T.C. Memo. 1998-70
UNITED STATES TAX COURT
LAVONNE ALLEN HODGSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21185-96. Filed February 19, 1998.
LaVonne Allen Hodgson, pro se.
Michelle Or, for respondent.
MEMORANDUM OPINION
JACOBS, Judge: Respondent determined a $15,287 deficiency in
petitioner's Federal income tax for 1994. The deficiency arises
from petitioner's tax protester claims that we reject.
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All section references are to the Internal Revenue Code in
effect for 1994, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
Petitioner resided in Santa Maria, California, at the time he
filed his petition.
Background
During 1994, petitioner was employed as an engineer for the
Northrop Grumman Corp., for which he was paid $67,337 for services
rendered. On his 1994 Federal income tax return, petitioner
reported the wages from his employment, but claimed a deduction in
an amount equal to the wages for "Non Taxable
Compensation/Renumeration Eisner vs McComber [sic] 252 US 189". As
a result, petitioner reported no taxable income and claimed a
$12,342 refund due to the Federal income taxes withheld by his
employer during the year.1 Above his signature on the return,
petitioner stamped the words "'Under Protest' UCC 1-207".
In his petition, filed September 30, 1996, petitioner stated
that he "disagree[d] with the disallowance of compensation for
labor as non-taxable income." During October and November 1997,
petitioner served on respondent two requests to produce documents,
a set of interrogatories, and requests for admissions, all seeking
the factual and legal basis for respondent's deficiency
1
The Internal Revenue Service "froze" the refund and
applied it as a prepayment credit against the 1994 deficiency.
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determination. In his pretrial memorandum, petitioner stated that
"his self assessment determined that he was not a 'taxpayer' as
that word of art is used in the Internal Revenue Code". He further
stated that he was not engaged in any taxable activity that would
subject him to income tax. At trial, petitioner presented no
evidence to refute respondent's deficiency determination.
Discussion
Instead of attempting to challenge the merits of respondent's
determinations, petitioner raises the usual "tax protester"
arguments which we and other courts have always rejected. See,
e.g., Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg.
T.C. Memo. 1987-225. We do not believe it appropriate to address
petitioner's assertions as to the validity of the Federal income
tax system "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 to say, section 61(a)(1) includes in gross
income compensation for services rendered, and it is undisputed
that petitioner received $67,337 as wages from services rendered to
the Northrop Grumman Corp.
Respondent's deficiency determinations are presumed correct,
and the burden is on petitioner to show that the determinations are
wrong. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).
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Petitioner failed to do so. Consequently, we sustain respondent's
deficiency determination.
Respondent filed a motion seeking to impose a penalty on
petitioner pursuant to section 6673(a). Section 6673(a)(1)
authorizes the Court to require a taxpayer to pay to the United
States a penalty up to $25,000 whenever it appears that proceedings
in this Court have been instituted or maintained by the taxpayer
primarily for delay, or that the taxpayer's position in such
proceeding is frivolous or groundless. A taxpayer's position is
frivolous or groundless "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).
We find that petitioner instituted this proceeding primarily
for delay and maintained a frivolous and groundless position.
Petitioner was made aware of the frivolous and groundless nature of
his arguments. He failed to heed these warnings and allowed his
case to proceed. Petitioner's insistence on pursuing his fruitless
argument has consumed the time and effort of both this Court and
the Commissioner that could have otherwise been devoted to
resolving bona fide claims of other taxpayers. See Cook v.
Spillman, 806 F.2d 948 (9th Cir. 1986). Accordingly, we shall
grant respondent's motion for an award of a penalty under section
6673 and require petitioner to pay a penalty to the United States
in the amount of $1,000, although we advise petitioner that the
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amount of the penalty may be greater if he persists with his tax
protester position in the future.
To reflect the foregoing,
An appropriate order will
be issued, and a decision will
be entered for respondent.