Response to Petitioner's Motion to Shift BOP

                                                                 US TAX COURT 

Julie Patriot,                      )				  		 
                Petitioner,         )   
                                    )		                      
     v.                             )         DOCKET #30xxx
                                    )     
Commissioner Internal Revenue,      )         Response to Petitioner's Motion to Shift the Burden of Proof
                Respondent.         )         
____________________________________)

RESPONDENT hereby responds as follows in opposition to the petitioner's Motion to Shift Burden of Proof, which was filed on September 9, 2008, as amended by the petitioner on September 19, 2008:

1. The petitioner's Motion and Amended Motion allege and are necessarily based on the petitioner's alleged compliance with the provisions of I.R.C. § 7491(a) when, in fact, the petitioner has not complied with or fulfilled the terms of this provision or with the provisions of the Internal Revenue Code generally.

2. Initially, the Court must be made aware that the petitioner has not filed an income tax return for the year at issue, 2004, even after being specifically requested to do so by the respondent (discussed below). For this reason alone, the petitioner cannot be said to have fulfilled the threshold requirements of Section 7491. These circumstances were raised and discussed in the respondent's Pretrial Memorandum which was lodged with the Court and sarved on the petitioner on September 18, 2008.

3. The present controversy involves the respondent's determination that the petitioner has a deficiency in income tax for taxable year 2004 in the amount of $15,732.00. This deficiency is principally based on the petitioner's receipt of $83,333.00 from her own subchapter S corporation, which reported this information to the respondent. (The respondent also determined that the petitioner has an overpayment of $5,268.00 based on withholding credits for this year.)

4. As indicated above, the petitioner has not filed a tax return for this period. The respondent by letter September 10, 2007, requested that the petitioner file her return and provide substantiation of any item with which she disagreed concerning the respondent's preliminary determination. A copy of this letter is attached to this Response as Exhibit A. The petitioner unmistakably received the letter since she attached a copy of this letter to a response which the respondent received on October 15, 2007. The petitioner did not file a return in response to this or any other request by the respondent. Thus, the petitioner has not satisfied either the letter or the spirit of I.R.C. § 7491.

5. The petitioner has alleged that she has "kept extensive records" to support her position in this case, but, if she has, she has not provided them to the respondent.

6. As stated in the respondent's Pretrail Memorandum:
Section 7491 (a) (1) may shift the burden to the Commissioner with the respect to factual issues affecting liability for tax where the taxpayer introduces credible evidence, but the provision operates only where the taxpayer establishes that he or she has complied under section 7491(a)(2) with all substantiation requirements, has maintained all required records, and has cooperated with reasonable requestes for witnesses, information, documents, meetings, and interviews. See H. Conf. Rep't. 105-599, at 239-240 (1998), 1998-3 C.B. 747, 993-994.
Arberg v. Commissioner, T.C. Memo. 2007-244.

7. Based on the receipt of over $80,000.00 from her own corporation, the petitioner was clearly required to have filed a 2004 income tax return well before this case came into existence. I.R.C. §§ 6001, 6012(a)(1), 6072(a); see discussion at pp. 4-5, respondent's Pretrial Memorandum. Not having done so, the petitioner cannot now be allowed to shift the burden of proof to the respondent.

8. The burden of proof to establish satisfaction of the requirements of Section 7491, the "burden of proof to shift the burden of proof", in effect, is upon the petitioner. Lenihan v. Commissioner, 2006 T.C. Memo. 259, n.2; Krohn v. Commissioner, T.C. Memo 2005-145.

WHEREFORE, the respondent respectfully requests that the petitioner's Motion to Shift Burden of Proof be denied.

Donald L. Korb
Chief Counsel
Internal Revenue Service

Date: September 24, 2008

Terry Serena
Senior Attorney
(Small Business/Self-Employed)
Tax Court Bar No. ST0069
Enquirer Bldg.
312 Elm St.
Suite 2300
Cincinnati, OH 45202-2727
(513) 263-4895

Of Counsel:
Thomas R. Thomas
Division Counsel
(Small Business/Self-Employed)
James E. Cannon
Acting Area Counsel
(Small Business/Self-Employed: Area 4)
Robert D. Kaiser
Associate Area Counsel
(Small Business/Self-Employed)

Certificate of Service

This is to certify that a copy of the foregoing RESPONSE TO PETITIONER'S MOTION TO SHIFT BURDEN OF PROOF was served on petitioner by mailing the same on September 24, 2008 in a postage paid wrapper.

Terry Serena
Senior Attorney
(Small Business/Self-Employed)
Tax Court Bar No. ST0069