T.C. Memo. 1998-246
UNITED STATES TAX COURT
ROSS WILLIAM BRUNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23790-90. Filed July 6, 1998.
Ross William Bruner, pro se.
Rick V. Hosler, for respondent.
MEMORANDUM OPINION
DINAN, Special Trial Judge: This case was heard pursuant
to the provisions of section 7443A(b)(3) and Rules 180, 181, and
182.1
1
Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the taxable years in
issue. All Rule references are to the Tax Court Rules of
(continued...)
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Respondent determined deficiencies in petitioner's Federal
income taxes and additions to tax for the years as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6653(a)(1)
1987 $1,004 $251 ---
1988 1,759 275 $88
Additions to Tax
Year Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6654(a)
1987 $50.20 * $48.20
1988 --- --- 95.00
*50% of the interest due on the deficiency.
The issues for decision are: (1) Whether petitioner
received and failed to report income during the taxable years in
issue; (2) whether petitioner is liable for the section
6651(a)(1) additions to tax for failure to file his 1987 and 1988
returns; (3) whether petitioner is liable for the section
6653(a)(1) additions to tax for negligence; (4) whether
petitioner is liable for the section 6654(a) additions to tax for
failure to make estimated income tax payments for 1987 and 1988;
and (5) whether we should impose sanctions on petitioner pursuant
to section 6673(a).
Petitioner resided in Tempe, Arizona, on the date the
petition was filed in this case. No stipulations of fact were
filed in this case.
1
(...continued)
Practice and Procedure.
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TATT Companies International d.b.a. Pedus Security Service
reported to respondent that it paid petitioner wages in the
amounts of $11,541 and $8,482 during 1987 and 1988, respectively.
The Department of the Air Force reported to respondent that it
paid petitioner a pension annuity in the amount of $8,165 during
1988. Morgan Shareholder Services Trust Company of AMR
Corporation (Morgan) reported to respondent that on February 13,
1987, petitioner sold some securities. Morgan reported that
petitioner received "stock&bond" income in the amount of $56 as a
result of the sale.
Petitioner did not file Federal income tax returns for his
1987 and 1988 taxable years.
Petitioner filed three bankruptcy petitions in the United
States Bankruptcy Court for the District of Arizona since filing
his petition in this Court. In dismissing his third bankruptcy
petition, the presiding judge concluded that petitioner is "a
serial filer and that [his] action as a serial filer constitutes
an abuse of the bankruptcy system."
The first issue for decision is whether petitioner received
and failed to report income during the taxable years in issue.
Section 61(a) includes in gross income all income from
whatever source derived including, but not limited to,
compensation for services, gains from dealings in property,
annuities, and pensions. Sec. 61(a)(1), (3), (9), (11).
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Respondent's revenue agent, Shelby Bare, testified that
respondent relied upon payer information returns which were
received under the Information Returns Program (IRP) in making
the determinations contained in the statutory notices of
deficiency issued to petitioner in this case. Respondent
submitted transcripts from his IRP master file which list the
payers which reported payments to petitioner during 1987 and
1988.
At trial, petitioner failed to submit any credible evidence
into the record. Cf. sec. 6201(d). He presented no documents
and the following is the extent of his testimony:
The Court: State your name for the record, please.
Petitioner: Ross William Bruner.
The Court: And your current address?
Petitioner: I live at 5 East Cairo, Tempe, Arizona.
The Court: Very well. What did [sic] you have to say
now to convince the Court that the contents
of the statutory notice of deficiency are in
error, Mr. Bruner?
Petitioner: I have never received income, therefore, I
stand in silence.
In response to numerous questions by respondent's counsel,
petitioner declined to offer any testimony relevant to the
determination of his income for 1987 and 1988. His response to
each question was "I stand in silence."
Based on the record, we find that petitioner has failed to
meet his burden of proving any error in respondent's
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determinations. Rule 142(a). Accordingly, we hold that
petitioner received and failed to report income in the amounts
determined by respondent for the taxable years in issue.
The second issue for decision is whether petitioner is
liable for the section 6651(a)(1) additions to tax for failure to
file his 1987 and 1988 returns.
Section 6651(a)(1) imposes an addition to tax for failure to
timely file a return, unless the taxpayer establishes that such
failure is due to reasonable cause and not due to willful
neglect. "Reasonable cause" requires the taxpayer to demonstrate
that he exercised ordinary business care and prudence and was
nonetheless unable to file a return within the prescribed time.
United States v. Boyle, 469 U.S. 241, 245-246 (1985). "Willful
neglect" means a conscious, intentional failure or reckless
indifference. Id. at 246. The addition to tax equals 5 percent
of the tax required to be shown on the return if the failure to
file is for not more than 1 month, with an additional 5 percent
for each additional month or fraction of a month during which the
failure to file continues, not to exceed a maximum of 25 percent.
Sec. 6651(a)(1).
Based on the record, we find that petitioner has failed to
prove that his failure to file his returns was not due to willful
neglect or that such failure was due to reasonable cause. We
therefore hold that petitioner is liable for the section
6651(a)(1) additions to tax.
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The third issue for decision is whether petitioner is liable
for the section 6653(a)(1) additions to tax for negligence.
We first review the language of section 6653(a)(1) which is
applicable to petitioner's 1987 taxable year. With respect to
tax returns the due date for which is after December 31, 1986,
section 6653(a)(1)(A) provides for an addition to tax equal to 5
percent of the entire underpayment of tax if any part of the
underpayment is due to negligence or intentional disregard of
rules or regulations. Furthermore, section 6653(a)(1)(B)
provides for an addition to tax equal to 50 percent of the
interest payable with respect to the portion of the underpayment
which is attributable to negligence or intentional disregard of
rules or regulations.
We next review the language of section 6653(a)(1) which is
applicable to petitioner's 1988 taxable year. With respect to
returns the due date for which is after December 31, 1988,
section 6653(a)(1) provides that if any part of any underpayment
required to be shown on a return is due to negligence or
disregard of rules or regulations, there shall be added to the
tax an amount equal to 5 percent of the underpayment.
We have defined negligence under section 6653 as a lack of
due care or failure to do what a reasonable and ordinarily
prudent person would do under the circumstances. Neely v.
Commissioner, 85 T.C. 934, 947 (1985). Petitioner bears the
burden of proving that no part of the underpayments for the years
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in issue is due to negligence or intentional disregard of rules
or regulations. Rule 142(a); Luman v. Commissioner, 79 T.C. 846,
860-861 (1982).
Based on the record, we find that petitioner's entire
underpayments for 1987 and 1988 are due to negligence and his
intentional disregard of the rules or regulations which require
him to report his income. Accordingly, we hold that petitioner
is liable for the section 6653(a)(1)(A) and (B) additions to tax
for 1987 and the section 6653(a)(1) addition to tax for 1988.
The fourth issue for decision is whether petitioner is
liable for the section 6654(a) additions to tax for failure to
make estimated income tax payments for 1987 and 1988.
Unless the taxpayer demonstrates that one of the statutory
exceptions applies, imposition of the section 6654(a) addition to
tax is mandatory where prepayments of tax, either through
withholding or by making estimated quarterly tax payments during
the course of the taxable year, do not equal the percentage of
total liability required under the statute. Sec. 6654(a);
Niedringhaus v. Commissioner, 99 T.C. 202, 222 (1992).
Petitioner bears the burden of proving his entitlement to any
exception. Habersham-Bey v. Commissioner, 78 T.C. 304, 319-320
(1982).
The reporting payers withheld taxes from petitioner's income
sources in the amounts of $189 and $659 for 1987 and 1988,
respectively. Petitioner did not make any estimated tax payments
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for 1987 or 1988, nor has he shown that any of the statutory
exceptions are applicable in this case. We therefore hold that
petitioner is liable for the section 6654(a) additions to tax for
1987 and 1988.
The fifth issue for decision is whether we should impose a
penalty on petitioner pursuant to section 6673(a).
Whenever it appears to this Court that proceedings before it
have been instituted or maintained by the taxpayer primarily for
delay or the taxpayer's position in such proceeding is frivolous
or groundless, the Court, in its discretion, may require the
taxpayer to pay to the United States a penalty not in excess of
$25,000. Sec. 6673(a)(1)(A) and (B). A position maintained by a
taxpayer in 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). A penalty is properly imposed when the taxpayer
knew or should have known that his claim or argument was
frivolous. Hansen v. Commissioner, 820 F.2d 1464, 1470 (9th Cir.
1987).
The amended petition filed in this case alleges that
respondent erred in the statutory notices of deficiency "in
holding that or proceeding as if the Petitioner is a person made
liable to the income tax imposed by the Code."
The other allegations of fact listed in petitioner's amended
petition and the arguments contained in his trial memorandum
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convince us that petitioner is using this Court as a stage for
presenting his misguided interpretation of the United States
Constitution and the Federal income tax laws.
Petitioner has caused this Court to waste its limited
resources on stale taxpayer protests which he knew or should have
known are without merit.
In view of the foregoing, we will exercise our discretion
under section 6673(a) and require petitioner to pay a penalty to
the United States in the amount of $1,000.
To reflect the foregoing,
An appropriate order
will be issued, and decision will
be entered for respondent.