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Estate of Allison v. Comm'r

2008 T.C. Memo. 149, 95 T.C.M. 1592, 2008 Tax Ct. Memo LEXIS 150
CourtUnited States Tax Court
DecidedJune 10, 2008
DocketNos. 247-00, 714-00
StatusUnpublished

This text of 2008 T.C. Memo. 149 (Estate of Allison v. Comm'r) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estate of Allison v. Comm'r, 2008 T.C. Memo. 149, 95 T.C.M. 1592, 2008 Tax Ct. Memo LEXIS 150 (tax 2008).

Opinion

ESTATE OF MARY V. ALLISON, DONOR, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ESTATE OF MARY V. ALLISON, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
Estate of Allison v. Comm'r
Nos. 247-00, 714-00
United States Tax Court
T.C. Memo 2008-149; 2008 Tax Ct. Memo LEXIS 150; 95 T.C.M. (CCH) 1592;
June 10, 2008, Filed
*150
Daniel B. Allison, II, for petitioners
Michael T. Sargent, for respondent.
Holmes, Mark V.
MARK V. HOLMES

MEMORANDUM OPINION

HOLMES, Judge: Mary Allison died in 1995. Her son, Daniel Allison, is an attorney and the personal representative of her estate. He opened a probate case shortly after her death in Seattle's King County Superior Court. It is still not closed. Mr. Allison also filed two Tax Court cases for the estate in early 2000. Neither of them has been closed. It appears that Mr. Allison has been telling our Court that resolution of the probate case is all that's needed to wrap up the Tax Court cases, and telling the King County Superior Court that resolution of the Tax Court cases is all that's needed to wrap up the probate case. We issued an order to Mr. Allison to show cause why we shouldn't sanction him for his misrepresentations. This opinion explains the reasons for our decision to make that order absolute.

BACKGROUND

The combined records of the probate and tax cases support the following timeline:

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YearTax CourtSuperior Court
1995September 7
Mr. Allison opened the
probate case in the King
County Superior Court.
1997May
Mr. Allison and his sister
began litigating a dispute
over the administrative
expenses paid from their
mother's and father's
estates.
1999December 3
Nothing in the docket having
happened in two years, the
Superior Court ordered Mr.
Allison to close his mother's
estate or file a status
report.
2000January 4
Mr. Allison filed a
petition in Tax Court,
docket number 247-00,
contesting the IRS's
determination of a
deficiency in gift tax
owed by his late mother.
January 11
Mr. Allison requested a
one-year continuance in the
YearTax CourtSuperior Court
1995September 7
Mr. Allison opened the
probate case in the King
County Superior Court.
1997May
Mr. Allison and his sister
began litigating a dispute
over the administrative
expenses paid from their
mother's and father's
estates.
1999December 3
Nothing in the docket having
happened in two years, the
Superior Court ordered Mr.
Allison to close his mother's
estate or file a status
report.
2000January 4
Mr. Allison filed a
petition in Tax Court,
docket number 247-00,
contesting the IRS's
determination of a
deficiency in gift tax
owed by his late mother.
January 11
Mr. Allison requested a
one-year continuance in the
probate case while he
resolved the dispute with the
Commissioner.
January 13
The Superior Court granted a
continuance until January 4,
2001. The order listed the
reason for continuance as
"Dispute with IRS."
January 18
Mr. Allison filed a
second petition in Tax
Court, docket number 714-00,
challenging the IRS's
determination of a deficiency
in estate tax. This case
is closely related to the
gift tax case.
April 26
Both Tax Court cases were
put on the October 2000
Baltimore trial calendar.
September 18
Mr. Allison and the
Commissioner jointly moved
to continue the Tax Court
cases. Filed with the motion
was a stipulation of agreed
issues settling "all the
outstanding issues in the
two cases with the exception
of the issues of fees and
commissions on the Federal
Estate Tax Return." These
issues, they explained, "are
currently the subject of
litigation between [Mr.
Allison] and a beneficiary."
This litigation appears
to be the probate case still
pending in the Superior
Court.
December 29
Mr. Allison, a graduate of
Stanford Law School, was
admitted to the Tax Court
bar.
2001January 4
The Superior Court again
ordered Mr. Allison to close
the estate or report on its
status.
May 17
The Tax Court cases were
put on the October 2001
Baltimore trial calendar.
July 5
Mr. Allison requested another
continuance of the probate
case, until JUly 5, 2002,
because the "[e]state
[could not] be closed at
[that] time because of a
dispute with the [IRS]." Mr.
Allison then promised to
close the estate after
he resolved the IRS dispute,
not telling Superior Court of
the stipulation of agreed
issues filed in Tax Court.
The Superior Court
continued the case until
December 20, 2001.
August 21
Mr. Allison and the
Commissioner jointly move a
second time for a continuance
citing the unresolved
probate case.
December 27
The Superior Court continued
the probate case until
July 11, 2002, for good
cause shown.
2002
April 3
The Tax Court cases were put
on the September 2002
Baltimore trial calendar.
July 19
Mr. Allison and the
Commissioner jointly move a
third time to continue the
Tax Court cases, Mr. Allison
having advised the
Commissioner "that the
litigation between the
personal representative and
a beneficiary concerning the
fees and commissions issues
[was] still pending."
September 11
The Superior Court issued a
form order to show cause and
citation for contempt of
court, but noted that "[Mr.
Allison] appeared and gave
good reason why there has not
been compliance with prior
court orders," and continued
the contempt proceeding until
November 13, 2002. The court
also noted that this "[c]ase
has been on [the] delinquency
calendar since 12/03/1999 and
each year [Mr. Allison]
requests case be continued
another year due to
dispute with the IRS. Local
agent never notified of
delinquencies, and neither
was creditor who has
requested special notice."
November 15
Mr. Allison wrote the
Superior Court explaining
that the dispute with the IRS
was still not resolved. He
also requested the order
to show cause be discharged
because, he claimed, all
creditors had been paid and
the dispute with the IRS
was set on the Tax Court's
trial calendar and he
expected the tax case to be
called in September or
October of 2003. (Note
that the motion to remove
the Tax Court cases from
the trial calendar had
already been granted and no
new trial date had yet
been set.) Mr. Allison
also asked for a continuance
of the probate case until
December 1, 2003, saying that
he couldn't close the estate
until he obtained a
release from the IRS.
December 18
The Tax Court cases were
put on the May 2003
Baltimore trial calendar.
2003March 20
Mr. Allison and the
Commissioner jointly moved
a fourth time to continue
the Tax Court cases,
Mr. Allison having advised
the Commissioner "that the
litigation between the
personal representative and
a beneficiary concerning the
fees and commissions
issues is still pending."
June 7
Mr. Allison wrote a letter
to the Superior Court
(labeled an "Interim Status
Report") explaining that he
couldn't close the estate
because of the ongoing IRS
dispute. He also said that
the IRS cases were expected
to be called on the 2004
trial calendar. He asked
the Superior Court to
continue the probate case for
another year without issuing
another order to show cause.
June 16
The Superior Court, stating
that "[Mr. Allison] appeared
and gave good reason why
there has not been compliance
with prior court orders,"
continued the probate case
until July 23, 2003. It also
noted that "[Mr. Allison]
is directed to appoint a
non-corporate entity as
resident agent and to file
documentation from IRS case
in support of request for
continuance."
July 21
Mr. Allison sent another
"Interim Status Report" to
the Superior Court similar
to his June 7, 2003 letter.
November 24
The Tax Court cases were
put on the April 2004
Baltimore trial calendar.
2004January 20
Mr. Allison and the
Commissioner jointly move a
fifth time to continue the
Tax Court cases, Mr. Allison
having advised the
Commissioner "that the
litigation between the
personal representative and
a beneficiary concerning the
fees and commissions issues
[was] still pending."
July 29
Mr. Allison sent another
"Interim Status Report" to
the Superior Court, similar
to the previous reports, and
stated that the Tax Court
cases were "set on the trial
calendar and * * * expected
to be called on the 2005
trial calendar." He also
wrote that "[a]ll of the
assets of the Estate have
been distributed. All of the
creditors have been paid."
August 10
The Tax Court cases were put
on the January 2005 Baltimore
trial calendar.
December 2
Mr. Allison and the
Commissioner jointly moved a
sixth time to continue the
Tax Court cases, Mr. Allison
having advised the
Commissioner "that the
litigation between the
personal representative and
a beneficiary concerning the
fees and commissions issues
[was] still pending." We
granted the motion, but put
the cases on a status-report
track and ordered them not
returned to the general
docket. Mr. Allison did not
inform the Commissioner or
the Court that he had
distributed all the estate's
assets and paid all its
creditors.
2005February 17
Mr. Allison filed a status
report with the Tax Court
and gave the same reasons
for continuing the cases as
contained in the previously
filed joint motions, adding
that the probate case was
"not set for trial this year
and that the probability of
settlement before trial is
very low."
February 22
The Tax Court ordered the
parties to submit a status
report with information
allowing Tax Court to track
the progress of the probate
case over the internet.
May 17
Mr. Allison wrote to the Tax
Court that the Superior
Court had not yet scheduled
a trial date for the probate
case. He failed to mention
that this was a result of
his own repeated motions and
reports to the Superior
Court.
August 12
The Superior Court ordered
Mr. Allison to appear on
November 9, 2005, and to
show cause why he shouldn't
be held in contempt. The
orderalso stated that Mr.
Allison "shall produce
documenting evidence of IRS
dispute prior to hearing, in
order to receive continuance.
Failure to do so shall
result in closure of estate."
November 14
The Superior Court issued a
form order to show cause and
a citation for contempt of
court, stating that "[Mr.
Allison] appeared and gave
good reason why there has
not been compliance with
prior court orders." The
court then continued the
contempt proceeding until
November 8, 2006. The court
also noted that the "Estate
has two actions against IRS
proceeding in US Tax Court."
It is unclear what
documentation, if any, Mr.
Allison provided to the
Superior Court or how he
explained the lack of
progress in the Tax Court
cases.
December 7
The Tax Court issued to Mr.
Allison an order to show
cause, requiring him to set
a trial date in the probate
case or face dismissal of
the Tax Court cases.
2006June 14
Mr. Allison told the
Superior Court that the
issue regarding
administrative expenses had
to be resolved and asked for
a trial date.
July 17
Mr. Allison filed a
supplemental response to the
Tax Court stating that the
Superior Court had set a
trial date for October 8,
2007.
December 19
Mr. Allison failed to file a
status report with the Tax
Court, and we ordered him to
submit certified copies of
all papers filed after July
1, 2006, in the Superior
Court.
2007January 9
Mr. Allison failed to
provide the copies,
promising to do so when
the Superior Court responded
to his request.
March 1
We ordered Mr. Allison to
submit the certified copies
previously requested and not
yet produced.
March 9
Instead of submitting the
copies, Mr. Allison filed a
status report stating
that his adversary in the
probate case changed lawyers,
and the new lawyer needed
time to review the case
documents. Also, Mr. Allison
said that the burden of
producing all the requested
documentation was too heavy
because the file was large.
Mr. Allison attached a few
certified copies from the
probate case.
April 6
We ordered the Commissioner
to produce the requested
documents.
April 23
The Commissioner did so.
July 2
Mr. Allison successfully
moved for continuance of the
Superior Court trial date
from October 2007 to
February 4, 2008.
2008January 10
Mr. Allison successfully
moved for continuance of the
Superior Court trial date
from February 4, 2008, to
May 12, 2008.
March 7
We issued an order to show
cause why we should not
sanction Mr. Allison for his
conduct and ordering Mr.
Allison to appear before
this Court on April 2.
April 2
We held a hearing regarding
the order but Mr. Allison
didn't show up.
May 1
Mr. Allison successfully
moved for continuance of the
Superior Court trial date
from May 12, 2008 to
September 15, 2008.

We *151 must now decide whether to sanction Mr. Allison.

DISUSSION

From the comparison of the documents filed with this Court and with the King County Superior Court, we believe that Mr. Allison is taking advantage of the calendar system of both courts to indefinitely postpone the resolution of the probate case and the Tax Court cases. We find that he deliberately and repeatedly told each court that the other matter had to be resolved first, and in doing so, he has misled and misinformed this Court.

Section 66731 says in part:

SEC. 6673(a). Tax Court Proceedings. --

(1) Procedures instituted primarily for delay, etc. --

Whenever it appears to the Tax Court that --

(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay, the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $ 25,000.

* * * * * * *

(2) Counsel's liability for excessive costs. -- Whenever it appears to the Tax Court that any attorney or other person admitted to practice before the Tax Court has multiplied the proceedings in any case unreasonably and vexatiously, the Tax Court may require --

(A) that such attorney or other person *152 pay personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct * * *

This penalty is used to "sanction and deter the use of false documents and testimony and to protect the integrity of our proceedings from intentional misconduct." Bagby v. Commissioner, 102 T.C. 596, 615 (1994).

Section 6673(a)(1) permits us to impose sanctions against the taxpayer -- the estate in this case. In Williams v. Comm'r, 119 T.C. 276 (2002), an individual income tax case brought by a pro se petitioner, we imposed a $ 25,000 sanction under section 6673 after we found that the taxpayer had intentionally delayed the case by serially filing bad faith bankruptcy cases (and even forging what looked like bankruptcy court documents). We later discovered that he was allowing the bankruptcy cases to linger just long enough to invoke the automatic stay to delay trial in this Court. This outrageous behavior also prompted us to punish his dishonesty with an additional $ 5,000 penalty for criminal contempt under section 7456. Id. at 282-83.

In this case, though, we think it more appropriate *153 to sanction Mr. Allison personally in his role as the estate's attorney, so that any other beneficiaries of the estate don't suffer for his actions. Section 6673(a)(2)(A) gives us the power to make Mr. Allison himself pay any fees or excessive costs that the Commissioner has incurred as a result of his bad behavior -- actions which have "multiplied the proceedings * * * unreasonably and vexatiously."

Mr. Allison repeatedly requested continuances from this Court, telling us that he was pursuing the probate case diligently while repeatedly telling the probate court that he was moving forward in the Tax Court cases. He also has failed on many occasions to timely satisfy this Court's requests and orders. His failure to submit information regarding the status of the probate case that we requested in 2005 is especially notable, since it would likely have helped us catch his serial misrepresentations sooner.

Mr. Allison's education and legal experience, not to mention his admission to the Tax Court bar, underscore the egregiousness of his conduct. The issues in both cases before us are fairly simple and should have been resolved long ago. Instead, the cases before us have dragged on for over *154 eight years, and the probate case has lingered for more than a decade. We therefore find that he used procedures of our Court primarily for delay, and in doing so was repeatedly dishonest. Mr. Allison's persistence in the face of warnings from both courts thus warrants a penalty under section 6673(a)(2). That section requires a determination of the costs imposed on the Commissioner, and we will order the Commissioner to file evidence of what those costs were.

Because Mr. Allison is an attorney currently admitted to practice before the Tax Court, other sanctions may be appropriate. We will also send this opinion (and the order to show cause dated March 7, 2008) to the King County Superior Court for their consideration in In re Estate of Allison, No. 95-403740-0.

An appropriate order will be issued.

Footnotes

  • 1. Unless otherwise indicated, all section references are to the Internal Revenue Code.↩

Related

Williams v. Comm'r
119 T.C. No. 17 (U.S. Tax Court, 2002)
Bagby v. Commissioner
102 T.C. 596 (U.S. Tax Court, 1994)

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Bluebook (online)
2008 T.C. Memo. 149, 95 T.C.M. 1592, 2008 Tax Ct. Memo LEXIS 150, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estate-of-allison-v-commr-tax-2008.