UNITED STATES TAX COURT
NNABUGWU C. EZE,
Petitioner
v.
COMMISSIONER OF INTERNAL
REVENUE
Respondent
CASE NO. 21425- 19
RESPONSE TO MOTION TO COMPEL STIPULATION
COMES NOW Petitioner NNABUGWU C. EZE, and files this Response to the
Respondent’s Motion to Compel Stipulation under Tax Court Rule 91(f). In support of this
Response, Petitioner states as follows:
- On or about January 31, 2022, Respondent emailed Petitioner a copy of the
Proposed Stipulation of Facts along with Exhibits, and a passcode for the attachment thereof. - Later on or about January 26, 2022, the Petitioner sent a facsimile to the
Respondent containing copies of Petitioner’s additional documents. - On or about February 3, 2022, the Respondent emailed Petitioner enquiring
whether Petitioner would sign the Proposed Stipulation if the Respondent included the
Petitioner’s additional documents. - On or about February 9, 2022, Respondent and Petitioner discussed about the
terms in the Proposed Stipulation. Petitioner proposed changes to the Stipulation. Petitioner also
objected to paragraphs 42 and 43 of the Stipulation. Paragraph 42 of the Stipulation provided
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thus: “Petitioner received $20,355 in connection to his residential construction business in tax
year 2015. This income did not appear in Exhibit 4-R.” Paragraph 43 stated: “Petitioner received
$27,875 in connection to his residential construction business in tax year 2016. This income did
not appear in Exhibit 5-R.”
- On or about February 11, 2022, the Respondent filed a Motion for an order to
show cause why proposed facts and evidence in the Respondent’s Proposed Stipulation should
not be accepted as Established. Petitioner hereby makes this response to the said Motion.
ARGUMENTS
i. The Proposed Stipulation does not include pertinent information
- Stipulation process has been called “the bedrock of Tax Court practice,”
Branerton Corp. v. Commissioner, 61 T.C. 691, 692, 1974 WL 2703 (1974). It is for that reason
that under Rule 91(e), a stipulation is treated “as a conclusive admission by the parties.” Tax
Ct. R. 91(e) (emphasis added). See also Ballard v. Commissioner of Internal Revenue, No.
11554-21. Tax Court Rule 91(a)(1) requires that the parties stipulate to the fullest extent
possible to “all facts, all documents and papers or contents or aspects thereof, and all evidence
which fairly should not be in dispute.” (Emphasis added). - In the instant action, the Proposed Stipulation lacked crucial information. It is
instrumental to note that on or about February 3, 2022, Mr. Warren, the attorney for the
Respondent, emailed Petitioner inquiring whether the Proposed Stipulation would be signed if
Petitioner included the items that Petitioner had faxed to the Respondent. However, Mr. Warren
did not include the following items that were mailed, emailed, and/or faxed to him per the
attached Information Document Request forms from March 13, 2019 to December 6, 2019.
These documents are:
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a) Northrop Grumman ID for consulting business;
b) Northrop Grumman Work Authorization Forms for consulting business;
c) Time-sheets with email approval from Northrop Grumman management for
consulting business;
d) Unsworn affidavit;
e) Home Improvement Invoices;
f) Information Document Request form-Old IDR, New IDR, (Last IDR- in separate
email); and
g) Bank statement.
ii. The Notice of Deficiency was incorrect
“As a general rule, this Court will not look behind a deficiency notice to examine the
evidence used or the propriety of respondent’s motives or of the administrative policy or
procedure involved in making his determinations.” Greenberg’s Express, Inc. v. Commissioner,
62 T.C. 324, 327 (1974). However, where there is substantial evidence of unconstitutional
conduct by respondent in connection with the deficiency determined, the Court has, as an
exception and on occasion, may look behind the notice of deficiency. Riland v. Commissioner,
79 T.C. 185, 207 (1982); Greenberg’s Express, Inc. v. Commissioner, supra at 328; Suarez v.
Commissioner, 58 T.C. 792, 814 (1972), overruled in part. If in “looking behind” a deficiency
notice the Court finds that the IRS did not have sufficient information to make a determination or
that the determination was based upon illegally seized evidence, the notice would not be afforded
the usual presumption of correctness.
In the instant action, the notice of deficiency (NOD) listed all issues as outstanding hence
the stipulated facts document completed by the IRS counsel listed all items as disputed.
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However, the last Information document request (IDR) on December 5, 2019 from the IRS
auditor had only two items remaining that the Petitioner could not agree on. Petitioner maintains
that a NOD informs a taxpayer that their prior tax payment was deficient, or lacking necessary
funds. The only contention that remained was with two items in the Respondent’s December 5 th
IDR. It follows; the NOD is incorrect and reliance on it would be against the interest of justice.
iii. The Proposed Stipulation contains erroneous information
- The stipulation process has broad scope, and is not confined to the stipulation of
facts or evidence. Willamette Indus. v. Commissioner, 69 T.C.M. (CCH) 2319 (1995). - Rule 91 of the Tax Court Rules of Practice and Procedure, requires the parties to
stipulate, to the fullest extent to which complete or qualified agreement can or fairly should be
reached. It is also instrumental to note that stipulations have binding effect. Tax Rule 91(e)
provides in that regard that “[a] stipulation should be treated as a conclusive admission by the
parties to the stipulation, unless otherwise permitted by the Court or agreed upon by those
parties.” Further, “[t]he Court will not permit a party to a stipulation to qualify, change, or
contradict a stipulation in whole or in part, except that it may do so where justice requires.” - The foregoing shows that because of their binding nature, stipulations need to
reflect the intention and agreement of the parties. In Estate of Quirk v. Commissioner, 928 F.2d
751, 759 (6th Cir.1991), the Court held in this regard that “if parties could challenge their prior
stipulations at will, stipulations would lose much of their purpose.” See also Kampel v.
Commissioner, 634 F.2d 708 (2d Cir.1980). - In the instant action, Petitioner raises concerns over paragraphs 42 and 43 of the
Proposed Stipulation. - Paragraph 42 of the Stipulation provided thus: “Petitioner received $20,355 in
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connection to his residential construction business in tax year 2015. This income did not appear
in Exhibit 4-R.” Petitioner avers that personal contract business was reported on return not w2
wages. Petitioner further maintains that 4R is for quarterly reporting of income, and that the 2015
1099 income from consulting does not appear on Exhibit 4R either. It is worth noting that the
Petitioner’s objection as to relevance of the assertion in paragraph 42 was not noted in the
stipulation.
- Paragraph 43 stated: “Petitioner received $27,875 in connection to his residential
construction business in tax year 2016. This income did not appear in Exhibit 5-R.” Petitioner
avers that personal contract business was reported on return. Petitioner further avers that 5R is
for quarterly reporting of income, and that the 2016 1099 income from consulting does not
appear on Exhibit 5R either. It is worth noting that the Petitioner’s objection as to relevance of
the assertion in paragraph 43 was not noted in the stipulation.
WHEREFORE, the foregoing considered, Petitioner requests this Court denies
Respondent’s Motion to Compel Stipulation. It is only when the response to a Rule 91(f) Motion
is evasive or not fairly directed to the proposed stipulation that the Tax Court will deem the
proposed facts and documents stipulated. See Tax Ct. R. 91(f)(3). Cain v. Commissioner for
Internal Revenue, 460 F2d 1243. Petitioner avers that this Response suffices an adequate answer
and/or opposition to Respondent’s Motion to Compel Stipulation.
Respectfully submitted,
NNABUGWU C. EZE
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DATED: _
CERTIFICATE OF SERVICE
The undersigned hereby certifies that he served a copy of the foregoing on the
Respondent by depositing a copy, contained in a first-class postage-paid wrapper or envelope, at
an office of the United States Postal Service, addressed as follows:
[ENTER RESPONDENT’S ADDRESS]
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NNABUGWU C. EZE
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