Narramore v. Commissioner

T.C. Memo. 1996-11

UNITED STATES TAX COURT

GENE E. & MARILYN NARRAMORE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 34184-87. Filed January 22, 1996.

David G. Hendricks, for respondent.

MEMORANDUM OPINION

DAWSON, Judge: This case was assigned to Special Trial

Judge John J. Pajak pursuant to section 7443A(b)(4) of the Code

and Rules 180, 181, and 183. Unless otherwise indicated, all

section numbers refer to the Internal Revenue Code for the

taxable year in issue, and all Rule numbers refer to the Tax

Court Rules of Practice and Procedure. The Court agrees with and
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adopts the Special Trial Judge's opinion, which is set forth

below.

OPINION OF THE SPECIAL TRIAL JUDGE

PAJAK, Special Trial Judge: This case is before the Court

on respondent's Motion to Dismiss for Lack of Prosecution and

respondent's Motion to Award Damages pursuant to section 6673.

Respondent determined a deficiency in and additions to

petitioners' Federal income tax, with increased interest, as

follows:

Increased
Interest
Additions to Tax under Sections under Section
Year Deficiency 6653(a)(1) 6653(a)(2) 6661 6621(c)

1983 $25,256 $1,263 1 6,314 2

1 50 percent of the interest due on $25,256, which is the
underpayment of tax due to negligence.

2 $16,800 of the deficiency is a substantial underpayment
attributable to a tax motivated transaction for purposes of
computing the interest payable with respect to such amount under
section 6621(c).

The Court must decide whether respondent's motion to dismiss

for lack of prosecution should be granted and whether petitioners

are liable for a penalty under section 6673.

For clarity and convenience, the findings of fact and

conclusions of law have been combined.

Petitioners lived in Broken Arrow, Oklahoma, when their

petition was filed. Petitioners filed their petition on October

19, 1987. They put the entire amount set forth in the notice of

deficiency into controversy.
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Respondent's Appeals Officer scheduled conferences for

February 4, 1988, and March 4, 1988. The Appeals Officer offered

petitioners the opportunity to set the date and time of the

conferences. Petitioners refused to attend any conferences or to

discuss the issues in this case.

In August 1988, petitioners were afforded the opportunity to

settle a portion of this case according to a uniform settlement

offer developed with regard to the Petro West tax litigation

project. Petitioners did not provide the Appeals Officer with

the documentation necessary to settle the case (i.e.,

verification of cash out-of-pocket expenses), nor did they

respond to the settlement offer.

On August 11, 1988, respondent sent petitioners a Branerton

letter, Branerton Corp. v. Commissioner, 61 T.C. 691 (1974), and

invited petitioners to meet for an informal discovery conference

on August 17, 1988. Respondent also suggested that petitioners

assemble documents and other records to establish that

petitioners were not liable for the adjustments set forth in the

notice of deficiency. The letter gave petitioners the option of

stipulating to be bound by the outcome of the lead case in the

Petro West tax litigation project. Petitioners failed to appear

for the August 17, 1988, meeting and also failed to provide any

of the requested documents.

Respondent, by formal discovery pursuant to Rule 72,

requested on August 17, 1988, and August 25, 1988, that
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petitioners produce documents, and on August 25, 1988, also

requested permission to enter petitioners' alleged mining claim

for the purpose of inspecting it. Petitioners failed to respond

to these formal discovery requests.

On September 2, 1988, a letter from petitioners was filed by

this Court as a Motion to Dismiss. The motion, in part, asked

that the petition be withdrawn due to an Affidavit of Revocation

and Rescission (ARR), which was attached to the motion. The ARR

was replete with tax protester arguments. In the ARR, Gene E.

Narramore (petitioner) states that "I am not and never was a

'taxpayer' as the term is defined in the Internal Revenue Code, a

'person liable' for any Internal Revenue tax, or a 'person

subject to the provisions of that Code, and declare that I am,

and have always been, a 'nontaxpayer.'" The motion was denied on

September 9, 1988.

On November 7, 1988, this Court filed a November 2, 1988,

two-page letter, from petitioner and treated it as a Motion to

Vacate. The letter again sought to withdraw the petition and

again attached the AAR. Petitioner's November 2, 1988, letter

was also replete with familiar tax protester statements; i.e.,

petitioner's "current 'non-taxpayer status'" and "fraud by the

U.S. Government, the IRS, the various media and others." It

alluded to constitutional arguments that this Court and other

Federal Courts have repeatedly held to be without merit. E.g.
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Rowlee v. Commissioner, 80 T.C. 1111 (1983). This Court denied

the motion on November 22, 1988.

On February 23, 1989, this Court dismissed petitioners' case

at docket No. 5010-88, for lack of prosecution due to their

failure to appear at a February 13, 1989, calendar call at

Muskogee, Oklahoma. The Court entered a decision that, for the

year 1984, petitioners owed an income tax deficiency of $212,697,

with additions to tax under sections 6653(a)(1) and 6661 of

$10,635 and $53,174, respectively, and under section 6653(a)(2)

of 50 percent of the interest due on the deficiency.

On May 14, 1990, respondent offered petitioners the

opportunity to be bound by the outcome of the then pending case

of Gampp v. Commissioner, docket No. 16968-87, as to the Petro

West issue. In this letter, respondent cautioned petitioners

that the Government would seek an award of damages pursuant to

section 6673 if they continued to pursue their frivolous

protester arguments. Petitioners did not respond to this

correspondence.

By letters dated June 23, 1994, August 18, 1994, August 24,

1994, and August 29, 1994, respondent attempted to enlist

petitioners' assistance in preparing this case for trial.

Forwarded with this correspondence were copies of Rule 70(a)(1),

Rule 91(a), Order dated August 2, 1994, with attached Standing

Pre-Trial Order, Stipulated Decision Document, Gampp v.

Commissioner, T.C. Memo. 1991-548.
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Respondent received a July 4, 1994, letter from John B.

Kotmair, Jr., of Save-A-Patriot Fellowship. Mr. Kotmair and

petitioners were advised by respondent that since Mr. Kotmair had

not made an entry of appearance, respondent would continue to

correspond directly with petitioners. Thereafter, respondent

received a letter dated August 5, 1994, from petitioner

describing a hearing disability and indicating that he would

forward all correspondence to Mr. Kotmair.

An Order setting this case for trial at the Oklahoma Trial

Session with a date certain of 10:00 a.m. Tuesday, October 4,

1994, was served on petitioners on August 3, 1994. Attached to

the Order was a Standing Pre-Trial Order directing the parties to

meet for purposes of settlement and/or preparation of a

stipulation, and warning that dismissal was possible if any

unexcused failure to comply with the Order affected the timing or

conduct of the trial. Among other things, unless a basis of

settlement had been reached, the parties were ordered to exchange

Trial Memoranda.

Respondent received a letter dated August 24, 1994, from

petitioner in which petitioner stated that he was not subject to

the jurisdiction of this Court as a result of the ARR previously

sent to the Court. In this letter, petitioner threatened a suit

for damages against all individuals who did not honor the ARR.

Respondent, in a September 2, 1994, letter, again cautioned

petitioners that the Court has authority to award a penalty of up
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to $25,000 pursuant to section 6673. Respondent also provided a

copy of Estate of Ming v. Commissioner, 62 T.C. 519 (1974), and

again requested that petitioners assist in the preparation of

this case for trial.

Respondent received a September 10, 1994, letter from

petitioner in which petitioner acknowledged receipt of

respondent's September 2, 1994, letter. Once again, petitioner

alluded to his ARR.

On September 14, 1994, respondent timely served a copy of

respondent's trial memorandum on petitioners. Petitioners failed

to timely submit a trial memorandum as required by the Court's

Standing Pre-Trial Order.

On October 4, 1994, petitioners failed to appear for the

scheduled trial of this case. Respondent entered an appearance

and filed the two motions currently before us.

Motion to Dismiss

With respect to respondent's motion to dismiss, Rules 123(b)

and 149(a) provide as follows:

Rule 123. *** Dismissal

* * * * * * *

(b) Dismissal: For failure of a petitioner properly
to prosecute or to comply with these Rules or any order
of the Court or for other cause which the Court deems
sufficient, the Court may dismiss a case at any time
and enter a decision against the petitioner. The Court
may, for similar reasons, decide against any party any
issue as to which such party has the burden of proof,
and such decision shall be treated as a dismissal for
purposes of paragraphs (c) and (d) of this Rule.
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* * * * * * *

Rule 149. ***

(a) Attendance at Trials: The unexcused absence of
a party or a party's counsel when a case is called for
trial will not be ground for delay. The case may be
dismissed for failure properly to prosecute, or the
trial may proceed and the case be regarded as submitted
on the part of the absent party or parties.

We find that petitioners' failure to cooperate with

respondent during the pre-trial period made it impossible for

respondent to conduct negotiations, exchange information, and

stipulate mutually agreeable facts as required by Rule 91(c).

The Standing Pre-Trial Order has not been complied with by

petitioners, nor has there been compliance with the mandates of

the Court in Branerton Corp. v. Commissioner, 61 T.C. 691 (1974).

Furthermore, no trial memorandum was filed on behalf of

petitioners. Thus, in light of petitioners' conduct in this

proceeding and their failure to appear when the case was called

for trial, we conclude that dismissal is appropriate.

Accordingly, respondent's motion to dismiss for lack of

prosecution will be granted.

Penalty Under Section 6673

Respondent has moved for a penalty under section 6673.

Under the applicable provisions of that section, the Court may

award a penalty to the United States of up to $25,000 when the

proceeding has been instituted or maintained by the taxpayer

primarily for delay or if the taxpayer's position in such
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proceeding is frivolous or groundless. Based on the record, we

conclude that such an award is appropriate in this case.

Petitioners have pursued a frivolous and groundless position

in this proceeding from the time that they submitted their Motion

to Dismiss with the attached AAR on September 2, 1988, to their

failure to appear at the Trial Session on October 4, 1994.

Petitioners' arguments are no more than stale tax protester

contentions long dismissed summarily by this Court and all other

courts which have heard such contentions. See, e.g., Lonsdale v.

United States, 919 F.2d 1440 (10th Cir. 1990) (this is the

circuit to which an appeal would lie in this case); Rowlee v.

Commissioner, 80 T.C. 1111 (1983).

In sum, the conduct and the inaction described above support

a finding that petitioners instituted and maintained this action

primarily for delay. We are convinced that petitioners knew

their position to be groundless and frivolous, yet they persisted

in maintaining this proceeding primarily to impede the proper

workings of our judicial system and to delay the payment of their

Federal income tax liabilities. Accordingly, a penalty is

awarded to the United States under section 6673 in the amount of

$7,500.

To reflect the foregoing,

An appropriate order and

decision will be entered.