Tax Court
(Tax Liability)

(1) Procedures instituted primarily for delay, etc.--Whenever it appears to the Tax Court that--
(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay,
(B) the taxpayer's position in such proceeding is frivolous or groundless, or
(C) the taxpayer unreasonably failed to pursue available administrative remedies, the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000.

(2) Counsel's liability for excessive costs.--Whenever it appears to the Tax Court that any attorney or other person admitted to practice before the Tax Court has multiplied the proceedings in any case unreasonably and vexatiously, the Tax Court may require--
(A) that such attorney or other person pay personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct, or
(B) if such attorney is appearing on behalf of the Commissioner of Internal Revenue, that the United States pay such excess costs, expenses, and attorneys' fees in the same manner as such an award by a district court.

(1) Claims under section 7433.--Whenever it appears to the court that the taxpayer's position in the proceedings before the court instituted or maintained by such taxpayer under section 7433 is frivolous or groundless, the court may require the taxpayer to pay to the United States a penalty not in excess of $10,000.

(2) Collection of sanctions and costs.--In any civil proceeding before any court (other than the Tax Court) which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, any monetary sanctions, penalties, or costs awarded by the court to the United States may be assessed by the Secretary and, upon notice and demand, may be collected in the same manner as a tax.

(3) Sanctions and costs awarded by a court of appeals.--In connection with any appeal from a proceeding in the Tax Court or a civil proceeding described in paragraph (2), an order of a United States Court of Appeals or the Supreme Court awarding monetary sanctions, penalties or court costs to the United States may be registered in a district court upon filing a certified copy of such order and shall be enforceable as other district court judgments. Any such sanctions, penalties, or costs may be assessed by the Secretary and, upon notice and demand, may be collected in the same manner as a tax.

You have a case in tax court for either Tax Liability or CDPH case. Frequently you will need to talk with the agents of the enemy. Most of the time you will eventually speaking with the IRS internal lawyer, the District Counsel, this is what you should do:

1. Be sure you are speaking to District Counsel and this telephone conversation is NOT to be considered your CDP hearing. Be very clear and specific on this.
2. Tell him youwould like to record this phone call and see what he says. You can put it on speaker phone and use a regular tape recorder if he agrees.
3. Don't volunteer any information that you have not already stated in your letters.
4. If he asks for witness' names for the trial tell him they would like to remain anonymous. If he says that they'll have to be named at the hearing, tell him "we'll cross that bridge when we come to it."
5. Always ask for a continuance or postponement. These are seldom granted.
6. Always ask for a settlement out of court.
7. Don't let them bully you in anything. Be firm and take charge of the conversation. If you catch them lying or if they threaten you, then you tell them you do not accept subterfuge, misrepresentation and cheap intimidation.

Every person who comes to court claiming or demanding a right is required to prove he or she is entitled to relief. This requirement to prove is called "the burden."

Suppose your neighbor sues you for running over her dog with a lawn mower. She files her complaint and demands judgment. To get from complaint to the court's judgment, however, she must meet her burden. She must prove you did what she says.

You are not required to prove you didn't. The burden is on her. It's her case to prove.

The burden of proof in court is always on the person asserting a claim, making a motion, demanding a right. Before the court can lawfully grant relief of any kind, the party seeking relief must carry his burden of proving he is entitled to relief.

You may have heard the expression, "It's your word against his." That is not true in court. In fact, one side always has the burden. The burden may shift back and forth during a complicated lawsuit, depending on who is claiming what. However the burden is always on the side seeking relief, the party making a claim, the litigant moving the court, the claimant alleging a fact, etc. This is part of our American system of justice…and it is a good part.

For example, suppose you are sued by an angry woman who says you kicked her dog. You say you didn't do it. Is it your word against hers? Not at all. It is up to her to carry the burden of proof to show that you did, indeed, kick her dog. You are never required to prove you didn't do it. The other side is required to prove you did. After all, they're the ones who started the fight!

Some lawyers attempt to put the other side "on the defensive", i.e., they try to get the other side to prove something did not happen…like the kicked dog incident. Inexperienced defendants may go to great lengths to show they were out of town that day or that they were confined to a wheelchair or even that they are devoted dog lovers. This is what the plaintiff wants. If the defendant ignorantly tries to prove the dog-kicking did not take place, the plaintiff will be spared the effort of trying to prove that it did take place. A smarter defendant would move the court to take judicial notice that the burden of proof is on the plaintiff, then sit back and wait to see what the plaintiff can show in the way of admissible evidence in support of her claim. Put the ball in the court where it belongs.

Every person asserting a claim, making a motion, seeking relief, or otherwise coming to court with an allegation upon which he expects the court to act favorably to his cause must first meet his burden to prove what he says is true. In civil court cases the burden is a preponderance of the admissible evidence, i.e., by"the greater weight" of admissible evidence. In criminal cases (and a few other matters like incompetency proceedings) the burden of proof is clear and convincing evidence, i.e., "beyond a reasonable doubt".

This business of meeting the burden cannot be overstressed. Many cases are won on no more clever tactic than sitting back and requiring the complaining party to prove his claim. If the party seeking relief cannot prove his claim, i.e., if he cannot meet the burden of proof, he loses…(upon the defendant's motion for a directed verdict at the close of the plaintiff's faulty case)…and the defending party can go home without anything further.

Put the burden where it belongs.

A. Provision(s) covered: Section 3001 (new I.R.C. 7491). Burden of Proof.

In general, 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:

• The taxpayer has complied with any current requirements to substantiate any item;
• The taxpayer has maintained all records in accordance with then current requirements;
• The taxpayer has cooperated with reasonable requests by the IRS for witnesses, information, documents, meetings and interviews; and
• If the taxpayer is not an individual, it does not have a net worth in excess of $7 million.

The burden of proof regarding a factual issue will not be shifted in cases where the Code provides for a specific burden of proof with respect to such issue. Act § 3001(a) adding I.R.C. § 7491. The Conference Report (H.Rpt. 105-599) indicates that credible evidence is evidence which, after critical analysis, the court would find sufficient upon which to base a decision on the issue if no contrary evidence were submitted. Implausible factual assertions, frivolous claims, tax protestor-type arguments and evidence not worthy of belief by the court should not be considered credible evidence. The Conference Report also notes that 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. Cooperation also includes exhaustion of the taxpayer's administrative remedies, including any appeal rights provided by the Service, but does not include the taxpayer's agreement to extend the statute of limitations. In the case of an individual taxpayer, the IRS has the burden of proof in any court proceeding with respect to any item of income which was reconstructed by the Service solely through the use of statistical information on unrelated taxpayers. I.R.C. § 7491(b). In the case of an individual taxpayer, the Service also has the burden of production of evidence in any court proceeding with respect to the imposition of penalties or additions to tax. I.R.C. § 7491(c). The Conference Report indicates that taxpayers still have the responsibility for raising issues such as reasonable cause or substantial authority to refute application of such penalties. These burden of proof provisions apply to court proceedings arising in connection with examinations that commence after July 22, 1998, the date of enactment. Where there is no examination, these provisions apply to court proceedings arising in connection with taxable periods or events beginning or occurring after the date of enactment. Act § 3001(c).

B. Background: By statute or rule, the general burden of proof in court with respect to establishing the taxpayer's liability has always been placed upon the taxpayer. There were exceptions to this rule made by statute, court rule, and federal common law, but those exceptions were few. Under prior law, there was no specific burden of proof rules with respect to proof of income by statistic averages or with respect to penalties (except the fraud and other minor penalties); therefore, the taxpayer bore the burden of proof with respect to those issues also.

Congress believed that the placement of the general burden of proof on the taxpayers created the perception of guilt until proven innocent and that a better balance would place the burden of proof on the government to show an increase in liability if the taxpayer complied with the procedural and record keeping requirements of the tax laws. That is, if the taxpayer was generally law-abiding, it should be the government's responsibility to show that the taxpayer's determination of liability was not correct. Congress was also concerned that individual and small business taxpayers, who are generally tax compliant, are at a disadvantage when forced to litigate with the Service and the general burden of proof contributed to that unfairness or appearance of unfairness.

Congress also believed that it is inappropriate in all cases for the taxpayer to be required to disprove unreported income when the Service determined that income solely on statistical information on unrelated taxpayers. Finally, Congress was concerned that in a court proceeding, taxpayers often ignored the issue of penalties, and that they were applied by the courts and the IRS by default. Therefore, it determined that the IRS should not be able to rest on the presumption of correctness if it does not provide any evidence whatsoever relating to penalties.

C. Change(s): Three changes were made in the burden of proof in tax litigation.

1. A new provision places the general burden of proof on the Service with respect to factual issues in certain situations. To qualify, the taxpayer must show that they have complied with all the substantiation requirements; has maintained all the records required by the Code; has cooperated with all the Service's reasonable requests for witnesses, information, documents, meetings, and interviews; and meets certain net worth requirements.
   
   
2. A second provision places the burden of proof on the Service if it asserts an item of income based solely on statistical information relating to unrelated taxpayers. In this event, there is no requirement that the taxpayer maintain records or cooperate with the Service.
   
   
3. A third provision provides that when the Service asserts penalties, additions to tax, or additional amounts, the Service must initially produce evidence with respect to the penalty before the general burden of proof rules apply.

D. Impact

1. When taxpayers meet the prerequisites for a shift in the burden of proof, the Service will have the burden to show the correctness of the Service's position, rather than rely upon the taxpayer to disprove the Service's determination. However, this shift should not pose an unreasonable obstruction to the Service in determining the correct tax liability. Good auditing and good litigation practice, similar to most determinations in the past, will ordinarily produce sufficient evidence to sustain the burden of proof. That is, the Service and Chief Counsel have not, in the past, generally relied upon the taxpayer's failure of proof to sustain the asserted liability, but rather have affirmatively shown the proper liability. Adherence to these practices will satisfy the new standard, but it is now extremely important that a thorough investigation and documentation of liability be done prior to the initiation of litigation.
2. Further, the standard will now place greater emphasis and scrutiny as to the audit process. Under prior law, determinations of the court were strictly de novo meaning that what happened during the audit was immaterial -- the taxpayer needed to prove the proper liability in court. Now, the exceptions to the burden of proof rule concentrate on communications between the Service and the taxpayer during audit; that is, what requests for information were made by the Service and did the taxpayer cooperate. Thus it is essential that audit work papers document the taxpayers cooperation and substantiation, and the Service's requests for information.
3. There is some concern that, despite the explicit requirements that the taxpayer substantiate items and cooperate with the Service, taxpayers may interpret the burden of proof standard as meaning that they no longer need to do these things. Service personnel thus should make the record maintenance and production requirements clear to taxpayers at all times.

E. Necessary Actions

1. Actions/Procedures: Revisions to the IRM and CCDM will need to be made to implement and explain this provision. Additional guidance and training as to the impact of these provisions will be necessary.
   
   
2. The public and Service personnel must understand that these new standards do not, in any way, detract from or minimize the responsibilities of taxpayers to properly determine, and document, their tax liabilities. Local outreach, and individualized discussions, will be necessary to continually underscore this point.

General Burden of Proof:

Statistical Information:

Penalties:

F. Other Special Comments: Additional guidelines and instructions will be provided. In the interim, Service personnel should use the guidelines above.

(a) Burden shifts where taxpayer produces credible evidence

(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). Subparagraph (c) shall not apply to any qualified revocable trust (as defined in section 645(b)(1)) with respect to liability for tax for any taxable year ending after the date of the decedent's death and before the applicable date (as defined in section 645(b)(2)).

(3) Coordination Paragraph
(a) shall not apply to any issue if any other provision of this title provides for a specific burden of proof with respect to such issue.
(b) Use of statistical information on unrelated taxpayers In the case of an individual taxpayer, the Secretary shall have the burden of proof in any court proceeding with respect to any item of income which was reconstructed by the Secretary solely through the use of statistical information on unrelated taxpayers.
(c) Penalties 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.

ARTICLE IX. AUTHENTICATION AND IDENTIFICATION Rule 901. Requirement of Authentication of Identification (a) General provision - The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims. and (b) (1) Testimony of witness with knowledge, - Testimony that a matter is what it is claimed to be.

United States Tax Court

Pursuant to Tax Court Rule # 133, Petitioner above hereby moves this court for a continuance of trial now scheduled for September 11, 2006 based upon the following grounds:

1. Petitioner mailed her stipulations to District Counsel on August 23, 2006. District Counsel has not responded to them. On August 23, 2006 Petitioner received the Stipulations of the Respondent and has not had time to prepare a response. When the stipulations of both parties are filed, most likely they will settle the case. The only disputes include the figures, the net income of Petitioner, dependents and a few other minor matters.
2. Respondent filed their stipulations late and in violation of the rules for filing discovery. Pre-trial discovery should be completed 45 days before trial, pursuant to Tax Court Rule # 70(a)(2).
   The Respondents have been unfair, demanding and unreasonable when Petitioner requests settlement.
3. This case is ready for settlement. District Counsel has not bothered to respond to Petitioner's frequent requests for an out of court settlement.
4. Petitioner needs more time to secure records, prepare for trial and fill out stipulations.
5. Petitioner is a pro se litigant, unschooled in law and unfamiliar with procedures and needs more time to prepare for trial. The Supreme Court has ruled that pro se litigants are not held to the same procedural standards as highly trained attorneys. Haines vs. Kerner 404US 519(1972).
6. Opposing Counsel is Terry Serena, Senior Counsel, Cincinnati, Ohio. Petitioner has not contacted him about this matter because he is hostile to pro se litigants.

CERTIFICATE OF SERVICE: I do hereby certify that on this date, I sent properly a copy of this pleading to opposing counsel.

______________________________    Date:___________________
Dr. Julie Freeman, Petitioner Pro se
        Bridgeport, WV

Lucky Patriot
6870 Georgia Hwy
Landfill, Georgia 30003

JAMES R. RICH
Senior Attorney
Tax Court Bar No. RJ0164
320 Federal Place
Greensboro, NC 27401

December 15, 2004

RE: Docket No. 107

Dear Mr. Rich;

Since the Court requires the parties to agree in writing to facts and documents which should not be in dispute, Lucky Patriot in a “good faith” attempt has herein enclosed three (3) signed PETITIONER’S STIPULATION OF FACTS, that are the facts that Lucky Patriot has personal knowledge and understanding of in this instant matter. Lucky Patriot believes that any deviation from these stated facts would be a manipulation/misrepresentation of the facts.

Should you agree with this STIPULATION OF FACTS please sign, date and return one original to Lucky Patriot and forward one original and one copy to the U.S. TAX COURT and retain one original for your records.

Yours,

Lucky Patriot
Petitioner

Enclosures: (3) Original STIPULATION OF FACTS with this cover letter.

John Ray Adams, Jr.
705 Patriot Run Court
Gatlinburg, TN 33333

Caroline R. Krivacka
Senior Attorney
(Small Business/Self-Employed)
Tax Court Bar No. KC0314
810 Broadway, Suite 400
Nashville, TN 37203

January 24, 2005

RE: Docket No. 6582
Dear Ms. Caroline R. Krivacka;

Since the Court requires the parties to agree in writing to facts and documents which should not be in dispute, Petitioner John Ray Adams, Jr. in a “good faith” attempt has herein enclosed three (3) signed PETITIONER’S STIPULATION OF FACTS, that are the facts that John Ray Adams, Jr. has personal knowledge and understanding of in this instant matter. John Ray Adams, Jr. believes that any deviation from these stated facts would be a manipulation/misrepresentation of the facts.

Should you agree with this STIPULATION OF FACTS please sign, date and return one original to John Ray Adams, Jr. and forward one original and one copy to the U.S. TAX COURT and retain one original for your records.

Yours,

John Ray Adams, Jr.
Petitioner

Enclosures: (3) Original STIPULATION OF FACTS with this cover letter.

United States Tax Court

It is hereby stipulated that, for the purpose of this case, the following statements may be accepted as facts and all exhibits referred to herein and attached hereto may be accepted as authentic and are incorporated in this stipulation and made a part hereof; provided, however, that either party has the right to object to the admission of any such facts and exhibits in evidence on the grounds of relevancy and materiality, but not on other grounds unless expressly reserved herein, and provided, further, that either party may introduce other and further evidence not inconsistent with the facts herein stipulated.

1. Petitioner had cost/expenditures of $80,479.11 for Year 2001.

2. Petitioner had two dependents for the year 2001.

3. Petitioner received proceeds from the sale of stock in 2001. Petitioner had a cost basis of $4,500.00 in said stock proceeds for 2001.

4. Petitioner sold real estate in the year 2001. Petitioner had a cost basis in said real estate of $28,148.00 and costs/expenditures of $4740.00 expenses involved in maintaining/selling the real estate for the year 2001.

5. Petitioner built a shop/barn in year 2001 at a cost of $27,592.70.

Certificate of Service: I do hereby certify that on this date I sent properly a copy of this pleading to opposing counsel.

_______________________           _____________________
Lucky Patriot, Petitioner         Evil IRS Lawyer
6870 Georgia Hwy                  320 Federal Place
Landfill, GA 30003                Greensboro, NC 27401
Date:_______________________      Date:___________________

Stipulation of facts

It is hereby stipulated that, for the purpose of this case, the following statements may be accepted as facts and all exhibits referenced to herein and attached hereto may be accepted as authentic and are incorporated in this stipulation and made a part hereof; provided, however, that either party has the right to object to the admission of any such facts and exhibits in evidence on the grounds of relevancy and materiality, but not on other grounds unless expressly reserved herein, and provided that either party may introduce other and further evidence not inconsistent with the facts herein stipulated.

1. Petitioner was involved in the same activities for Year 2001 as in prior years1999 and 2000.
2. Petitioner had deductions, expenses, losses and other allowances for the year 2001, same as prior 2 years, 1999 and 2000, for which petitioner received refunds for those years and expect a refund for 2001.
3. Someone other than Petitioner filed a substitute for return without consideration of previous tax returns.
4. Petitioner’s original tax returns for 1999 and 2000 have been destroyed by incident and are needed for 2001 to complete all information required for the court’s consideration and for proper amount of refund owed to me.
5. Petitioner has requested copies of previous returns as exculpatory evidence that no taxes are owed, no deficiency exists and petitioner expected a refund prior to Notice of Deficiency, 1-14-2004.
6. Petitioner was involved with IRS Notice of Lien/Levy, until July 1, 2004 Final Determination in his favor and filing a return during that time period would have resulted in my refund being improperly seized.

DONALD L. KORB, Chief Counsel, INTERNAL REVENUE SERVICE

__________________________     ___________________________
John Ray Adams, Jr.            Caroline R. Krivacka
Petitioner                     Senior Attorney
705 Patriot Run Court          Tax Court Bar No. KC0314
Gatlinburg, TN 33333           810 Broadway, Suite 400
                               Nashville, TN 37203
Date:_________________________ Date:______________________
Certificate of Service: I do hereby certify that on
this date I sent properly a copy of this pleading to
opposing counsel.
DONALD L. KORB
Chief Counsel
INTERNAL REVENUE SERVICE
__________________________     __________________________
John Ray Adams , Jr.           Caroline R. Krivacka
Petitioner                     Senior Attorney
705 Patriot Run Court          Tax Court Bar No. KC0314
Gatlinburg, TN 33333           810 Broadway, Suite 400
                               Nashville, TN 37203
Date:______________________    Date:______________________