MEMORANDUM OPINION
CHIECHI, JUDGE: This case is before the Court on petitioners' motion for leave to file motion to vacate decision (petitioners' motion). Respondent filed an objection to petitioners' motion and a declaration by David R. Jojola (Mr. Jojola) in support of that objection. Petitioners filed a reply to respondent's objection (petitioners' reply). We shall deny petitioners' motion.
BACKGROUND
On October 29, 1997, respondent issued a notice of deficiency (notice) to petitioners that determined the following deficiencies in, and fraud penalties under section 6663(a) 1 on, petitioners' Federal income tax (tax):
Fraud Penalty
Year Deficiency Under Sec. 6663(a)
____ __________ __________________
1991 $ 18,508 $ 13,881
1992 40,931 30,698
1993 70,662 52,997
On December 29, 1997, petitioners timely filed pro sese a petition. This case was calendared for trial at the Court's trial session in Los Angeles, California, that commenced on February 8, 1999.
On February 2, 1999, Robert H. Appert (Mr. Appert) entered an appearance on behalf of petitioners. On February 8, 1999, the parties filed a stipulation of settled issues, a first supplemental stipulation of settled issues, and a second supplemental stipulation of settled issues (collectively, stipulations of settled issues). Each of those stipulations was signed on February 6, 1999, by Mr. Appert on behalf of petitioners as well as by each petitioner and by Mr. Jojola on behalf of respondent. On March 11, 1999, the parties submitted to the Court a stipulated decision document (stipulated decision document) that was signed on March 10, 1999, by Mr. Appert on behalf of petitioners and by a representative of respondent and that reflected the agreement of the parties as set forth in the stipulations of settled issues.
On March 15, 1999, the Court entered a decision in this case pursuant to the agreement of the parties as reflected in the stipulated decision document 2 that petitioners are not liable for the fraud penalty under section 6663(a) for any of the years at issue and that they are liable for deficiencies in, and accuracy-related penalties under section 6662(a) on, petitioners' tax, as follows:
Fraud Penalty Accuracy-Related Penalty
Year Deficiency Under Sec. 6663(a) Under Sec. 6662(a)
____ __________ _________________ ________________________
1991 $ 2,973 None $ 595
1992 6,008 None 1,202
1993 20,379 None 4,076
DISCUSSION
The Court's decision in this case was entered pursuant to the agreement of the parties on March 15, 1999. No notice of appeal or timely motion to vacate or revise the decision was filed in this case, see sec. 7483 and Rule 162, and the decision herein became final on June 13, 1999, see sec. 7481(a)(1); Fed. R. App. P. 13(a).
Petitioners' motion was filed on February 12, 2001, almost two years after the Court entered the decision in this case and 20 months after that decision became final. Once a decision becomes final, the Court may vacate it only in narrowly circumscribed situations, such as where the decision was obtained through fraud on the Court, see Abatti v. Commissioner, 859 F.2d 115, 118 (9th Cir. 1988), affg. 86 T.C. 1319 (1986), or where the decision is void or a legal nullity for lack of this Court's jurisdiction over either the subject matter or the party, see Billingsley v. Commissioner, 868 F.2d 1081, 1084-1085 (9th Cir. 1989); Abeles v. Commissioner, 90 T.C. 103, 105-106 (1988). 3
The Court of Appeals for the Ninth Circuit has defined the phrase "fraud on the court" to be "'an unconscionable plan or scheme which is designed to improperly influence the court in its decision.'" Toscano v. Commissioner, 441 F.2d 930, 934 (9th Cir. 1971)(quoting England v. Doyle, 281 F.2d 304, 309 (9th Cir. 1960)), vacating 52 T.C. 295 (1969); see Abatti v. Commissioner, supra. In order to prove fraud on the Court, petitioners have the burden of establishing that "an intentional plan of deception designed to improperly influence the Court in its decision has had such an effect on the Court." Abatti v. Commissioner, 86 T.C. 1319, 1325 (1986), affd. 859 F.2d 115 (9th Cir. 1988); see Drobny v. Commissioner, 113 F.3d 670, 677-678 (7th Cir. 1997), affg. T.C. Memo 1995-209, and cases cited therein.
The Court has carefully reviewed petitioners' motion and petitioners' reply. Petitioners' motion states in pertinent part:
1) IRS hold the document (from the Bank Deposits) and made the
copies of receipts back to 1995 of taxable year 1991-1993;
But, never exchange to taxpayer or CPA even requested for
years to see what the results from and run out of the
appealing time, jumped to the conclusion which no one would
believe it * * *.
* * * * * * *
3) It was found IRS made mistakes for taxable year of 1990 by
double taxing on the petitioners because IRS always using the
worksheets to jot down the numbers which could be partially
reported and IRS examiners never recreated on the official
forms to show or exchange to the taxpayers.
4) IRS eventually released the data in Dec. of 1998 and
petitioners hired the attorney Robert H. Appert to check and
recreate the official 1040 forms for taxable year of 1991-
1993 as the reference to the Tax Court.
5) The counsel for Petitioners did not attend the conference
meeting on time held by judge Carolyn Chiechi, nor recreated
the 104
6) The motion to withdraw the counsel of petitioners was ordered
from the court because Robert with CPA background charging
$ 20
7) From the IRS booklets; When all the data are available, the
professionals require only hours to fill out 1040 forms;
Actually, back to 1995, when auditor Jennifer was in CPA's
office to examine the taxable year of 1991; The CPA took only
half hour to accomplish the 1040 forms with schedule C to
auditor for information when all the receipts and cancelled
checks were copied by the auditor.
8) The reason to use official 1040 forms was easy to communicate
with the other party and should any number in doubt, the
taxpayers can have receipts or cancelled check or bank
statement to prove it. To prevent IRS examiners to hide or
delete items or made partial report to jump to the conclusion
misleading the judgments; It must have the 1040 forms to be
as the reference. It does not matter which 1040 forms to be
used.
9) The petitioner has been in electronics industry for 16 years
and being laid off from July 1991 due to the Eaton Corp.
closed completely in Los Angeles; Since the petitioners have
no idea of accounting/book keeping, every year must have the
CPA/tax specialist to prepare the 1040 forms.
10) In 1992, petitioner could not find the right job after being
laid off For almost one year starting to do import/trade
business using the Savings or IRA funds to purchase the
goods. The Cost of goods in the year 1992 was Around $ 54,000
plus the operation expenses of startup this new field of
business. Definitely, the operating expenses (Schedule C)
for this new trade business was far more than the profits of
selling the products. It does not matter which official
forms (1040 EZ or 1040A) to be used; The results of the
income loss (profits) should be the same.
11) It does not matter what method to be used to analysis the new
startup business; The bank saving dropping from 1991 to 1993
indicated the seeds money being used up for the import
business startup, and in 1992 & 1993, even could not afford
to hire the part time bookkeeper. Mrs. Chu majoring in Music
helped to just put all the receipts aside without knowing how
to organize it. But, everyone knows without investing or
buying the seeds to fertilize it, the fruits will not be
there years after. In other words, no one would expect the
profits (Fruits) in the first few years of startup a new
business (seeds). [Reproduced literally.]
Petitioners' reply states in pertinent part:
12) This Court has jurisdiction to vacate a final decision if the
decision of the Court was obtained by fraud on the Court.
Partially report the COG is the act of fraud, which would
influence the judgment. Treating petitioners unfairly or
differently will be justified by the court as the act of
fraud or one kind of discriminating the petitioners had no
tax/accounting background or knowledge.
14) The definition of Fraud is an act of deliberate deception
with the design of securing something by taking unfair
advantage of another-New International Dictionary; A
deliberate deception for unfair or unlawful gain-American
Heritage Dictionary. Respondent is a tax professional, hold
the documents retrieved from the bank without exchange to the
petitioners for four years (1995-1999) and jump to the
decision without providing the appeal meeting for petitioners
to explain until tax solving date requested by the
congressman to release the files to the petitioners to check.
15) To prove such fraud, petitioners (No Tax background) hired
the CPA and attorney to analyze and prepare the detailed 1040
forms and schedule C for easy understanding without
eliminating or modified the numbers where the banks
statements or receipts/cancelled checks were all available.
The respondent (Professional tax expert) claimed in his
office the preparation of 1040 forms need one more year and
he could not find help to prepare it based on the
receipts/cancelled checks and bank transaction statement.
Actually, respondent spent only two hours to put the numbers
into the 1040 forms (See Exhibit A), but, hold the progress
of checking the taxable years of 1992 and 1993. Because
respondent knowing that petitioner lost the main job in 1992
and started to import the different small quantities of
samples of audio devices from April of 1992. Respondent
deliberately hold the progress of reviewing the expenses of
start-up business, which was about two weeks from Feb. 8,
1999. (Deadline to turn in the paper to the court). The
petitioners hired the attorney to continue to review and
prepare the 1040 form and schedule C which estimated only
need four hours required, but, not successful and on Feb.
6th, 1999, petitioners being told that counsel could do it at
the second phase; First phase he did not care about what
respondent did. This was the main reason the petitioner had
the motion to withdraw the counsel.
17) The legal counsel was hired to make the progress of reviewing
the COGs of 1992, 1993 and few expenses items which
respondent deliberately hold or partially report in his
stipulation report. During the time of hiring, not only the
counsel was late in the meeting called by the judge, but, he
did not make any progress report to petitioners until Feb.
6th, 1999 (Two days away from the deadline set by the court);
Besides, the petitioner (spouse) had the operation of the
chest and under daily radiation treatment of cancer disease;
Under such mentally pressure, Robert forced the petitioners
to sign the incompletely stipulation report by saying he can
fix it at the second phase. As the Fraud is an act; only if
the professional made it, later can be caught what did the
respondent make. During the stage of professional's intention
to design the scheme, it was hard to get the evidence. As
Fraud is an act using professional knowledge to take
advantage of the non-professionals by treating the taxpayer
unfairly, differently or not just. As people say that non-
professionals might use tangible weapons to rob the bank to
get money illegally; But, professionals can use intangible
way (their knowledge to write the makeup figures) to take the
money from the taxpayer pockets illegally. As the
professional always use the rules in favor of his misconduct
as the fraud activity, he would never tell anyone by holding
such case for how many years would dismiss (drop) the case;
Since by holding the case, IRS put the interest on it, and
when IRS owed petitioner money, also, holding the check for
the taxable year of 1990 without releasing by making the
excuses. As there are two different issues.
18) Because of the following reasons, the settlement was never
reached.
A) The deficiency of taxable year 1991, 1992 and 1993 came
out without giving the petitioners the documents describing
where the figures from or how it was calculated. The only
paper received was last week the exhibits of respondent
letter, which had lots of expenses, items being deleted or
partially report. In other words, The stipulation issues were
not only vague, incomplete but, very confusing to the court
if the judge knowing in 1992 and 1993 the petitioners had no
main job and using up the savings or even the IRA fund as
emergency seed money used to start up the new trade business;
The tax deficiency in 1992 (Petitioner lost the main job) was
calculated twice as higher as in the 1991 ($ 2,973.00 + $ 595)
which petitioner still had the main job. In 1993 (the second
year of the new start-up trade business), the deficiency was
calculated eight times ($ 20,379 + $ 4076) higher than the
1991. It would make the judge very confused by just looking
at the above figures made-up by the respondent deliberately
to deceive the court judgment.
(B) Before the deadline (Feb. 2, 1999); Judge agreed the
withdrawal of petitioners counsel. Because no progress report
and even negligence of the meeting called by the judge.
(C) The petitioner (Spouse) was under cancer treatment and
mentally in the bad shape. Petitioners have to totally trust
and rely on the counsel hired with the $ 20
(D) Under above stress conditions, the petitioners' counsel
talked into the petitioners to sign the incomplete
stipulation issues made up by the respondent at the last
minute on Feb. 6th, 1999 by saying he could do the second
phase work or he would not represent the petitioners on the
Feb. 8th, 1999 in the court.
(E) In the morning (About 9:00 A.M.) of Feb. 8th, 1999;
Petitioner did turn in the above situation paper and
requested the Judge to consider the COGs of 1992, 1993 and
few expenses items which respondent deliberately drop or cut
off in respondent issues two days ago. Showing the
stipulations has the figures made up by the respondent except
the taxable year of 1991. Starting from the end of January
1999; The respondent just hold the progress of reviewing the
taxable year of 1992 and 1993; Do not mention to exchange the
documents or provide the opportunity for petitioners until
Feb. 6th, 1999. All the papers were prepared for last minutes
signatures. This was the way the professional designed the
trap to take advantage of the taxpayers unfairly by giving
petitioners no opportunity at all saying the court need the
signatures to turn in. The petitioners did not sign the
stipulations of facts at the first place because the
respondent did not provide the complete expenses report when
reviewing the taxable year of 1991. I believe the laws give
the taxpayers to know how the deficiency being calculated and
based on. Respondent hold or hide the documentations and
provided no chance for petitioners to explain or exchange are
not only unfair, but, trying to stop the court to review what
figures respondent made up deliberately to take advantage of
the petitioners is obviously seen. If the respondent did not
make up the figures or untruth report to the court,
respondent should not be afraid of any questions to be asked
by the Judge during the next investigation. [Reproduced
literally.]
We find petitioners' motion and petitioners' reply to be vague and confusing. However, those filings do not appear to suggest or argue that we had no jurisdiction over the subject matter or petitioners in this case. Nor do petitioners' motion and petitioners' reply appear to suggest or argue that there was any corruption of the Court. Assuming arguendo that petitioners are contending in petitioners' motion and petitioners' reply that some sort of fraud was perpetrated on the Court, on the instant record, we reject any such contention. That record establishes that: Petitioners retained legal counsel shortly before the scheduled trial in this case was to begin; after retaining legal counsel, the parties reached a basis of settlement and memorialized that settlement in the stipulations of settled issues which were signed by petitioners' counsel, Mr. Appert, on behalf of petitioners as well as by each petitioner and by Mr. Jojola on behalf of respondent; the Court entered a decision in this case pursuant to the agreement of the parties as shown in the stipulated decision document 4 that was signed by Mr. Appert on behalf of petitioners and by a representative of respondent and that reflected the stipulations of settled issues; 5 and petitioners did not appeal the decision in this case or timely move to vacate or revise that decision.
Based on our review of the entire record before us, we find that petitioners have failed to show that the decision entered in this case is the result of fraud on the Court or any other situation that warrants our exercise of our discretion under Rule 162 to grant petitioners' motion. Based on that record, we find that petitioners have failed to persuade us that we should grant them leave to file a motion to vacate the decision.
To reflect the foregoing,
An order will be issued denying petitioners' motion for leave to file motion to vacate decision.