US TAX COURT
Julie Patriot )
Petitioner, ) DOCKET #303x-xx
)
v. ) Memorandum in Support of Petitioner's Motion to Shift Burden of Proof
)
Commissioner Internal Revenue )
Respondent )
____________________________________)
1. Petitioner comes before this court to shift the burden of proof from Petitioner to Respondent as permitted under IRC §7491 and the Internal Revenue Service Restructuring and Reform Act of 1998 (the "Act").
2. On July 22, 1998, the Act was signed into law. The Act strengthens and enhances the rights of and protections applicable to taxpayers. It states that the burden of proof with respect to a factual issue in any court proceeding is shifted from the taxpayer to the Internal Revenue Service, provided the taxpayer first introduces credible evidence with respect to the factual issue and satisfies four conditions: (1) The taxpayer has complied with any current requirements to substantiate any item; (2) The taxpayer has maintained all records in accordance with then current requirements; (3) The taxpayer has cooperated with reasonable requests by the IRS for witnesses, information, documents, meetings and interviews; and (4) If the taxpayer is not an individual, it does not have a net worth in excess of $7 million.
3. In the present case, Petitioner complied with any requirements to substantiate any item, Petitioner has maintained all records, and Petitioner has cooperated with reasonable requests.
4. Furthermore, the Act requires "balanc[ing] the need for the efficient collection of taxes with the legitimate concern of the [taxpayer] that any collection action be no more intrusive than necessary" Living Care Alternatives of Utica, Inc. v. U.S., C.A.6 (Ohio) 2005, 411 F.3d 621.
5. Also according to Act, “a taxpayer has cooperated with the IRS if the taxpayer has provided reasonable assistance to the IRS in obtaining access to and inspection of the items requested by the Service.”
6. In the present case, Petitioner has provided “reasonable assistance” to the IRS, appeared whenever she was required to appear, offered documentations when needed, and made challenges within the law if a request was considered “more intrusive than necessary.”
7. According to 26 U.S.C.A. § 7491(a):
(1) General rule.--If, in any court proceeding, a taxpayer introduces credible evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer for any tax imposed by subtitle A or B, the Secretary shall have the burden of proof with respect to such issue.
(2) Limitations.--Paragraph (1) shall apply with respect to an issue only if--
(A) the taxpayer has complied with the requirements under this title to substantiate any item;
(B) the taxpayer has maintained all records required under this title and has cooperated with reasonable requests by the Secretary for witnesses, information, documents, meetings, and interviews; and
(C) in the case of a partnership, corporation, or trust, the taxpayer is described in section 7430(c)(4)(A)(ii).
8. Once again, Petitioner complied with any requirements to substantiate any item, maintained all records, and cooperated with reasonable requests. Petitioner has cooperated or is willing to cooperate with reasonable requests for witnesses, information, documents, meetings, and interviews.
9. Petitioner has already attended meetings with IRS agents, submitted briefs or documents, and complied with court schedule. She is available to be a witnesses, or be interviewed, when she is asked at a reasonable time to do so.
10. Based on numerous cases, courts have consistently found that the burden shifts to the IRS when Petitioner kept extensive records, credibly testified, provided books and records, cooperated with the IRS, introduced credible evidence, complied with substantiation and recordkeeping requirements, or other similar reasons.
11. In the present case, Petitioner has kept records, cooperated with the IRS within the law, and complied with any aspect pertinent to her case. As a matter of fact, Petitioner has cooperated in every respect, in every step of this proceeding when she was required to cooperate.
12. In one case example, taxpayer's testimony was credible and sufficient to place burden of proof on IRS, IRS offered insufficient contrary evidence to overcome taxpayers' evidence that they were individually engaged in separate trade or business apart from their investments in S corporation and partnerships, as would support deduction of their payment of property taxes on properties belonging to partnerships. Griffin v. C.I.R., U.S.Tax Ct.2004, 2004 WL 440431.
13. In the present case, Petitioner has always maintained her credibility in her filings and with the court, never falsified any of her claims, and is always willing to testify or introduce credible evidence relevant to her case. This memorandum, as well as previous submissions to the courts or the IRS, is a testament on Petitioner’s credibility and cooperation.
14. According to In re Industrial Commercial Elec., Inc, Section 7491 was added to the Internal Revenue Code as part of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L. 105-206, 112 Stat. 685, in an effort to level the playing field in tax cases.
The Committee is concerned that individual and small business taxpayers frequently are at a disadvantage when forced to litigate with the Internal Revenue Service. The Committee believes that the present burden of proof rules contribute to that disadvantage. The Committee believes that, all other things being equal, facts asserted by the individual and small business taxpayers who cooperate with the IRS and satisfy relevant recordkeeping and substantiation requirements should be accepted. The Committee believes that shifting the burden of proof to the Secretary in such circumstances will create a better balance between the IRS and such taxpayers, without encouraging tax avoidance. H.R. Rep. 105-364(1) at 56; S. Rep. 105-174 at 44.
In re Industrial Commercial Elec., Inc., 304 B.R. 24, 30-31 (Bkrtcy.D.Mass.,2004).
15. In this case, Petitioner is a small business owner, and at a disadvantage when forced to litigate pro se with the IRS. Petitioner cooperated and continues to cooperate with the IRS and what is being reasonably asked of her. As Congress intended, shifting the burden of proof to the Secretary in such circumstances will create a better balance between the IRS and Petitioner.
16. Furthermore, 26 U.S.C.A. § 7491(c) states the following:
Notwithstanding any other provision of this title, the Secretary shall have the burden of production in any court proceeding with respect to the liability of any individual for any penalty, addition to tax, or additional amount imposed by this title.
17. In compliance with 26 U.S.C.A. § 7491(c), Petitioner requests that the IRS produces to her copies of all documents that would relate to any alleged penalty, addition to tax, or additional amount. In this manner, Petitioner would be in a better position to know all the elements pertaining to her case.
18. In Conclusion, Petitioner has furnished all information requested by the Service, as long as the request was relevant, material, and reasonable.
19. Petitioner hereby requests that this court acknowledges that she is in compliance with IRC 7491, pertaining to the shift of the burden of proof. Petitioner requests that the court orders the IRS to assume its burden of proof under the law, and notify Petitioner of this change.
CERTIFICATE OF SERVICE: I do hereby certify on this date that a copy this pleading was properly sent to the opposing council.
Date: September 4, 2008
Julie Patriot, Petitioner Pro se
Bridgeport, West Virginia 26330