- 11 -
2(...continued)
(1970), affd. 445 F.2d 985 (10th Cir. 1971), in cases going to
the Court of Appeals, to be governed by the Weimerskirch line of
cases, we defer to the Court of Appeals’ allocation to the
Commissioner of the burden of proof with respect to the necessary
minimal foundation. We offer the following remarks,
nevertheless, for consideration by the Court of Appeals.
The rule first stated in Weimerskirch results from the Court
of Appeals interpretation of United States v. Janis, 428 U.S.
433, 441 (1976), a combination refund and collection case,
wherein the Supreme Court held that an assessment of tax is a
“naked assessment”, and not subject to the usual rule imposing
the burden of proof in tax cases on the taxpayer, if the
assessment is “without rational foundation and excessive”. See
Foster v. Commissioner, 756 F.2d 1430, 1439 (9th Cir. 1985),
affg. in part and vacating in part 80 T.C. 34 (1983); see also
Estate of Magnin v. Commissioner, 184 F.3d 1074, 1081 (9th Cir.
1999), revg. and remanding T.C. Memo. 1996-25. In Janis, the
Supreme Court stated that, notwithstanding some debate among the
Courts of Appeals as to the allocation of the burden of proof in
a tax case when there is positive evidence that the assessment is
incorrect, there was no debate among the Courts of Appeals that,
where the assessment is shown to be naked and without any
foundation, the rule to be applied is the rule of Helvering v.
Taylor, 293 U.S. 507 (1935). In Helvering v. Taylor, supra at
514, the Supreme Court held that an invalid determination of tax
(one that is without rational foundation and excessive) may be
set aside notwithstanding that the taxpayer does not show the
correct amount (if any) of tax. The Court added:
“Unquestionably the burden of proof is on the taxpayer to show
that the Commissioner’s determination is invalid.” Id. at 515.
The Court of Appeals’ placement on the Commissioner of the
burden to construct a minimal evidentiary foundation linking the
taxpayer with the source of any unreported income appears
inconsistent with the quoted language from Taylor. It is
inconsistent with the general rule in deficiency cases that the
taxpayer bears the burden of proof, see Welch v. Helvering, 290
U.S. 111, 115 (1933), and in refund cases that the taxpayer bears
the burden of showing the amount that he is owed, see United
States v. Janis, supra at 440. It is also inconsistent with
Congress’s intent as expressed in sec. 7491, which was added to
the Code by the Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, sec. 3001(c)(2), 112 Stat. 685,
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011