Berkery v. Commissioner

90 T.C. No. 20, 90 T.C. 259, 1988 U.S. Tax Ct. LEXIS 20

• Court: United States Tax Court
• Decided: February 16, 1988
• Docket: Docket Nos. 13900-82, 22182-82
• Status: Published

Opinions

WELLS, Judge:

For the taxable year 1980, respondent determined a deficiency in petitioner’s Federal income tax in the amount of $364,237.29 and an addition to tax under section 6653(a)¹ in the amount of $18,211.85. For the taxable year 1981, respondent determined a deficiency in petitioner’s Federal income tax in the amount of $209,606, an addition to tax under section 6651(a)(1) in the amount of $20,961, and an addition to tax under section 6653(a)(1) in the amount of $10,480.00.²

The issues presented for our decision are as follows:

(1) Whether petitioner’s legal residence for purposes of section 7482(b) was located in Philadelphia, Pennsylvania, at the time the petitions in these cases were filed;

(2) Whether these cases should be dismissed because petitioner is a fugitive from justice;

(3) Whether respondent violated grand jury secrecy rules, and if so, whether the violation causes certain evidence relied upon by respondent to be excluded and the burden of going forward in these cases on the issues concerning deficiencies in Federal income taxes to shift to respondent; and

(4) Whether petitioner failed to report taxable income for taxable years 1980 and 1981 from alleged transactions in violation of Federal drug laws, and is liable for the aforementioned deficiencies in and additions to Federal income taxes.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The stipulations and exhibits attached to the stipulations are incorporated herein by reference.

Petitioner claimed a legal residence in Philadelphia, Pennsylvania, at the time he filed his petitions with this Court.

On January 13, 1982, petitioner was indicted for violating Federal drug laws. Petitioner was not arrested upon being indicted because he was a fugitive from justice at such time. Petitioner presently remains a fugitive from justice.³

Respondent’s determinations in these cases are based upon his claim that petitioner failed to report taxable income for the taxable years 1980 and 1981 from alleged transactions involving the possession and distribution of phenyl-2-propanone (“P-2-P”), an ingredient used to manufacture methamphetamine.⁴

Respondent issued a statutory notice of deficiency for the 1980 taxable year on March 18, 1982, and issued a statutory notice of deficiency for the 1981 taxable year on June 10, 1982.⁵ Subsequently, petitioner’s counsel filed petitions with the Court in a timely manner. These cases were tried in Philadelphia, Pennsylvania.

OPINION

Petitioner’s Legal Residence

The first issue presented for our decision is whether petitioner’s legal residence for purposes of section 7482(b)⁶ was located in Philadelphia, Pennsylvania, at the time the petitions in these cases were filed. For purposes of that section, the term “residence” means domicile. Brewin v. Commissioner, 72 T.C. 1055, 1059 (1979), revd. and remanded on other issues 639 F.2d 805 (D.C. Cir. 1981). We find that, for purposes of these cases, petitioner’s domicile at the time the petitions in these cases were filed was in Philadelphia, Pennsylvania.

In Brewin v. Commissioner, 72 T.C. at 1059, we enumerated the following general principles for determining the domicile of an individual petitioner:

Domicile is based on physical residence conjoined with the intent to remain thereat, at least for a time. Texas v. Florida, 306 U.S. 398, 424 (1939). Statements of intention are evidence of domicile, but are given slight weight when such statements conflict with conduct. Relevant to the determination is conduct with respect to establishment of a principal home, its furnishings and objects, family history and familial associations, location of interest, and time spent thereat.

Petitioner has the burden of proof to establish domicile at the time his petitions were filed. Rule 142(a). “Where one lives is prima facie evidence of domicile.” Krasnov v. Dinan, 465 F.2d 1298, 1300 (3d Cir. 1972), citing District of Columbia v. Murphy, 314 U.S. 441 (1941).

In the present cases, respondent called Ronald Raiton (Raiton), who testified on cross-examination that Raiton delivered P-2-P to petitioner “near [petitioner’s] home up in the Northeast part of Philadelphia.” Moreover, respondent stated on brief that “Petitioner abandoned his residence in Philadelphia prior to petitioning the Court and has not established that he is domiciled in Philadelphia.” (Emphasis supplied.) Respondent’s statement seems to concede that, at the very least, petitioner had a physical residence in Philadelphia prior to the time petitioner became a fugitive from justice. Finally, the tax returns filed by petitioner for the taxable years in issue list a mailing address in Philadelphia, Pennsylvania.

Based upon the record as a whole, we find that petitioner lived in Philadelphia, Pennsylvania, prior to the time he became a fugitive from justice. There is no evidence in the record that would indicate that petitioner’s domicile was not in Philadelphia prior to the time petitioner became a fugitive from justice.⁷ Thus, we find that petitioner’s domicile was in Philadelphia, Pennsylvania, prior to the time the petitions in these cases were filed.

Having determined petitioner’s domicile prior to the time the petitions in these cases were filed, we must now determine petitioner’s domicile at the time the petitions in these cases were filed. Sec. 7482(b). “Once domicile is established, the question of whether that domicile has been abandoned arises.” Brewin v. Commissioner, 72 T.C. at 1059. The party alleging that an earlier domicile was abandoned in favor of a later one carries the burden of proof on that issue. Texas v. Florida, 306 U.S. 398, 427 (1939); Mitchell v. United States, 88 U.S. (21 Wall.) 350, 353 (1874); Slaughter v. Toye Brothers Yellow Cab Co., 359 F.2d 954, 955 (5th Cir. 1966). More accurately stated, when a party alleges that a domicile was abandoned, the burden of going forward with evidence on the issue of abandonment of domicile shifts to that party. Slaughter v. Toye Brothers Yellow Cab Co., supra at 955.

Respondent may not rely upon petitioner’s status as a fugitive from justice as proof that a place other than Philadelphia became petitioner’s domicile. Petitioner’s fugitive status, standing alone, does not indicate that petitioner departed from Philadelphia and established a domicile elsewhere. Cf. Lloyd v. Loeffler, 694 F.2d 489, 490 (7th Cir. 1982).

Based upon the foregoing, we find that petitioner’s domicile, and therefore his residence for purposes of section 7482(b), was located in Philadelphia, Pennsylvania, at the time the petitions in these cases were filed with this Court.

Dismissal of Cases

The next issue in these cases is whether we should dismiss these cases because of petitioner’s status as a fugitive from justice, as argued by respondent. Petitioner argues that we should not exercise our discretion to dismiss these cases. Based upon the analysis that follows, we dismiss petitioner’s cases due to his status as a fugitive from justice.

In Molinaro v. New Jersey, 396 U.S. 365 (1970) (per curiam), the Supreme Court dismissed a defendant’s appeal of a criminal conviction because the defendant was a fugitive from justice. The Court stated that the defendant’s status as a fugitive “disentitles the defendant to call upon the resources of the Court for determination of his claims.” Molinaro v. New Jersey, supra at 366. See also Bohahan v. Nebraska, 125 U.S. 692 (1887); Smith v. United States, 94 U.S. 97 (1876).

Courts have rejected the argument that Molinaro only applies to appeals from criminal convictions. E.g., Ali v. Sims, 788 F.2d 954, 958-959 (3d Cir. 1986) (after reversing District Court’s grant of partial summary judgment in favor of plaintiff in a civil rights suit, the Court of Appeals for the Third Circuit held that plaintiff’s fugitive status disentitled plaintiff to a new trial on the issue of defendant’s liability); Conforte v. Commissioner, 692 F.2d 587, 589-590 (9th Cir. 1982), stay denied 459 U.S. 1309 (1982) (taxpayer appealed this Court’s decision in favor of the Commissioner, and the appeal was dismissed by the appellate court because the individual became a fugitive from justice after the appeal was filed); Doyle v. United States Department of Justice, 494 F. Supp. 842, 845 (D. D.C. 1980), affd. per curiam 668 F.2d 1365 (D.C. Cir. 1981), cert. denied 455 U.S. 1002 (1982) (proceeding instituted by plaintiff to obtain documents under the Freedom of Information Act was dismissed by the District Court due to plaintiff’s status as a fugitive from justice).⁸ In fact, it has been stated that Molinaro “should apply with greater force in civil cases where an individual’s liberty is not at stake.” Conforte v. Commissioner, 692 F.2d at 589.

Petitioner argues that we should not exercise our discretion to apply Molinaro to the cases at bar because petitioner is represented by counsel and “there is no requirement pursuant to any relevant authority that a petitioner be present for his trial before this Court.” Petitioner misses the point of Molinaro and the civil cases in which Molinaro was applied. Those cases were not dismissed because of the failure of the litigants in those cases to be present at the civil trial; they were dismissed because the litigants were fugitives from justice.⁹

Petitioner has refused to submit to the jurisdiction of the Federal courts for trial on charges that he violated Federal drug laws, yet he calls upon the resources of this Court in order to dispute deficiencies in and additions to Federal income taxes that arose out of his alleged illegal drug activities.¹⁰ The Court of Appeals for the Third Circuit stated in Ali v. Sims, 788 F.2d at 959, “Particularly in this age of overcrowded dockets and court backlogs, it is unreasonable to expect a court to expend its scarce resources on one who has blatantly disregarded the court’s procedures.” We share those concerns, as well as those expressed by the Supreme Court in Molinaro.

Petitioner wishes to pick and choose which of the benefits and burdens of the U.S. legal system apply to him. Petitioner’s contemptuous behavior toward the Federal courts, however, disentitles him to call upon the resources of this Court in the instant cases. Molinaro v. New Jersey, 396 U.S. at 366. We deem that behavior sufficient cause to exercise our discretion to dismiss these cases. Rules 123(b), 123(d). Thus, we will enter a decision for respondent for the full amount of the deficiencies in and additions to Federal income taxes determined by respondent. If, however, within 30 days after this written opinion has been served, petitioner submits himself to the jurisdiction of the Federal courts for purposes of a trial on the charges for which he has been indicted and files a motion with this Court to vacate the decisions in these cases, we will consider his cases on the merits of the other issues he has advanced. In view of our dismissal of petitioner’s cases, we need not now expend our resources any further to consider those issues.

To reflect the foregoing,

Decisions will be entered for the respondent.

Reviewed by the Court.

Sterrett, Nims, Kórner, Hamblen, Clapp, Swift, Jacobs, Gerber, Wright, Parr, Williams, and WHALEN, JJ., agree with the majority opinion. Shields, J., dissents. RUWE, J., did not participate in the consideration of this case.

1 All section references are to the Internal Revenue Code as amended and in effect during the years in issue, unless otherwise indicated. All Rule references are to the Tax Court Rules of Practice and Procedure.

2 For petitioner’s taxable years in issue, respondent did not determine additions to tax under sec. 6653(b).

3 The parties stipulated to the facts regarding petitioner’s status as a fugitive from justice.

4 Petitioner was indicted for conspiring to distribute and possess with the intent to distribute P-2-P, in violation of 21 U.S.C. sec. 846, and for possessing with the intent to distribute P-2-P, in violation of 21 U.S.C. sec. 841, but was not indicted for distributing P-2-P.

5 The statutory notice of deficiency for the 1980 taxable year was issued after respondent made a jeopardy assessment for such taxable year, and the statutory notice of deficiency for the 1981 taxable year was issued after respondent made a termination assessment for such taxable year.

6 SEC. 7482. COURTS OF REVIEW.

(b) Venue.—

(1) In general. — Except as otherwise provided in paragraphs (2) and (3), such decisions [of the United States Tax Court] may be reviewed by the United States court of appeals for the circuit in which is located—

(A) in the case of a petitioner seeking redetermination of tax liability other than a corporation, the legal residence of the petitioner,

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If for any reason [subparagraph (A) does not apply] * * * , then such decisions [of the United States Tax Court] may be reviewed by the Court of Appeals for the District of Columbia. For purposes of this paragraph, the legal residence referred to herein shall be determined as of the time the petition seeking redetermination of tax liability was filed with the Tax Court * * *

(2) By agreement. — Notwithstanding the provisions of paragraph (1), such decisions may be reviewed by any United States Court of Appeals which may be designated by the Secretary and the taxpayer by stipulation in writing.

7 Petitioner became a fugitive from justice prior to the filing of the petitions of these cases.

8 See also United States v. $129,374, 769 F.2d 583 (9th Cir. 1985); Schuster v. United States, 765 F.2d 1047 (11th Cir. 1985); United States v. $45,940, 739 F.2d 792 (2d Cir. 1984); Broadway v. City of Montgomery, Alabama, 530 F.2d 657 (5th Cir. 1976).

9 This Court has been faced with the issue of whether we should apply Molinaro v. New Jersey, 396 U.S. 365 (1970) (per curiam), to dismiss cases brought by fugitives from justice in two Memorandum Opinions of this Court. In Terpil v. Commissioner, T.C. Memo. 1985-350, and Vesco v. Commissioner, T.C. Memo. 1979-369 (we assumed for purposes of our analysis that the taxpayer was a fugitive, even though we questioned whether the taxpayer was, in fact, a fugitive), we refused to exercise our discretion to apply Molinaro to dismiss the cases. Terpil and Vesco are, however, distinguishable from the instant cases. In Terpil and Vesco, the fugitive taxpayers had spouses who were not fugitives from justice but would have been bound by the dismissal of the cases. Petitioner does not have a spouse who would be affected similarly by a dismissal of the instant cases.

10 Since these cases are related to the criminal charges forming the basis of petitioner’s fugitive status, we need not address whether nexus is a requirement for the applicability of Molinaro. See United States v. $129,374, 769 F.2d at 588; Schuster v. United States, 765 F.2d at 1049-1050, and cases cited therein at n. 13.