- 7 -
delegation of the burden of proof to the taxpayer. Under Rule
142(a)(1), the burden of proof is on the Commissioner with
respect to any new matter, increase in deficiency, or any
affirmative defenses. None of these exceptions apply here.
In 1998, Congress passed the Internal Revenue Service
Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. 105-206,
112 Stat. 685. Under RRA 1998, sec. 3001, 112 Stat. 726-727, the
burden of proof is reallocated to the IRS when the taxpayer meets
certain substantiation and record keeping requirements. However,
section 7491 is effective only for court proceedings arising in
connection with examinations beginning after July 22, 1998. RRA
1998 sec. 3001(a), 112 Stat. 726. Therefore, section 7491 does
not apply to this proceeding.4
The estate cites a line of authority where courts use common
law principles to shift the burden of proof in cases where the
Commissioner’s determination is arbitrary, lacks a factual basis,
or is without rational purpose. See, e.g., United States v.
Janis, 428 U.S. 433, 440 (1976); Helvering v. Taylor, 293 U.S.
507, 514 (1935); Jackson v. Commissioner, 73 T.C. 394, 403-405
(1979). However, none of those situations are present here. The
estate is not challenging the substance of the determination or
4The estate has cited legislative history from the enactment
of sec. 7491 to support its position; however, given that the
statute itself is not applicable, it follows that any legislative
history argument derived from it is equally inapplicable
authority.
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011