Boyce v. Commissioner

T.C. Memo. 1996-439

UNITED STATES TAX COURT

JOEL L. AND DELYNN E. BOYCE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 7168-96. Filed September 25, 1996.

Joel L. and DeLynn Boyce, pro se.

Louise Pais, for respondent.

MEMORANDUM OPINION

DAWSON, Judge: This case was assigned to Special Trial

Judge Larry L. Nameroff pursuant to section 7443A(b)(4) and Rules
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180, 181, and 183.1 The Court agrees with and adopts the opinion

of the Special Trial Judge, which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

NAMEROFF, Special Trial Judge: This case is before us on

respondent's Motion to Dismiss for Failure To State A Claim and

To Impose A Penalty Under Section 6673. Respondent determined

the following deficiencies and additions to tax with respect to

petitioner Joel L. Boyce:

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

1991 $47,204 $11,801 $2,493
1992 35,173 8,793 1,536
1993 49,278 12,320 1,891

In addition, respondent determined the following deficiencies and

additions to tax with respect to petitioner DeLynn E. Boyce:

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

1991 $19,209 $4,802 $882
1992 13,852 3,463 606
1993 18,503 4,626 604

The adjustments giving rise to the above deficiencies and

additions to tax are based upon the failure of petitioners to

file Federal income tax returns and report gross receipts from

State Farm Insurance, dividend income, interest income, a

1
All section references are to the Internal Revenue Code
in effect for the years in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
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premature distribution from an individual retirement account, a

distribution from the Oregon Public Employees Retirement Fund,

and capital gains from the sale of mutual funds and real estate.

Petitioners filed a petition with this Court on April 19,

1996. The gist of petitioners' allegations in their petition is

that (1) petitioners are "American citizens and residents

(Domestic) and not united states citizens and/or residents

(National)"; (2) that this case can only be heard by an Article

III court;2 (3) that the issuance of the notice of deficiency was

an abuse of discretion by the Commissioner; (4) that the

Commissioner erroneously and arbitrarily determined that

petitioners were "taxpayers", that they received "taxable

income", and that they were engaged in a "taxable activity"; (5)

that petitioners have been denied adequate notice and a

meaningful opportunity to be heard at the administrative level;

(6) that petitioners have been denied certain procedural

safeguards guaranteed to them as "sovereign citizens of one of

the several Sovereign Republican states of the Continental States

United"; (7) that petitioners have been labeled "tax protesters";

and (8) that the additions to tax under sections 6651 and 6654

are confined to alcohol, tobacco, and firearms revenue.

2
Petitioners did not explain why they filed a petition in
an Article I court. They could have paid the deficiencies and
additions to tax and filed a claim for refund, and, if
disallowed, sued for refund in an Article III Court.
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Petitioners make further allegations in the petition, which are

common in tax protester petitions, regarding the audit techniques

utilized by respondent.

In her motion to dismiss, respondent contends that the

petition fails to allege clear and concise assignments of error

in respondent's deficiency determination in violation of Rule

34(b)(4) and concise lettered statements of fact on which

petitioners base the assignments of error, in violation of Rule

34(b)(5). Attached to respondent's motion were copies of letters

sent by, or on behalf of, petitioners to respondent's agents

during the course of the investigation of their tax liabilities.

These letters contain many of the same tax protester arguments as

in the petition and petitioners' objection to respondent's motion

to dismiss.

Subsequent to the filing of respondent's motion, the Court

reviewed the petition herein and agreed with respondent that the

allegations therein are tax protester allegations that have been

repeatedly rejected by this and other courts. Accordingly,

petitioners were ordered to file an objection to respondent's

motion or, alternatively, an amended petition setting forth

adequate assignments of error and statements of fact in response

to the merits of respondent's determinations.

Petitioners filed an objection on July 24, 1996. The

objection contains further tax protester arguments including that
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this Court lacks "in personam" jurisdiction over petitioners and

that petitioners reside in the California Republic. The

objection also includes an objection to the spelling of

petitioners' names in capital letters because they are not

"fictitious entities". In view of the state of the record, we

conclude that no useful purpose would be served by scheduling a

hearing in this matter.

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

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

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

may be grounds for dismissal. Rules 34(a)(1), 123(b).
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The arguments made by petitioners are without factual and

legal foundation and appear to represent a protest of the Federal

tax laws. These types of tax protester arguments have been heard

by this Court on many occasions and rejected. We see no need to

respond to each of petitioners' arguments with copious citations

of precedent. See Crain v. Commissioner, 737 F.2d 1417 (5th Cir.

1984). In short, petitioners are taxpayers subject to the income

tax laws. See Abrams v. Commissioner, 82 T.C. 403, 406-407

(1984). Petitioners' argument that they are not taxpayers is

frivolous. United States v. Studley, 783 F.2d 934, 937 (9th Cir.

1986).

Gross income, pursuant to section 61, means all income from

whatever source derived and includes income realized in any form,

whether in money, property, or services. Since petitioners were

citizens and residents of the United States and earned their

income in the United States, their income comes within the

general definition of gross income under section 61. Moreover,

under section 7701(a)(1) petitioners were "persons" and were

required, under section 6012, to file Federal income tax returns,

and pay the income tax due thereon. The authority of Congress to

impose and collect Federal income taxes from individuals has long

been upheld as constitutional. James v. United States, 366 U.S.

213 (1961); O'Malley v. Woodrough, 307 U.S. 277 (1939); Lynch v.

Hornby, 247 U.S. 339 (1918).
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Furthermore, this Court generally (as in the case here) will

not look behind a deficiency notice to examine evidence used or

the propriety of the Commissioner's motives, or the

administrative policy or procedures involved in making her

determinations. Abrams v. Commissioner, supra at 406; Riland v.

Commissioner, 79 T.C. 185, 201 (1982); Greenberg's Express Inc.

v. Commissioner, 62 T.C. 324, 327 (1974). Petitioners'

contention that they were denied adequate notice and a meaningful

opportunity to be heard has been rejected as irrelevant numerous

times. Brock v. Commissioner, 92 T.C. 1127 (1989); Cupp v.

Commissioner, 65 T.C. 68 (1975), affd. without published opinion

559 F.2d 1207 (3d Cir. 1977); Boyce v. Commissioner, T.C. Memo.

1990-555. In addition, petitioners' contention that they have

been labeled as "tax protesters" causing them to be subjected to

"peculiar procedures" has been consistently rejected as

meritless. United States v. Amon, 669 F.2d 1351, 1356-1357 (10th

Cir. 1981); United States v. Rickman, 638 F.2d 182, 183 (10th

Cir. 1980); United States v. Scott, 521 F.2d 1188, 1195 (9th Cir.

1975).

Moreover, petitioners' contention that their case should be

heard by an Article III court and that a special trial judge

should not decide their case is without merit. The

constitutionality of the Tax Court has been repeatedly upheld on

the basis of congressional authority to create specialized courts
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under Article I of the Constitution. Freytag v. Commissioner,

501 U.S. 868 (1991); Rowlee v. Commissioner, 80 T.C. 1111 (1982);

Burns, Stix Friedman & Co. v. Commissioner, 57 T.C. 392 (1971).

The Tax Court is a court of law which exercises judicial power to

interpret and apply the provisions of the Internal Revenue Code

in disputes between taxpayers and the Commissioner. Freytag v.

Commissioner, supra. Moreover, under section 7443A(b)(4), the

Chief Judge of the Tax Court can assign any Tax Court proceeding

to a special trial judge for hearing and the preparation of

proposed findings of fact and written opinion. Id. The Court

rejects this and other tax protester type arguments raised by

petitioners as being frivolous and without merit.

Petitioners have failed to raise any issue with regard to

the amount of their income or deductions, or the correct amount

of their tax liability, including the additions to tax.

Accordingly, they have not raised any justiciable issues, and

respondent's motion to dismiss will be granted.

Section 6673 authorizes this Court to impose a penalty in

favor of the United States, in an amount not to exceed $25,000,

whenever it appears that the taxpayer's position in a proceeding

is frivolous, groundless, or instituted or maintained primarily

for delay. A petition in the Tax Court is frivolous "if it is

contrary to established law and unsupported by a reasoned,
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colorable argument for change in the law." Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).

Petitioners have made frivolous arguments. They were

advised that the allegations in the petition were similar to

those in other cases for which section 6673 penalties have been

awarded. Nevertheless, petitioners failed to file an amended

petition containing clear and concise assignments of error or

statements of fact. Rather, they continued to assert stale and

time-worn tax protester rhetoric. We find that petitioners have

instituted and maintained this action primarily for delay and

that petitioners' position in this proceeding is frivolous and

groundless.

In view of the above, respondent's request for a penalty

under section 6673 will be granted, petitioner Joel L. Boyce will

be required to pay the United States a penalty of $10,000, and

petitioner Delynn E. Boyce will be required to pay a penalty of

$5,000.

An appropriate order

and decision will be

entered for respondent.