In Clark v. Commissioner, T.C. Memo. 2007-172, the U.S. Tax Court held that a truck driver who did not file tax returns was not entitled to deduct expenses where his records were destroyed in a fire.
Facts & Procedural History
Mr. Clark was a truck driver. He was employed by Jimmy Harris Trucking, Inc., Vandy Trucking, Inc., and Peters Hauling, Inc.
Mr. Clark failed to file income tax returns for 2001 or 2002. The IRS conducted an audit for 2001 and 2002.
Mr. Clark did not did submit the amounts of or evidence of deductions and exemptions to which he was entitled, as his records were lost during a fire at his father’s residence in 2005.
The IRS agent asserted that Mr. Clark made no attempt to reconstruct records or obtain corroboration of his claims.
The IRS agent then issued a statutory notice of deficiency for 2001 to and 2002 and Mr. Clark petitioned the U.S. Tax Court to contest the amount of the tax due.
The court noted that Mr. Clark did not cooperate with the IRS attorney or the court and the IRS attorney responded by requiring excessive questions be answered in writing. The court described the interplay between Mr. Clark and the IRS as follows:
The [taxpayer] did not cooperate with respondent in preparing the case for trial, which led to excessive reactions by respondent, including excessive interrogatories and motions. Respondent’s interrogatories contained eight pages of “definitions” and “instructions” and were, in effect, directions to require petitioner to lay out his case in writing rather than simple questions such as those anticipated by Rule 71. See Pleier v. Commissioner, 92 T.C. 499 (1989). Such interrogatories are particularly inappropriate against a pro se petitioner and were unnecessary in this case because petitioner’s compliance with other Rules and the standing pretrial order would have supplied the information that respondent needed. Moreover, the interrogatories apparently motivated petitioner to give evasive answers to respondent’s poorly phrased requests for admissions and to refuse to admit to the items of income identified in the statutory notice and in the requests for admissions. Thus, respondent’s motions to compel answers to interrogatories and to review the sufficiency of the responses to the requests for admissions were denied.
The court went on to note that it would estimate the amount of deductions that Mr. Clark was entitled to; however, it could not do this given that Mr. Clark did not provide enough evidence to even make an estimate. The court even gave Mr. Clark additional time after the trial to provide further information and the IRS apparently offered Mr. Clark suggestions as to how his records could be reconstructed.
It is not clear what suggestions were provided to reconstruct Mr. Clark’s records. If Mr. Clark was an over-the-road truck driver, it is easy to understand how daunting a task it can be to recreate lost records. Many truck drivers are not able to accurately account for their expenses even if they have the records, given the time on the road, the varying nature of the expenses, etc. Even identifying which expenses were reimbursed and not reimbursed can be difficult given that Mr. Clark had three employers during these two years.