T.C. Memo. 2014-130
UNITED STATES TAX COURT
GARY DENNIS BOWERS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10137-13. Filed June 26, 2014.
Gary Dennis Bowers, pro se.
Kathryn E. Kelly, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
NEGA, Judge: Respondent determined a deficiency in petitioner’s 2009
income tax of $11,656, an addition to tax of $2,623 under section 6651(a)(1), an
addition to tax of $1,807 under section 6651(a)(2), and an addition to tax of $279
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[*2] under section 6654.1 After trial respondent moved to impose sanctions on
petitioner pursuant to section 6673. The issues for decision are:
(1) whether petitioner received taxable income from the Social Security
Administration of $20,436 in 2009;
(2) whether he received taxable pension distributions of $50,790 in 2009;
(3) whether he is liable for the failure to timely file addition to tax under
section 6651(a)(1);
(4) whether he is liable for the failure to timely pay addition to tax under
section 6651(a)(2);
(5) whether he is liable for the estimated tax addition to tax under section
6654; and
(6) whether he is liable for the frivolous arguments penalty under section
6673.
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code in effect for the year at issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure. All monetary amounts are rounded to the
nearest dollar.
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[*3] FINDINGS OF FACT
Petitioner resided in Pekin, Illinois, at the time he filed his petition.
Petitioner was retired during tax year 2009 and received $24,042 from the Social
Security Administration, of which $20,436 was taxable, and a combined $50,790
from the UA Locals 63 353 Joint Pension Trust Funds and the Plumbers and
Pipefitters National Pension Fund. During trial petitioner agreed he had received
Social Security and pension payments, although he refused to testify as to the
amounts as determined by respondent. Respondent submitted to the Court the
records of both pension funds, authenticated by declarations of the plan
administrators pursuant to rules 803(6)(D) and 902(11) of the Federal Rules of
Evidence, verifying the amounts paid to petitioner.
Petitioner failed to file a Form 1040, U.S. Individual Income Tax Return,
for tax year 2009 and did not pay any tax for that year.2 At trial he testified that he
knew of no law requiring him to file a return. Respondent prepared a substitute
for return (SFR) for petitioner pursuant to section 6020(b). On the basis of the
SFR, respondent issued a notice of deficiency on February 4, 2013. Petitioner
2
Petitioner also failed to file a tax return for tax year 2008, a fact which is
relevant for purposes of calculating the sec. 6654 addition to tax. See sec.
6654(d)(1)(B); Wheeler v. Commissioner, 127 T.C. 200, 210-212 (2006), aff’d,
521 F.3d 1289 (10th Cir. 2008).
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[*4] timely filed a petition with the Court disputing the deficiency as well as the
additions to tax under sections 6651(a)(1) and (2) and 6654. Trial was held at the
session of the Court commencing February 25, 2014, in Chicago, Illinois.
Following trial respondent moved to impose sanctions on petitioner pursuant to
section 6673. Petitioner filed a brief in opposition to respondent’s motion for
sanctions on April 10, 2014.
Petitioner’s arguments before and during trial concerned the proper
authority of Bill Banowsky, the Internal Revenue Service (IRS) employee who
signed the notice of deficiency and of Layne Carver, the employee who signed the
SFR. In addition to alleging that the employees did not have authority to issue the
SFR and the notice of deficiency, petitioner argued that they likely “pawned off”
the responsibilities of drafting the SFR and the notice of deficiency and that
therefore the persons who actually drafted these documents likewise lacked
authority.
OPINION
I. Burden of Proof
The Commissioner’s determination as to a taxpayer’s tax liability is
presumed correct, and the taxpayer bears the burden of proving otherwise. See
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The Court of
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[*5] Appeals for the Seventh Circuit, to which this case is appealable, has held
that the Commissioner’s determination regarding unreported income is entitled to
a presumption of correctness only if the determination is supported by a minimal
evidentiary foundation. See, e.g., Pittman v. Commissioner, 100 F.3d 1308, 1317
(7th Cir. 1996), aff’g T.C. Memo. 1995-243; Ruth v. United States, 823 F.2d
1091, 1094 (7th Cir. 1987). Section 61(a) generally requires taxpayers to include
in gross income all income from whatever source derived. The burden of proof
with respect to a factual issue relevant to liability for tax may shift to the
Commissioner where a taxpayer produces credible evidence and meets other
statutory requirements. Sec. 7491(a). Petitioner has not produced any credible
evidence and has not shown that he meets the statutory criteria for shifting the
burden to respondent. Accordingly, petitioner has the burden of showing that
respondent’s income tax deficiency determination is in error.3
3
In addition, if a taxpayer raises a reasonable dispute with respect to a
third-party information return and has otherwise fully cooperated with the
Commissioner, the burden of production may shift to the Commissioner to present
reasonable and probative evidence to verify the information return. Sec. 6201(d).
Petitioner testified at trial that he was unsure of the amounts received from the
Social Security Administration and from his pensions, but he did not reasonably
dispute the accuracy of the third-party reporting. Accordingly, the burden of
production does not shift to respondent under sec. 6201(d).
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[*6] With respect to any addition to tax or penalty, section 7491(c) imposes the
burden of production on the Commissioner. Higbee v. Commissioner, 116 T.C.
438, 446 (2001). To fulfill this burden, the Commissioner must come forward
with sufficient evidence indicating that it is appropriate to impose the relevant
penalty. Sec. 7491(c); Higbee v. Commissioner, 116 T.C. at 446. Once the
Commissioner has met this burden, the taxpayer bears the burden of proving that
the penalty is inappropriate because, for example, the taxpayer acted with
reasonable cause and in good faith. Higbee v. Commissioner, 116 T.C. at 447.
II. Petitioner’s Tax Liability
Petitioner’s argument regarding the authority of the IRS employees is
similar to those we have previously held to be without merit. In numerous
opinions, we have determined that arguments questioning the authority of IRS
employees to sign and issue documents are frivolous. See, e.g., Roye v.
Commissioner, T.C. Memo. 2012-246; Cooper v. Commissioner, T.C. Memo.
2006-241; Kozack v. Commissioner, T.C. Memo. 2005-246 (“We note that all of
petitioner’s arguments are specious and without substance, and many of them have
been offered by others who are merely attempting to avoid the payment of Federal
tax.”); see also Wnuck v. Commissioner, 136 T.C. 498, 501-513 (2011); cf. Crain
v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984) (“We perceive no need to
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[*7] refute * * * [petitioner’s] arguments with somber reasoning and copious
citation of precedent; to do so might suggest that * * * [his] arguments have some
colorable merit.”). Petitioner conceded at trial that he had received income from
the Social Security Administration and two pension funds. Documents submitted
by pension plan administrators verified that petitioner received income in the
amounts respondent determined. Petitioner has not met his burden to show that
the amounts he admittedly received from the Social Security Administration and
the pension funds were in error. Accordingly, we hold that petitioner has not
shown that respondent’s determination with regard to his tax liability is in error.
III. Additions to Tax and Penalty
Next, we consider whether petitioner is liable for additions to tax under
section 6651(a)(1) and (2) for failure to timely file a 2009 income tax return or to
timely pay the tax due for that year. Section 6651(a)(1) provides for an addition to
tax for failure to timely file, unless it is shown that the failure is due to reasonable
cause and not due to willful neglect. Similarly, section 6651(a)(2) provides for an
addition to tax for failure to timely pay the amount shown as tax on any return,
unless it is shown that the failure is due to reasonable cause and not due to willful
neglect.
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[*8] Respondent has satisfied his burden of production with respect to the
additions to tax under section 6651(a)(1) and (2). Petitioner admitted at trial that
he did not file an income tax return. Petitioner’s only argument as to why he did
not file an income tax return was that he knew of no authority requiring him to file
a return. Thus, petitioner has not shown that his failure to file was due to
reasonable cause. Accordingly, petitioner is liable for the addition to tax under
section 6651(a)(1). Respondent prepared a return in accordance with his authority
under section 6020(b), and petitioner did not pay the amount shown as due. See
Cabirac v. Commissioner, 120 T.C. 163, 170-173 (2003). The return respondent
prepared met the requirements for a substitute for return under section 6020(b).
See Wheeler v. Commissioner, 127 T.C. 200, 210 (2006), aff’d, 521 F.3d 1289
(10th Cir. 2008). As a result, respondent has satisfied his burden of producing
evidence that supports an addition to tax for failure to timely pay tax due under
section 6651(a)(2). Petitioner has not offered any arguments alleging reasonable
cause for failure to pay the amount shown as due on the return and so is liable for
the addition to tax under section 6651(a)(2).
Next, we consider whether petitioner is liable for the addition to tax under
section 6654(a) for failure to make estimated payments. The required annual
payment of estimated tax, as it relates to this case, equals 90% of petitioner’s tax
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[*9] for 2009. Sec. 6654(d)(1)(B)(i). Petitioner made no payments of estimated
tax. There are exceptions to the obligation to make estimated tax payments set
forth in section 6654, but petitioner has not shown that he meets the criteria for
those exceptions. See sec. 6654(e). Accordingly, we hold that petitioner is liable
for the section 6654(a) addition to tax for failure to make estimated tax payments.
We next determine whether to impose a penalty against petitioner under
section 6673, which authorizes the Tax Court to require a taxpayer to pay a
penalty of up to $25,000 whenever it appears that proceedings have been instituted
or maintained primarily for delay or that the taxpayer’s position in such
proceedings is frivolous or groundless. See sec. 6673; Scruggs v. Commissioner,
T.C. Memo. 1995-355, aff’d without published opinion, 117 F.3d 1433 (11th Cir.
1997). The purpose of section 6673 is to compel taxpayers to think and to
conform their conduct to settled tax principles. See Coleman v. Commissioner,
791 F.2d 68, 71 (7th Cir. 1986); see also Grasselli v. Commissioner, T.C. Memo.
1994-581.
We are mindful that petitioner is representing himself and may not be
familiar with all the Court’s Rules and procedures. Pro se status, however, is not a
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[*10] license to litter the dockets of the Federal courts with ridiculous allegations
concerning the Code. Parker v. Commissioner, 117 F.3d 785 (5th Cir. 1997).
Petitioner has not previously received a warning regarding section 6673
penalties. The Court will not impose this penalty as this time, but petitioner is
warned that if he continues to make frivolous arguments in this or other Tax Court
proceedings, the Court may impose a penalty under section 6673(a) against him.
Further, petitioner is hereby specifically warned that advancing frivolous and
groundless arguments in the future may lead to the imposition of a penalty on him
pursuant to section 6673(a).
To reflect the foregoing,
An appropriate order and decision
will be entered.