Cryer's Lawyer Sanctioned

[LPC]

George E. Harp, who is Tommy Cryer's attorney of record in Cryer's criminal prosecution, has been sanctioned $5,000 by the Tax Court for making frivolous arguments in Harp's appeal of his own collection due process hearing.

It doesn't get much better than that.

George E. Harp v. Commissioner, T.C. Memo. 2007-83, 2007 TNT 69-10, No. 14176-05L (4/9/2007).

GEORGE E. HARP,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent


UNITED STATES TAX COURT

Filed April 9, 2007

George E. Harp, pro se.

Elke B. Esbjornson, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

HAINES, Judge: This case is before the Court on respondent's motion for summary judgment filed pursuant to Rule 121.1 The issues for decision are whether respondent abused his discretion in sustaining the proposed collection actions and whether the Court should impose against petitioner a penalty under section 6673(a).

FINDINGS OF FACT

At the time he filed his petition, petitioner resided in Shreveport, Louisiana.

Petitioner is an attorney admitted to practice before this Court. He has represented at least two taxpayers before the Court. See Olmos v. Commissioner, T.C. Memo. 2007-82; Heers v. Commissioner, T.C. Memo. 2007-10.

Petitioner failed to timely file Federal income tax returns for 1995 through 2000 (years at issue). During the examination of the years at issue, petitioner submitted tax returns reporting all zeroes and attached documents entitled "Asseveration of Claimed Gross Income" and "Statement and Asseveration of Exclusion of Remuneration from Gross Income". In the returns and attachments, petitioner argued that his income was not includable in gross income and raised various tax-protester arguments. After respondent received petitioner's returns, respondent used the bank deposits method to reconstruct petitioner's income.2

On November 22, 2003, respondent issued petitioner a notice of deficiency, which petitioner received. Respondent determined the following deficiencies in Federal income tax, additions to tax under section 6651(a)(1) for failure to timely file returns, and penalties under section 6663 for civil tax fraud:

Additions to tax Penalties
Year Tax Sec. 6651(a)(1) Sec. 6663
______________________________________________________________

1995 $9,158 $2,290 $6,869
1996 9,496 2,374 7,122
1997 5,033 1,258 3,775
1998 3,245 811 2,434
1999 1,666 417 1,250
2000 3,544 886 2,658

Petitioner did not file a petition with this Court in response to the notice of deficiency.

On March 22, 2004, respondent assessed the tax due, the additions to tax, and the penalties for the years at issue. On the same day, respondent issued petitioner a notice of balance due and demand for payment.

On December 18, 2004, respondent issued petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (notice of intent to levy). On January 13, 2005, respondent issued petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under I.R.C. § 6320 (notice of Federal tax lien). On January 18 and February 23, 2005, respectively, respondent received two Forms 12153, Request for a Collection Due Process Hearing, in response to the notice of intent to levy and the notice of Federal tax lien. In the Forms 12153, petitioner argued that respondent violated petitioner's due process rights by not allowing him "to confront and cross-examine the witnesses" who provided respondent with petitioner's bank records and by not requesting technical advice from respondent's National Office.

On March 4, 2005, Appeals Officer Catherine Smith (Ms. Smith) was assigned to petitioner's case. On April 13, 2005, Ms. Smith sent petitioner a letter stating that courts have considered petitioner's arguments to be frivolous or groundless. Ms. Smith explained what issues could be addressed during the section 6330 hearing, requested that petitioner submit financial information and any desired collection alternatives, and scheduled a telephonic section 6330 hearing for May 11, 2005. Petitioner's section 6330 hearing was held on May 11, 2005, during which petitioner made the same arguments raised in the Forms 12153. Petitioner did not provide financial information, nor did he propose any collection alternatives.

On July 1, 2005, respondent issued petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) with respect to the years at issue. Respondent determined that petitioner's arguments were frivolous, that the arguments went to the underlying tax liability, and that petitioner was precluded from challenging the underlying tax liability because he had received a notice of deficiency.3 After verifying that all administrative and statutory requirements were met, respondent sustained the proposed collection actions.4 Respondent warned petitioner that, if he continued to raise frivolous arguments, the Court could impose a penalty under section 6673(a)(1).

In response to the notice of determination, petitioner filed a petition with this Court on August 1, 2005. Petitioner argued that Ms. Smith abused her discretion "in relying on 'cherry picked' documentation to determine that the requirements of applicable law and administrative procedures had been met" and that "The assessments for each of the tax years in question were made and a notice of deficiency was issued in violation of Taxpayer's due process * * * rights".

On July 14, 2006, the Court filed respondent's motion for summary judgment. On September 18, 2006, the Court filed petitioner's response and heard arguments on respondent's motion.

OPINION

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant summary judgment when there is no genuine issue of material fact and a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988). We conclude that there are no genuine issues of material fact and a decision may be rendered as a matter of law.

When, as is the case here, the taxpayer received a notice of deficiency and did not petition the Court, the validity of the underlying tax liability is not at issue, and the Court will review the notice of determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

Petitioner argues that, prior to the issuance of the notice of deficiency, he was improperly denied his Sixth Amendment right to "confront and cross-examine" the parties who provided respondent with petitioner's bank records. Further, petitioner argues that, prior to the issuance of the notice of deficiency, respondent improperly refused to apply for technical advice on the Sixth Amendment issue. Petitioner concludes that "The assessments for each of the tax years in question were made and a notice of deficiency issued in violation of Taxpayer's due process rights". While petitioner characterizes his arguments otherwise, these arguments are challenges to the notice of deficiency and the underlying tax liability. Because he received a notice of deficiency but did not petition the Court, petitioner is precluded as a matter of law from challenging the validity of the underlying tax liability. See Sego v. Commissioner, supra at 610; Goza v. Commissioner, supra at 181-182; see also sec. 6330(c)(2)(B). Even if petitioner's arguments could be properly characterized as something other than a challenge to the underlying tax liability, we find that petitioner's arguments are frivolous and groundless. "We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).

Petitioner also argues that Ms. Smith abused her discretion by "cherry-picking" documentation to verify that the assessment procedures were followed and to determine that the requirements of applicable law and administrative procedures were satisfied. Petitioner's argument is without merit.

Section 6330(c)(1) provides that "The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." Section 6330(c)(1) does not require the Appeals officer to rely on a particular document to satisfy the verification requirement. Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), affd. 329 F.2d 1224 (11th Cir. 2003); Kubon v. Commissioner, T.C. Memo. 2005-71. Generally, the Appeals officer may rely on TXMODA transcripts of account to satisfy the verification requirement. See Kubon v. Commissioner, supra; Schroeder v. Commissioner, T.C. Memo. 2002-190; Weishan v. Commissioner, T.C. Memo. 2002-88, affd. 66 Fed. Appx. 113 (9th Cir. 2003); Lindsey v. Commissioner, T.C. Memo. 2002-87, affd. 56 Fed. Appx. 802 (9th Cir. 2003).

Ms. Smith obtained and reviewed TXMODA transcripts of account for petitioner's tax years at issue to verify that the assessments were properly made and that all other requirements of applicable law and administrative procedure had been met. Petitioner has not alleged any irregularity which would raise a question about the information contained in the TXMODA transcripts relied on by Ms. Smith. Accordingly, we conclude there is no question that Ms. Smith satisfied the verification requirement of section 6330(c)(1). See Kubon v. Commissioner, supra.

Petitioner makes no other arguments against the validity of the notice of determination. In particular, petitioner fails to make a valid challenge to the appropriateness of respondent's intended collection actions, raise a spousal defense, or offer alternative means of collection. See sec. 6330(c)(2)(A). We conclude that respondent did not abuse his discretion in determining that collection should proceed and that respondent is entitled to judgment as a matter of law.

Section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty in an amount not to exceed $25,000 whenever it appears to the Court that the proceedings have been instituted or maintained primarily for delay or that the taxpayer's position in the proceeding is frivolous or groundless. Sec. 6673(a)(1)(A) and (B). Respondent does not ask the Court to impose a penalty on petitioner under section 6673(a)(1). However, the Court may sua sponte determine whether to impose such a penalty.

We find that petitioner instituted and maintained this case primarily for delay. During the examination prior to the issuance of the notice of deficiency, the section 6330 hearing, and the trial of this case, petitioner raised no arguments of merit. Instead, he advanced only frivolous and groundless arguments. In the notice of determination, respondent warned petitioner of the possibility of a penalty under section 6673(a)(1). Additionally, petitioner is an attorney who is admitted to practice before this Court and has represented at least two taxpayers before the Court. See Olmos v. Commissioner, T.C. Memo. 2007-82; Heers v. Commissioner, T.C. Memo. 2007-10. Under the circumstances, it is reasonable to assume that petitioner understood the potential consequences of maintaining an action primarily for delay and of raising frivolous and groundless arguments. On the basis of the above, we shall impose a penalty on petitioner pursuant to section 6673(a)(1) in the amount of $5,000.

We have considered all arguments made, and, to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit.

To reflect the foregoing,

An appropriate order and decision will be entered.

FOOTNOTES

1 Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure. Amounts are rounded to the nearest dollar.

2 Respondent issued summonses to various banks, ordering the banks to produce petitioner's bank records for the years at issue. Prior to the issuance of the notice of deficiency, petitioner requested to cross-examine the parties who submitted documentation in response to the summonses. Respondent denied petitioner's request. Respondent also denied petitioner's request that the examining officer submit a request for technical advice regarding the cross-examination issue to respondent's National Office.

3 Apparently, during the sec. 6330 hearing, petitioner also argued that the Federal tax lien should be withdrawn because petitioner submitted at least two sec. 6330 hearing requests before the notice of intent to levy and the notice of Federal tax lien were issued. Respondent determined that petitioner's right to a sec. 6330 hearing did not arise until after the notice of intent to levy and the notice of Federal tax lien were issued, that the previous sec. 6330 hearing requests were premature, and that petitioner did not otherwise establish why the Federal tax lien was improperly filed. In his petition, petitioner does not argue that the Federal tax lien was improperly filed. Thus, we find petitioner has conceded the issue. See Rule 331(b)(4).

4 To determine whether assessment procedures were followed and whether all administrative and statutory requirements were met, Ms. Smith relied on TXMODA transcripts of account for petitioner's tax years at issue.

END OF FOOTNOTES

[The Observer]

Harp didn't make much of an impression with his other appearance on behalf of another taxpayer - a dentist no less:

STEVEN R. OLMOS,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

Release Date: APRIL 09, 2007

Published by Tax AnalystsTM

UNITED STATES TAX COURT

Filed April 9, 2007

George E. Harp, for petitioner.

Alisha M. Harper, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

HAINES, Judge: Respondent determined a deficiency in petitioner's 2001 Federal income tax of $ 43,886 and additions to tax under sections 6651(a)(1) and 6654(a) of $ 10,072 and $ 1,754, respectively./1/ The issues for decision are: (1) Whether petitioner received unreported income in the form of interest and medical and healthcare payments in 2001; (2) whether petitioner is liable for self-employment tax for 2001; (3) whether petitioner is liable for an addition to tax under section 6651(a)(1) for failing to file his 2001 tax return; (4) whether petitioner is liable for an addition to tax under section 6654(a) for failing to make estimated tax payments with respect to his 2001 tax liability; and (5) whether petitioner is liable for a penalty under section 6673(a)(1).

FINDINGS OF FACT

At the time he filed his petition and amended petition, petitioner resided in Niles, Ohio.

During 2001, petitioner was a dentist with an office in La Mesa, California. Petitioner received medical and healthcare payments from insurance companies and other entities for services rendered to his patients. The insurance companies and other entities issued petitioner Forms 1099-MISC, Miscellaneous Income, reflecting the following payments made during 2001:

Payor Payment(s)
____________________________________________________

Aramco Services Co. $ 1,449
Blue Cross of California 37,502
Continental Casualty Co. 2,245
Delta Dental Plan of 2,034
California
Great-West Life & Annuity 2,360
Ins. Co.
Interinsurance Exchange 1,104
Nationwide Mutual Ins. Co. 951
Niagra Fire Ins. Co. 1,695
Republic Indemnity Co. 2,111
San Diego Elec. Health & 720
Welfare Trust
State Comp. Ins. Fund 2,428
Tristar Risk Management 1,823
Truck Ins. Exchange 15,740
United Healthcare Ins. Co. 4,002

Total 76,164

During 2001, petitioner also received and cashed checks totaling $ 2,279 from Kaiser Permanente Medical Care Program and checks totaling $ 12,827 from State Farm Mutual Automobile Insurance Company.

Despite receiving medical and healthcare payments totaling at least $ 91,270 in 2001, petitioner did not make estimated tax payments and did not file a Federal income tax return.

On October 31, 2003, respondent issued petitioner a notice of deficiency for 2001. Based on information received from third-party payors, respondent determined petitioner received interest income of $ 72 from Wells Fargo and self-employment income of $ 132,242 from medical and healthcare payments./2/ In addition to the medical and healthcare payments reflected above, respondent determined petitioner also received medical and healthcare payments from the following sources:

Payor Payment(s)
____________________________________________________

Aetna, Inc. $ 5,789
Aetna Life Ins. Co. 11,196
Best Life Assurance 1,000
Calfarm Ins. Co. 4,218
Federal Ins. Co. 1,300
Intercare Ins. Services 3,763
Kyocera International, Inc. 4,558
Peoria Unified School 1,975
District
Twin City Fire Ins. Co. 5,404

Total 39,203

After allowing petitioner a standard deduction, a personal exemption, and an adjustment for self-employment tax, respondent determined petitioner's 2001 taxable income was $ 118,108. Respondent determined petitioner had a deficiency in tax of $ 43,866 for 2001, which included self-employment tax of $ 13,511. Respondent also determined petitioner was liable for additions to tax under sections 6651(a)(1) and 6654(a) of $ 10,072 and $ 1,754, respectively.

On February 5, 2004, the Court filed petitioner's imperfect petition. By order dated February 9, 2004, the Court ordered petitioner to file a proper amended petition and pay the filing fee on or before March 25, 2004. The Court received petitioner's filing fee on March 29, 2004, but did not receive a proper amended petition. By order dated June 2, 2004, the Court extended the time to file a proper amended petition to June 30, 2004. No response to the Court's June 2, 2004, order was received, and on August 13, 2004, the Court dismissed petitioner's case for lack of jurisdiction.

On November 12, 2004, the Court filed petitioner's motion to vacate the order of dismissal. Petitioner attached an amended petition to his motion. On November 12, 2004, the Court granted petitioner's motion, vacated the order of dismissal, and filed petitioner's amended petition.

A notice setting case for trial during the Court's Cleveland, Ohio, trial session beginning March 27, 2006, was served on petitioner on October 21, 2005. By order dated March 23, 2006, the Court set petitioner's case for a date and time certain of 10:00 a.m. EST on Friday, March 31, 2006.

When petitioner's case was called for trial on March 31, 2006, petitioner did not appear. Instead, George E. Harp (Mr. Harp) appeared on petitioner's behalf, and the Court filed Mr. Harp's entry of appearance. Although Mr. Harp offered no evidence at trial regarding petitioner's unreported income,/3/ Mr. Harp objected to all but one of respondent's exhibits. After hearing argument on the objections, we overruled petitioner's objections and admitted the exhibits.

OPINION

I. Unreported Income

Section 61(a) defines gross income for purposes of calculating taxable income as "all income from whatever source derived". Respondent determined petitioner received gross income in the form of taxable interest and medical and healthcare payments, and that petitioner failed to file a 2001 Federal income tax return reporting these items.

Generally, a taxpayer bears the burden of proving the Commissioner's determinations incorrect./4/ Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). However, the Court of Appeals for the Sixth Circuit, the Circuit to which appeal in this case would lie absent stipulation otherwise,/5/ has held: "The law imposes much less of a burden upon a taxpayer who is called upon to prove a negative--that he did not receive the income which the Commissioner claims--than it imposes upon a taxpayer who is attempting to sustain a deduction." Weir v. Commissioner, 283 F.2d 675, 679 (6th Cir. 1960), revg. T.C. Memo. 1958-158; see also United States v. Walton, 909 F.2d 915, 918-919 (6th Cir. 1990); United States v. Besase, 623 F.2d 463, 465 (6th Cir. 1980); Richardson v. Commissioner, T.C. Memo. 2006-69. In cases involving unreported income, the Commissioner bears the initial burden of establishing "at least a 'minimal' factual predicate or foundation of substantive evidence linking the taxpayer to income- generating activity or to the receipt of funds." Richardson v. Commissioner, supra (citing United States v. Walton, supra at 918-919). Once the Commissioner meets his initial burden of production, the taxpayers bear the "burden of producing credible evidence that they did not earn the taxable income attributed to them or of presenting an argument that the IRS deficiency calculations were not grounded on a minimal evidentiary foundation." United States v. Walton, supra at 919.

To satisfy his initial burden of production, respondent introduced into evidence Forms 1099-Misc issued to petitioner by 14 third-party payors. Respondent also introduced into evidence checks issued to and cashed by petitioner from two third-party payors. Respondent introduced the Forms 1099-Misc as business records through written declarations under rules 803(6) and 902(11) of the Federal Rules of Evidence and introduced the checks as self-authenticating commercial paper under rule 902(9) of the Federal Rules of Evidence./6/

The business records and checks respondent introduced establish that petitioner received income from medical and healthcare payments during 2001. While this evidence covers only 16 of the 25 third-party payors from which respondent determined petitioner received income, it establishes a minimal factual predicate or foundation of substantive evidence linking the taxpayer to income-generating activity. We conclude that respondent laid the requisite foundation for the contested unreported income from medical and healthcare payments and that petitioner bears the burden of proving respondent's determination incorrect.

Respondent did not, however, introduce any evidence establishing that petitioner received interest income during 2001. Because respondent has not laid the requisite foundation in this regard, we find that the alleged interest income of $ 72 is not included in petitioner's gross income for 2001.

Petitioner did not attend the trial, and he did not attempt through his counsel to introduce any evidence regarding the items of unreported income. Therefore, we conclude that petitioner has failed to carry his burden of proof. Respondent's unreported income adjustments relating to the medical and healthcare payments are sustained.

II. Self-Employment Tax

Section 1401 imposes a tax on the self-employment income of individuals. Self-employment income means the net earnings from self- employment derived by an individual. Sec. 1402(b). Respondent determined the medical and healthcare payments received by petitioner constituted self-employment income and consequently petitioner was liable for self-employment tax. Petitioner bears the burden of proving respondent's determination incorrect. See Rule 142(a); Welch v. Helvering, supra at 115. Petitioner argues he is not liable for self-employment tax because "Respondent has failed to establish self-employment income". As described above, respondent established petitioner received income from medical and healthcare payments received for services rendered by petitioner. Petitioner presented no testimony or evidence regarding his liability for self- employment tax and has failed to meet his burden of proof. Therefore, we conclude that petitioner is liable for self-employment tax.

III. Addition to Tax Under Section 6651(a)(1)

Section 6651(a)(1) imposes an addition to tax for failure to file a return on the date prescribed, unless the taxpayer can establish that such failure is due to reasonable cause and not willful neglect. Respondent determined petitioner is liable for an addition to tax under section 6651(a)(1) because he failed to file a 2001 Federal income tax return.

Respondent bears the burden of production with respect to petitioner's liability for the addition to tax under section 6651(a)(1). See sec. 7491(c); Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001). To meet his burden of production, respondent must come forward with sufficient evidence indicating it is appropriate to impose the addition to tax. See Higbee v. Commissioner, supra at 446-447. Once respondent meets his burden of production, petitioner bears the burden of proving he is not liable for the additions to tax. See id. at 447.

Respondent introduced into evidence a Form 3050, Certification of Lack of Record, and a Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, both of which show petitioner did not file a 2001 Federal income tax return. On the basis of this evidence, we find that respondent has met his burden of production.

Petitioner did not introduce any evidence to prove he had reasonable cause for his failure to file a 2001 Federal income tax return. Therefore, we conclude that petitioner is liable for an addition to tax under section 6651(a)(1).

IV. Addition to Tax Under Section 6654(a)

Section 6654(a) imposes an addition to tax on an underpayment of a required installment of individual estimated tax unless one of the statutory exceptions applies. Sec. 6654(a), (b), (e). Each required annual installment of estimated tax is equal to 25 percent of the "required annual payment", which is equal to the lesser of (1) 90 percent of the tax shown on the individual's return for that year (or, if no return is filed, 90 percent of his tax for such year), or (2) if the individual filed a return for the immediately preceding taxable year, 100 percent of the tax shown on that return. Sec. 6654(d)(1)(A) and (B). Respondent determined that petitioner is liable for an addition to tax under section 6654(a) because he made no estimated tax payments for 2001.

Respondent bears the burden of production with respect to petitioner's liability for the addition to tax under section 6654(a). See sec. 7491(c); Higbee v. Commissioner, supra at 446- 447. "In order to satisfy his burden of production * * * regarding petitioner's liability for the section 6654 addition to tax, respondent, at a minimum, must produce evidence necessary to enable the Court to conclude that petitioner had a required annual payment under section 6654(d)(1)(B)." Wheeler v. Commissioner, 127 T.C. 200, 211 (2006).

Respondent introduced into evidence Form 3050, which shows that petitioner did not file tax returns for 2000 or 2001. Thus, respondent has established that, because petitioner did not file a 2000 Federal income tax return, petitioner was required by section 6654(d)(1)(B) to make an annual payment during 2001 of 90 percent of the tax for 2001./7/ Respondent also introduced into evidence Form 4340, which shows that petitioner did not make the required estimated tax payments. On the basis of this evidence, we find that respondent has met his burden of production.

We do not find that a statutory exception to the addition to tax under section 6654(e) applies. Therefore, we conclude that petitioner is liable for an addition to tax under section 6654(a).

V. Penalty Under Section 6673(a)(1)

Section 6673(a)(1) authorizes the Court to require a taxpayer to pay the United States a penalty in an amount not to exceed $ 25,000 whenever the taxpayer's position is frivolous or groundless or the taxpayer has instituted or pursued the proceeding primarily for delay. At trial and on brief, respondent asked the Court to impose a penalty under section 6673(a)(1) against petitioner due to petitioner's failure to cooperate, his failure to appear at trial, and his continual delay.

Petitioner's actions evidence an intention to delay the proceedings, and he has failed to cooperate with respondent at every level. Additionally, while petitioner did not raise typical tax- protester arguments, petitioner's actions and his failure to introduce any evidence to support his claims closely mirrors the tactics of many tax protesters. However, petitioner was not warned until the conclusion of this case that a penalty might be imposed under section 6673(a)(1). For this reason only, we decline to impose a penalty under section 6673(a)(1). We strongly admonish petitioner that if he persists in using tactics of delay or in failing to cooperate with respondent in proceedings hereafter, the Court will not be so favorably inclined in the future.

In reaching our holdings, we have considered all arguments made, and, to the extent not mentioned above, we conclude that they are moot, irrelevant, or without merit.

To reflect the foregoing,

An appropriate order and decision will be entered under Rule 155.

FOOTNOTES

/1/ Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure. Amounts are rounded to the nearest dollar.

/2/ These medical and healthcare payments included $ 1,611 from Metropolitan Life Ins. Co. On brief, respondent conceded petitioner did not receive medical and healthcare payments from Metropolitan Life Ins. Co.

/3/ Petitioner did introduce into evidence a letter from respondent's counsel outlining documents respondent intended to use at trial. It is unclear why petitioner introduced this letter into evidence, as it does not relate to any issue and was not cited by petitioner on brief.

/4/ Petitioner does not argue that sec. 7491(a) operates to shift the burden of proof to respondent. Even if petitioner had so argued, the burden of proof would not shift under sec. 7491(a) because petitioner has not shown he maintained any records, nor has he cooperated with the reasonable requests of respondent during the administrative proceedings or in preparation for trial.

/5/ While petitioner apparently resided in California during 2001, he resided in Niles, Ohio, when he filed his petition and amended petition. Sec. 7482(b)(1)(A) provides that reviewable decisions of the Tax Court are appealable to the Circuit in which the taxpayer resides at the time the petition was filed. Therefore, this case is appealable to the Court of Appeals for the Sixth Circuit.

/6/ Petitioner argued on brief that respondent had the burden of proof regarding the unreported income adjustments and respondent did not satisfy that burden because the business records and checks offered at trial were inadmissible. As discussed elsewhere in this opinion, respondent bears only the initial burden of production and not the ultimate burden of proof. Respondent has satisfied his initial burden of production by introducing the business records and checks. The business records in question were kept in the regular course of business and were properly authenticated in certifications submitted under Fed. R. Evid. 803(6) and 902(11), and the checks are self-authenticating commercial paper under Fed. R. Evid. 902(9). Therefore, the records and checks were properly admitted into evidence at trial, and we do not consider petitioner's arguments further.

/7/ As discussed supra, respondent also established that petitioner has tax due for 2001 as the result of the medical and healthcare payments received. The amount of tax due, and consequently, the amount of the additions to tax, must be determined by the parties under Rule 155.