T.C. Memo. 1998-369
UNITED STATES TAX COURT
JOHN ROBERT FORREST V, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2437-97. Filed October 8, 1998.
John Robert Forrest V, pro se.
Cheryl M. D. Rees, 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
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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. 6654
1991 $850 $212.50 ---
1992 832 208.00 $36.27
1993 872 218.00 36.54
1994 883 220.75 45.85
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 returns for
the taxable years in issue; (3) whether petitioner is liable for
the section 6654(a) additions to tax for failure to make
estimated income tax payments for 1992, 1993, and 1994; and (4)
whether we should impose a penalty on petitioner pursuant to
section 6673(a).
Some of the facts have been stipulated and are so found.
The stipulations of fact and attached exhibits are incorporated
herein by this reference. Petitioner resided in Grimstead,
Virginia, on the date the petition was filed in this case.
Petitioner did not file Federal income tax returns for the
taxable years in issue. He was a 50-percent partner in Forrest
Seafood Company (FSC) during the taxable years in issue. He
received guaranteed payments from FSC which he has stipulated
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
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were self-employment income during the taxable years in which
such payments were received. He has also stipulated that
respondent properly determined the amounts of his distributive
shares of FSC's income, loss, and deductions for the taxable
years in issue.
The first issue for decision is whether petitioner received
and failed to report income during the taxable years in issue.
Petitioner has stipulated to all of the adjustments in the
statutory notice of deficiency except for the unreported interest
income determined from information returns received by
respondent. Petitioner has not asserted any reasonable dispute
with respect to the accuracy of the information returns. Cf.
sec. 6201(d). Based on the record, we find that petitioner has
failed to prove any error in respondent's determinations of his
unreported income. Rule 142(a). Accordingly, we hold that
petitioner received and failed to report income during the
taxable years in issue in the amounts determined by respondent.
The second issue for decision is whether petitioner is
liable for the section 6651(a)(1) additions to tax for failure to
file his returns for the taxable years in issue.
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
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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.2 We
therefore hold that petitioner is liable for the section
6651(a)(1) additions to tax.
The third 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 1992, 1993, and 1994.
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
2
The only explanation that petitioner provided for his
failure to file was that he "conscientiously object[s] to being
in the Social Security system and there is no way that [he]
know[s] of to avoid that other than to not file."
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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).
Petitioner did not make any estimated tax payments for 1992,
1993, or 1994, 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
1992, 1993, and 1994.
The fourth 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).
We find that petitioner's arguments made in his trial
memorandum and his objection at trial to his participation in the
Social Security system are clearly frivolous. Petitioner has
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caused this Court to waste its limited resources on his erroneous
interpretations of the Internal Revenue Code which he knew or
should have known are completely 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 $500.
To reflect the foregoing,
Decision will be entered
for respondent.