                          T.C. Memo. 1995-558



                      UNITED STATES TAX COURT



      MIGUEL PAGAN, JR. AND MARTHA C. PAGAN, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 165-93.                    Filed November 27, 1995.


     Claire R. McKenzie, for respondent.


                          MEMORANDUM OPINION

     FAY, Judge:   This case is before the Court on respondent's

motion to dismiss for failure to properly prosecute, filed June

20, 1994.   On July 12, 1994, a hearing was held in Chicago,

Illinois, on respondent's aforementioned motion.   Petitioners did

not appear.   Respondent was heard, whereupon the Court took

respondent's motion under consideration.
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       By statutory notice of deficiency, respondent determined

 deficiencies in and additions to petitioners' Federal income tax

 in the following amounts:

                                          Additions to Tax
                              Sec.            Sec.         Sec.         Sec.
Year      Deficiency       6653(a)(1)         6654         6661       6662(a)
1988       $15,063          $753.15           --         $3,765.75      --
1989        12,270            --           $182.56           --       $2,454

       All section references are to the Internal Revenue Code in

 effect for the years in issue, and Rule references are to the Tax

 Court Rules of Practice and Procedure, unless otherwise

 indicated.

       The sole issue for decision is whether respondent's motion

 to dismiss for failure to properly prosecute should be granted.

 We hold that it should.

 Background

       Petitioners filed joint Federal income tax returns for the

 years at issue.       In response to the statutory notice, peti-

 tioners, by and through their counsel, Todd M. Conover, timely

 filed their petition on January 4, 1993.            Petitioners resided in

 Highland, Indiana, at the time the petition in this case was

 filed.

       Respondent's answer was filed on February 24, 1993.           There-

 after, this case was set for trial on January 31, 1994, in

 Chicago, Illinois.       Before the scheduled trial, petitioners'

 counsel, Todd M. Conover, filed, on November 4, 1993, a motion to
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withdraw.   Such motion was granted on November 12, 1993.    There-

after, petitioners proceeded with this case pro se.

     On December 17, 1993, respondent filed a motion for continu-

ance.   On December 21, 1993, respondent's motion was granted.    By

the same order, the parties were instructed to file status

reports on or before February 21, 1994.

     On February 17, 1994, petitioners filed a status report

informing the Court that a meeting had been scheduled for

February 17, 1994, with a representative of the Chicago Appeals

Office.   Respondent also filed her status report on February 17,

1994.   Because both parties indicated that attempts at settlement

were progressing satisfactorily, the Court ordered on February

24, 1994, that the parties file additional status reports on or

before June 9, 1994.

     Respondent's status report was filed June 3, 1994.     No

status report was received from petitioners.     Respondent's status

report outlined ongoing attempts to contact petitioners in order

to obtain the documents needed to substantiate petitioners'

claims.

     On February 17, 1994, petitioner Martha Pagan met with

respondent's Appeals Officer.   At that meeting, petitioner agreed

to meet with the Appeals Officer on March 3, 1994, to provide him

with substantiation documentation.      Petitioner canceled the March

3, 1994, meeting.   The meeting was rescheduled for March 9, 1994.

Petitioner canceled the March 9, 1994, meeting.     It was resched-
                                - 4 -

uled for March 16, 1994.    Petitioner canceled the March 16, 1994,

meeting.    It was rescheduled for March 28, 1994.   Petitioner

canceled the March 28, 1994, meeting but requested permission to

mail the necessary documents to the Appeals Officer.

     On April 19, 1994, the Appeals Officer telephoned

petitioners to inquire as to the status of the expected records.

Petitioner again promised to mail the information to the Appeals

Officer.    On April 29, 1994, the Appeals Officer again called

petitioners to inform them that no records had, as yet, been

received.    Petitioner informed the Appeals Officer that she had

not yet sent the desired documents.     The Appeals Officer then

mailed petitioners a letter summarizing many phone calls and

canceled meetings that had occurred.     On May 4, 1994, the Appeals

Officer mailed petitioners a letter that informed petitioners

that their substantiation documentation had not been received and

included decision documents reflecting the amounts due as shown

on the statutory notice.    The Appeals Officer then attempted to

reach petitioners by phone on May 4 and 5, 1994.

     On May 16, 1994, respondent telephoned petitioner and

informed her of the need to file a status report and the need for

the substantiation materials in order to proceed with settlement;

respondent suggested that a joint status report be filed.     On

May 17, 1994, respondent attempted to reach petitioners by phone

at home and at their places of employment.     On May 18, 1994,
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respondent spoke with petitioner who restated her intent to mail

the needed substantiation material to respondent.

     On May 18, 1994, respondent mailed to petitioners, by

certified and regular mail, a proposed joint status report along

with a letter informing petitioners of respondent's intent to

file a motion to dismiss if adequate substantiation were not

received by June 15, 1994.    Petitioner signed the return receipt

for the certified letter on May 23, 1994, but took no action in

response to the letter.

      Thereafter, on June 20, 1994, respondent filed her motion

to dismiss for failure to properly prosecute.    By order of June

22, 1994, this Court ordered that the case be calendared for a

hearing on respondent's motion to dismiss on July 12, 1994.

     The case was called on July 12, 1994.    There was no

appearance by or on behalf of petitioners.    Petitioners did not

submit to the Court a written statement of their position nor did

they submit any supporting documents.    Respondent had, by that

time, made three additional attempts to resolve the case.      On

June 14, 1994, respondent sent petitioners a certified letter

informing them of her intention to file a motion to dismiss for

failure to properly prosecute.    In this letter, respondent

indicated that, should the needed substantiation documents be

received, she would withdraw the motion.    No documents were

received from petitioner.    On June 24, 1994, respondent spoke

with petitioner on the phone.    Petitioner indicated that she had,
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indeed, received this Court's order calendaring for a hearing

respondent's motion to dismiss for failure to prosecute.    On July

5, 1994, respondent sent petitioners a letter reminding them of

the hearing and again requesting the needed substantiation

documents.    Petitioner promised, yet again, to mail the necessary

documentation.   No documents were received by the date of the

hearing on respondent's motion to dismiss for failure to properly

prosecute.

Discussion

     In light of the record in this case, the Court finds that

petitioners have clearly indicated by their conduct and the

overall record in this case that they no longer wish to contest

any issue involved in this case.   Petitioners have the burden of

proof as to the deficiencies and additions to tax at issue.

     It is well established that this Court can dismiss a case

against a party if that party fails to follow our Rules or

otherwise fails to properly prosecute his or her case.     Ducommun

v. Commissioner, 732 F.2d 752 (10th Cir. 1983).   Rule 123(b)

provides for the dismissal of a case when a taxpayer fails to

prosecute his or her case, fails to comply with the Court's Rules

or any order of the Court, or for any cause which the Court deems

sufficient.    Smith v. Commissioner, 91 T.C. 1049 (1988), affd.

926 F.2d 1470 (6th Cir. 1991); Basic Bible Church v. Commis-

sioner, 86 T.C. 110, 112 (1986).   Dismissal of a case is a
                                 - 7 -

sanction resting in the discretion of the trial court.        Levy v.

Commissioner, 87 T.C. 794, 803 (1986).

     As set forth above, petitioners failed to cooperate with

respondent in her attempt to either reach a settlement in the

case or to prepare properly for trial.       Petitioners delayed the

proceedings under the pretext of wanting to amicably settle this

case.   Petitioners' bad faith, coupled with their failure to

cooperate, has made it impossible for respondent to conduct

negotiations or otherwise proceed with this case.

     Accordingly, we grant respondent's motion to dismiss for

failure to properly prosecute.    Therefore, respondent prevails on

the underlying deficiencies and the additions to tax.

                                              Decision will be entered

                                         for Respondent.
