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period. Federal income tax was not withheld from petitioner’s
compensation during the disputed pay period.
Petitioners did not report the $12,396 in nonemployee
compensation on their 1999 Federal income tax return. By
notice of deficiency issued on March 15, 2002, respondent
determined a deficiency in the amount of $3,476, based upon an
increase of $12,396 in gross income as reported by New
Dimensions on the Form 1099 and the imposition of a tax under
section 1401 on self-employment income (and the allowance of a
corresponding deduction for one-half of the self-employment tax
under section 164(f)).
In the petition, petitioners claim that petitioner remained
an employee during the disputed pay period and thought that New
Dimensions continued to withhold Federal income tax on his
behalf.
Burden of Proof/Burden of Production
The Commissioner’s determinations in a notice of deficiency
are presumed correct, and generally, the taxpayer must prove
those determinations wrong in order to prevail. Rule 142(a)(1).
Section 7491 provides that the burden of proof may shift to
the Commissioner if the taxpayer introduces credible evidence
with respect to any factual issue relevant to ascertaining a tax
liability, provided the taxpayer has substantiated all items at
issue and has generally maintained books and records with
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