T.C. Memo. 2000-169
UNITED STATES TAX COURT
DAVID R. AND DARLENE FUNK, ET AL.,1 Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 18510-99, 1366-00, Filed May 23, 2000.
1367-00, 1368-00,
1369-00, 1370-00,
1371-00.
David R. Funk and Darlene Funk, pro se in docket No. 18510-
99.
Richard Marks (an officer), for petitioners in docket Nos.
1366-00 through 1371-00.
1
Cases of the following petitioners are consolidated
herewith: David R. Funk, DC, Trust, Caribe Corp., Trustee,
docket No. 1366-00; DF2 Management, Trust, Caribe Corp., Trustee,
docket No. 1367-00; Odessa Properties, Trust, Caribe Corp.,
Trustee, docket No. 1368-00; D & D Leasing, Trust, Caribe Corp.,
Trustee, docket No. 1369-00; Computer Training Center, Trust,
Caribe Corp., Trustee, docket No. 1370-00; and Darlene Funk,
Trust, Caribe Corp., Trustee, docket No. 1371-00.
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Jeremy L. McPherson, for respondent.
MEMORANDUM OPINION
COHEN, Chief Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos pursuant to the provisions of
section 7443A(b)(5). Unless otherwise indicated, section
references are to the Internal Revenue Code as amended, and all
Rule references are to the Tax Court Rules of Practice and
Procedure. The Court agrees with and adopts the opinion of the
Special Trial Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: Respondent determined
deficiencies in petitioners’ Federal income tax for the taxable
year 1995, additions to tax, and penalties as follows:
Addition to Tax Penalty
Docket No. Deficiency Sec. 6651(a)(1) Sec. 6662(a)
18510-99 $196,211 $9,780.75 $39,242.20
1366-00 53,503 2,675.00 10,701.00
1367-00 22,951 1,148.00 4,590.00
1368-00 9,105 455.00 1,821.00
1369-00 574 29.00 115.00
1370-00 114,727 5,736.00 22,945.00
1371-00 4,453 223.00 891.00
Background
These cases are before the Court on respondent’s motions to
dismiss for failure to state a claim and to impose a penalty
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under section 6673. In docket Nos. 1366-00 through 1371-00,
respondent filed a supplement to the motion to dismiss wherein
respondent noted that the respective dockets were related to the
lead docket No. 18510-99. A hearing was held with respect to the
motions filed in the respective dockets.
The notice of deficiency issued to petitioners David R. and
Darlene Funk in docket No. 18510-99 determined that petitioners
failed to report various items of gross income including Schedule
E, Supplemental Income and Loss, rental and royalty income.
Also, respondent determined that petitioners must include on
their individual return self-employment income reflected on trust
income tax returns which were the subject matter of the related
dockets. The notices of deficiency in the trust cases (docket
Nos. 1366-00 through 1371-00) indicate that, although income was
reported on respective trust returns, a zero tax liability was
reflected as a result of claimed deductions equaling or exceeding
the income reported. The notices of deficiency issued to the
trusts disallowed Schedule C, Profit or Loss From Business,
expenses claimed on the trust returns.2
2
We cannot determine from this record whether respondent
seeks to impose a tax on the same income against both the trusts
and the individuals. To the extent respondent has taken a
position in the notice of deficiency issued to petitioners David
and Darlene Funk inconsistent with the position in the notices of
deficiency issued to the trusts, we shall issue an order under
Rule 155 directing respondent to provide computations in all
dockets that reflect consistent treatment of income and
(continued...)
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At the time the petition was filed in docket No. 18510-99,
petitioners David R. and Darlene Funk resided at Rocklin,
California. At the time of filing the petitions in docket Nos.
through 1366-00 through 1371-00, the officer of the trustee of
the respective trusts, Richard Marks, resided at Rocklin,
California.
Respondent asserts in his motions that each of the
respective dockets should be dismissed for failure to state a
claim on the basis that petitioners have failed to allege in the
respective petitions or amended petitions any justiciable error
and that they merely assert frivolous arguments as a protest
against paying taxes.
Paragraph 4 of the petition in each of these cases contained
as a basis for disagreement with the notice of deficiency
identical language as follows:
The District Director issued a Statutory Notice of
Deficiency claiming petitioner has a tax liability
without there being a statutorily procedural correct
lawful tax assessment. Attached to the Notice of
Deficiency, IRS Form 4549A, income tax examination
changes, line 11 states, “Total Corrected Tax
Liability.” Respondent has failed to provide the
petitioners with internal revenue code sections or
regulations this total corrected tax liability was
calculated or assessed under. The respondent has
refused to provide the petitioners with a Summary
Record of Assessment as per Internal Revenue Regulation
301.6203-1. Respondent has failed to properly sign the
Notice of Deficiency as required under IRC Section
2
(...continued)
deductions.
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6065. There can be no meaningful administrative
hearing until respondent provides petitioners with the
requested information, and until that time, petitioner
will disagree with all of the adjustments.
After the filing of respondent’s motions, the Court issued
orders providing the respective petitioners an opportunity to
file an amended petition. The Court directed petitioners to set
forth with specificity each error they allege was made by
respondent in the determination of the deficiency and separate
statements of fact upon which petitioners base the assignment of
each error. An amended petition was filed in each docket. The
amended petitions, which are virtually identical in each docket,
do not assert any justiciable claims. Petitioners assert in each
of the amended petitions the issues presented as follows:
1. Where is the missing Internal Revenue Code Section
that caused a tax liability?
2. Where is the Statutory Procedurally Correct Lawful
Assessment?
3. Where is Discovery?
4. Should Respondent be Sanctioned?
Discussion
Rule 34(b)(4) requires that a petition filed in this Court
contain clear and concise assignments of each and every error
that the taxpayer alleges to have been committed by the
Commissioner in the determination of the deficiency and the
additions to tax in dispute. Rule 34(b)(5) further requires that
the petition contain clear and concise lettered statements of the
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facts on which the taxpayer bases the assignments of error. See
Jarvis v. Commissioner, 78 T.C. 646, 658 (1982).
The petitions and amended petitions filed in these cases do
not satisfy the requirements of Rule 34(b)(4) and (5). There is
neither assignment of error nor allegation of fact in support of
any justiciable claim. Rather, there is nothing but frivolous
rhetoric and legalistic gibberish, as demonstrated by the summary
of the petitions provided above. Under the circumstances, we see
no need to catalog petitioners' arguments and painstakingly
address them. As the Court of Appeals for the Fifth Circuit has
remarked: "We perceive no need to refute these arguments with
somber reasoning and copious citation of precedent; to do so
might suggest that these arguments have some colorable merit."
Crain v. Commissioner, 737 F.2d 1417 (5th Cir. 1984); see also
Hansen v. Commissioner, 820 F.2d 1464 (9th Cir. 1987); Grimes v.
Commissioner, 806 F.2d 1451 (9th Cir. 1986).
In docket No. 18510-99, petitioners filed a motion to
dismiss for lack of jurisdiction, a motion to compel discovery,
and an application for order to take depositions. We denied
these motions. Petitioners’ primary argument was that respondent
failed to explain the basis for the determination and also that
there is no lawful, proper assessment. In docket Nos. 1366-00
through 1371-00, petitioners also filed motions to dismiss for
lack of subject matter jurisdiction. The assertions in those
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motions are virtually identical with those made in docket No.
18510-99. We shall deny the motion in each docket.
When the cases were called for hearing, petitioners asked
for a continuance to provide additional time to pursue discovery.
The stated purpose of the discovery was to ascertain information
with respect to the “correctness of the dollar amount, or
additional tax liability that the district [director] * * * used
to make his determination” and the failure of that individual to
“identify the IRS code section or regulation that the notice of
deficiency determination was based on”. We denied the oral
motions to continue since they were essentially repetitive of
petitioners’ prior written motions.
The notices of deficiency in these cases make determinations
based on tax returns filed by petitioners. As such, petitioners’
reliance on Scar v. Commissioner, 814 F.2d 1363 (9th Cir. 1987),
revg. 81 T.C. 855 (1983), is misplaced. In Scar, the parties
agreed that the notice of deficiency had no relationship to the
taxpayer’s return. Petitioners’ argument that the determination
of a deficiency without a “statutorily procedural correct lawful
assessment” is likewise misplaced. Once a notice of deficiency
has been issued, a taxpayer has 90 days in which to file a
petition with this Court. During this period, no assessment for
the deficiency may be made, and no levy or proceeding in court
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for its collection can be begun or, if a petition is filed, until
a decision of this Court is final. See sec. 6213(a).
Because the petitions fail to state a claim upon which
relief can be granted, we shall grant respondent's motion to
dismiss in each docket. See Rules 34(a)(1), 123(b); Scherping v.
Commissioner, 747 F.2d 478 (8th Cir. 1984).
Section 6673
We now consider that part of respondent’s motions that seeks
an award of a penalty against petitioners under section 6673(a).
Section 6673(a)(1) authorizes the Tax Court to require a taxpayer
to pay to the United States a penalty not in excess of $25,000
whenever it appears that proceedings have been instituted or
maintained by the taxpayer primarily for delay or that the
taxpayer’s position in such proceedings is frivolous or
groundless.
A petition is frivolous if it is contrary to established
law, or unsupported by a reasoned, colorable argument for change
in the law. See Coleman v. Commissioner, 791 F.2d 68, 71 (7th
Cir. 1986), affg. an order of this Court.
A review of the record in these cases satisfies us that
petitioners are not interested in disputing the merits of the
deficiencies, additions to tax, or penalties. Petitioners appear
to regard these cases as a vehicle to present their views. The
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Court’s time and resources have been wasted, and we are convinced
that petitioners maintained this proceeding primarily for delay.
In view of the foregoing we shall exercise our discretion
under section 6673(a)(1) and require petitioners David R. and
Darlene Funk (docket No. 18510-99) to pay a penalty to the United
States in the amount of $3,000. We shall also require each
petitioner in docket Nos. 1366-00 through 1371-00 to pay a
penalty to the United States in the amount of $1,000 each.
To reflect the foregoing,
An appropriate order
will be issued.3
3
As previously indicated, the Court will order respondent
to provide a computation in all dockets which reflects consistent
treatment of income in these related dockets.