Philips v. Commissioner

T.C. Memo. 1996-319

UNITED STATES TAX COURT

SCOTT R. PHILIPS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5057-96. Filed July 15, 1996.

Scott R. Philips, pro se.

Michael H. Salama, for respondent.

MEMORANDUM OPINION

NAMEROFF, Special Trial Judge: This case was heard pursuant

to the provisions of section 7443A(b)(4)1 and Rules 180, 181, and

183. This case is before us on respondent's Motion to Dismiss

for Failure to State A Claim and to Impose a Penalty Under

1
All section references are to the Internal Revenue Code
in effect for the years at issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
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Section 6673, filed pursuant to Rule 40. The Court, sua sponte,

also considers whether to strike portions of the petition under

Rule 52.

Respondent determined deficiencies in, and additions to,

petitioner's Federal income taxes, as follows:

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

1992 $34,134 $8,534 $1,489
1993 69,478 17,370 2,911

The adjustments giving rise to the above deficiencies and

additions to tax are based upon the failure of petitioner to file

Federal income tax returns and report nonemployee compensation,

dividend income, and income from the sale of stock for the years

in issue. The additions to tax under section 6651(a)(1) were

based on respondent's determination that petitioner's failure to

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) were based on respondent's determination that

petitioner failed to pay the requisite estimated income tax for

the taxable years in issue. Petitioner resided in San Clemente,

California, at the time he filed his petition.

Petitioner filed a petition for redetermination on March 19,

1996. In the petition, petitioner disputed the adjustments as

determined by respondent in the notice of deficiency. The

petition contains assignments of error and statements of facts
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relating directly to the determinations made in the notice of

deficiency. Specifically, paragraph 4(A)(1) through (5) for 1992

and paragraph 4(B)(1) through (7) for 1993 contend that

respondent erred in the various specific adjustments. Moreover,

paragraph 5(A)(1) through (5) for 1992 and paragraph 5(B)(1)

through (7) for 1993 clearly allege that petitioner did not

receive the income determined by respondent and that petitioner

is not liable for the deficiencies and additions to tax.

However, the petition contains a paragraph on page 3 which states

the following:

FOR ALL TAX YEARS

(1) Respondent has failed to allege sufficient facts
to establish that Respondent has jurisdiction over
Petitioner in this matter.

(2) By her previous actions, Respondent has attempted
to mislead or has actually misled Petitioner with
respect to the obligation to file tax returns and/or
the obligation to report income.

(3) Respondent failed to provide specific information
as to whether the deficiencies in tax are direct taxes
or indirect (excise) taxes.

As indicated, respondent filed a Motion to Dismiss for

Failure to State A Claim on April 29, 1996. In her motion to

dismiss, respondent contends that the petitioner fails to allege

clear and concise assignments of error in respondent's deficiency

determination in violation of Rule 34(b)(4). Further, respondent

contends that the petitioner fails to allege clear and concise

lettered statements of fact on which petitioner bases assignments
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of error in violation of Rule 34(b)(5). In addition, respondent

contends that the document filed in this matter is not a proper

petition, but rather, is a "statement making frivolous

constitutional arguments with no factual basis"; that the

document filed does not comply with the Rules of the Tax Court as

to the form and content of a petition; that petitioner filed this

document as a protest to paying taxes; and that petitioner is a

devoted tax protester.

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

which 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
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a petition to conform with the requirements set forth in Rule 34

may be grounds for dismissal. Rules 34(a)(1), 123(b).

The petition filed in this case contains clear and concise

assignments of error and statements of facts. Thus, the petition

satisfies the requirements of Rule 34(b)(4) and (5) with the

exception of the above-quoted paragraph. Because the petition

does state a claim upon which relief may be granted, we shall

deny respondent's motion to dismiss.

We turn now, on our own motion, to the issue of whether to

strike the above-quoted paragraph of the petition. Pursuant to

Rule 52, the Court, on its own initiative at any time, may order

stricken from any pleading any insufficient claim or defense or

any redundant, immaterial, impertinent, frivolous, or scandalous

matter. See Estate of Jephson v. Commissioner, 81 T.C. 999

(1983); Allen v. Commissioner, 71 T.C. 577, 579 (1979). The

above-quoted paragraph contains neither assignments of error nor

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

such paragraph contains nothing but tax protester rhetoric and

legalistic gibberish. 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). We see no need to catalog petitioner's contentions and

painstakingly address them. The short answer to them is that

petitioner is not exempt from Federal income tax. See Abrams v.
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Commissioner, supra at 406-407. The matters set forth in the

above-quoted paragraph consist solely of stale and time-worn tax

protester rhetoric. Because the above-quoted paragraph is

frivolous and immaterial, we order such paragraph stricken from

the petition. Rule 152; see Allen v. Commissioner, supra. Trial

in this case, if necessary, will be limited to the factual issues

concerning petitioner's receipt or nonreceipt of income; the

amount, if any, of the deficiency; and the applicability of the

additions to tax.

Finally, we turn to respondent's motion to impose a penalty

against petitioner under section 6673. As relevant herein,

section 6673(a)(1) authorizes the Tax Court to require the

taxpayer to pay to the United States a penalty not in excess of

$25,000 whenever it appears that the 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.

We note that this is not the first time petitioner has

appeared before this Court to advance tax protester claims. See

Philips v. Commissioner, T.C. Memo. 1995-540. At that time, the

Court explained to petitioner that his arguments, which are

similar to those raised here in the above-quoted paragraph of the

petition, are frivolous tax protester claims. Indeed, the Court
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rejected petitioner's contentions and also imposed a penalty of

$10,000.

Based on the petition filed by petitioner, we believe

petitioner is interested in disputing the merits of the

deficiencies in income tax and the additions to tax as determined

by respondent in the notice of deficiency. Accordingly, we will

deny respondent's motion to impose a penalty. However, we

caution petitioner that a continued persistence in frivolous and

groundless protester allegations will subject him to a penalty

under the provisions of section 6673.

In order to reflect the foregoing,

An order denying respondent's

motion and striking a portion of

the petition will be issued.