T.C. Memo. 1998-326
UNITED STATES TAX COURT
JAMES M. ABRAHAM, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14716-97. Filed September 17, 1998.
James M. Abraham, pro se.
Valerie N. Larson, for respondent.
MEMORANDUM OPINION
WOLFE, Special Trial Judge: This case was heard pursuant to
the provisions of section 7443A(b)(3) and Rules 180, 181, and
182. All section references are to the Internal Revenue Code in
effect for the tax year in issue, unless otherwise indicated.
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All Rule references are to the Tax Court Rules of Practice and
Procedure.
Respondent determined a deficiency in petitioner's 1994
Federal income tax in the amount of $1,293 and an addition to tax
for failure to file timely a Federal income tax return pursuant
to section 6651(a)(1) in the amount of $323.25.
We must decide the following issues:
(1) Whether petitioner is liable for a deficiency in income
tax for 1994 in the amount of $1,293. We hold that he is.
(2) Whether petitioner is liable for an addition to tax in
the amount of $323.25 under section 6651(a)(1) for failure to
file timely an income tax return for 1994. We hold that he is.
(3) Whether petitioner is entitled to a jury trial in
deficiency proceedings in the U.S. Tax Court with respect to the
above-mentioned issues concerning his income tax liability for
1994. We hold that he is not.
(4) Whether petitioner is liable for a penalty under
section 6673(a). We hold that he is liable for such a penalty
and require him to pay to the United States a penalty of $500.
Background
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
Escondido, California, when his petition was filed. Petitioner
did not file a Federal income tax return for the year 1994. On
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April 18, 1997, respondent issued a statutory notice of
deficiency for petitioner for 1994 based upon taxable income
reports to the Internal Revenue Service (IRS) received from
Hidden Valley Ranch, Inc., and from the U.S. Department of the
Treasury (Treasury Department). The report from Hidden Valley
Ranch, Inc., reported wages paid to petitioner in the amount of
$15,560 for 1994. The report from the Treasury Department
reported interest income paid to petitioner in the amount of $94
for 1994.
Discussion
Petitioner presented no evidence at trial to refute
respondent's determination of deficiency. To the contrary,
petitioner has stipulated that he received $15,560 of wages from
Hidden Valley Ranch, Inc., and $94 of interest income from the
Treasury Department. During the trial, petitioner did not
dispute respondent's determination of a deficiency, but instead
stated that his purpose for filing his petition was "to simply be
able to become an up-to-date taxpayer and pay my taxes from '94 *
* * without having to pay penalties or interest on those years."
Since petitioner does not deny that he owes the amount of the
deficiency, we sustain respondent's determination of the
deficiency in petitioner's income tax for 1994.
Section 6651(a) imposes an addition to tax for a taxpayer's
failure to file a required return on or before the specified
filing date, including extensions. The addition to tax is
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inapplicable, however, if the taxpayer shows that the failure to
file the return was due to reasonable cause and not due to
willful neglect. Sec. 6651(a)(1). To prove "reasonable cause",
a taxpayer must show that he exercised ordinary business care and
prudence and still was unable to file the return within the
statutorily prescribed time. Crocker v. Commissioner, 92 T.C.
899, 913 (1989). Whether the elements which constitute
reasonable cause or willful neglect are present in any given
situation is a question of fact. United States v. Boyle, 469
U.S. 241, 249 n.8 (1985). In the present case, petitioner
admitted that he had failed or refused to file a tax return for
1994. His argument in justification was that allegedly he had
been treated poorly by representatives of the IRS during a prior
audit with respect to other years. Petitioner's argument is not
adequate to show reasonable cause; his position is patently
unreasonable and has no basis in the tax law. On its face,
petitioner's argument is a statement of his willfulness in
refusing to file a return for 1994. Respondent's determination
of an addition to tax for 1994 under section 6651(a) is
sustained.
Petitioner asserted during trial that he is entitled to a
jury trial by reason of the Seventh Amendment to the
Constitution, which provides: "In suits at common law, when the
value in controversy shall exceed twenty dollars, the right of
trial by jury shall be preserved." It has long been held that
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taxpayers are not entitled to jury trial in the Tax Court.
Nunley v. Commissioner, 758 F.2d 372 (9th Cir. 1985); Dawn v.
Commissioner, 675 F.2d 1077 (9th Cir. 1982), affg. T.C. Memo.
1979-479; Swanson v. Commissioner, 65 T.C. 1180 (1976).
Petitioner's contention that he was improperly denied a right to
a jury trial in this Court lacks merit.
As to respondent's oral motion for imposition of a penalty
under section 6673, section 6673(a)(1) allows this Court to award
a penalty not in excess of $25,000 when proceedings have been
instituted or maintained primarily for delay, or where the
taxpayer's position is frivolous or groundless if it is contrary
to established law and unsupported by a reasoned, colorable
argument for a change in the law. Coleman v. Commissioner, 791
F.2d 68, 71 (7th Cir. 1986); Kish v. Commissioner, T.C. Memo.
1998-16; Talmage v. Commissioner, T.C. Memo. 1996-114, affd.
without published opinion 101 F.3d 695 (4th Cir. 1996). In our
opinion, such is the case here, and we believe that a penalty is
appropriate. The position argued by petitioner is frivolous and
wholly without merit. We will require petitioner to pay a $500
penalty under section 6673(a).
To reflect the foregoing,
An appropriate order and
decision will be entered.