1996 Tax Ct. Memo LEXIS 514 | Tax Ct. | 1996
R determined deficiencies in and additions to P's Federal income tax. P failed to address substantively the pertinent issues in this case and resorted instead to making absurd, discredited, and misguided tax-protester arguments.
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MEMORANDUM OPINION
HALPERN,
Additions to Tax | |||
Sec. | Sec. | ||
Year | Deficiency | 6651(a)(1) | 6654(a) |
1983 | $ 4,533 | $ 1,133 | $ 277 |
1984 | 5,098 | 1,275 | 321 |
1985 | 5,863 | 1,466 | 336 |
1986 | 10,619 | 2,655 | 513 |
1987 | 11,578 | 2,895 | 624 |
1988 | 11,156 | 2,789 | 713 |
1989 | 12,748 | 3,187 | 865 |
1990 | 13,969 | 3,492 | 920 |
1991 | 12,141 | 3,035 | 698 |
1992 | 22,074 | 5,519 | 964 |
1993 | 17,493 | 4,373 | 732 |
In addition to determining whether these deficiencies in tax and additions to tax should be sustained, we must determine whether petitioner must pay to the United States a penalty under
Unless otherwise noted, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Petitioner filed a petition on June 22, 1995. At that time petitioner resided in Portland, Oregon. In the petition, petitioner states the basis of her disagreement with respondent for each year in issue. Petitioner claims that respondent has attributed to her more income than she has earned and has allowed her far less expense 1996 Tax Ct. Memo LEXIS 514">*516 than she has incurred and is allowed to deduct. In the petition, petitioner states that the relevant notices of deficiency are attached thereto. In the answer, respondent denies for lack of knowledge that complete copies of the notices of deficiency are attached to the petition. There are four separate pages attached to the petition, each dated March 20, 1995, each titled "NOTICE OF DEFICIENCY", and each setting forth the amounts of deficiencies and penalties (additions to tax) for two or more of the years in issue. Each page carries at the bottom the notation "(continued next page)", but no additional pages are attached to the petition.
Prior to the trial in this case, which was held in Portland, Oregon, on May 21, 1996, petitioner filed, among other motions, a motion to dismiss, a motion for sanctions against respondent for failure to litigate in good faith, and a motion for continuance of trial pending U.S. District Court decision on petitioner's motion to quash 90-day deficiency notice. All of those motions were denied.
At the trial in this case, petitioner offered no stipulation of any agreed facts, nor did she offer any stipulated exhibits. She offered no other documentary evidence. 1996 Tax Ct. Memo LEXIS 514">*517 She testified on her own behalf, but she did not rebut the adjustments giving rise to respondent's determinations of deficiencies in tax. The substance of her testimony was an argument that the Government has no authority to tax her income and that the Court has no authority to decide this case. Indeed, petitioner testified that she had stated to respondent's counsel in this case that she would "pay every dime, anything you say, if you [respondent's counsel] will show me in the tax code what section makes me liable for an income tax." Petitioner concedes that she has failed to file returns for the years in question or make any payments of tax.
Subsequent to the trial of this case, petitioner moved for sanctions, pursuant to
I.
A.
We have deduced, however, from Exhibit A and from petitioner's testimony and briefs that respondent's adjustments leading to the deficiencies in question result from respondent's claim that petitioner failed to report certain rental income from real estate in each of the years in issue. Exhibit A states: It is determined that you 1996 Tax Ct. Memo LEXIS 514">*519 received gross income from rental income as shown above. The gross income amounts have been determined according to the information available, including information provided by the payers of rental income and/or third party recordkeepers.
Further, from petitioner's testimony, we deduce that the essential point of petitioner's disagreement with respondent over the real estate income concerns whether petitioner In our meeting [petitioner with respondent's counsel] I pointed out that they [the IRS] were attributing real estate rents from property that I've not owned, controlled or had any interest, no financial interest in whatsoever, for at least a decade. * * *
Thus, we shall determine whether petitioner has proven that she no longer owns the real estate in question.
B.
The general rule is that the burden of proof is upon petitioner,
Respondent determined unreported income from real estate that petitioner concedes she once owned, but claims she no longer owns. Petitioner cannot credibly maintain that she does not know what real estate respondent has in mind. Moreover, ownership of real estate is a matter that is commonly proved in courts of law. Indeed, attached as exhibits to petitioner's brief are affidavits that petitioner claims prove just that issue. Petitioner has the burden to prove that she no longer owns the real estate in question. Petitioner, however, has failed to carry that burden.
C.
In the petition, petitioner avers nothing with respect to the ownership of any real estate. Petitioner's brief contains sections titled "Petitioner's Sworn Statement of Facts" and "Proposed Findings of Fact". Neither section, if intended to be petitioner's proposed findings of fact, complies with
Petitioner testified that the deficiencies in question were attributable to real estate rents from property that she no longer owned. Petitioner offered no corrobative evidence, either testimonial or written, to support that assertion. Indeed, she failed even to identify the properties in question. Given petitioner's failure to corroborate her assertions, we need not, and decline to, take them at face value. See, e.g.,
D.
Petitioner 1996 Tax Ct. Memo LEXIS 514">*525 has not argued that the real estate in question was not rent producing, nor has she produced evidence to that effect. Rents are includable in gross income. Sec. 61(a)(5). Petitioner has failed to convince us that there is any error in respondent's adjustments increasing her gross income on account of the omission of certain rental income.
E.
Petitioner's principal legal arguments in this case are directed to the authority of the Government to tax her income and the authority of the Court to hear her case. Petitioner's brief contains a section titled "Petitioner's Statement on Points of Law", which contains a list of petitioner's legal arguments. In pertinent part, that list is as follows: 6. Petitioner had no income within the meaning of the law. 7. Petitioner's real estate rents are not subject to an income tax as a matter of law. 8. An income tax on petitioner's rents pursuant to 9. No statute makes Petitioner legally "liable" for an income tax. 10. No statute authorizes the Secretary to estimate an amount of tax based on a return. The Secretary has statutory authority only to 11. No 12. If a return is not filed the Secretary is limited by law to either assessing the tax or bringing an action in court for collection. The Secretary has done neither in this case. 13. By law all Internal Revenue Code sections require an implementing regulation to become enforceable or mandatory. 14. Code section 6211 is totally without implementing regulation. 15. By law, no penalties can be imposed under a Code section lacking legislative regulation. 16. By law, no tax is due until an 17. The income tax laws are based on voluntary self-assessment not upon distraint. 18. The 19. Code 20. Code 21. Code 22. Code section 6214 limits 1996 Tax Ct. Memo LEXIS 514">*527 the jurisdiction of Tax Court to 23. By law, Tax Court has no authority to decide matters of law or Constitutional issues. 24. The deficiency notices are null and void because they were issued in violation of procedures required by law. 25. By law, Tax Court cannot acquire jurisdiction if petition is coerced or compelled under duress. 26. It is fact that a civil case is decided based upon a preponderance of the evidence. Petitioner gave evidence in sworn testimony that the deficiency notices were not true. All of this evidence and all of the other issues raised by petitioner went undenied, unchallenged and unrefuted by respondent and, therefore, must be considered by the Court to be true.
Petitioner's contentions are typical tax-protester arguments, which have been rejected repeatedly by the courts. For example, the Tax Court has jurisdiction to decide constitutional questions. E.g.,
F.
Respondent's determinations of deficiencies 1996 Tax Ct. Memo LEXIS 514">*529 are sustained in full.
II.
A.
Petitioner has conceded that she consciously decided not to file returns for the taxable years in issue. Petitioner only offers unreasonable tax-protester arguments to justify her failure to file. Petitioner has not carried her burden of proof. Respondent's determinations of additions to tax under
B.
Petitioner concedes that she paid no tax, and she has not proven that any of the exceptions apply. 1996 Tax Ct. Memo LEXIS 514">*530 Again, petitioner only offers unreasonable tax-protester arguments to justify her failure to comply. Petitioner has not carried her burden of proof. Respondent's determinations of additions to tax under
III.
Respondent orally moved that we impose a penalty on petitioner pursuant to
Based on the record in this case, we conclude that 1996 Tax Ct. Memo LEXIS 514">*531 petitioner's position in this proceeding is both frivolous and groundless and that petitioner undertook certain actions primarily for delay. Petitioner has never substantively addressed the pertinent issues in this case, which relate to the correct determination of income and deductions for the years in issue and various additions to tax. Instead, petitioner has asserted absurd, discredited, and misguided tax-protester arguments such as the following: ( 1) the Internal Revenue Code does not make anyone "liable" for an income tax, ( 2) the Internal Revenue Code contains no mandatory provisions, and therefore, compliance is voluntary, (3) the Tax Court has no authority to decide matters of law or Constitutional issues, and (4) an income tax on petitioner's rents pursuant to
Petitioner has maintained her frivolous and groundless positions not only by way of her testimony and on brief, but also in numerous additional written submissions to the Court, all of which have required consideration and response by the Court. Petitioner's pretrial motions--her motion to dismiss, her motion for sanctions against respondent 1996 Tax Ct. Memo LEXIS 514">*532 for failure to litigate in good faith, and her motion for continuance of trial pending U.S. District Court decision on petitioner's motion to quash 90-day deficiency notice--run 24 pages, 59 pages, and 53 pages, respectively. Her posttrial motion for
Petitioner's filings have been both numerous and lengthy. Notwithstanding the lack of merit to her arguments, she has caused both the Court and respondent to expend scarce resources to respond to those filings and to conduct a trial that barely touched the grounds of respondent's determinations of deficiencies. Although this appears to be petitioner's first trip to the Tax Court, she is deserving of a significant penalty because of the persistence of her frivolous assault.
Accordingly, respondent's oral motion for damages will be granted and petitioner will be required to pay to the United States1996 Tax Ct. Memo LEXIS 514">*533 a penalty in the amount of $ 15,000.
Footnotes
1. Although
(9th Cir. 1979), revg.Weimerskirch v. Commissioner , 596 F.2d 358">596 F.2d 35867 T.C. 672">67 T.C. 672 (1977), dealt specifically withillegal unreported income, it is now well established that the Court of Appeals for the Ninth Circuit applies theWeimerskirch rule inall cases of unreported income where the taxpayer challenges the Commissioner's determination on the merits. E.g., , 680 F.2d 1268">1270 (9th Cir. 1982) (in that case, involving unreported income from an income-generating auto repair business owned by the taxpayer, the court stated: "We note, however, that the Commissioner's assertion of deficiencies are presumptively correct once some substantive evidence is introduced demonstrating that the taxpayer received unreported income.Edwards v. Commissioner , 680 F.2d 1268">680 F.2d 1268 , 596 F.2d 358">360 (9th Cir. 1979).");Weimerskirch v. Commissioner , 596 F.2d 358">596 F.2d 358 , 92 T.C. 661">689 (1989) ("the Ninth Circuit requires that respondent come forward with substantive evidence establishing a 'minimal evidentiary foundation' inPetzoldt v. Commissioner , 92 T.C. 661">92 T.C. 661all cases involving the receipt of unreported income to preserve the statutory notice's presumption of correctness. ." (Emphasis added.));Weimerskirch v. Commissioner , 596 F.2d 358">596 F.2d at 362 , 1382 (9th Cir. 1988) (Commissioner can rely on the presumption that his determination is correct if taxpayer does not contest the determination on the merits).Roat v. Commissioner , 847 F.2d 1379">847 F.2d 13792.
Rule 151(e)(3) provides:(e) Form and Content: All briefs shall contain the following in the order indicated:
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(3) Proposed findings of fact (in the opening brief or briefs), based on the evidence, in the form of numbered statements, each of which shall be complete and shall consist of a concise statement of essential fact and not a recital of testimony nor a discussion or argument relating to the evidence or the law. In each such numbered statement, there shall be inserted references to the pages of the transcript or the exhibits or other sources relied upon to support the statement. In an answering or reply brief, the party shall set forth any objections, together with the reasons therefor, to any proposed findings of any other party, showing the numbers of the statements to which the objections are directed; in addition, the party may set forth alternative proposed findings of fact.
3. For some of the years in issue, different subsections of
sec. 6654↩ contain the exceptions.