Green v. Commissioner

T.C. Memo. 1996-107

UNITED STATES TAX COURT

JOHN PRYOR GREEN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 18712-94. Filed March 7, 1996.

John Pryor Green, pro se.

Bruce G. Warner, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

LARO, Judge: John Pryor Green petitioned the Court with

respect to respondent’s determinations concerning his 1987

through 1992 Federal income taxes. Respondent determined that

petitioner was liable for the following deficiencies and

additions thereto:
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Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654

1987 $4,221 $1,055 $227
1988 3,750 938 241
1989 5,826 1,457 397
1990 5,587 1,397 367
1991 4,099 1,025 235
1992 4,109 1,027 180

Following concessions, we must decide:

1. Whether certain amounts paid to petitioner during the

subject years were taxable income. We hold they were.

2. Whether petitioner is subject to self-employment tax on

these amounts. We hold he is.

3. Whether petitioner is liable for the additions to tax

for delinquency determined by respondent under section

6651(a)(1). We hold he is.

4. Whether petitioner is liable for the additions to tax

for underpayments of estimated tax determined by respondent under

section 6654. We hold he is.

Unless otherwise stated, section references are to the

Internal Revenue Code in effect for the years in issue. Rule

references are to the Tax Court Rules of Practice and Procedure.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein. Petitioner resided in Miami, Florida, when

he petitioned the Court. He did not file income tax returns for

any of the subject years, and he did not make any estimated
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payments for those years. Petitioner was unmarried during the

subject years.

Petitioner is a court reporter. In 1987, he was engaged by

Patterson Reporting (Patterson), and Patterson paid him $18,165

for these engagements. Patterson issued petitioner a Form

1099-EC, Nonemployee Compensation, showing that it paid him this

amount. During the 1988 through 1992 taxable years, petitioner

was engaged by Metro-Dade County (Metro), and Metro paid him for

these engagements. Petitioner received Forms 1099-NEC from

Metro, showing that Metro paid him $12,557 in 1988; $22,659 in

1989; $22,111 in 1990; $8,282 in 1991; and $6,508 in 1992.

During the 1989 and 1990 taxable years, petitioner was engaged by

the State of Florida, and the State paid him for these

engagements. Petitioner received Forms 1099-NEC from the State

showing that it had paid him $858 in 1989 and $631 in 1990.

During each of the subject years, petitioner was required to

(and did) furnish his own supplies. He was required to furnish

most of his own equipment when he went out on assignment. He did

his own transcribing and typing.

Respondent determined that petitioner did not file an income

tax return for any of the subject years, and she computed his tax

liability for those years. First, respondent determined that

petitioner had received the income reported on the Forms

1099-NEC. Second, she referred to the Bureau of Labor Statistics

and determined that he had received additional amounts of taxable
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income in 1988, 1991, and 1992. Third, she determined that he

was liable for self-employment tax on all of his unreported

income. Fourth, she determined that he could deduct the standard

deduction for each year, and that he could deduct one-half of his

self-employment tax for 1990, 1991, and 1992. Fifth, she

determined that his filing status was “Single”, and that he was

entitled to one exemption. Sixth, she determined that he was

liable for the additions to tax mentioned above.

OPINION

1. Taxable Income

Respondent determined that the amounts listed on the Forms

1099-NEC were includable in petitioner’s gross income. She also

referred to the Bureau of Labor Statistics, and determined that

petitioner received additional taxable income in 1988, 1991, and

1992. In his opening argument at trial, respondent’s counsel

conceded the adjustments based on the labor statistics.

At the outset, we note that we need not, and do not, reach

the issue involved in Portillo v. Commissioner, 932 F.2d 1128

(5th Cir. 1991), affg. in part and revg. in part T.C. Memo.

1990-68, because petitioner has not challenged the accuracy of

the Forms 1099-NEC issued to him. As we understand petitioner’s

argument, he performed his court reporting assignments as an

employee of Patterson, Metro, and the State of Florida, and he

was not an independent contractor as determined by respondent.
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Petitioner must prove respondent wrong. Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933).

Whether an employee-employer relationship exists in a given

situation is a factual question to which common law principles

apply. Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323

(1992); Weber v. Commissioner, 103 T.C. 378, 386 (1994), affd.

60 F.3d 1104 (4th Cir. 1995). Factors that are relevant in

determining the substance of an employment relationship include:

(1) The degree of control exercised by the principal over the

details of the work; (2) the taxpayer's investment in the

facilities used in his or her work; (3) the taxpayer's

opportunity for profit or loss; (4) the permanency of the

relationship between the parties; (5) the principal's right of

discharge; (6) whether the work performed is an integral part of

the principal's regular business; (7) the relationship the

parties believe they are creating; and (8) the provision of

employee benefits. NLRB v. United Ins. Co., 390 U.S. 254, 258

(1968); United States v. Silk, 331 U.S. 704, 716 (1947);

Professional & Executive Leasing, Inc. v. Commissioner, 862 F.2d

751 (9th Cir. 1988), affg. 89 T.C. 225 (1987); Weber v.

Commissioner, supra at 387; see also sec. 31.3121(d)-(1)(c)(2),

Employment Tax Regs. (setting forth criteria for identifying

employees under the common law rules). No single factor is

dispositive; the Court must assess and weigh all incidents of the

relationship. Nationwide Mut. Ins. Co. v. Darden, supra at 324.
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The factors are not weighed equally; they are weighed according

to their significance in the particular case. Aymes v. Bonelli,

980 F.2d 857, 861 (2d Cir. 1992).

Petitioner has not attempted to prove respondent’s

determination wrong. Instead, petitioner appears to argue that

he is an employee because the state of the law concerning the

employment status of court reporters is amorphous. Petitioner

refers the Court to a number of revenue rulings concerning court

reporters, which come to different conclusions as to a court

reporter’s employment status. Petitioner primarily relies on

Rev. Rul. 70-528, 1970-2 C.B. 204, in which the Commissioner

ruled that services performed by court reporters and their

deputies appointed by the Governor under the Florida Statutes

Annotated are excepted from “employment” under the provisions of

section 3121(b)(7) of the Federal Insurance Contributions Act and

section 3306(c)(7) of the Federal Employment Tax Act.

We are not persuaded by petitioner’s argument. Revenue

rulings are based on specific fact patterns. Petitioner has not

proven that he falls within the specific facts of any of the

Commissioner’s rulings concerning court reporters. Indeed,

petitioner has told us very little about himself, except for the

facts that: (1) He was a court reporter who was paid for his

engagements, (2) he was required to (and did) furnish his own

supplies; (3) he was required to furnish most of his own
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equipment, (4) he did his own transcribing and typing, and (5) he

was issued Forms 1099-NEC.

Because the record does not show that petitioner was an

employee, we hold for respondent on this issue.1 Accord Ekren v.

Commissioner, T.C. Memo. 1986-509; Moore v. United States,

54 AFTR 2d 84-5410, 84-1 USTC par. 9510 (E.D. Cal. 1984).

2. Self-Employment Tax

A self-employment tax is imposed on net earnings of $400 or

more from self-employment income, subject to a maximum amount of

self-employment income. Secs. 1401 and 1402(b). The term

"self-employment income" means income derived from carrying on a

trade or business, less allowable deductions. Sec. 1402(a) and

(b).

We hold that petitioners's income is subject to the

self-employment tax. Petitioner has not proven otherwise. Rule

142(a); Welch v. Helvering, supra at 115.

3. Additions to Tax Under Section 6651(a)(1)

Respondent determined an addition to tax under section

6651(a) for each year in issue, asserting that petitioner failed

to file Federal income tax returns. In order to avoid this

addition to tax, petitioner must prove that his failure to file

was: (1) Due to reasonable cause and (2) not due to willful

1
Even if we were to agree with petitioner that he was an
employee, his gross income would still include the amounts that
he received from Patterson, Metro, and the State of Florida.
Sec. 61(a).
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neglect. Sec. 6651(a); Rule 142(a); United States v. Boyle,

469 U.S. 241, 245 (1985); In re Stanford, 979 F.2d 1511, 1512

(11th Cir. 1992). A failure to file a Federal income tax return

is due to reasonable cause if the taxpayer exercised ordinary

business care and prudence and, nevertheless, was unable to file

the return within the prescribed time. In re Stanford, supra at

1514; sec. 301.6651-1(c)(1), Proced. & Admin. Regs. Willful

neglect means a conscious, intentional failure or reckless

indifference. United States v. Boyle, supra at 245.

As we understand petitioner’s argument, he did not file

income tax returns due to an absence of forms pertaining to his

situation. Petitioner testified that he did not want to swear

under oath that his return was correct because he would be

committing perjury by stating that he was an independent

contractor. We find this argument unpersuasive. Because

petitioner has failed to prove that his failure to file was due

to reasonable cause and not due to willful neglect, we sustain

respondent on this issue.

4. Additions to Tax Under Section 6654

Respondent determined an addition to tax under section 6654

for each year in issue asserting that petitioner failed to pay

estimated tax. This addition to tax is mandatory unless

petitioner proves that he has met one of the exceptions contained

in section 6654. In re Stanford, supra at 1514; Recklitis v.
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Commissioner, 91 T.C. 874, 913 (1988). Because petitioner has

failed to do so, we sustain respondent on this issue.

For the foregoing reasons,

Decision will be entered

under Rule 155.