Unpublished Disposition, 911 F.2d 738 (9th Cir. 1990)

MEMORANDUM^** 

Carl F. Pleier appeals, pro se, the Tax Court's dismissal of his petition for redetermination of deficiencies and additions to tax assessed by the Commissioner of Internal Revenue (CIR) for tax years 1982, 1983, and 1984. The Tax Court dismissed Pleier's petition for failure to properly prosecute pursuant to Tax Court Rule 123(b). We affirm the Tax Court's decision, as well as its imposition of sanctions pursuant to section 6673 of the Internal Revenue Code (Code). In addition, we find Pleier's appeal to be frivolous and impose $500 as a sanction pursuant to Fed. R. App. P. 38 and 28 U.S.C. § 1912.

We review decisions of the tax court on the same basis as we review decisions entered after civil bench trials in the district court. See Wilcox v. Commissioner, 848 F.2d 1007, 1008 (9th Cir. 1988). The Tax Court's decision to dismiss a case for failure to prosecute is reviewed for an abuse of discretion. See Noli v. Commissioner, 860 F.2d 1521, 1527 (9th Cir. 1988); Edelson v. Commissioner, 829 F.2d 828, 831 (9th Cir. 1987).

Under Rule 123(b) of the Tax Court Rules of Practice and Procedure, the Tax Court may dismiss a petition for failure to (1) properly prosecute, (2) abide by Tax Court Rules, or (3) comply with a Tax Court order. See Tax Ct.R. 123(b). Pro se litigants challenging the CIR's assessments must abide by the Tax Court's Rules. See Carter v. Commissioner, 784 F.2d 1006, 1008-09 (9th Cir. 1986); Swimmer v. IRS, 811 F.2d 1343, 1345 (9th Cir. 1987) (pro se litigant must follow the court's rules). Tax Court Rule 70 requires that "the parties attempt to attain the objectives of discovery through informal consultation or communication before utilizing the discovery procedures provided in these Rules." Tax Ct.R. 70(a). Furthermore, "Tax Court Rule 91 requires the parties to stipulate, to the fullest extent possible, to all nonprivileged matters which are relevant to a pending case." Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir. 1975).

Here, Pleier failed to (1) cooperate with the informal discovery process, (2) meet with the IRS's representative, or (3) stipulate to undisputed and nonprivileged matters. Because Pleier failed to comply with the Tax Court's Rules, the Tax Court did not abuse its discretion when it dismissed Pleier's petition under Rule 123(b).

Moreover, the CIR's determinations of deficiencies and additions to tax are presumptively correct. See, e.g., Baxter v. Commissioner, 816 F.2d 493, 495 (9th Cir. 1987). Thus the taxpayer bears the burden of producing evidence showing that the CIR's determination is incorrect. Id.

Here, Pleier failed to allege any specific errors that the CIR made in computing the amount of tax deficiency or produce any documents or testimony in support of his contention that the CIR had erred in its deficiency determination. Instead, Pleier alleged that the Tax Court was without jurisdiction because he had not been indicted by a grand jury for a federal crime pursuant to section 6531 of the Code, and that the federal income tax system was voluntary, not mandatory. We reject, as did the Tax Court, these frivolous arguments. See Wilcox, 848 F.2d at 1008 ("paying taxes is not voluntary"); 26 U.S.C. § 7442 (establishing the Tax Court's jurisdiction); Abrams v. Commissioner, 814 F.2d 1356, 1357 (9th Cir. 1987) (the Tax Court's jurisdiction is invoked when the CIR issues a notice of deficiency). Thus, the Tax Court's decision to dismiss was appropriate because Pleier failed to properly prosecute his claim by introducing evidence to rebut the presumption that the CIR's determination was correct.

Pleier argues for the first time on appeal that the Administrative Procedure Act (APA) entitles him to a full administrative hearing on his claim as well as various other procedural rights.¹  Section 554(a) (1) of the APA, however, provides that the APA does not apply to matters "subject to subsequent consideration of the law and facts de novo in a court." Because the CIR's determination is subject to such review in the Tax Court, this contention too is without merit.

"The Tax Court may impose a penalty [, not to exceed $5,000,] on a taxpayer ... for bringing an action which is frivolous or groundless." Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir. 1985) (per curiam) (citing 26 U.S.C. § 6673). We review the Tax Court's imposition of damages pursuant to section 6673 of the Code for abuse of discretion. Id.

Here, the Tax Court found that Pleier's claims were frivolous and instituted for purposes of delay, and awarded the CIR $5,000 in damages pursuant to section 6673 of the Code. In spite of the warnings of possible sanctions, Pleier persisted in his failure to comply with the Rules. Because we agree that Pleier's petition was frivolous, we find that the Tax Court did not abuse its discretion by imposing damages on him.

The CIR requests sanctions against Pleier for bringing this appeal. This court has discretion to impose damages against litigants, even pro se, as a sanction for bringing a frivolous appeal. Fed. R. App. P. 38; 28 U.S.C. § 1912; Wilcox, 848 F.2d at 1008-09 ($1,500 sanction imposed on pro se litigant for bringing a frivolous appeal). An appeal is frivolous if the results are obvious, or the arguments of error are wholly without merit. Wilcox, 848 F.2d at 1009 (citation omitted).

Pleier's claims are wholly without merit. Accordingly, we impose $500 damages as a sanction.

AFFIRMED.