T.C. Memo. 1999-73
UNITED STATES TAX COURT
LAWRENCE W. WIRENIUS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15414-97. Filed March 10, 1999.
Lawrence W. Wirenius, pro se.
Louise Pais, for respondent.
MEMORANDUM OPINION
NAMEROFF, Special Trial Judge: This case was heard pursuant
to the provisions of section 7443A(b)(3)1 and Rules 180, 181, and
182.
Respondent determined a deficiency in petitioner’s Federal
income tax for the taxable year 1994 in the amount of $6,317 plus
additions to tax under section 6651(a)(1) in the amount of
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue. All
Rule references are to the Tax Court Rules of Practice and
Procedure.
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$1,579.25 and section 6654(a) in the amount of $325.47. The
issues for decision are: (1) Whether petitioner received and
failed to report taxable income in the amount of $25,836; (2)
whether petitioner is liable for self-employment tax in the
amount of $3,651; (3) whether petitioner is liable for the
delinquency addition to tax under section 6651(a)(1); and (4)
whether petitioner is liable for the addition to tax for failure
to pay estimated tax under section 6654(a). Some of the facts
have been stipulated, and the stipulation of facts is
incorporated herein by reference. Petitioner resided in
California at the time his petition was filed.
Prior to 1994, petitioner had been a carpenter working for
various movie studios. Petitioner stopped working for a time
because he was “burned out”. In 1994, petitioner was hired by
Clairmont Camera Inc. (Clairmont) to develop a “quiet camera”
room. Clairmont submitted to the Internal Revenue Service a Form
1099-MISC for 1994 reflecting that it had paid petitioner
$25,836.92 for 1994. The record reflects checks issued from
Clairmont to petitioner totaling that amount in 1994. However,
two of those checks, totaling $3,381.92, were issued by Clairmont
for the reimbursement of materials used in the development of the
quiet camera room.
In the notice of deficiency issued to petitioner on April
18, 1997, respondent determined that petitioner received income
of $25,836. Respondent now concedes that petitioner’s income for
1994 from Clairmont was only $22,455.
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On a weekly basis, petitioner would submit an invoice to
Clairmont for the amount of hours spent during the week on the
development of the quiet camera room. These invoices were
approved by an officer of Clairmont and paid. Clairmont did not
withhold any income or Social Security tax from the payments to
petitioner. Petitioner did not receive any employee benefits
from Clairmont, such as annual leave, sick leave, or pension.
Petitioner did not file a Federal income tax return for
1994. Respondent’s records also reflect that petitioner did not
file a Federal income tax return for 1993. Petitioner testified
and we find that petitioner did not have any income in 1993.
This case is basically a case involving a nonfiler who
refuses to acknowledge liability under the Internal Revenue Code
and who has asserted various tax protester arguments. However,
petitioner did engage in discussions of the merits of the case
with respondent, did enter into a stipulation of facts and
supplemental stipulation of facts, and did testify under oath as
to the merits of respondent’s determination. We shall first
address the issues which we do not categorize as tax protester
issues.
1. Gross Income Petitioner worked for Clairmont during 1994
and received $25,836.92. Respondent admits that only $22,455 was
compensation for labor. Petitioner also agrees that the
$25,836.92 was not all compensation for his labor and that he did
receive $22,455 as compensation for his labor. Compensation for
labor is includable in a taxpayer’s gross income. Sec. 61(a).
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Accordingly, we hold that petitioner had gross income in 1994 of
$22,455.
2. Self-employment Tax Section 1401(a) imposes a tax on
self-employment income for old-age, survivors, and disability
insurance. Section 1401(b) imposes an additional tax on self-
employment income for hospital insurance. Self-employment income
is defined as the net earnings from self-employment derived by an
individual during the taxable year. Sec. 1402(b). Net earnings
from self-employment is the gross income derived by an individual
from any trade or business carried on by such individual, less
any deduction attributable thereto. Sec. 1402(a).
Courts look to several factors to decide whether an
employment relationship exists. Among them are the following:
(1) The degree of control exercised by the principal over the
manner in which work is performed; (2) the individual's
investment in the facilities used; (3) the individual's
opportunity for profit or loss; (4) whether or not the principal
has the right to discharge the individual; (5) the permanency of
the relationship; (6) whether the work performed is an integral
part of the principal's regular business; and (7) the
relationship the parties believe they are creating. United
States v. Silk, 331 U.S. 704, 716 (1947); Simpson v.
Commissioner, 64 T.C. 974, 984-985 (1975); sec. 31.3121(d)-
1(c)(2), Employment Tax Regs. These factors are not weighed
equally, but must be evaluated according to their significance in
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each particular case. See Aymes v. Bonelli, 980 F.2d 857, 861
(2d Cir. 1992).
Based on the record, we conclude that petitioner was self-
employed in 1994 and was not an employee of Clairmont. It
appears that petitioner, a carpenter, agreed to build a room for
Clairmont and was to be paid on the basis of the amount of time
he spent in building that room. On a weekly basis, petitioner
would submit invoices showing the number of hours he had worked,
and Clairmont would pay the bill. Clairmont did not deduct
Federal or State income taxes or Social Security taxes.
Petitioner received no employee benefits from Clairmont. At the
conclusion of the task for which petitioner was hired, petitioner
no longer worked for Clairmont. During the time petitioner
worked for Clairmont, he was free to accept other jobs, even
though the Clairmont job was time consuming. Based upon this
record, we conclude that petitioner was self-employed in 1994.
Therefore, petitioner is liable for self-employment tax, which
will be recomputed under Rule 155.2
3. Addition to Tax for Delinquency Petitioner did not file
a 1994 Federal income tax return. His only reason for not filing
the return was his own version of why he is not subject to the
Internal Revenue Code. Section 6651(a)(1) imposes an addition to
2
In the notice of deficiency respondent allowed petitioner
a deduction of one-half of the calculated self-employment tax.
This amount will also have to be adjusted under Rule 155 in view
of the modification of the amount of self-employment income
petitioner received.
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tax equal to 5 percent per month of the underpayment up to a
maximum of 25 percent for untimely filed returns. This addition
to tax is not imposed if there was reasonable cause for the
failure to file. We hold that petitioner has not shown that
there was reasonable cause for his failure to file a 1994 return
and, therefore, he is liable for the addition to tax, which will
be recomputed under Rule 155.
4. Addition to Tax for Failure to Make Estimated Income Tax
Payments Petitioner failed to make estimated income tax payments
in 1994. However petitioner did not earn income in 1993 and did
not have any income tax liability for 1993. Respondent agreed
that if petitioner did not have any income tax liability for
1993, the exemption under section 6654(e)(2) would apply and
petitioner would not be liable for this addition to tax.
Accordingly, we hold that petitioner is not liable for the
addition to tax under section 6654(a).
5. Tax Protester Arguments
The bulk of this case--the bulk of the pleadings,
stipulation of facts, supplemental stipulation of facts, and
petitioner’s testimony relates to petitioner’s version of why he
is not liable for income tax under the Internal Revenue Code. We
will not list petitioner’s misguided arguments or attempt to
refute them with copious citations, for to do so would grant them
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a status they do not deserve. Crain v. Commissioner, 737 F.2d
1417 (5th Cir. 1984) Petitioner’s arguments are timeworn tax
protester arguments which have been rejected by the courts often
enough.
Petitioner states that he is not a tax protester and that he
has researched each of these arguments. Our answer to petitioner
is that his research has never gone far enough. He has never
found the many cases which have held his arguments to be invalid.
The short answer to petitioner’s arguments is that he is not
exempt from Federal income tax, and we so hold.
Section 6673 authorizes the Court to award a penalty to the
United States not in excess of $25,000 whenever it appears to the
Court that proceedings have been instituted or maintained by the
taxpayer primarily for delay, the taxpayer’s position in such
proceedings is frivolous or groundless, or the taxpayer
unreasonably failed to pursue available administrative remedies.
The arguments that petitioner presented to exempt himself from
tax liability are frivolous and groundless.
However respondent has not moved for an award under section
6673, and, in view of the petitioner’s success with regard to
several of the issues, we shall not impose this penalty at this
time. However, petitioner should be advised that if he raises
these tax protester arguments in the future, the Court may
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favorably consider a proper motion for imposition of a penalty
under section 6673.
To reflect the above,
Decision will be entered under
Rule 155.