Bivolcic v. Commissioner

T.C. Memo. 2000-62

UNITED STATES TAX COURT

ROBERT J. BIVOLCIC, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 18721-98. Filed February 28, 2000.

Robert J. Bivolcic, pro se.

Caroline Ades-Pierri, for respondent.

MEMORANDUM OPINION

PAJAK, Special Trial Judge: Respondent determined a

deficiency in petitioner's Federal income tax in the amount of

$7,131, an addition to tax under section 6651(a)(1) of $1,198,

and an addition to tax under section 6654 of $239 for the taxable

year 1996. Unless otherwise indicated, section references are to

the Internal Revenue Code in effect for the year in issue.

At trial, respondent conceded the section 6651(a)(1)

addition to tax. The Court must decide: (1) Whether wages
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received by petitioner are subject to Federal income tax in

excess of amounts paid to Social Security and medicare, and (2)

whether a penalty should be awarded to the United States under

section 6673. (Because respondent conceded that the return was

filed timely, we do not have jurisdiction over the section 6654

addition to tax. Section 6665(b)(2); Fujita v. Commissioner,

T.C. Memo. 1999-164).

Some of the facts in this case have been stipulated and are

so found. Petitioner resided in Englishtown, New Jersey, at the

time he filed his petition.

Petitioner was a construction laborer in 1996. During this

year, he worked for Cruz Contracting Corp. (Cruz), Freehold

Regional High School District (Freehold), Defino Contracting

Corp. (Defino), and Suburban Trails, Inc. (Suburban). Petitioner

earned total wages of $39,474 from these employers. Petitioner

also received $3,300 in unemployment compensation from New York

State, Department of Labor-Manpower. The employers each issued

petitioner a W-2, Wage and Tax Statement, for 1996. Cruz and

Freehold withheld $2,928.98 in Federal income tax from

petitioner's pay. Defino and Suburban did not withhold any

Federal income taxes from petitioner's wages. Petitioner paid no

estimated taxes. Cruz, Freehold, Defino, and Suburban

collectively withheld $2,447.45 in Social Security tax and

$572.36 in Medicare tax.
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Respondent conceded that petitioner filed his 1996 tax

return on time. Petitioner mailed his W-2 forms with his return.

The amounts listed in Box 1 of each W-2 form, “Wages, tips, other

compensation” were scratched out on each of the four forms.

Attached to petitioner's tax return was the following statement:

Please note that I Robert J. Bivolcic did not, I
repeat, I did not recieve [sic] the items or amounts
recorded in box 1 [Wages, tips, other compensation], on
Forms W-2 Wage and Tax Statements 1996, I did however
recieve [sic] the items and amounts recorded in box 3
[Social security wages], on Forms W-2 1996, and did pay the
full amount of federal income tax required by law pursuant
to 26 U.S.C., Subtitle C, Section 3101, on this wage income.

Petitioner failed to include any of his wages from the four

employers on line 7, Wages, salaries, tips, etc., of his Form

1040, U.S. Individual Income Tax Return. He included in income

only the $3,300 which he received as unemployment compensation.

Petitioner filed as married filing a separate return, used the

standard deduction, and took one exemption. The 1996 tax return

showed zero taxable income and zero tax. Petitioner then claimed

a refund for $2,928.98, the full amount of Federal income tax

that was withheld from his wages.

Petitioner, in a typical tax protester argument, contends

that the taxation of his income under section 61 and the taxation

of his income under section 3101 constitute double taxation,

which he claims is unconstitutional. Respondent contends that

petitioner’s wage income is subject to Federal taxation
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regardless of whether petitioner pays Social Security and

medicare tax under section 3101.

Petitioner’s argument is completely without merit. It is

well established that income tax laws are constitutional. Connor

v. Commissioner, 770 F.2d 17 (2d Cir. 1985), affg. an unreported

Order of this Court; Abrams v. Commissioner, 82 T.C. 403, 406-407

(1984). Section 1(d) imposes a tax on the taxable income of

married individuals who do not file jointly. Section 3101 also

imposes a tax on the income of every individual under the Federal

Insurance Contributions Act. Section 3101 specifically states

that this tax is imposed “in addition to other taxes”. The

imposition of this tax does not mean that other taxes may not be

exacted. Under section 61(a)(1), compensation for services is

unequivocally included in gross income. Nowhere is it stated

that wages taxed under section 3101 should be exempt from being

included in gross income under section 61(a)(1). Because

petitioner is not exempt from Federal income tax, we sustain

respondent’s determination as to the deficiency in income tax.

Respondent has moved for a penalty under section 6673.

Under the applicable provisions of that section, this Court may

award a penalty to the United States of up to $25,000 when the

proceeding has been instituted or maintained by the taxpayer

primarily for delay or if the taxpayer’s position in such

proceeding is frivolous or groundless. Sec. 6673. Based on the
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record, we conclude that such an award is appropriate in this

case.

Petitioner has pursued a frivolous and groundless position

throughout this proceeding. He is long familiar with the Court’s

position on such tax protester arguments, as he has ample

experience with this Court dating back to a March 24, 1988,

Memorandum Sur Order in Bivolcic v. Commissioner, docket No.

38854-87, which holds against petitioner. In that case,

petitioner argued that his wages were not income, and this Court

held against petitioner and awarded the United States a penalty

in the amount of $5,000 pursuant to section 6673. The Memorandum

Sur Order resulted in an Order of Dismissal and Decision dated

March 31, 1988. Petitioner filed a Motion to set aside the

Order, which was denied. On appeal, the U.S. Court of Appeals

for the Third Circuit held in favor of respondent. Regarding tax

years different from those in the above mentioned case, the U.S.

District Court for the District of New Jersey, in United States

v. Bivolcic, Case No. Cr. 91-380(01), in 1992 convicted

petitioner for failure to file tax returns under section 7203 and

tax evasion under section 7201. Petitioner did not pay the tax

liabilities as he was ordered to do by the District Court. After

the Internal Revenue Service (IRS) issued a levy against his

property, petitioner filed an action seeking to enjoin the IRS

from filing notices of Federal Tax Liens and issuing Notices of
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Levy. The action was dismissed by the United States District

Court, and on his appeal, the United States Court of Appeals for

the Third Circuit affirmed the judgment of the District Court.

While petitioner’s current argument is different from the

one he used in his previous case before us, this argument is no

less frivolous. At the beginning of this trial, the Court

repeatedly and clearly warned petitioner that if he proceeded

with his current argument he would be subject to penalties.

Petitioner knew or should have known his position was groundless

and frivolous, yet he persisted in maintaining this proceeding

primarily to impede the proper workings of our judicial system

and to delay the payment of his Federal income tax liabilities.

Accordingly, a penalty is awarded to the United States under

section 6673 in the amount of $6,000.

Decision will be entered for

respondent as to the deficiency,

and a penalty will be awarded to

the United States under section

6673, and decision will be entered

for petitioner as to the section

6651(a) addition to tax.