1992 Tax Ct. Memo LEXIS 216 | Tax Ct. | 1992
1992 Tax Ct. Memo LEXIS 216">*216 Decision will be entered for respondent and an appropriate order imposing a penalty under
MEMORANDUM FINDINGS OF FACT AND OPINION
CLAPP,
Additions to Tax | ||
Deficiency | Sec. 6653(b) | Sec. 6654 |
$ 44,199.99 | $ 22,100.00 | $ 1,847.72 |
The issues for decision are:
(1) Whether petitioner had unreported gross income in the amount of $ 141,952 and taxable income in the amount of $ 96,042 in 1979 as determined by respondent. We hold that he did.
(2) Whether petitioner's underpayment of tax required to be shown on a return is due to fraud, with the result that petitioner is liable for additions to tax under
(3) Whether petitioner is liable for additions to tax under
(4) Whether petitioner is liable for a penalty under
All section references are to the Internal Revenue Code in effect for the year in issue. All Rule references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
We incorporate by reference the stipulation of facts and attached exhibits. Petitioner resided in Hamden, Connecticut, at the time of the filing of his petition.
Petitioner is an intelligent, educated individual. He received a Bachelor of Science degree in accounting and economics from the University of Connecticut in 1950, where his course work included classes in accounting, business law, and Federal income taxation. In addition, he holds a CLU (chartered life underwriters) degree. CLU degree holders are required to pass a series of exams on topics that include income taxation.
During 1979, the year at issue, petitioner was president and controlling officer of Irwin Schiff, Inc., an insurance agency which administered plans of insurance for the State medical society. Petitioner received commissions and other compensation in that year for services rendered to Irwin Schiff, Inc.Irwin Schiff, Inc., did not withhold any taxes1992 Tax Ct. Memo LEXIS 216">*218 from any of its payments to petitioner in 1979.
Petitioner also engaged in a publishing and lecturing activity during 1979 and received gross income from these efforts in the form of book sales and speaking fees. Petitioner was self-employed in these activities. Petitioner authored and published various tax books and materials from 1976 through at least 1990 under the trade name of Freedom Books. Petitioner's writings and publications included The Biggest Con: How the Government is Fleecing You (1976); The Tax Rebel's Guide to the Constitution, How Anyone Can Stop Paying Income Taxes (1982); and The Federal Mafia - How it Illegally Imposes and Unlawfully Collects Income Taxes (1990).
During 1979, petitioner conducted lectures around the country advising those in attendance that they were not required to file income tax returns or pay Federal income tax. Petitioner also encouraged taxpayers not to cooperate with the Internal Revenue Service and advocated using false social security numbers. Petitioner instructed his audiences that no American has an income tax liability and, therefore, should file W-4 forms claiming exempt status so no tax would be withheld. Petitioner charged1992 Tax Ct. Memo LEXIS 216">*219 an admission fee of between $ 10 and $ 15 for those attending his lectures.
Petitioner has made no estimated tax payments nor has he voluntarily paid any income taxes from 1973 through at least 1979. Petitioner was convicted of failing to file Federal income tax returns in violation of section 7203 for 1974 and 1975, and found liable for civil fraud additions under
Petitioner's bank records for 1979 were obtained by respondent, and a bank deposit analysis was performed to determine petitioner's 1979 income. Respondent contacted petitioner in a March 26, 1986, letter detailing respondent's determination of his 1979 income. The letter invited petitioner to meet with respondent's representatives to discuss and comment on respondent's findings, and to provide respondent with any additional information or explanation. Petitioner scheduled two appointments but failed to show for either.
Petitioner had gross income of $ 141,952 and taxable income of $ 96,042 in 1979. Petitioner did not have any taxes withheld on any of his earnings in 1979, made no 1979 estimated tax payments, and did not file an income tax return for the tax year 1979.
OPINION
1992 Tax Ct. Memo LEXIS 216">*220
Respondent reconstructed petitioner's 1979 taxable income using the bank deposits method. Respondent excluded transfers between accounts and deducted items qualifying as deductible expenses. Petitioner was given an opportunity to participate in that process and provide relevant information, but failed to do so. We have found that petitioner received commission and other income from his insurance agency, Irwin Schiff, Inc., and self-employment income1992 Tax Ct. Memo LEXIS 216">*221 from sales of his tax books and admission charges earned from his tax lectures. Petitioner does not dispute that he earned this income in 1979. Instead, petitioner confines his argument against respondent's 1979 deficiency determination to the proposition that his acknowledged 1979 income is simply not taxable by the United States.
According to petitioner, no deficiency can exist, and, therefore, no valid notice of deficiency can be issued without and until a valid assessment has been made. Petitioner's basic premise is that no valid assessment can be made without a voluntarily filed tax return, which petitioner strenuously asserts is something that he has not done. Petitioner also argues that respondent cannot determine a tax on his income for which Congress has not made him liable; that he had no income within the meaning of the Internal Revenue Code; that respondent seeks to impose a tax not authorized by the taxing clauses of the United States Constitution; that this Court has no jurisdiction over petitioner; and that the Tax Court is not a court anyway.
These are stale and long discredited tax protester arguments that have been proffered to and rejected by this and other1992 Tax Ct. Memo LEXIS 216">*222 courts countless times. See, e.g.,
Next we address whether petitioner is liable for the additions to tax under
By his own admission, as well as a proclamation in one of his books, petitioner has not made a voluntary tax payment since 1973.
Liability for
Finally, we must decide whether a penalty should be imposed on petitioner under
As noted above, petitioner has unsuccessfully pressed these arguments many times in various courts. See, e.g.,