                        T.C. Memo. 2000-86



                      UNITED STATES TAX COURT



     RICHARD HENRY AND CARMEN M. STRICKLAND, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9799-95.                     Filed March 14, 2000.



     Richard H. Strickland, pro se.

     Steven M. Roth, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     GERBER, Judge:   Respondent determined a deficiency in

petitioners’ 1990 Federal income tax of $3,365, a section

6651(a)(1)1 addition to tax of $88 and a section 6662(a) penalty



     1
        Unless otherwise stated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 2 -

of $673.   Respondent also determined a deficiency in petitioners’

1991 Federal income tax of $13,438 and a section 6662(a) penalty

of $2,688.   After concessions,2 the only substantive issue for

our consideration is whether petitioners are entitled to deduct

any of the 1990 Schedule C car and truck expenses.   Petitioners

also allege that the audits and resulting deficiency

determinations were improperly conducted, and they ask that

damages be awarded for any injuries they may have suffered as a

result.

                         FINDINGS OF FACT3

     Petitioners Richard H. and Carmen M. Strickland resided in

West Covina, California, at the time their petition was filed.

Carmen M. Strickland is a petitioner in this case because she

filed a joint return with Richard Strickland.   Subsequent

references to “petitioner” refer only to Richard Strickland.

     Petitioner filed his 1990 Federal income tax return on

August 26, 1991.   Petitioner did not receive an extension, nor

did he offer an explanation for the late filing.

     The 1990 tax return included a deduction on Schedule C for

car and truck expenses, in the amount of $8,020.   Respondent

disallowed the $8,020 deduction.   That disallowance, along with


     2
       Respondent has conceded the 1991 deficiency and related
penalty.
     3
       The stipulation of facts and the exhibits attached thereto
are incorporated herein by this reference.
                                - 3 -

an income adjustment, resulted in a $3,365 income tax deficiency.

Petitioner admits that there was an error in his 1990 return

requiring the income adjustment.   He has offered no evidence to

either substantiate the Schedule C expenses or to show that they

were ordinary and necessary.

                               OPINION

     Petitioner does not seek to show that respondent’s

adjustments to income and deductions were in error; instead he

asks the Court to “waive” the 1990 deficiency and award $50,000

in damages from respondent.    Petitioner contends that the above

relief is justified due to respondent’s alleged improper audit

procedures and actions.   Petitioner contends that respondent’s

following actions were improper:   (1) Violation of the Privacy

Act of 1974, Pub. L. 93-579, 88 Stat. 1896 (the Privacy Act),

when respondent’s agent informed petitioner that his was a

“routine” audit, (2) failure to meet the burden of production

allegedly imposed by section 6201, and (3) lack of substantial

justification to begin the audit that led to the deficiency

determination.   Petitioner claims that he was injured by these

alleged improprieties and should be compensated by being relieved

from the 1990 deficiency.   He also claims that he is entitled to

section 7435 civil damages because respondent’s counsel

“intentionally misstated facts” in his proposed stipulation of

facts included in his motion, under Rule 91(f), to show cause why
                                 - 4 -

such facts should not be stipulated.     Said facts were deemed to

be admitted as a sanction for petitioner’s failure to comply with

the Court’s order, dated December 16, 1996.

     This Court is a court of limited jurisdiction.    See Naftel

v. Commissioner, 85 T.C. 527, 529 (1985).     Two of petitioner’s

claims fall outside that jurisdiction.    Actions under the Privacy

Act, codified as 5 U.S.C. 552a (1994), and pursuant to section

7435 are both properly brought in U.S. District Courts.    See

Crowell v. Commissioner, 102 T.C. 683, 693 (1994) (“The exclusive

remedy for individuals seeking redress for a violation of the

Privacy Act is a civil action in Federal District Court pursuant

to 5 U.S.C. section 552a(g)(1)”.); sec. 7435 (taxpayer must bring

section 7435 action in a district court and “Such civil action

shall be the exclusive remedy for recovering damages”).    We do

not have the authority to address these claims.

     Petitioner also contends that he was injured by respondent’s

alleged failure to meet a burden of production under section 6201

when respondent did not produce a requested Form 1099 discussed

during the audit.   Assuming that respondent ever had such a

burden, the document was related only to the 1991 deficiency,

which respondent has conceded.

     Petitioner’s only remaining claim of injury is that the

deficiency notice was the result of an audit that was not

substantially justified.   This allegation stems from petitioner’s
                                - 5 -

theory of a third party’s malicious information instigating the

audit.    As a general rule, we do not look behind the deficiency

notice.    See Greenberg’s Express, Inc. v. Commissioner, 62 T.C.

324, 330 (1974).   The Court of Appeals for the Ninth Circuit has

recognized an exception to this rule and has looked behind the

notice of deficiency in cases involving unreported income where

the Commissioner introduced no substantive evidence but rested on

the presumption of correctness and the taxpayer challenged the

notice of deficiency on the grounds that it was arbitrary.     See

Weimerskirch v. Commissioner, 596 F.2d 358 (9th Cir. 1979), revg.

67 T.C. 672 (1977).    This exception to the rule is not applicable

to the instant case; therefore, we shall not look behind the

deficiency notice to evaluate the audit procedure.      There is no

inherent evil residing in the fact that the Commissioner may

institute an audit based on information received from a third

party.    We find petitioner’s claims of injury and request for

damages to be either without merit or without our jurisdiction.

     The remaining matter in this case is whether petitioner is

entitled to the Schedule C car and truck expense deductions he

claimed.    Initially, we observe that petitioner bears the burden

of proving by a preponderance of evidence that the Commissioner’s

disallowance was in error.    See Olton Feed Yard, Inc. v. United

States, 592 F.2d 272, 275 (5th Cir. 1979) (citing Helvering v.

Taylor, 293 U.S. 507, 515 (1935)).      Petitioner has presented no
                               - 6 -

evidence regarding these expenses; therefore, we hold for

respondent on this issue.

     Respondent also determined an accuracy-related penalty under

section 6662(a), which imposes an addition to tax in the amount

of 20 percent of any underpayment attributable to negligence.   To

avoid this negligence penalty, petitioner has the burden of

showing that his actions were not careless, reckless, or made

with intentional disregard of rules or regulations.   See Delaney

v. Commissioner, 743 F.2d 670 (9th Cir. 1984), affg. T.C. Memo.

1982-666.   Because petitioner has presented no evidence as to why

his actions were reasonable, petitioners are liable for the

section 6662 penalty for the taxable year 1990.   See Lyszkowski

v. Commissioner, T.C. Memo. 1995-235, affd. 79 F.3d 1138 (3d Cir.

1996).   In addition, petitioner’s allegations that respondent’s

actions were improper do not constitute reasonable cause.

     Respondent also determined that petitioners were subject to

an addition to tax for failure to timely file a tax return.   This

addition is imposed by section 6651(a)(1) unless petitioner can

show that the late filing was due to reasonable cause.   See Bixby

v. Commissioner, 58 T.C. 757 (1972).   Petitioner has offered no

evidence to show that respondent’s determination of the addition

to tax was in error.   Accordingly, petitioners are liable for the

section 6651(a)(1) addition to tax for their 1990 tax year.
                            - 7 -



In light of the foregoing,


                            Decision will be entered for

                    petitioners with respect to the 1991 tax

                    year and for respondent for the 1990 tax

                    year.
