Bratcher v. Commissioner

T.C. Memo. 1996-252

UNITED STATES TAX COURT

CRAIG A. BRATCHER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 20553-95. Filed May 30, 1996.

Craig A. Bratcher, pro se.

Jordan S. Musen, Stewart Todd Hittinger, and Diane L. Worland,

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
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
 - 2 -

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 (1) Respondent's Motion To Dismiss For Failure To State A

Claim Upon Which Relief Can Be Granted, as supplemented, filed

pursuant to Rule 40; (2) petitioner's Motion To Shift Burden Of

Proof To Respondent; and (3) petitioner's Motion To "Quash The

Going Forward With The Evidence".

Petitioner resided in Chesterton, Indiana, at the time that

the petition was filed in this case.

Respondent's Notice of Deficiency

Respondent issued a notice of deficiency to petitioner dated

July 12, 1995. In said notice, respondent determined the

following deficiencies in petitioner's Federal income taxes and

additions to tax:

Additions to tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)

1991 $19,1111 $4,028 $1,098
1992 12,037 3,009 524
1993 3,223 611 100
1
The determination of a statutory deficiency does not take
into account certain payments and credits, such as payment on
account of estimated tax. See sec. 6211(b)(1); see also infra
note 2.

The deficiencies in income taxes, which include self-

employment taxes for 1991 and 1992, are based on respondent's
 - 3 -

determination that petitioner failed to report income as

reflected in the following schedule:

Income 1991 1992 1993

Nonemployee
compensation $56,115 $34,726 ---
Wages --- 6,780 $25,5411
Interest 36 --- ---

Total 56,151 41,506 25,541
1
For 1993, respondent gave petitioner credit for amounts
withheld from his taxes insofar as his ultimate tax liability for
that year is concerned. However, the determination of a
statutory deficiency does not take such amounts into account.
See sec. 6211(b)(1).

In making the foregoing determinations, respondent relied on

Forms 1040X (Amended U.S. Individual Income Tax Return) that

petitioner submitted in July 1994 for the taxable years 1991 and

1992. In this regard, the Form 1040X for 1991 disclosed "Total

income" in the amount of $56,151, whereas the Form 1040X for 1992

disclosed "Total income" in the amount of $34,726.

In making the foregoing determinations, respondent also

relied on the following Forms W-2 and 1099 that disclosed the

payment of income to petitioner by various third-party payors:

1991
Income Payor Amount

Nonemployee
compensation A M Cabinets, Inc. $3,535
Interest Founders National Bank 36
 - 4 -

1992
Income Payor Amount

Nonemployee
compensation A M Cabinets, Inc. $2,980
Wages Adwood Corp. 6,780

1993
Income Payor Amount

Wages Adwood Corp. $ 1,130
Wages USX Corp. 24,411
Total 25,541

The additions to tax under section 6651(a)(1) are based on

respondent's determination that petitioner's failure to timely

file income tax returns for the taxable years in issue was not

due to reasonable cause. Finally, the additions to tax under

section 6654(a) are based on respondent's determination that

petitioner failed to pay the requisite amount of estimated taxes

for the taxable years in issue.

Petitioner's Petition and Amended Petition

Petitioner filed his petition on October 11, 1995. The crux

of petitioner's position is that the Commissioner may not

determine a deficiency if a taxpayer has not filed a return.

Thus, the petition includes the allegation that "For the

Commissioner to make an 'examination' a return must exist."

On November 13, 1995, petitioner filed an amended petition.

In his amended petition, petitioner admits that he did not file

income tax returns for the taxable years in issue. Petitioner

also alleges, in part, as follows:
 - 5 -

The alleged Notice of Deficiency has fail [sic] to
prove that the petitioner was engaged in any income-
producing activity during the years of the deficiency
notice. Nor is their [sic] any evidence that the
respondent's determination was based on information,
other than that of presumption, concerning petitioner's
alleged income-producing activities during the years in
issue.

Petitioner then contends that respondent bears the burden of

proof, and he offers what purports to be a memorandum of law on

such matter. However, petitioner's "memorandum of law" is

nothing other than an extended excerpt from this Court's opinion

in Senter v. Commissioner, T.C. Memo. 1995-311, which has been

subtly modified to make it appear as if it were petitioner's own

submission.

Respondent's Rule 40 Motion and Subsequent Developments

As indicated, respondent filed a Motion To Dismiss For

Failure To State A Claim Upon Which Relief Can Be Granted.2 On

2
Respondent subsequently supplemented her motion to dismiss
in two respects. First, respondent supplemented her motion to
account for an error in the determination of the addition to tax
under sec. 6654(a) for 1991. In this regard, respondent
acknowledges that the computation of such addition should take
into account two payments made by petitioner in 1992 in the
aggregate amount of $3,000. Accordingly, such addition has been
reduced from $1,098 to $169.83.
Second, respondent supplemented her motion to decrease the
total amount of income that petitioner failed to report for 1992.
In this regard, respondent now asserts that petitioner failed to
report $34,726; i.e., the amount disclosed by petitioner as
"Total income" on petitioner's Form 1040X for 1992. Thus:

(continued...)
 - 6 -

November 27, 1995, shortly after respondent filed her motion to

dismiss, the Court issued an order calendaring respondent's

motion for hearing and also directing petitioner to file a second

amended petition in accordance with the requirements of Rule 34.

In particular, the Court directed petitioner to file a second

amended petition setting forth with specificity each error

allegedly made by respondent in the determination of the

deficiency and separate statements of every fact upon which the

assignments of error are based.

Petitioner responded to the Court's Order dated November 27,

1995, by filing a second amended petition on December 29, 1995.

In his second amended petition, petitioner again admits that he

did not file income tax returns for the taxable years in issue

and alleges that respondent's deficiency determinations were not

based on any factual evidence. The second amended petition also

includes the following allegations:

(...continued)
Income 1992

Nonemployee
compensation $27,946
Wages 6,780
Interest ---
Total 34,726

As a consequence of the foregoing, respondent recomputed the
deficiency and the additions to tax for 1992, as follows:

Additions to tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)

1992 $9,314 $2,329 $406
 - 7 -

Petitioner has never been notified of a duty to
file, or that any requirement was placed upon the
Petitioner to file, nor was Petitioner ever served with
any notice by the Commissioner of Internal Revenue
requiring Petitioner to keep records or file a tax
return or statement; * * *

* * * * * * *

Petitioner's Official Records (IMF, not to exclude
other systems of records), created and maintained
solely by the Internal Revenue Service, reflects the
Internal Revenue Service fraud upon Petitioner.

Petitioner's Two Motions

On December 29, 1995, petitioner filed his first motion,

namely, the Motion To Shift Burden Of Proof To Respondent. This

motion is premised on petitioner's argument that respondent's

deficiency determinations were not based on any factual evidence.

On January 11, 1996, petitioner filed his second motion,

namely, the Motion To "Quash The Going Forward With The

Evidence". Such motion closely tracks petitioner's first motion

but also alleges various violations of petitioner's

Constitutional rights.

The Hearing on the Parties' Motions

Respondent's motion to dismiss and petitioner's two motions

were called for hearing in Washington, D.C., on February 14,

1996, and again on March 6, 1996. Counsel for respondent

appeared at the hearings and presented argument and adduced

evidence in respect of the pending motions. Petitioner did not
 - 8 -

appear at either hearing. However, he did file a Rule 50(c)

statement, together with an "Affidavit of Fact", prior to the

first hearing.

In his "Affidavit of Fact", petitioner alleges, inter alia,

that he is an "Indiana state Citizen * * * having a working

knowledge and understanding of the Internal Revenue Code (Title

26 USC) and its implementing regulations." Petitioner also

alleges that he:

has read and studied the Internal Revenue Code and its
implementing regulations, and various internal policy
and procedural manuals, thereby [he] has determined
that [his] current status is not that of a "taxpayer"
* * *

Petitioner's Forms 1040X

At the hearing on February 14, 1996, respondent introduced

copies of the Forms 1040X that petitioner submitted to respondent

in July 1994. On Line 1 of Form 1040X for 1991, petitioner

reported "Total income" in the amount of $56,151, whereas on Line

2 petitioner claimed an "Adjustment to income" in the form of

"income from 'without U.S.'" in the same amount, thereby

eliminating all income. Similarly, on Line 1 of Form 1040X for

1992, petitioner reported "Total income" in the amount of

$34,726, whereas on Line 2 petitioner claimed an "Adjustment to

income" in the form of "income from 'without U.S.'" in the same

amount, once again eliminating all income. Both Forms 1040X

refer to "attached supporting forms".
 - 9 -

In the "attached supporting forms", petitioner alleges,

inter alia, that the 50 States are excluded from the definition

of "United States" for purposes of the income tax under subtitle

A of the Internal Revenue Code. Petitioner further alleges that

although he is a resident of Chesterton, Indiana, he is neither a

"U.S. Citizen" nor a "resident" or "inhabitant" of the United

States. Petitioner basically concludes that all income received

by him is not taxable because it constitutes "compensation for

labor or personal services performed without the United States".

Petitioner finishes by attempting to revoke his signature on all

prior Federal income tax returns. Thus:

I hereby REVOKE all signatures, of the property
known as CRAIG BRATCHER, that appear on every 1040 Form
(Codicil), including, but not limited to, the
"original" 1040 Forms and any/all other federal forms
and documents for the years 1958 through 1993.

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

which 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
 - 10 -

that the taxpayer alleges to have been committed by the

Commissioner in the determination of the deficiency and any

addition 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, amended petition, and the second amended

petition filed in this case do not satisfy the requirements of

Rule 34(b)(4) and (5). There is neither assignment of error nor

allegation of fact in support of any justiciable claim. Rather,

there is nothing but tax protester rhetoric and legalistic

gibberish, as demonstrated by the passages from petitioner's

pleadings and other documents that were previously quoted. See

Abrams v. Commissioner, 82 T.C. 403 (1984); Rowlee v.
 - 11 -

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 November 27, 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 to the

Court's order in a meaningful fashion.

We see no need to catalog petitioner's arguments and

painstakingly address them. 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). Suffice it to say that petitioner is not exempt

from Federal income tax or from the obligation to file income tax

returns. See sec. 6012(a)(1); Abrams v. Commissioner, supra at

406-407. Moreover, the contention that the Commissioner cannot

determine a deficiency because the taxpayer has not filed an

income tax return is frivolous. Zyglis v. Commissioner, T.C.

Memo. 1993-341, affd. without published opinion 29 F.3d 620 (2d

Cir. 1994); Scruggs v. Commissioner, T.C. Memo. 1995-355; Roman

v. Commissioner, T.C. Memo. 1995-175.

We also think it appropriate to comment briefly on

petitioner's allegation that respondent's deficiency
 - 12 -

determinations were not based on any factual evidence. Here we

note that for 1991 and 1992, respondent's deficiency

determinations, as supplemented in respondent's motion to

dismiss, were based on admissions made by petitioner in Forms

1040X submitted by petitioner in July 1994. In other words,

petitioner has been charged with having no more income than the

amounts disclosed by petitioner on the Forms 1040X that he

himself submitted to respondent. Moreover, we note that

petitioner has repeatedly admitted that he failed to file income

tax returns for the years in issue, an admission that confirms

respondent's determination and that provides a basis for imposing

additions to tax under sections 6651(a)(1) and 6654(a).

Insofar as 1993 is concerned, we note that respondent's

deficiency determination is based on two Forms W-2 submitted to

respondent under petitioner's name and taxpayer identification

number. The Forms W-2 disclose the payment of wages by USX

Corporation in the amount of $24,411 and by Adwood Corporation in

the amount of $1,130.

We think it significant that petitioner has not denied that

he was employed by either USX Corporation or Adwood Corporation

in 1993. Indeed, petitioner has not even denied receiving the

amount of wages that respondent determined he received. If
 - 13 -

petitioner had wanted to dispute any of these matters, it would

have been extraordinarily easy for him to have done so.3

Given the factual basis for respondent's deficiency

determinations, as supplemented in respondent's motion to

dismiss, for the taxable years in issue, petitioner is in no

position to argue that such determinations are arbitrary. Zuhone

v. Commissioner, 883 F.2d 1317, 1325-1326 (7th Cir. 1989), affg.

T.C. Memo. 1988-142.

Because the petition, amended petition, and second amended

petition fail to state a claim upon which relief can be granted,

we will grant respondent's motion to dismiss, as supplemented.4

See Scherping v. Commissioner, 747 F.2d 478 (8th Cir. 1984). We

will also deny petitioner's two motions because they represent

nothing other than a restatement of the claims made by petitioner

in his pleadings.

3
The fact that petitioner may deny receiving taxable
income, as opposed to compensation, is to no avail. In this
regard, the record is clear that petitioner's views on what is
taxable are not based on provisions of the Internal Revenue Code,
but rather reflect frivolous and groundless tax-protester
arguments.

4
The fact that respondent has conceded part of the
deficiency and additions to tax for 1992, as well as part of the
addition to tax under sec. 6654(a) for 1991, is attributable to
the Court's involvement in this case and not to any effort by
petitioner to address the merits of this case.
 - 14 -

We turn now, on our own motion, to the award of a penalty

against petitioner under section 6673(a).

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 his own 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 his pleadings and other filings, 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
 - 15 -

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 $2,500. 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.

In order to reflect the foregoing,

An order of dismissal and

decision will be entered.5

5
See supra note 2.