                                  T.C. Memo. 2014-241



                         UNITED STATES TAX COURT



                   PAUL NEIL FILZER, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 10436-13.                         Filed November 25, 2014.



      Paul Neil Filzer, pro se.

      Nancy P. Klingshirn, for respondent.



                           MEMORANDUM OPINION


      CHIECHI, Judge: This case is before us on respondent’s motion for default

and dismissal (respondent’s motion).1 We shall grant respondent’s motion.



      1
        Respondent filed respondent’s motion before the commencement on
October 6, 2014, of the trial session of the Court in Cleveland, Ohio (Cleveland
trial session), at which this case was calendared for trial.
                                         -2-

[*2]                                 Background

       Petitioner resided in Ohio at the time he filed the petition.

       Respondent issued a notice of deficiency (notice) to petitioner with respect

to his taxable years 2005, 2006, 2007, 2008, 2009, and 2010. In that notice,

respondent determined deficiencies in, and additions under sections 6651(a)(2)

and (f) and 6654(a)2 to, petitioner’s Federal income tax (tax) as follows:

                                                    Additions to tax
                                          Sec.            Sec.           Sec.
           Year         Deficiency     6651(a)(2)        6651(f)        6654(a)
           2005          $154,686     $28,221.25         $81,841.63    $4,341.69
           2006             66,370     14,397.50          41,752.75     2,679.23
           2007             48,459     12,114.75          35,132.78     2,205.50
           2008             17,703          *             12,834.68       568.89
           2009             44,490          *             34,803.55     1,174.83
           2010             10,677          *              6,820.08       199.68

       *Amount to be determined at a later date pursuant to sec. 6651(a)(2).

       In the petition, petitioner indicated that he disagreed with the determinations

in the notice. In support of that disagreement, petitioner alleged that for each of

the years at issue “[t]he Determination used ‘married filing separately’ instead of

       2
       All section references are to the Internal Revenue Code in effect for the
years at issue. All Rule references are to the Tax Court Rules of Practice and
Procedure.
                                         -3-

[*3] ‘married filing jointly.’ The Determination used the incorrect number of

exemptions.” Petitioner also alleged for taxable year 2005 only that “the Determi-

nation incorrectly calculated Capital Gains.”

      In the answer, respondent admitted that “respondent determined the amount

of taxes due from petitioner for the taxable years 2005, 2006, 2007, 2008, 2009

and 2010 using the filing status of ‘married filing separately.’” Respondent denied

the remaining substantive allegations.

      Respondent further affirmatively alleged in the answer:

             a. Since 1994, petitioner has not filed a federal income tax
      return.

            b. Petitioner is a lawyer with approximately twenty years of
      experience in the practice. He specializes in Native American law.

             c. In the taxable years 2006, 2007 and 2008, petitioner was a
      partner in Filzer Gruttadaurio Strickland, LLP; petitioner was a
      Subchapter S shareholder in Filzer Gruttadaurio Strickland Co., Inc.,
      in the taxable year 2008, and a Subchapter S shareholder in Filzer &
      Strickland, Inc. in the taxable years 2009 and 2010.

            d. Petitioner was also employed by Noram-AHG, LLC in the
      taxable years 2005 and 2006.

             e. Petitioner was an active member of an investment partner-
      ship, JJP Holdings, LLC, in the taxable year 2010.

            f. The above-referenced flow-through entities filed Forms
      1065 or Forms 1120S, and issued Schedules K-1 for petitioner’s use
      in preparing his income tax returns in the years at issue.
                                         -4-

[*4]         g. Noram-AHG, LLC and Filzer & Strickland, Inc. issued
       Forms W-2 for petitioner’s use in preparing his income tax returns in
       the years at issue.

             h. Petitioner received Schedule K income and wage income
       from the above-referenced entities in the taxable years 2005, 2006,
       2007, 2008, 2009 and 2010 in the amounts of $208,270.00,
       $208,898.00, $145,864,00, $74,668.00, $145,327.00, and $56,627.00,
       respectively.

             i. Petitioner failed to make any estimated tax payments with
       respect to the taxable years 2005, 2006, 2007, 2008, 2009 or 2010.

             j. On January 12, 2004, petitioner purchased property located
       at 304 East Greentree Lane, Lake Mary, Florida for $525,000. On
       December 30, 2005, petitioner sold such property for $1,125,000.00,
       recognizing a gain in the taxable year 2005 of $600,000.00.

             k. In 2004, petitioner was contacted by the Service regarding
       the non-filing of his 2001 Form 1040. Petitioner was non-responsive;
       the Service assessed taxes in the amount of $128,823.00 for the tax-
       able year 2001.

              l. On September 21, 2006, the Service contacted petitioner
       regarding the collection of his assessed liability for the taxable year
       2001, as well as his failure to file subsequent income tax returns.
       Petitioner stated to the Service that he had no good reason for not
       filing his tax returns, except that he knew he would owe a lot of
       money.

             m. Petitioner failed to attend scheduled appointments with the
       Service on December, 28, 2011 and January 18, 2012, regarding his
       unfiled income tax returns for the taxable years 2005 through 2010.

              n. On March 15, 2012, petitioner was summoned to appear
       before the Service for an appointment scheduled on March 28, 2012.
       Petitioner failed to appear; the Service received a response from
                                        -5-

[*5] petitioner’s POA stating that delinquent tax returns would be pre-
     pared. Petitioner became non-responsive and to date, such returns
     have not been received.

            o. Given petitioner’s education and profession, he knew he had
      a duty to file income tax returns and pay income taxes.

             p. Petitioner earned substantial income in all of the the [sic]
      years at issue. His failure to make any estimated payments of taxes
      with respect to this income coupled with the failure to file income tax
      returns in the years at issue constitutes fraudulent activity with an
      intent to evade federal taxes.

             q. In the 2005 taxable year, petitioner recognized substantial
      capital gain from the sale of property. His failure to report the gain
      on a timely filed income tax constitutes fraudulent activity with an
      intent to evade federal taxes.

             r. Although petitioner had all of the information necessary to
      file federal income tax returns for each of the taxable years 2005,
      2006, 2007, 2008, 2009 and 2010, he failed to file such returns; such
      failure was fraudulent and was done with the intent to evade taxes.

             s. Petitioner’s statement indicating that he had no good reason
      for not filing his tax returns, except that he knew he would owe a lot
      of money, indicates that such failure was fraudulent and done with the
      intent to evade taxes.

             t. Petitioner’s continued lack of cooperation with the Service
      indicates that his failure to file income tax returns for the 2005 through
      2010 taxable years was fraudulent and done with the intent to evade
      taxes.

             u. Petitioner’s fraudulent failure to file income tax returns for
      the taxable years 2005, 2006, 2007, 2008, 2009 and 2010 is part of a
      five-year pattern of an intent to evade taxes.
                                          -6-

[*6]         v. A part of the underpayment of tax required to by [sic] shown
       on petitioner’s income tax returns for each of the taxable years 2005,
       2006, 2007, 2008, 2009 and 2010 is due to fraud.

       Respondent served a copy of the answer on petitioner at the address that

petitioner had shown as his mailing address in the petition. That service copy of

the answer was not returned to respondent.

       Petitioner did not file a reply to the answer.

       In respondent’s motion, respondent represents that respondent made various

attempts, most of which were unsuccessful, to contact petitioner, who is an attor-

ney, in an attempt to prepare this case for trial and/or to settle it, as required by

certain of our Rules and our standing pretrial order dated May 6, 2014. According

to respondent,

               7. On May 27, 2014, respondent’s Office of Appeals mailed a
       letter to petitioner’s address as shown on the petition and to an ad-
       dress found for petitioner online. Each letter stated that the Office of
       Appeals was unable to contact petitioner by telephoning the number
       set forth in the petition and requested that petitioner contact the
       Office of Appeals immediately.

              8. The letter mailed to petitioner’s address as shown on the
       petition was not returned to respondent’s Office of Appeals; the letter
       mailed to the other address was returned on May 30, 2014.

             9. On July 31, 2014, respondent mailed a letter to petitioner’s
       address as shown on the petition requesting petitioner to contact
       respondent immediately to commence preparation of a stipulation of
                                        -7-

[*7] facts in accordance with Branerton Corp. v. Commissioner, 61 T.C. 691
     (1974).

             10. On August 4, 2014, such letter was returned to respondent.

             11. Petitioner has not filed a 2011, 2012 or 2013 federal
      income tax return; respondent’s records reflect petitioner’s address as
      that reflected on the petition.

             12. On August 14, 2014, through an internet search, respon-
      dent obtained an address and telephone number of the law firm of
      Filzer & Strickland Inc. located in Willoughby, Ohio. On such date,
      respondent called the telephone number associated with such firm and
      heard a recording stating that respondent had reached the telephone
      number of General Aviation Parts, LLC.

            13. On August 14, 2014, through an internet search, respon-
      dent obtained the name of Filzer & Gruttadaurio, P.L.L., a law firm
      located in Florida. No further contact information was available.

      On September 19, 2014, respondent filed a pretrial memorandum, as

required by our standing pretrial order. Petitioner failed to file a pretrial memo-

randum.

      On September 24, 2014, we issued an order in which we ordered petitioner

to file a response to respondent’s motion that was to be received by the Court by

October 1, 2014. The copy of that order that we served on petitioner was returned

by the U.S. Postal Service marked “NOT DELIVERABLE AS ADDRESSED

UNABLE TO FORWARD.” Petitioner did not file a response to respondent’s

motion.
                                        -8-

[*8] This case was called from the calendar at the Cleveland trial session.

Counsel for respondent appeared. There was no appearance by or on behalf of

petitioner. We took respondent’s motion under advisement.

                                     Discussion

      Petitioner bears the burden of proof for each of the taxable years at issue

with respect to the deficiency determination and the determinations under sections

6651(a)(2) and 6654(a) for each of those years. See Rule 142(a). Respondent

bears the burden of proof for each of the years at issue with respect to the fraud

penalty under section 6651(f) for each of those years, and respondent must satisfy

that burden by clear and convincing evidence. See sec. 7454(a); Rule 142(b).

      On the record before us, we find petitioner in default under Rule 123(a).

We further find on that record that petitioner has failed to carry his burden of

establishing for each of the years at issue any error in respondent’s deficiency

determination and respondent’s determinations under sections 6651(a)(2) and

6654(a) for each of those years. We sustain those determinations in the notice.

      On the record before us, we also find that respondent has carried respon-

dent’s burden of establishing for each of the years at issue through the
                                       -9-

[*9] well-pleaded facts in the answer3 the correctness of respondent’s determina-

tion of the fraud penalty under section 6651(f) for each of those years. We sustain

those determinations in the notice.

      To reflect the foregoing,


                                             An order granting respondent’s mo-

                                      tion and decision for respondent will be

                                      entered.




      3
      Our holding petitioner in default has the effect of his admitting well-
pleaded facts in the answer. See, e.g., Smith v. Commissioner, 91 T.C. 1049,
1056-1057 (1988), aff’d, 926 F.2d 1470 (6th Cir. 1991).
