Judges: Holmes
Attorneys: Daniel B. Allison, II , for petitioners Michael T. Sargent , for respondent.
Filed: Jun. 10, 2008
Latest Update: Dec. 05, 2020
Summary: T.C. Memo. 2008-149 UNITED STATES TAX COURT ESTATE OF MARY V. ALLISON, DONOR, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ESTATE OF MARY V. ALLISON, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket Nos. 247-00, 714-00. Filed June 10, 2008. Daniel B. Allison, II, for petitioners Michael T. Sargent, for respondent. MEMORANDUM OPINION HOLMES, Judge: Ma
Summary: T.C. Memo. 2008-149 UNITED STATES TAX COURT ESTATE OF MARY V. ALLISON, DONOR, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ESTATE OF MARY V. ALLISON, DECEASED, DANIEL B. ALLISON, II, PERSONAL REPRESENTATIVE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket Nos. 247-00, 714-00. Filed June 10, 2008. Daniel B. Allison, II, for petitioners Michael T. Sargent, for respondent. MEMORANDUM OPINION HOLMES, Judge: Mar..
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T.C. Memo. 2008-149
UNITED STATES TAX COURT
ESTATE OF MARY V. ALLISON, DONOR, DECEASED, DANIEL B. ALLISON,
II, PERSONAL REPRESENTATIVE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
ESTATE OF MARY V. ALLISON, DECEASED, DANIEL B. ALLISON, II,
PERSONAL REPRESENTATIVE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Docket Nos. 247-00, 714-00. Filed June 10, 2008.
Daniel B. Allison, II, for petitioners
Michael T. Sargent, for respondent.
MEMORANDUM OPINION
HOLMES, Judge: Mary Allison died in 1995. Her son,
Daniel Allison, is an attorney and the personal representative of
her estate. He opened a probate case shortly after her death in
Seattle’s King County Superior Court. It is still not closed.
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Mr. Allison also filed two Tax Court cases for the estate in
early 2000. Neither of them has been closed. It appears that
Mr. Allison has been telling our Court that resolution of the
probate case is all that’s needed to wrap up the Tax Court cases,
and telling the King County Superior Court that resolution of the
Tax Court cases is all that’s needed to wrap up the probate case.
We issued an order to Mr. Allison to show cause why we shouldn’t
sanction him for his misrepresentations. This opinion explains
the reasons for our decision to make that order absolute.
Background
The combined records of the probate and tax cases support
the following timeline:
Year Tax Court Superior Court
1995 September 7
Mr. Allison opened the
probate case in the King
County Superior Court.
May
1997 Mr. Allison and his sister
began litigating a dispute
over the administrative
expenses paid from their
mother’s and father’s
estates.
1999 December 3
Nothing in the docket having
happened in two years, the
Superior Court ordered Mr.
Allison to close his mother’s
estate or file a status
report.
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2000 January 4
Mr. Allison filed a
petition in Tax Court,
docket number 247-00,
contesting the IRS’s
determination of a
deficiency in gift tax
owed by his late mother.
January 11
Mr. Allison requested a one-
year continuance in the
probate case while he
resolved the dispute with the
Commissioner.
January 13
The Superior Court granted a
continuance until January 4,
2001. The order listed the
reason for continuance as
“Dispute with IRS.”
January 18
Mr. Allison filed a
second petition in Tax
Court, docket number
714-00, challenging the
IRS’s determination of a
deficiency in estate tax.
This case is closely
related to the gift tax
case.
April 26
Both Tax Court cases were
put on the October 2000
Baltimore trial calendar.
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September 18
Mr. Allison and the
Commissioner jointly
moved to continue the Tax
Court cases. Filed with
the motion was a
stipulation of agreed
issues settling “all the
outstanding issues in the
two cases with the
exception of the issues
of fees and commissions
on the Federal Estate Tax
Return.” These issues,
they explained, “are
currently the subject of
litigation between [Mr.
Allison] and a
beneficiary.” This
litigation appears to be
the probate case still
pending in the Superior
Court.
December 29
Mr. Allison, a graduate
of Stanford Law School,
was admitted to the Tax
Court bar.
2001 January 4
The Superior Court again
ordered Mr. Allison to close
the estate or report on its
status.
May 17
The Tax Court cases were
put on the October 2001
Baltimore trial calendar.
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July 5
Mr. Allison requested another
continuance of the probate
case, until July 5, 2002,
because the “[e]state [could
not] be closed at [that] time
because of a dispute with the
[IRS].” Mr. Allison then
promised to close the estate
after he resolved the IRS
dispute, not telling Superior
Court of the stipulation of
agreed issues filed in Tax
Court.
The Superior Court
continued the case until
December 20, 2001.
August 21
Mr. Allison and the
Commissioner jointly move
a second time for a
continuance, citing the
unresolved probate case.
December 27
The Superior Court continued
the probate case until July
11, 2002, for good cause
shown.
2002 April 3
The Tax Court cases were
put on the September 2002
Baltimore trial calendar.
July 19
Mr. Allison and the
Commissioner jointly move
a third time to continue
the Tax Court cases, Mr.
Allison having advised
the Commissioner “that
the litigation between
the personal
representative and a
beneficiary concerning
the fees and commissions
issues [was] still
pending.”
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September 11
The Superior Court issued a
form order to show cause and
citation for contempt of
court, but noted that “[Mr.
Allison] appeared and gave
good reason why there has not
been compliance with prior
court orders,” and continued
the contempt proceeding until
November 13, 2002. The court
also noted that this “[c]ase
has been on [the] delinquency
calendar since 12/03/1999 and
each year [Mr. Allison]
requests case be continued
another year due to dispute
with the IRS. Local agent
never notified of
delinquencies, and neither
was creditor who has
requested special notice.”
November 15
Mr. Allison wrote the
Superior Court explaining
that the dispute with the IRS
was still not resolved. He
also requested the order to
show cause be discharged
because, he claimed, all
creditors had been paid and
the dispute with the IRS was
set on the Tax Court’s trial
calendar and he expected the
tax case to be called in
September or October of 2003.
(Note that the motion to
remove the Tax Court cases
from the trial calendar had
already been granted and no
new trial date had yet been
set.) Mr. Allison also asked
for a continuance of the
probate case until December
1, 2003, saying that he
couldn’t close the estate
until he obtained a release
from the IRS.
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December 18
The Tax Court cases were
put on the May 2003
Baltimore trial calendar.
2003 March 20
Mr. Allison and the
Commissioner jointly
moved a fourth time to
continue the Tax Court
cases, Mr. Allison having
advised the Commissioner
“that the litigation
between the personal
representative and a
beneficiary concerning
the fees and commissions
issues is still pending.”
June 7
Mr. Allison wrote a letter to
the Superior Court (labeled
an “Interim Status Report”)
explaining that he couldn’t
close the estate because of
the ongoing IRS dispute. He
also said that the IRS cases
were expected to be called on
the 2004 trial calendar. He
asked the Superior Court to
continue the probate case for
another year without issuing
another order to show cause.
June 16
The Superior Court, stating
that “[Mr. Allison] appeared
and gave good reason why
there has not been compliance
with prior court orders,”
continued the probate case
until July 23, 2003. It also
noted that “[Mr. Allison] is
directed to appoint a non-
corporate entity as resident
agent and to file
documentation from IRS case
in support of request for
continuance.”
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July 21
Mr. Allison sent another
“Interim Status Report” to
the Superior Court similar to
his June 7, 2003 letter.
November 24
The Tax Court cases were
put on the April 2004
Baltimore trial calendar.
2004 January 20
Mr. Allison and the
Commissioner jointly move
a fifth time to continue
the Tax Court cases, Mr.
Allison having advised
the Commissioner “that
the litigation between
the personal
representative and a
beneficiary concerning
the fees and commissions
issues [was] still
pending.”
July 29
Mr. Allison sent another
“Interim Status Report” to
the Superior Court, similar
to the previous reports, and
stated that the Tax Court
cases were “set on the trial
calendar and * * * expected
to be called on the 2005
trial calendar.” He also
wrote that “[a]ll of the
assets of the Estate have
been distributed. All of the
creditors have been paid.”
August 10
The Tax Court cases were
put on the January 2005
Baltimore trial calendar.
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December 2
Mr. Allison and the
Commissioner jointly
moved a sixth time to
continue the Tax Court
cases, Mr. Allison having
advised the Commissioner
“that the litigation
between the personal
representative and a
beneficiary concerning
the fees and commissions
issues [was] still
pending.” We granted the
motion, but put the cases
on a status-report track
and ordered them not
returned to the general
docket. Mr. Allison did
not inform the
Commissioner or the Court
that he had distributed
all the estate’s assets
and paid all its
creditors.
2005 February 17
Mr. Allison filed a
status report with the
Tax Court and gave the
same reasons for
continuing the cases as
contained in the
previously filed joint
motions, adding that the
probate case was “not set
for trial this year and
that the probability of
settlement before trial
is very low.”
February 22
The Tax Court ordered the
parties to submit a
status report with
information allowing Tax
Court to track the
progress of the probate
case over the internet.
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May 17
Mr. Allison wrote to the
Tax Court that the
Superior Court had not
yet scheduled a trial
date for the probate
case. He failed to
mention that this was a
result of his own
repeated motions and
reports to the Superior
Court.
August 12
The Superior Court ordered
Mr. Allison to appear on
November 9, 2005, and to show
cause why he shouldn’t be
held in contempt. The order
also stated that Mr. Allison
“shall produce documenting
evidence of IRS dispute prior
to hearing, in order to
receive continuance. Failure
to do so shall result in
closure of estate.”
November 14
The Superior Court issued a
form order to show cause and
a citation for contempt of
court, stating that “[Mr.
Allison] appeared and gave
good reason why there has not
been compliance with prior
court orders.” The court
then continued the contempt
proceeding until November 8,
2006. The court also noted
that the “Estate has two
actions against IRS
proceeding in US Tax Court.”
It is unclear what
documentation, if any, Mr.
Allison provided to the
Superior Court or how he
explained the lack of
progress in the Tax Court
cases.
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December 7
The Tax Court issued to
Mr. Allison an order to
show cause, requiring him
to set a trial date in
the probate case or face
dismissal of the Tax
Court cases.
June 14
2006 Mr. Allison told the Superior
Court that the issue
regarding administrative
expenses had to be resolved
and asked for a trial date.
July 17
Mr. Allison filed a
supplemental response to
the Tax Court stating
that the Superior Court
had set a trial date for
October 8, 2007.
December 19
Mr. Allison failed to
file a status report with
the Tax Court, and we
ordered him to submit
certified copies of all
papers filed after July
1, 2006, in the Superior
Court.
January 9
2007 Mr. Allison failed to
provide the copies,
promising to do so when
the Superior Court
responded to his request.
March 1
We ordered Mr. Allison to
submit the certified
copies previously
requested and not yet
produced.
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March 9
Instead of submitting the
copies, Mr. Allison filed
a status report stating
that his adversary in the
probate case changed
lawyers, and the new
lawyer needed time to
review the case
documents. Also, Mr.
Allison said that the
burden of producing all
the requested
documentation was too
heavy because the file
was large. Mr. Allison
attached a few certified
copies from the probate
case.
April 6
We ordered the
Commissioner to produce
the requested documents.
April 23
The Commissioner did so.
July 2
Mr. Allison successfully
moved for continuance of the
Superior Court trial date
from October 2007 to February
4, 2008.
January 10
2008 Mr. Allison successfully
moved for continuance of the
Superior Court trial date
from February 4, 2008, to
May 12, 2008.
March 7
We issued an order to
show cause why we should
not sanction Mr. Allison
for his conduct and
ordering Mr. Allison to
appear before this Court
on April 2.
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April 2
We held a hearing
regarding the order but
Mr. Allison didn’t show
up.
May 1
Mr. Allison successfully
moved for continuance of the
Superior Court trial date
from May 12, 2008 to
September 15, 2008.
We must now decide whether to sanction Mr. Allison.
Discussion
From the comparison of the documents filed with this Court
and with the King County Superior Court, we believe that Mr.
Allison is taking advantage of the calendar system of both courts
to indefinitely postpone the resolution of the probate case and
the Tax Court cases. We find that he deliberately and repeatedly
told each court that the other matter had to be resolved first,
and in doing so, he has misled and misinformed this Court.
Section 66731 says in part:
SEC. 6673 (a). Tax Court Proceedings.--
(1) Procedures instituted primarily for
delay, etc.--Whenever it appears to the Tax
Court that--
(A) proceedings before it have been
instituted or maintained by the taxpayer
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code.
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primarily for delay, the Tax Court, in
its decision, may require the taxpayer
to pay to the United States a penalty
not in excess of $25,000.
* * * * * * *
(2) Counsel’s liability for excessive
costs.--Whenever it appears to the Tax Court
that any attorney or other person admitted to
practice before the Tax Court has multiplied
the proceedings in any case unreasonably and
vexatiously, the Tax Court may require--
(A) that such attorney or other person
pay personally the excess costs,
expenses, and attorneys’ fees reasonably
incurred because of such conduct * * *
This penalty is used to “sanction and deter the use of false
documents and testimony and to protect the integrity of our
proceedings from intentional misconduct.” Bagby v. Commissioner,
102 T.C. 596, 615 (1994).
Section 6673(a)(1) permits us to impose sanctions against
the taxpayer--the estate in this case. In Williams v.
Commissioner, 119 T.C. 276 (2002), an individual income tax case
brought by a pro se petitioner, we imposed a $25,000 sanction
under section 6673 after we found that the taxpayer had
intentionally delayed the case by serially filing bad faith
bankruptcy cases (and even forging what looked like bankruptcy
court documents). We later discovered that he was allowing the
bankruptcy cases to linger just long enough to invoke the
automatic stay to delay trial in this Court. This outrageous
behavior also prompted us to punish his dishonesty with an
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additional $5,000 penalty for criminal contempt under section
7456. Id. at 282-83.
In this case, though, we think it more appropriate to
sanction Mr. Allison personally in his role as the estate’s
attorney, so that any other beneficiaries of the estate don’t
suffer for his actions. Section 6673(a)(2)(A) gives us the power
to make Mr. Allison himself pay any fees or excessive costs that
the Commissioner has incurred as a result of his bad behavior--
actions which have “multiplied the proceedings * * * unreasonably
and vexatiously.”
Mr. Allison repeatedly requested continuances from this
Court, telling us that he was pursuing the probate case
diligently while repeatedly telling the probate court that he was
moving forward in the Tax Court cases. He also has failed on
many occasions to timely satisfy this Court’s requests and
orders. His failure to submit information regarding the status
of the probate case that we requested in 2005 is especially
notable, since it would likely have helped us catch his serial
misrepresentations sooner.
Mr. Allison’s education and legal experience, not to mention
his admission to the Tax Court bar, underscore the egregiousness
of his conduct. The issues in both cases before us are fairly
simple and should have been resolved long ago. Instead, the
cases before us have dragged on for over eight years, and the
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probate case has lingered for more than a decade. We therefore
find that he used procedures of our Court primarily for delay,
and in doing so was repeatedly dishonest. Mr. Allison’s
persistence in the face of warnings from both courts thus
warrants a penalty under section 6673(a)(2). That section
requires a determination of the costs imposed on the
Commissioner, and we will order the Commissioner to file evidence
of what those costs were.
Because Mr. Allison is an attorney currently admitted to
practice before the Tax Court, other sanctions may be
appropriate. We will also send this opinion (and the order to
show cause dated March 7, 2008) to the King County Superior Court
for their consideration in In re Estate of Allison, No. 95-4-
03740-0.
An appropriate order will be
issued.
