On November 23, 2012, the Commissioner filed his motion for summary judgment (making factual assertions on the basis of Mr. Schlussel's deemed admissions); and on that same date the Court ordered as follows:

This case is scheduled to be tried at the Court's session in Boston, beginning February 4, 2013. However, on November 23, 2012, respondent (the IRS) filed a motion for summary judgment. The IRS's motion asserts that no trial is necessary in this case, because (the IRS says) no relevant facts are in dispute. The motion contends that, on the basis of the undisputed facts, the case can be decided in the IRS's favor. The Court will order petitioner Michael Schlussel to file a response to the IRS's motion.

If Mr. Schlussel disagrees with the facts set 2013 Tax Ct. Memo LEXIS 194">*200 out in the IRS's motion, then his response should point out the specific facts in dispute. If he disagrees with the IRS's argument as to the law, then his response should also set out his position on the disputed legal issues. Q&As that the Court has prepared on the subject "What is a motion for summary judgment? How should I respond to one?" *191 are available at ustaxcourt.gov/taxpayer_info_start.htm#START40 and are printed on the page attached to this order.

Mr. Schlussel should note that Tax Court Rule 121(d) provides, "If the adverse party [i.e., Mr. Schlussel] does not so respond [to a motion for summary judgment], then a decision, if appropriate, may be entered against such party"—i.e., against Mr. Schlussel.

To resolve the IRS's motion for summary judgment, it is

ORDERED that, no later than December 21, 2012, Mr. Schlussel shall file with the Court and serve on the IRS a response to the IRS's motion for summary judgment.

On December 10, 2012, Mr. Schlussel filed a motion for a 180-day extension. The motion stated:

I AM REQUESTING THE COURT TO ALLOW ME 180 DAYS ADJOURNMENT, DUE TO THE FACT THAT I HAVE BEEN STRICKEN BY A STROKE, AND SUBSEQUENTLY HAD A SEIZURE, WHERE MY HEART STOPPED BEATING, 2013 Tax Ct. Memo LEXIS 194">*201 AND, DUE TO THE PROXIMITY OF COMPETENT MEDICAL STAFF, I WAS PROMPTLY REVIVED BACK TO LIFE.

I HAVE BEEN FITTED, WITH A PACEMAKER WHICH WAS FINALLY IMPLANTED INTO MY CHEST TO KEEP ME ALIVE. I HAVE HAD A FEW SEIZURES IN THE MIDDLE OF THE NIGHT, WHERE I FELL OUT OF BED ON A CONCRETE FLOOR.

I AM PRESENTLY ATTEMPTING TO GET BACK TO FULL HEALTH. I WANT YOU TO KNOW THAT I DO NOT HAVE ANY OF MY TAX RECORDS WITH ME AT THIS MEDICAL CTR.

*192 ITS FOR THAT REASON, THAT I AM REQUESTING A CONTINUANCE OF THIS CASE FOR AT LEAST 180 DAYS, JUST SO THAT I CAN GET BACK TO HEALTH, AND BE ABLE TO REPRESENT MYSELF COMPETENTLY.

I THANK YOU IN ADVANCE FOR PROMPT REPLY TO MY REQUEST.

By order of December 21, 2012, we granted Mr. Schlussel's request, and we stated as follows:

The Court will grant Mr. Schlussel's motion, even though doing so will require taking this case off of the upcoming calendar and may complicate further proceedings, and even though an extension of 180 days (i.e., six months) is an extraordinary extension. Even for persons who are incarcerated and who are sick, the IRS is required to perform its duties imposed by law, and the Court is obliged to process the cases on its docket. Sick or incarcerated 2013 Tax Ct. Memo LEXIS 194">*202 persons are entitled to reasonable accommodations, but they are not entitled to indefinite exemption from the tax laws. Six months should certainly suffice, and Mr. Schlussel is warned that he should not expect any further extension. He should immediately begin to obtain his records; and if fortunate circumstances allow him to respond earlier, he should certainly do so, rather than risk an adverse turn of events and find himself unable to act in June 2013. If Mr. Schlussel were unable to obtain his records and to prepare his response in that six-month period, then it would be hard to assume that any further extension would actually facilitate a response, rather than just delaying the case indefinitely, which the Court would not do. It is therefore

ORDERED that Mr. Schlussel's motion for an extension is granted, and that he shall file a response to respondent's motion no later than June 21, 2013.

Under Rule 121 (the Tax Court's analog to Rule 56 of the Federal Rules of Civil Procedure) the Court may grant summary judgment where there is no genuine dispute of any material fact and a decision 2013 Tax Ct. Memo LEXIS 194">*203 may be rendered as a matter of law. The moving party (here, the Commissioner) bears the burden of showing that no genuine dispute of material fact exists, ² and the Court will view any factual material and inferences in the light most favorable to the nonmoving party (here, Mr. Schlussel). Dahlstrom v. Commissioner, 85 T.C. 812">85 T.C. 812, 85 T.C. 812">821 (1985); cf. Anderson v. Liberty Lobby, Inc., 477 U.S. 242">477 U.S. 242, 477 U.S. 242">255, 106 S. Ct. 2505">106 S. Ct. 2505, 91 L. Ed. 2d 202">91 L. Ed. 2d 202 (1986) (same standard under Fed. R. Civ. P. 56). "The opposing party [i.e., Mr. Schlussel] is to be afforded the benefit of all reasonable doubt, and any inference to be drawn from the underlying facts contained in the record must be viewed in a light most favorable to the party opposing the motion for summary judgment." Espinoza v. Commissioner, 78 T.C. 412">78 T.C. 412, 78 T.C. 412">416 (1982).

*194 However, 2013 Tax Ct. Memo LEXIS 194">*204 the non-moving party may not sit on his hands. He is required by Rule 121(d) to "set forth specific facts showing that there is a genuine dispute for trial. If the adverse party does not so respond, then a decision, if appropriate, may be entered against such party." Despite having this requirement called to his attention, Mr. Schlussel failed to make any response to the IRS's motion for summary judgment.

Proceeds of a criminal activity are taxable income. The Supreme Court "has given a liberal construction to the broad phraseology of the 'gross income' definition statutes in recognition of the intention of Congress to tax all gains except those specifically exempted." James v. United States, 366 U.S. 213">366 U.S. 213, 366 U.S. 213">219, 81 S. Ct. 1052">81 S. Ct. 1052, 6 L. Ed. 2d 246">6 L. Ed. 2d 246, 1961-2 C.B. 9 (1961). In James, the Supreme Court held that "wrongful appropriations" are includible in gross income. 366 U.S. 213">Id. at 219-220. The Commissioner has shown (and Mr. Schlussel has not contradicted) that in 2006 and 2007 Mr. Schlussel received income from his criminal activity (and other sources) for which he owes Federal income tax in the amounts determined in the notice of deficiency.

The Commissioner 2013 Tax Ct. Memo LEXIS 194">*205 has also shown that Mr. Schlussel's failure to file returns for 2006 and 2007 was fraudulent. Section 6651(f) provides:

SEC. 6651(f). Increase in Penalty for Fraudulent Failure to File.—If any failure to file any return is fraudulent, paragraph (1) of subsection (a) shall be applied—

In case of failure—

(1) to file any return required under authority of subchapter A of chapter 61 * * * on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate * * *. [Emphasis added.]

Section 6651(a)(2) imposes an addition to tax for failure to pay the amount of tax shown on a return, and the Commissioner contends that Mr. Schlussel is liable for this addition for the two years at issue. The addition to tax under section 6651(a)(2) applies only when an amount of tax is shown on a return, Cabirac v. Commissioner, 120 T.C. 163">120 T.C. 163, 120 T.C. 163">170 (2003), and the Commissioner has the burden of production to show the filing of a return, i.e., to show an "amount shown as tax on * * * [a] return", sec. 6651(a)(2). A return made by the Secretary under section 6020(b)—i.e., an SFR—is treated as "the return filed by the taxpayer for purposes of determining the amount of the addition" under section 6651(a)(2). Sec. 6651(g)(2). The Commissioner's motion shows that the IRS did prepare SFRs for Mr. Schlussel in compliance with section 6020(b). Cf. Wheeler v. Commissioner, 127 T.C. 200">127 T.C. 200, 127 T.C. 200">210 (2006), aff'd, 521 F.3d 1289">521 F.3d 1289 (10th Cir. 2008). The Commissioner has thus carried his burden of production under section 7491(c) to show that Mr. Schlussel is liable for 2013 Tax Ct. Memo LEXIS 194">*207 the addition to tax under section 6651(a)(2). Mr. Schlussel has not made any defense, and he is liable for the failure-to-pay addition to tax.

Section 6654 imposes an addition to tax on an individual taxpayer who underpays his estimated tax. The Commissioner determined this addition for Mr. Schlussel's 2006 and 2007 years. A taxpayer has an obligation to pay estimated tax for a particular year if he has a "required annual payment" for that year. Sec. 6654(d). A "required annual payment" is defined in section 6654(d)(1)(B), in pertinent part, as "the lesser of—(i) 90 percent of the tax shown on the return for the taxable year (or, if no return is filed, 90 percent of the tax for such year)", or (ii) if the individual filed a return for the preceding taxable year, then "100 percent of the tax shown on the return of the individual for the preceding taxable year". Thus, the Commissioner's burden of production under section 7491(c) requires him to produce, for each year for which the addition is asserted, evidence that the taxpayer had a required annual payment under section 6654(d); and in order to do so he must demonstrate the tax shown on the taxpayer's 2013 Tax Ct. Memo LEXIS 194">*208 return for the preceding year or that the taxpayer filed no return. For the year 2007, the "preceding taxable year" is 2006; for the year 2006, the "preceding taxable year" is 2005; and for neither of these "preceding taxable year[s]" did Mr. Schlussel file a return. Consequently, the Commissioner carried his burden of production to show that Mr. Schlussel is liable for the section 6654*198 addition for 2006 and 2007, and he made no defense. He is therefore liable for this addition for failure to pay estimated tax.

The foregoing discussion resolves this case on its merits. In the alternative, we would reach the same outcome by dismissing the case, on our own motion, for Mr. Schlussel's failure to comply with our orders of November 23 and December 21, 2012, directing him to file a response to the Commissioner's motion for summary judgment. As we advised him in our order,

Tax Court Rule 121(d) provides, "If the adverse party [i.e., Mr. Schlussel] does not so respond [to a motion for summary judgment], then a decision, if appropriate, may be entered against such party"—i.e., against Mr. Schlussel.

*199 As we have noted, the Commissioner has the burden of proof on the issue of fraud; but where (as here) his answer alleges specific facts sufficient to sustain a finding of fraud, a decision of default can be entered pursuant to Rule 123(a) against a petitioner who "has failed to plead or otherwise proceed". See Smith v. Commissioner, 91 T.C. 1049">91 T.C. 1049, 91 T.C. 1049">1056 (1988), aff'd, 926 F.2d 1470">926 F.2d 1470 (6th Cir. 1991). Likewise, where fraud is at issue, a petition can be dismissed for "failure * * * properly to prosecute or to comply with these Rules or any order" under Rule 123(b), where "the Commissioner * * * come[s] forward, either 2013 Tax Ct. Memo LEXIS 194">*210 in the pleadings or at trial, with sufficient facts to sustain a finding of fraud". Fifer v. Commissioner, T.C. Memo. 1993-44.

The Court explained to Mr. Schlussel the nature of the Commissioner's motion for summary judgment and the proper manner for responding to the motion and then showed extraordinary leniency by allowing him an additional six months to file his response—though that allowance substantially delayed decision in this case and consequently (by operation of section 6213(a)) delayed the assessment against Mr. Schlussel of the tax at issue. Having been granted the allowance he requested, Mr. Schlussel then made no filing in response to the Court's order. He thus induced delay in these proceedings for no purpose. This circumstance warrants dismissal of the case for failure to comply with the Court's order.

The Commissioner is entitled to summary judgment. To reflect the foregoing,

An appropriate order and decision will be entered.