 2005.
William E. Taggart, Jr., for petitioner.
Anthony J. Kim, for respondent.
MEMORANDUM OPINION
HAINES, Judge: This case is before the Court on
petitioner’s motion to vacate order and decision pursuant to Rule
162.1
1
Unless otherwise noted, 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 at all
relevant times.
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For the reasons stated below, we shall deny petitioner’s motion
to vacate.
Background
On November 13, 2003, respondent issued a notice of
deficiency to petitioner that determined a deficiency in
petitioner’s 2000 Federal income tax and a penalty under section
6662(a). On February 17, 2004, petitioner timely filed a
petition with the Court disputing respondent’s determination.
At the time he filed the petition, petitioner resided in San
Francisco, California.
This case was calendared for trial at the Court’s trial
session in San Francisco, California, that began on November 29,
2004. When the case was called from the calendar on December 3,
2004, the parties informed the Court that a basis of settlement
with respect to all issues had been reached. In the stipulation
of settlement submitted to the Court on December 3, 2004, the
parties stipulated as follows:
1. Petitioner and respondent agree that
petitioner should not have reported dependent’s W-2
income of $4,589.00 on his tax return for taxable year
2000.
2. Respondent concedes that petitioner does not
have to include in taxable income the $23,242.00 that
was reported on the Form 1099-MISC issued by Robert
Leslie in taxable year 2000.
3. Respondent concedes that petitioner may
deduct, as car and truck expenses, $2,925.00 of the
$4,560.00 of claimed deductions that petitioner
erroneously listed as mortgage expenses on his 2000 tax
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return. Petitioner concedes that he may not deduct the remaining
$1,635.00 of claimed deductions.
4. Petitioner concedes that he may not deduct the remaining
$19,925.00 of Schedule C expenses that he claimed on his 2000 tax
return. Those disallowed deductions are as follows:
(a) $750.00 of advertising expenses;
(b) $4,000.00 of commissions and fees expenses;
(c) $1,250.00 of insurance expenses;
(d) $8,000.00 of legal expenses;
(e) $3,000.00 of office expenses;
(f) $600.00 of repair expenses;
(g) $525.00 of taxes and licenses expenses; and
(h) $1,800.00 of travel and entertainment expenses.
5. Respondent concedes that, as a result of
respondent’s concession in paragraph 2, petitioner is
not liable for an accuracy-related penalty under I.R.C.
§ 6662(a) for the taxable year 2000.
The Court ordered the parties to submit a decision document by
January 18, 2005.
On January 6, 2005, respondent mailed to petitioner’s
counsel a proposed decision document. On January 10, 2005,
respondent received from petitioner’s counsel a letter dated
January 7, 2005, in which petitioner’s counsel stated that he
anticipated prompt approval by petitioner of the proposed
decision document.
On the next day, January 11, 2005, respondent received a
letter from petitioner’s counsel dated January 8, 2005, in which
petitioner’s counsel stated:
I also have completed my review of your
computation of the income tax liability that flows from
the settlement of this case. I do not entirely agree
with your computation.
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It is my impression from the information that I
have available that Mr. Slojewski is entitled to a
Child Tax Credit in the amount of $500 based on the
information in the administrative file. It also is
possible Mr. Slojewski is entitled to claim Child Care
Expense credit or Education credit. * * * I have
asked Mr. Slojewski to advise me whether he is entitled
to claim credits for Child Care Expenses or Education,
and whether he has any documentation to support such
claims.
* * * I believe the proper procedure for making
such an adjustment would be to pay the deficiency that
flows from our settlement, and then file an amended
return to claim the refund that flows from any credits
to which Mr. Slojewski may be entitled for Child Care
Expenses or Education. * * *
It is my impression it is unlikely that we will
agree on a decision document prior to January 18, 2005.
I suggest that you advise the court that we have
encountered some unexpected issues in agreeing on a
decision document, and that you request an additional
30 days for the submission of a mutually agreeable
decision document. * * *
On January 12, 2005, respondent mailed a letter to
petitioner’s counsel stating that respondent would not request
additional time to file the decision document. Respondent
explained that the record was closed and that petitioner’s
counsel did not appear to object to the decision document as it
pertained to the issues covered by the stipulation of settlement.
Respondent informed petitioner’s counsel that if the decision
document was not signed and returned by January 17, 2005,
respondent would file a motion for entry of decision.
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On January 14, 2005, petitioner filed a motion to withdraw
agreement to stipulation of settlement. The Court denied
petitioner’s motion to withdraw on February 14, 2005.
On January 18, 2005, the Court filed respondent’s motion for
entry of decision asking the Court to enter a decision in
accordance with the proposed decision document. Paragraph 15 of
respondent’s motion for entry of decision states: “Counsel for
petitioner objects to the granting of this motion.” On February
25, 2005, the Court granted respondent’s motion for entry of
decision and entered a decision that there is a deficiency of
$3,492 in petitioner’s 2000 Federal income tax and that there is
no penalty due from petitioner for the taxable year 2000 under
section 6662(a).
On March 3, 2005, petitioner filed a timely motion to vacate
order and decision pursuant to Rule 162. On March 18, 2005,
respondent filed an objection to petitioner’s motion to vacate
order and decision and a memorandum of points and authorities in
support of his objection.
Discussion
Rule 162 allows a party to file a motion to vacate or revise
a decision, with or without a new or further trial, within 30
days after the decision has been entered, unless the Court shall
otherwise permit. The disposition of a motion to vacate or
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revise a decision rests within the Court’s discretion. Vaughn v.
Commissioner, 87 T.C. 164, 166-167 (1986).
The Court has applied a stringent standard in evaluating
motions to vacate settlement agreements where, shortly before
trial, the parties have agreed to a settlement and caused the
trial date to be vacated. In such cases, we have held the
settlements to be enforceable unless the moving party can show a
lack of formal consent, mistake, fraud, or some similar ground.
See Dorchester Indus., Inc. v. Commissioner, 108 T.C. 320, 335
(1997), affd. 208 F.3d 205 (3d Cir. 2000); Stamm Intl. Corp. v.
Commissioner, 90 T.C. 315, 321-322 (1988). Moreover, a
settlement is generally binding irrespective of whether it is
correct on the merits. See, e.g., Lamanna v. Commissioner, T.C.
Memo. 2003-110, affd. in part, vacated and remanded in part 107
Fed. Appx. 723 (9th Cir. 2004).
We believe that petitioner should be held to this stringent
standard. Here the parties reached a settlement shortly before
trial, and the trial date was vacated as a result of that
settlement.
Petitioner argues that Rule 155 applies to this case and
therefore alleges that the Court should not have entered its
decision because the Clerk of the Court did not serve petitioner
with a notice of the filing of respondent’s motion for entry of
decision. Petitioner alleges that respondent was aware that
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petitioner disagreed with respondent’s computation of
petitioner’s deficiency on the basis of the items addressed in
the stipulation of settlement on the date respondent filed his
motion for entry of decision. Petitioner also argues that
respondent misled the Court by filing his motion for entry of
decision without disclosing, as required by Rule 50(a), that
petitioner disagreed with respondent’s computation of
petitioner’s deficiency on the basis of items addressed in the
stipulation of settlement. We disagree.
Rule 155 is the mechanism whereby the Court is enabled to
enter a decision in a case where the dollar amounts of the
deficiency, liabilities, and/or overpayment cannot readily be
determined. Cloes v. Commissioner, 79 T.C. 933, 935 (1982). In
accordance with the computations in respondent’s motion for entry
of decision, we entered a decision that there is a deficiency of
$3,492 in petitioner’s 2000 Federal income tax and that there is
no penalty due from petitioner for the taxable year 2000 under
section 6662(a).
Petitioner does not show that he disagreed with respondent’s
computation of petitioner’s tax liability in accordance with the
stipulation of settlement, nor does petitioner allege that there
was lack of consent, mistake, or fraud as the basis for his
motion to vacate order and decision. Instead, petitioner raises
new issues involving possible entitlement to a child tax credit,
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a child care expense credit, or an education credit. New issues
raised after a stipulation of settlement has been executed which
are not based on lack of consent, mistake, or fraud are not
sufficient grounds to vacate the stipulation of settlement, nor
to vacate an order and decision entered as a result of the
stipulation of settlement. See Brewer v. Commissioner, T.C.
Memo. 2005-10.
Finally, we conclude that respondent properly advised the
Court that petitioner objected to respondent’s motion for entry
of decision as provided in Rule 50(a). Paragraph 15 of
respondent’s motion for entry of decision states: “Counsel for
petitioner objects to the granting of this motion.”
In summary, petitioner has not shown that there was a lack
of formal consent, mistake, fraud, or some similar ground for
vacating the stipulation of settlement, nor has he cited any
ground or precedent that would support his motion to vacate our
order and decision. Consequently, we shall deny petitioner’s
motion to vacate order and decision.
In reaching our holding herein, we have considered all
arguments made, and, to the extent not mentioned above, we
conclude that they are irrelevant or without merit.
An order will be issued
denying petitioner’s motion to
vacate order and decision.