                       T.C. Memo. 2001-93



                     UNITED STATES TAX COURT



                 MANUEL G. LOPEZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4744-99.                    Filed April 17, 2001.


     Manuel G. Lopez, pro se.

     Cheryl M.D. Rees, for respondent.



                       MEMORANDUM OPINION

     POWELL, Special Trial Judge:   This case is before the Court

on respondent’s motion to dismiss for failure to properly

prosecute, and motion for a penalty under section 6673.1    The

issues before the Court are (1) whether, with respect to the


     1
        Unless otherwise indicated, 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.
                               - 2 -

issues for which petitioner bears the burden of proof, this case

should be dismissed for failure to properly prosecute; (2)

whether petitioner should be held in default as to the issues on

which respondent bears the burden of production and/or proof;

namely, petitioner’s liability for increased deficiencies and for

additions to tax; and (3) whether a penalty should be awarded

under section 6673.

     By separate notices of deficiency issued December 7, 1998,

respondent determined deficiencies in Federal income taxes and

additions to tax as follows:

                                     Additions to Tax
     Year    Deficiency   Sec.6651(a)(1) Sec.6651(a)(2) Sec.6654(a)

     1994    $3,334        $745.20        $678.96         $170.49
     1995     5,060       1,128.37         727.17          273.52
     1996     4,652       1,025.32         387.34          244.81

                             Background

     The relevant facts may be summarized as follows.     Petitioner

resided in Gordonsville, Virginia, at the time the petition was

filed.2   The petition was filed on March 11, 1999, and Richmond,

Virginia, was designated as the place of trial.     In the answer




     2
        It is unclear whether petitioner resided in Gordonsville,
Va., or Fort Washington, Md. In the petition petitioner shows
Gordonsville, Va., as his address; however, in his amended
petition petitioner suggests that his residence was Fort
Washington, Md. It does not appear that his residence affects
any item. For purposes of appeal, both Maryland and Virginia are
within the venue of the Court of Appeals for the Fourth Circuit.
                              - 3 -

filed May 3, 1999, respondent denied all errors alleged by

petitioner.

     The Court’s Notice Setting Case for Trial and Standing

Pretrial Order were served on February 25, 2000, and this case

was calendared for trial on May 15, 2000.       In pertinent part, the

standing pretrial order states:

          You are expected to begin discussions as soon as
     practicable for purposes of settlement and/or preparation of
     a stipulation of facts. * * * All minor issues should be
     settled so that the Court can focus on the issue(s) needing
     a Court decision.

     *        *        *          *         *          *        *

          If any unexcused failure to comply     with this Order
     adversely affects the timing or conduct     of the trial, the
     Court may impose appropriate sanctions,     including dismissal,
     to prevent prejudice to the other party     or imposition on the
     Court.

     *        *        *          *         *          *        *

          To effectuate the foregoing policies and an orderly and
     efficient disposition of all cases on the trial calendar, it
     is hereby

          ORDERED that all facts shall be stipulated to the
     maximum extent possible. All documentary and written
     evidence shall be marked and stipulated in accordance with
     Rule 91(b), unless the evidence is to be used to impeach the
     credibility of a witness. * * * If a complete stipulation of
     facts is not ready for submission at trial, and if the Court
     determines that this is the result of either party’s failure
     to fully cooperate in the preparation thereof, the Court may
     order sanctions against the uncooperative party. Any
     documents or materials which a party expects to utilize in
     the event of trial (except for impeachment), but which are
     not stipulated, shall be identified in writing and exchanged
     by the parties at least 15 days before the first day of the
     trial session. The Court may refuse to receive in evidence
     any document or material not so stipulated or exchanged,
                                 - 4 -

     unless otherwise agreed by the parties or allowed by the
     Court for good cause shown. It is further

     *         *        *          *          *         *         *

          ORDERED that all parties shall be prepared for trial at
     any time during the term of the trial session unless a
     specific date has been previously set by the Court. * * *

     When this case was called on May 15, 2000, petitioner and

counsel for respondent appeared.       In violation of the standing

pretrial order, petitioner had not cooperated with respondent in

preparing this case for trial.    No stipulation of facts had been

signed despite respondent’s efforts and petitioner’s

representations that he would enter into a stipulation.        Also in

violation of the standing pretrial order, petitioner had with him

at least five boxes of records many of which had not been

previously made available to respondent.

     The parties agreed in open court that petitioner’s filing

status for the years in issue was married filing jointly.

Petitioner’s wife, Rafaela B. Lopez, stated in open court that

she consented to this treatment.       Because this case was not ready

for trial, the Court continued the matter for trial to be held in

Washington, D.C., within 90 days.       The Court ordered that

petitioner cooperate with respondent in preparing this case for

trial and provide his records in an organized fashion to

respondent.   The Court also ordered that the parties meet

immediately after the calendar call to facilitate negotiations

and arrange for the exchange of documents.        This case was
                               - 5 -

subsequently recalendared for trial at Washington, D.C.,

commencing on September 19, 2000.

     In subsequent meetings and negotiations with respondent,

petitioner did not produce all of his records to respondent, and

the records that were produced were tendered in an unorganized

fashion.   As a result, on June 12, 2000, respondent commenced

formal discovery in the form of requests for admissions.

     On July 6, 2000, Frank A. Thomas III (Mr. Thomas), entered

an appearance as counsel for petitioner.     Pursuant to

petitioner’s motion for continuance, a further continuance was

granted, and this case was continued for trial on October 25,

2000.   On July 21, 2000, petitioner filed a status report with

the Court alleging compliance with the Court’s order to produce

his records.   The items provided to respondent allegedly included

summaries of petitioner’s bank accounts, purchases shown in

connection with Schedule C, Profit or Loss From Business,

inventories, work sheets used in preparation of petitioner’s tax

returns, summaries of petitioner’s Schedule E, Supplemental

Income and Loss, activities by items of expense, depreciation

schedules, other records pertaining to petitioner’s expenses, and

photocopies of petitioner’s ledgers for the Schedule C expenses.

     Respondent’s status report sets forth a different version of

petitioner’s level of cooperation.     Respondent stated that
                               - 6 -

petitioner had not yet responded to respondent’s proposed

supplemental stipulation of facts or to informal requests for

information and documents.   Respondent represented that only

slight progress had been made in preparing this case for trial

since the May 15, 2000, calendar call.

     On August 8, 2000, petitioner served requests for admissions

and interrogatories on respondent.     Petitioner failed to seek

informal discovery from respondent prior to initiating formal

discovery.   See Rules 70(a)(1), 90(a); Branerton Corp. v.

Commissioner, 61 T.C. 691, 692 (1974).3    As a result, respondent

filed a motion for protective order pursuant to Rule 103(a)(2).

The Court denied that motion as moot because of subsequent

events.

     In a telephone conference call held to resolve discovery

issues on August 23, 2000, the Court again ordered petitioner to

produce to respondent, on or before September 14, 2000, all

documents and records organized by year and category of expense

with the self-executing sanction that any documents or records

not produced by that date would not be allowed into evidence at

the trial scheduled to begin on October 25, 2000.




     3
        Requiring that parties make reasonable informal efforts
to obtain needed information voluntarily before resorting to
formal discovery.
                                - 7 -

     On August 28, 2000, petitioner moved for leave to amend the

petition.   Petitioner’s motion was granted, and the amended

petition accompanying the motion was filed on August 30, 2000.

The amended petition alleges that respondent failed to consider

the tax returns for the taxable years 1994, 1995, and 1996 that

petitioner had submitted to respondent on July 7, 2000.      Attached

to the amended petition are copies of the tax returns for 1994,

1995, and 1996.    The tax returns are computed using the married

filing jointly filing status and are signed by petitioner and his

wife, Rafaela B. Lopez.    The attached 1994 tax return is

purportedly an amended return and is signed with dates of June 18

and 20, 1996.

     On September 11, 2000, respondent filed a motion to show

cause why proposed facts in evidence should not be accepted as

established.    The motion sets forth allegations regarding

petitioner’s lack of cooperation with respondent.    The Court

entered an order to show cause on September 15, 2000.    Due to a

response from petitioner’s counsel alleging ongoing negotiations

and the subsequently filed supplemental stipulation of facts, the

order to show cause was discharged on October 12, 2000.

     Respondent filed an answer to petitioner’s amended petition

on September 19, 2000.    Respondent’s answer to amended petition

asserted increased deficiencies and additions to tax pursuant to

section 6214(a) as follows:
                               - 8 -

                Increased           Additions to Tax1
     Year       Deficiency     Sec.6651(a)(1)      Sec.6654(a)

     1994       $20,297          $4,553.05                -0-
     1995        20,921           5,332.38             $1,126.95
     1996        24,343           5,427.01              1,279.66
     1
       Respondent also seeks an addition to tax under sec.
6651(a)(2) from petitioner for the 1996 taxable year in an amount
equal to 0.5 percent of any unpaid portion of the deficiency in
Federal income tax for each month or fraction thereof from April
15, 1997, until the deficiency is fully paid, not exceeding 25
percent in the aggregate.

     Petitioner stipulated that no estimated income taxes had

been paid during the years in issue.

     Petitioner stipulated or admitted that he and his wife

received gross income in the following amounts:

Source of Income4               1994           1995         1996

Retirement pension-petitioner $28,368        $29,133     $29,925
Interest                           96          3,780       1,880
Wife’s wages                   55,359         51,268      66,964
Schedule C gross receipts
 (including accrued income)    27,037         37,954       26,935
Schedule E rental income        2,570          4,700        3,800
Schedule F farming activities     600          1,453        1,500

     Petitioner alleges that he incurred losses in his Schedule

C, E, and F activities during the taxable years 1987, 1988, 1989,

1991, 1992, 1993, 1994, 1995, and 1996.

     Respondent conceded that petitioner substantiated the

following expenses and exclusions from income:




     4
         These amounts are rounded to the nearest dollar.
                               - 9 -

Exclusions/Expenses5            1994            1995        1996

Type:
Exclusions from retirement     $2,012         $2,012      $2,012

Schedule A expenses:
  Real estate taxes             6,768           8,238       8,671
  Medical expenses              1,301           1,560       3,013
  State/Local income taxes      3,574           2,271       3,144
  Personal property taxes         235             176        -0-

Schedule C expenses:
  Advertising                     885           2,189        -0-
  Insurance                      -0-              987        -0-
  Mortgage interest             1,625           1,490        -0-
  Office expenses                 475              76        -0-
  Taxes/Licenses                  831             563        -0-
  Utilities                     3,845           4,020        -0-
  Wages                         1,230             766        ---
  Dues & Subscriptions           ---              180        -0-
  Water                          -0-              139        -0-

Schedule E rental expenses:
  Real estate taxes             3,142           1,602       1,608
  Water                           140            -0-         -0-
  Electricity                      34            -0-         -0-

     On October 25, 2000, Mr. Thomas filed a motion to withdraw

because his services had been terminated by petitioner.     In

pertinent part, the motion alleges that a settlement had been

negotiated and reached in this case, with petitioner’s acceptance

communicated to respondent on October 8, 2000; however, on

October 18, 2000, petitioner refused to sign the decision

documents, dismissed Mr. Thomas, and insisted on proceeding pro

se in this case.   The motion was granted.   Mr. Thomas also filed

a motion to continue, which the Court denied.



     5
         These amounts are rounded to the nearest dollar.
                                - 10 -

     Subsequently, on October 23, 2000, petitioner filed a motion

to dismiss on the ground that petitioner wished to resolve the

underlying controversies by an “audit.”    That motion was denied.

See sec. 7459(d); Johnson v. Commissioner, 116 T.C. ___ (2001)

(slip op. at 11).   The Court contacted petitioner and told him

that he must appear at the scheduled trial date on October 25,

2000.

     When this case was called for trial on October 25, 2000,

petitioner did not appear.    Respondent filed a motion to dismiss

for failure to properly prosecute and made an oral motion to

impose a section 6673 penalty.

                              Discussion

     Respondent’s motion to dismiss for failure to properly

prosecute falls under Rule 123.    A Rule 123(b) dismissal, as a

sanction against petitioner, is available as to those issues for

which petitioner bears the burden of proof.    A Rule 123(a)

default would be the proper sanction against petitioner as to

those issues for which respondent bears the burden of proof.    See

Smith v. Commissioner, 926 F.2d 1470 (6th Cir. 1991), affg. 91

T.C. 1049 (1988).   We shall consider the appropriate sanctions

against petitioner in turn.
                              - 11 -

A.   Dismissal With Respect to Issues Where Petitioner Had the

Burden of Proof

      Petitioner has the burden of proof with respect to the

determinations contained in the notices of deficiency.    See Rule

142(a).

      Rule 123(b) provides as follows:

           (b) Dismissal: For failure of a petitioner properly to
      prosecute or to comply with these Rules or any order of the
      Court or for other cause which the Court deems sufficient,
      the Court may dismiss a case at any time and enter a
      decision against the petitioner. The Court may, for similar
      reasons, decide against any party any issue as to which such
      party has the burden of proof, and such decision shall be
      treated as a dismissal for purposes of paragraphs (c) and
      (d) of this Rule.

      In Bauer v. Commissioner, 97 F.3d 45 (4th Cir. 1996), the

Court of Appeals for the Fourth Circuit considered the

application of Rule 123(b).   Noting that dismissal for failure to

prosecute typically occurs where a party fails to appear at

trial, the court set forth four factors that should be considered

in determining whether to dismiss a case for failure to

prosecute:   (1) The plaintiff’s degree of personal

responsibility; (2) the presence of a drawn out history of

deliberately proceeding in a dilatory fashion; (3) the amount of

prejudice caused the defendant; and (4) the effectiveness of

sanctions less drastic than dismissal.   See id. at 49.

      Petitioner was solely responsible for his attendance at the

October 25, 2000, trial.   He was well aware of the trial date by
                                - 12 -

communication from his former attorney, respondent, and this

Court.   The resolution of this case had been delayed because

petitioner failed to cooperate with respondent in preparing the

case for trial and appeared at the initial calendar call

unprepared for trial.    Petitioner’s actions in this proceeding

have prejudiced respondent in that respondent has been required

to devote hours of time trying to prepare this case for trial.

     Although petitioner initially and currently appears before

this Court in a pro se capacity, we see no reason to afford him

any special protection as a pro se petitioner.     The Court of

Appeals for the Fourth Circuit has noted that while “trial courts

are encouraged to liberally treat procedural errors made by pro

se litigants, especially when a technical or arcane procedural

rule is involved, such tolerance does not extend to a litigant’s

failure to appear in court without explanation or without

contacting the court beforehand.”     Id.   The Rules and orders of

this Court that petitioner repeatedly violated were not technical

or arcane.   Furthermore, petitioner was put on notice that his

failure to appear may result in dismissal of his case.

     Petitioner’s conduct leaves no alternative other than

dismissal for failure to properly prosecute.     No lesser sanction

exists that would remedy petitioner’s failure to appear or

prosecute his case.     Pursuant to the foregoing, all matters for

which petitioner bears the burden of proof are dismissed for
                              - 13 -

failure to properly prosecute.   Furthermore, consistent with our

finding that dismissal is appropriate under Rule 123(b), we find

against petitioner on all issues as to which petitioner bears the

burden of proof.

B.   Default With Respect to Issues Where Respondent Had the

Burden of Production or Burden of Proof

      Rule 123(a) provides as follows:

           (a) Default: If any party has failed to plead or
      otherwise proceed as provided by these Rules or as required
      by the Court, then such party may be held in default by the
      Court either on motion of another party or on the initiative
      of the Court. Thereafter, the Court may enter a decision
      against the defaulting party, upon such terms and conditions
      as the Court may deem proper, or may impose such sanctions
      (see, e.g., Rule 104) as the Court may deem appropriate.
      The Court may, in its discretion, conduct hearings to
      ascertain whether a default has been committed, to determine
      the decision to be entered or the sanctions to be imposed,
      or to ascertain the truth of any matter.

      In light of petitioner’s conduct in this case, it is

appropriate to consider sanctions under Rule 123(a).   Our Rule

123(a) is analogous to rule 55 of the Federal Rules of Civil

Procedure.   By analogy to rule 55 of the Federal Rules of Civil

Procedure, the party that bears the burden of proof may be

entitled to entry of decision on default.   See Bosurgi v.

Commissioner, 87 T.C. 1403, 1407 (1986).    Where a taxpayer has no

demonstrable desire to continue the litigation, and “does not

think well enough of his case to defend it where the government
                                  - 14 -

has the burden of proof, this Court should default him.”     Id. at

1408.     As stated in Bosurgi:

     To hold a trial in a case abandoned by the taxpayer is at
     best an indulgence of archaic manners and at worst an insult
     to the taxpayers who have a rightful claim on this Court’s
     time. * * * Entry of a default judgment is appropriate upon
     a determination in the sound judicial discretion of the
     Court that the pleadings of the moving party set forth facts
     sufficient to support the judgment. [Id.; fn. ref.
     omitted.]

See also Smith v. Commissioner, 926 F.2d 1470 (6th Cir. 1991),

affg. 91 T.C. 1049 (1988).

     We find that by failing to appear at trial and by violating

the standing pretrial order and numerous discovery orders,

petitioner failed to proceed as provided by our Rules and as

required by this Court.    Therefore, we find petitioner in default

as to the issues for which respondent bears the burden of proof.

Nonetheless, since respondent bears the burden of proof with

respect to the increased deficiencies and the burden of

production and/or proof with respect to the additions to tax, we

must determine whether respondent has satisfied these

requirements.

     1.    Liability for Increased Deficiencies.

     Respondent moves to increase the deficiencies for each of

the years in issue.    Section 6214(a) provides:

          SEC. 6214(a). Jurisdiction as to Increase of
     Deficiency, Additional Amounts, or Additions to the Tax.--
     Except as provided by section 7463, the Tax Court shall have
     jurisdiction to redetermine the correct amount of the
                               - 15 -

     deficiency even if the amount so redetermined is greater
     than the amount of the deficiency, notice of which has been
     mailed to the taxpayer, and to determine whether any
     additional amount, or any addition to the tax should be
     assessed, if claim therefor is asserted by the Secretary at
     or before the hearing or a rehearing.

     In the answer to amended petition, respondent claimed

increased deficiencies for 1994, 1995, and 1996 based on the

income that petitioner and his wife received in those years.

Respondent has the burden of proof as to the increases in

deficiencies made in the answer to amended petition.   See Rule

142(a); Quick v. Commissioner, 110 T.C. 172, 180 (1998);

Hendrickson v. Commissioner, T.C. Memo. 1999-357.

     Petitioner stipulated or admitted that he and his wife

received the following amounts of income:

                                1994          1995         1996

Wages received by wife        $55,359        $51,268     $66,964
Schedule C gross receipts      27,037         37,954      26,935
Schedule E rental income        2,570          4,700       3,800
Schedule F farming income         600          1,453       1,500

Based on these stipulations and admissions, respondent has proved

the receipt of the additional income underlying the increased

deficiencies raised in the answer to amended petition.

     2. Respondent’s Burden of Production and Proof With Respect

to Increased Additions to Tax.

     We are willing to assume, but do not decide here, that

respondent has the burden of production as to the additions to

tax in these circumstances.   See sec. 7491(c).   Respondent moves
                              - 16 -

to increase the additions to tax under section 6651(a)(1) for

each of the years in issue for failure to timely file, section

6651(a)(2) for 1996 for failure to timely pay,6 and section

6654(a) for 1995 and 1996 for failure to pay estimated income

taxes.7

     Section 6651(a)(1) provides for an addition to tax where a

return is not timely filed “unless it is shown that such failure

is due to reasonable cause and not due to willful neglect”.

Similarly, section 6651(a)(2) provides for an addition to tax

where payment of tax is not timely “unless it is shown that such

failure is due to reasonable cause and not due to willful

neglect”.   On the other hand, section 6654(a) provides for an

addition to tax “in the case of any underpayment of estimated tax

by an individual”.   Section 6654 does not provide relief for

reasonable cause.

     Respondent attached to the motion to dismiss for failure to

properly prosecute a Form 3050 (Certification of Lack of Record)

indicating that as of May 26, 2000, respondent did not have in

his possession a Form 1040 (U.S. Individual Income Tax Return)

for petitioner’s 1994, 1995, or 1996 taxable years.   Also



     6
         Respondent concedes that petitioner is not liable for
the additions to tax under sec. 6651(a)(2) for 1994 and 1995.
     7
        Respondent concedes that petitioner is not liable for an
addition to tax under sec. 6654(a) for 1994.
                                  - 17 -

attached to respondent’s motion was a Form 2688 (Application for

Additional Extension of Time to File U.S. Individual Income Tax

Return) signed by petitioner and his wife on April 10, 1997, in

which petitioner and his wife request additional time to file

their 1994 tax return.       Furthermore, petitioner stipulated that

neither he nor his wife made estimated tax payments, and the

withholding shown on the submitted returns was minimal.8      This

evidence is sufficient to satisfy respondent’s burden of

production and shift the burden of production to petitioner as to

the additions to tax asserted in the notices of deficiency.

       With respect to the increased additions to tax under section

6651(a)(1) for the years in issue, section 6651(a)(2) for 1996,

and section 6654(a) for 1995 and 1996, the same evidence is

sufficient to satisfy respondent’s burden of proof under Rule

142.       Respondent’s determinations with respect to the increased

additions to tax are sustained.

C.   Section 6673 Penalty

       Respondent orally moved to impose a penalty against

petitioner under section 6673.       Section 6673(a)(1) authorizes the

Tax Court to require a taxpayer to pay to the United States a


       8
        The Forms W-2 (Wage and Tax Statement) for 1994, 1995,
and 1996 show that petitioner’s wife had $2,416.48, $91.62, and
$222.20, respectively, withheld from her wages. The Forms 1099-R
(Distribution From Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc.) for 1994, 1995,
and 1996 show that petitioner had $22.20, $45.70, and $95.80,
respectively, withheld from his retirement pension.
                              - 18 -

penalty not in excess of $25,000 whenever it appears that

proceedings have been instituted or maintained by the taxpayer

primarily for delay or that the taxpayer’s position in such

proceeding is frivolous or groundless.   The gravamen of

respondent’s motion is that petitioner has maintained this

proceeding primarily for delay.

     We begin by observing that whatever is said does not reflect

on the representation provided by Mr. Thomas.   In our conference

calls with Mr. Thomas and respondent, it appeared that Mr. Thomas

at all times was acting in a responsible and good faith fashion

to bring this matter to a close either by trial or settlement.

This being said, however, we are still left with a decidedly

uncomfortable view of petitioner’s conduct throughout this

proceeding.

     Petitioner failed to file returns for the years in issue.

After the case was docketed in this Court, petitioner ignored the

standing pretrial order and refused to cooperate in preparing

this case for trial to the extent that at the initial calendar

call this case either could have been dismissed for failure to

properly prosecute or continued.   We gave petitioner the benefit

of doubt at that time and continued the case.   Even then, until

Mr. Thomas entered an appearance, petitioner refused to obey the

orders of the Court.   Mr. Thomas was successful in negotiating a

settlement in which petitioner initially concurred.   On the eve
                                - 19 -

of the trial, petitioner reneged on the settlement and dismissed

Mr. Thomas.     Petitioner then filed a motion to “withdraw” his

petition without prejudice that was without any basis in law or

fact.     Finally, on the date of trial, petitioner refused to

appear even though he had been informed that he must appear.

     A review of the record satisfies us that petitioner has

maintained this case primarily for delay.     The Court’s time and

resources have been wasted.     In view of the foregoing, we shall

exercise our discretion under section 6673(a)(1) and require

petitioner to pay a penalty to the United States of $2,000.       See

Funk v. Commissioner, T.C. Memo. 2000-169.

        To reflect the concessions of the parties,

                                      An appropriate order will

                                 be issued, and decision will be

                                 entered under Rule 155.
