Estate of Allison v. Comm'r

2008 T.C. Memo. 149, 95 T.C.M. 1592, 2008 Tax Ct. Memo LEXIS 150

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

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Daniel B. Allison, II, for petitioners

Michael T. Sargent, for respondent.

Holmes, Mark V.

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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:

Year	Tax Court	Superior Court
1995		September 7
		Mr. Allison opened the
		probate case in the King
		County Superior Court.
1997		May
		Mr. Allison and his sister
		began litigating a dispute
		over the administrative
		expenses paid from their
		mother's and father's
		estates.
1999		December 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.
2000	January 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.
2001		January 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.
2003	March 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.
2004	January 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.
2005	February 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.
2006		June 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.
2007	January 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.
2008		January 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 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 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 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 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.

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Footnotes

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