- 9 -
that payor had reported in its Form 1099. We found
that the Commissioner "arbitrarily decided to attribute
veracity to [the third-party payor] and assume that
[the taxpayer's] Form 1040 was false." [Portillo v.
Commissioner, 932 F.2d at 1134.] In Portillo, the
Commissioner's determination was arbitrary because the
Commissioner offered no factual basis for accepting one
sworn statement, the Form 1099, while rejecting another
sworn statement, the taxpayer's Form 1040.
Portillo did not hold that the IRS must conduct an
independent investigation in all tax deficiency cases.
In this case, the Commissioner has not arbitrarily
found the third-party forms credible: the Parkers
never filed a Form 1040 or any other document in which
they swore that they did not receive the payments in
question. The Commissioner has no duty to investigate
a third-party payment report that is not disputed by
the taxpayer.
Parker v. Commissioner, supra at 786-787.5
Like the taxpayers in Parker, petitioner in the instant case
never filed a Form 1040 or any other document in which he swore
that he did not receive unreported income. We find it
significant that nowhere in petitioner's petition, trial
5 Petitioner does not cite Parker v. Commissioner, 117 F.3d
785 (5th Cir. 1997), in his trial memorandum, brief, or reply
brief. On brief, petitioner cites Portillo v. Commissioner, 932
F.3d 1128 (5th Cir. 1991), affg. in part, revg. in part and
remanding T.C. Memo. 1990-68, for the proposition that
"Respondent is not allowed to blindly accept the veracity of tax
forms submitted by third parties when rendering proposed
deficiencies", but "is required to investigate the books,
receipts and other records of the third parties submitting these
forms to determine whether the forms are correct." Petitioner's
failure to mention the holding in Parker, that no such
investigation is required where, as in the instant case, the
taxpayer does not file a Form 1040 or other sworn document
denying receipt of unreported income, does little to instill
faith in petitioner's candor toward the Court. We generally
expect more from counsel representing parties appearing before
this Court.
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