T.C. Memo. 1997-307
UNITED STATES TAX COURT
DEAN G. STEELE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14897-96. Filed July 2, 1997.
Dean G. Steele, pro se.
Blake Ferguson and Timothy Lohrstorfer, for respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7443A(b)(3) and Rules 180,
181, and 182.1 Respondent determined a deficiency in
1
All section references are to the Internal Revenue Code
in effect for the year at issue. All Rule references are to the
(continued...)
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petitioner's 1993 Federal income tax in the amount of $5,302 and
additions to tax pursuant to sections 6651(a) and 6654(a) in the
amounts of $1,326 and $224, respectively. The issues for
decision are: (1) Whether petitioner is liable for taxes on
nonemployee compensation and interest income earned by him in
1993; (2) whether petitioner is liable for additions to tax for
failure to file a return and failure to pay estimated tax; and
(3) whether petitioner is subject to a penalty under section
6673(a)(1).
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Lakeland, Florida, at the time the petition was filed.
For the year ended December 31, 1993, petitioner earned the
following amounts of nonemployee compensation from the following
sources:
Source of Compensation Amount
Phoenix Home Life Mutual $918
Phoenix Home Life Mutual 5,703
Mutual of Omaha Insurance Co. 14,399
Protective Life Insurance Co. 924
Total 21,944
Petitioner earned the following amounts of interest from the
following sources during the year ended December 31, 1993:
1
(...continued)
Tax Court Rules of Practice and Procedure.
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Source of Interest Amount
Publix Employee Federal Credit Union $334
Lexington Federal 11
Total $345
Petitioner did not file a Federal income tax return for the
taxable year ended December 31, 1993.
Petitioner argues that the income tax is not a direct tax
but an excise tax. He further suggests that the excise tax is a
tax on taxable activities and that the terms "excise tax" and
"privilege tax" are synonymous. He concludes that respondent has
not submitted any evidence that petitioner has engaged in any
"privileged activities resulting in the requisite amount of
income to incur a tax liability for 1993".
We begin by noting that respondent's determinations are
presumed correct, and petitioner bears the burden of proving that
those determinations are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Moreover, deductions are a
matter of legislative grace, and petitioner bears the burden of
proving that he is entitled to any deductions claimed. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
Petitioner did not file a Federal income tax return for the
taxable year 1993. Respondent determined, and petitioner has
agreed, that petitioner earned nonemployee compensation and
interest income in 1993. This Court, as well as other Federal
courts, has consistently and uniformly held for many years that
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compensation is income. E.g., Beard v. Commissioner, 793 F.2d
139 (6th Cir. 1986), affg. per curiam 82 T.C. 766 (1984); Coleman
v. Commissioner, 791 F.2d 68, 70 (7th Cir. 1986); Carter v.
Commissioner, 784 F.2d 1006, 1009 (9th Cir. 1986); Olson v.
United States, 760 F.2d 1003, 1005 (9th Cir. 1985); United States
v. Burton, 737 F.2d 439, 441 (5th Cir. 1984); Gattuso v.
Pecorella, 733 F.2d 709, 710 (9th Cir. 1984); Funk v.
Commissioner, 687 F.2d 264, 265 (8th Cir. 1982), affg. T.C. Memo.
1981-506; Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir.
1981), affg. T.C. Memo. 1981-122; United States v. Romero, 640
F.2d 1014, 1016 (9th Cir. 1981).
Petitioner's arguments are basic protester rhetoric. 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). We need not say any more.
Respondent's determination with respect to the deficiency
and additions to tax is sustained.
We now consider respondent's motion for an 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
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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, supra
at 71. Petitioner's position, as set forth in the petition, as
well as in the other documents that petitioner submitted,
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
purposes of delay. Having to deal with this matter wasted the
Court's time, as well as respondent's. Moreover, taxpayers with
genuine controversies may have been delayed.
Finally, we are convinced that petitioner is, and was at the
time that he filed his petition, well aware of the provisions of
section 6673(a), as demonstrated by the references to that
section in correspondence between petitioner and respondent which
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was attached to respondent's motion. Nevertheless, petitioner
chose to ignore well-established precedent of this and other
Federal courts and pursue instead his protest agenda.
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 $1,500. 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, 82 T.C. 403, 408-411 (1984).
To reflect the foregoing,
An appropriate order and
decision will be entered.