T.C. Memo. 1995-471
UNITED STATES TAX COURT
ROB R. OLSEN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8708-95. Filed October 3, 1995.
Rob R. Olsen, pro se.
Grace K. Matuszeski and Richard A. Rappazzo, for respondent.
MEMORANDUM OPINION
DAWSON, Judge: This case was assigned to Special Trial
Judge Robert N. Armen, Jr., pursuant to the provisions of section
7443A(b)(4) and Rules 180, 181, and 183.1 The Court agrees with
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
(continued...)
and adopts the Opinion of the Special Trial Judge, which is set
forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
ARMEN, Special Trial Judge: This case is before the Court
on respondent's Motion To Dismiss For Failure To State A Claim
Upon Which Relief Can Be Granted, filed pursuant to Rule 40.
Petitioner resided in Phoenix, Arizona, at the time the
petition was filed in this case.
Respondent's Notices of Deficiency
By notices dated February 21, 1995, respondent determined
deficiencies in, and additions to, petitioner's Federal income
taxes for the taxable years 1987 through 1992 as follows:
Additions to Tax
Sec. Sec. Sec. Sec. Sec.
Year Deficiency 6651(a)(1) 6653(a)(1) 6653(a)(1)(A) 6653(a)(1)(B) 6654(a)
1
1987 $5,294 $1,324 --- $265 $285
1988 9,967 2,440 $498 --- --- 623
1989 17,260 4,315 --- --- --- 1,164
1990 11,137 2,778 --- --- --- 730
1991 16,141 4,035 --- --- --- 929
1992 25,808 6,452 --- --- --- 1,125
1
50 percent of the interest due on the underpayment of $5,294.
The deficiencies in income taxes are based on respondent's determination
that petitioner, who operated a pool service business known as R & O Pool
Service, failed to report on income tax returns for the taxable years in issue
net income from self-employment, as reconstructed by respondent, as well as
wages and interest, as follows:
1
(...continued)
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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Net income from
Year self-employment Wages Interest
1987 $21,828
1
1988 32,277 $1,530
1989 56,581
2 3
1990 37,609 375 $61
1991 50,669
1992 78,645
1
paid by Swimmin' Time, Inc.
2
paid by Dennis G. Hann
3
paid by Arizona Central Credit Union
The deficiencies in income taxes include self-employment taxes under section
1401.
The additions to tax under section 6651(a)(1) are based on respondent's
determination that petitioner's failure to file income tax returns for the
years in issue was not due to reasonable cause. The additions to tax under
section 6653(a)(1)(A) and (B) for 1987 and the addition to tax under section
6653(a)(1) for 1988 are based on respondent's determination that the
underpayment for each of those years is due to negligence or intentional
disregard of rules or regulations. Finally, the additions to tax under
section 6654(a) are based on respondent's determination that petitioner failed
to pay sufficient estimated income taxes for 1988 and 1990 and failed to pay
any estimated income taxes for the remaining years in issue.
Petitioner's Petition
Petitioner filed a petition for redetermination on May 25, 1995. The
petition contained no assignments of error or allegations of fact. The only
statement in the petition that is directed at respondent's deficiency
determination reads as follows: "Notice of Deficiency is without merit as it
is based on Fraudulent IRS Individual Master File kept on the petitioner by
the IRS".
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Respondent's Rule 40 Motion and Subsequent Developments
As indicated, on July 13, 1995, respondent filed a Motion To Dismiss For
Failure To State A Claim Upon Which Relief Can Be Granted. Shortly
thereafter, on July 18, 1995, the Court issued an order calendaring
respondent's motion for hearing and also directing petitioner to file a proper
amended petition in accordance with the requirements of Rule 34. In
particular, the Court directed petitioner to file a proper amended petition
setting forth with specificity each error allegedly made by respondent in the
determination of the deficiencies and separate statements of every fact upon
which the assignments of error are based.
On August 8, 1995, petitioner filed: (1) An objection to respondent's
motion, (2) a Rule 50(c) statement, and (3) an amended petition. Unlike the
petition, the amended petition is not terse. It consists of 7 typewritten
pages and includes the following statements:
Therefore Petitioner believing he is a non-taxpayer and not
required to file, further shows that even if he were compelled by
law to report, he is not mandated to assess, hence all of the
court's rulings on the voluntary assessment aspect of the tax
system, and without the voluntary assessment and material facts
the government prepared bookkeeping 'dummy/substitute'
forms/returns are without a basis in law or fact upon which to
rely for the authority to examine or audit. The bookkeeping
returns prepared by the Respondent are Forms 1040. Any issue
alleged for failure to report or file is an issue not justiciable
in this court, for this court has only been mandated to determine
the alleged civil liability, if there is one, after it has
exercised its review of the procedures used by Respondent in the
determinations made.
* * * * * * *
Petitioner states that the Form 1040 has not been authorized
by the Office of Management and Budget for the collection of
information/return for the Individual Income Tax found in Title 26
United States Code §1, which is a direct tax.
* * * * * * *
Petitioner states that he is not identified in the Internal
Revenue Code by person, class of persons, and/or activity as a taxpayer
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(as defined in the internal revenue code) and therefore Petitioner is
not subject to an internal revenue tax.
Petitioner has never been afforded a hearing to determine if he is
a "taxpayer" as defined within the definition of the internal revenue
code. Since non-taxpayers are not within the purview of the code they
are not subject to any internal revenue tax. Therefore the above
determinations are in error.
Since I am not a taxpayer, and the respondent has not made such an
assertion nor is there any evidence before this Court that I am engaged
in any revenue taxable activity, happening or event, the notice of
deficiency constitutes a "counterfeit security" and its signer is
subject to punishment under Title 18 United States Code Section 552 as a
felony. Since this counterfeit security was sent through the mail the
sender has committed mail fraud. Since this counterfeit security says
that I am liable for a tax without stating how I became liable it
constitutes the making of a false statement on a government form in
violation of 26 USC Section 7214(7).
Petitioner attached to the amended petition a number of documents,
including some 18 pages of OMB-related documents pertaining to Form 1040 and
its various schedules. Petitioner also attached to the amended petition an
"Affidavit in Commerce of Rob R. Olsen". This document provides in part as
follows:
I was not afforded a judicial hearing of any kind before the
appellation of "taxpayer" was bestowed upon me.
To my best knowledge and belief the notice of deficiency served on
me is a counterfeit security.
This affidavit in commerce stands as prima facie evidence unless
rebutted point by point by the respondent.
I, Rob R. Olsen, have personally researched the Notice of
Office of Management and Budget Action * * * with its attached
request for OMB Review * * * and its attached Form SF-83
Supporting Statement for Form 1040 for 1993 * * * and it is upon
this government Form, the 26 Code of Federal Regulations part 602
and the CFR Index and finding aids that I rebut and refute all
presentments made or alleged to have been made to or for me, by
the Respondent attempting to make me a taxpayer.
Petitioner's objection and Rule 50(c) statement rely on and incorporate
petitioner's "Affidavit in Commerce"; the objection and statement also advance
additional arguments equally devoid of merit.
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Respondent's motion to dismiss was called for hearing in Washington,
D.C., on August 16, 1995. Counsel for respondent appeared at the hearing and
presented argument on the pending motion. Petitioner did not appear at the
hearing; however, as previously indicated, he did file a Rule 50(c) statement.
Discussion
Rule 40 provides that a party may file a motion to dismiss for failure
to state a claim upon which relief can be granted. We may grant such a motion
when it appears beyond doubt that the party's adversary can prove no set of
facts in support of a claim that would entitle him or her to relief. Conley
v. Gibson, 355 U.S. 41, 45-46 (1957); Price v. Moody, 677 F.2d 676, 677 (8th
Cir. 1982).
Rule 34(b)(4) requires that a petition filed in this Court contain clear
and concise assignments of each and every error that the taxpayer alleges to
have been committed by the Commissioner in the determination of the deficiency
and the additions to tax in dispute. Rule 34(b)(5) further requires that the
petition contain clear and concise lettered statements of the facts on which
the taxpayer bases the assignments of error. See Jarvis v. Commissioner, 78
T.C. 646, 658 (1982). The failure of a petition to conform with the
requirements set forth in Rule 34 may be grounds for dismissal. Rules
34(a)(1); 123(b).
In general, the determinations made by the Commissioner in a notice of
deficiency are presumed to be correct, and the taxpayer bears the burden of
proving that those determinations are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Moreover, any issue not raised in the
pleadings is deemed to be conceded. Rule 34(b)(4); Jarvis v. Commissioner,
supra at 658 n.19; Gordon v. Commissioner, 73 T.C. 736, 739 (1980).
The petition filed in this case does not satisfy the requirements of
Rule 34(b)(4) and (5). There is neither assignment of error nor allegation of
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fact in support of any justiciable claim. Rather, there is nothing other than
a terse statement of tax protester rhetoric. See Abrams v. Commissioner, 82
T.C. 403 (1984); Rowlee v. Commissioner, 80 T.C. 1111 (1983); McCoy v.
Commissioner, 76 T.C. 1027 (1981), affd. 696 F.2d 1234 (9th Cir. 1983).
The Court's order dated July 18, 1995, provided petitioner with an
opportunity to assign error and allege specific facts concerning his liability
for the taxable years in issue. Unfortunately, petitioner failed to respond
properly to the Court's order. Rather, petitioner elected to continue to
proceed with time-worn tax protester rhetoric, expanding upon the gibberish in
his petition. See Abrams v. Commissioner, supra; Rowlee v. Commissioner,
supra; McCoy v. Commissioner, supra; Karlin v. Commissioner, T.C. Memo. 1990-
496.
We see no need to painstakingly address petitioner's arguments. The
short answer to them is that petitioner is not exempt from Federal income tax
or from the imposition of appropriate additions to tax. See Abrams v.
Commissioner, supra at 406-407. Moreover, as the Court of Appeals for the
Fifth Circuit has remarked: "We perceive no need to refute these arguments
with somber reasoning and copious citation of precedent; to do so might
suggest that these arguments have some colorable merit." Crain v.
Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
Because neither the petition nor the amended petition states a claim
upon which relief can be granted, we will grant respondent's motion to dismiss
for failure to state a claim. See Scherping v. Commissioner, 747 F.2d 478
(8th Cir. 1984); see also Nieman v. Commissioner, T.C. Memo. 1993-533; Solomon
v. Commissioner, T.C. Memo. 1993-509, affd. without published opinion 42 F.3d
1391 (7th Cir. 1994).
We turn now on our own motion, to the award of a penalty against
petitioner under section 6673(a).
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As relevant herein, section 6673(a)(1) authorizes the Tax Court to
require a taxpayer to pay to the United States a penalty not in excess of
$25,000 whenever it appears that proceedings have been instituted or
maintained by the taxpayer primarily for delay or that the taxpayer's position
in such proceeding is frivolous or groundless.
The record in this case convinces us that petitioner was not interested
in disputing the merits of either the deficiencies in income taxes or the
additions to tax determined by respondent in the notice of deficiency.
Rather, the record demonstrates that petitioner regards this case as a vehicle
to protest the tax laws of this country and espouse misguided views.
A petition to the Tax Court is frivolous "if it is contrary to
established law and unsupported by a reasoned, colorable argument for change
in the law." Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).
Petitioner's position, as set forth in the petition and the amended petition,
consists solely of tax protester rhetoric and legalistic gibberish. Based on
well established law, petitioner's position is frivolous and groundless.
We are also convinced that petitioner instituted and maintained this
proceeding primarily, if not exclusively, for purposes of delay. Having to
deal with this matter wasted the Court's time, as well as respondent's.
Moreover, taxpayers with genuine controversies were delayed.
In view of the foregoing, we will exercise our discretion under section
6673(a)(1) and require petitioner to pay a penalty to the United States in the
amount of $2,000. Coleman v. Commissioner, supra at 71-72; Crain v.
Commissioner, supra at 1417-1418; Coulter v. Commissioner, 82 T.C. 580, 584-
586 (1984); Abrams v. Commissioner, supra at 408-411.
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To reflect the foregoing,
An order of dismissal and
decision will be entered.