T.C. Summary Opinion 2001-84
UNITED STATES TAX COURT
ELMER P. SCHECKEL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6405-00S. Filed June 13, 2001.
Elmer P. Scheckel, pro se.
Lisa K. Hartnett, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed.1 The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 1996
and 1997, the taxable years in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
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Respondent determined deficiencies in petitioner’s income
taxes and additions to tax for the years and in the amounts as
follows:
Additions to tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654(a)
1
1996 $2,366 $591.50 $125.93
1
1997 2,546 636.50 136.19
1
Cannot be computed until the date of payment.
The issues for decision are as follows:
(1) Whether petitioner is liable for the deficiencies in
income taxes and additions to tax as determined by respondent in
the notice of deficiency. We hold that he is.
(2) Whether petitioner is liable for a penalty under section
6673(a)(1). We hold that he is.
Background
None of the facts have been stipulated.
Petitioner resided in the State of Iowa at the time that his
petition was filed with the Court.
During 1996 and 1997, the taxable years in issue, petitioner
was employed by Transco Railroad Products, Inc. (Transco) and
received compensation in exchange for services rendered.
Utilizing Form W-2, Wage and Tax Statement, Transco reported
compensation paid to petitioner for the years in issue as
follows:
Year Amount
1996 $22,338
1997 23,749
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During 1996 and 1997, petitioner maintained an account with
Maynard Savings Bank (Maynard). Utilizing Form 1099, Maynard
reported the payment of interest to petitioner for the years in
issue as follows:
Year Amount
1996 $5
1997 30
Petitioner was unmarried throughout 1996. Petitioner
married in April 1997 and remained married for the balance of
that year.
Petitioner did not file a Federal income tax return for
either 1996 or 1997. Petitioner had no prepayments of tax,
either through withholding or the making of estimated quarterly
tax payments during the course of the taxable year, for either
1996 or 1997.
In or about September 1999, respondent prepared returns for
petitioner for 1996 and 1997 pursuant to the authority granted
respondent in section 6020(b).
On March 17, 2000, respondent mailed a notice of deficiency
to petitioner determining the deficiencies in income taxes and
the additions to tax that are in issue herein. See sec. 6212(a).
The deficiencies are based on respondent's determination that
petitioner failed to report compensation from Transco and
interest from Maynard in the amounts reported by the payors. In
computing the deficiencies, respondent utilized the tax table
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pertaining to unmarried (single) individuals and allowed
petitioner one personal exemption and the applicable standard
deduction.
The additions to tax under section 6651(a)(1) are based on
respondent's determination that petitioner's failure to file for
1996 and 1997 was not due to reasonable cause. The additions to
tax under section 6651(a)(2) are based on respondent’s
determination that petitioner’s failure to pay his tax liability
for 1996 and 1997 was not due to reasonable cause. Finally, the
additions to tax under section 6654(a) are based on respondent's
determination that petitioner failed to pay the requisite amount
of estimated taxes for 1996 and 1997.
On June 8, 2000, petitioner timely filed a petition for
redetermination. See sec. 6213(a).
Discussion
At trial, petitioner stated that he did not dispute any of
the income amounts determined by respondent in the notice of
deficiency.2 Rather, petitioner took the position that “The
income items are irrelevant.” In addition, petitioner alleged
that the Government has shown him nothing that “connects me with
2
Indeed, in the petition, petitioner did not set forth any
assignments of error nor any statements of fact. See Rule
34(b)(4) (“Any issue not raised in the assignments of error shall
be deemed to be conceded.”); see also Rule 34(b)(5); cf. Parker
v. Commissioner, 117 F.3d 785 (5th Cir. 1997); White v.
Commissioner, T.C. Memo. 1997-459.
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the Internal Revenue Code.” Notwithstanding the Court’s effort
to explain pertinent provisions of the Code, specifically
including sections 1 and 6673, petitioner persisted in advancing
what may only be described as tax protester arguments.
A. Petitioner’s Income Tax Liabilities
Section 1 of the Internal Revenue Code imposes a tax on the
taxable income of individuals. Section 63(b) defines “taxable
income”, as applicable to petitioner’s situation, as gross income
less the standard deduction and one personal exemption. Section
61(a)(1), (4) defines gross income to mean “all income from
whatever source derived, including * * * Compensation for
services * * * [and] Interest”.
As detailed above, petitioner received gross income in the
form of wages and interest income for the years in issue in the
following amounts:
1996 1997
Compensation $22,338 $23,749
Interest income 5 30
Gross income 22,343 23,779
Petitioner's taxable income for the years in issue is as
follows:
1996 1997
Gross Income $22,343 $23,779
less:
Personal exemption -2,550 -2,650
Standard deduction -4,000 -4,150
Taxable income 15,793 16,979
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Pursuant to section 1(c) for 1996 and section 1(d) for 1997,
as well as the tax tables mandated by section 3(a), (c),
petitioner’s tax liabilities for the years in issue are as
follows:
1996 1997
$2,366 $2,546
In view of the fact that petitioner did not file income tax
returns for the years in issue, petitioner’s tax liabilities for
those years constitute deficiencies in income taxes. See sec.
6211(a). Accordingly, we hold that petitioner is liable for the
deficiencies in income taxes as determined by respondent in the
notice of deficiency.3
B. Addition to Tax For Failure To File
As applicable to petitioner, section 6012(a)(1)(A)(i)
requires that an income tax return be filed by every individual
who has gross income equal to, or greater than, the sum of the
standard deduction and one personal exemption. For an individual
who is a calendar-year taxpayer, the return is due on or before
the 15th day of April following the close of the taxable year.
3
Because petitioner was married in 1997, see sec.
7703(a)(1), respondent should have utilized the tax table
applicable to married individuals filing separately and the
standard deduction applicable to that filing status. As a
consequence, respondent’s deficiency determination for 1997 was
understated. However, respondent has not asserted any claim for
an increased deficiency. See sec. 6214(a). Accordingly, we lack
jurisdiction to redetermine the correct amount of the deficiency.
See id.
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See sec. 6072(a).
Section 6651(a)(1) imposes an addition to tax for failure to
file a timely return.4 The addition to tax may be avoided if the
failure to file is due to reasonable cause and not due to willful
neglect. “Reasonable cause” contemplates that the taxpayer
exercised ordinary business care and prudence and was nonetheless
unable to file a return within the prescribed time. United
States v. Boyle, 469 U.S. 241, 246 (1985); sec. 301.6651-1(c)(1),
Proced. & Admin. Regs. “Willful neglect” means a conscious,
intentional failure or reckless indifference. United States v.
Boyle, supra at 245.
In the present case, petitioner failed to file income tax
returns for the years in issue. Petitioner’s professed belief
that he is not a taxpayer within the scope of the Internal
Revenue Code does not, as a matter of law, constitute reasonable
cause for petitioner’s failure to file. See Rowlee v.
Commissioner, 80 T.C. 1111, 1120 (1983) (rejecting taxpayer’s
claim that taxpayer is not a “person liable” for tax); Ebert v.
Commissioner, T.C. Memo. 1991-629 (rejecting taxpayer’s assertion
that there is no section of the Internal Revenue Code that makes
taxpayer liable for the taxes claimed), affd. without published
4
Sec. 6651(g)(1) provides that in the case of any return
made by the Commissioner under sec. 6020(b), such return shall be
disregarded for purposes of determining the amount of the
addition to tax under sec. 6651(a)(1).
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opinion 986 F.2d 1427 (10th Cir. 1993).
In view of the foregoing, we hold that petitioner is liable
for the additions to tax under section 6651(a)(1) as determined
by respondent in the notice of deficiency.
C. Addition to Tax for Failure To Pay
As applicable to petitioner, section 6151(a) provides that a
taxpayer who is required to file a return shall pay the tax shown
on the return at the time fixed for filing the return (determined
without regard to any extension of time for filing the return).
As previously discussed, for an individual who is a calendar-year
taxpayer, the return is due on or before the 15th day of April
following the close of the taxable year.
Section 6651(a)(2) imposes an addition to tax for failure to
pay the amount shown as tax on a return on or before the date
prescribed for payment of such tax.5 The addition to tax may be
avoided if the failure to pay is due to reasonable cause and not
due to willful neglect. “Reasonable cause” contemplates that the
taxpayer exercised ordinary business care and prudence in
providing for payment of the taxpayer’s tax liability and was
nonetheless unable to pay the tax or would suffer an undue
hardship if the tax was paid within the prescribed time. Sec.
5
Sec. 6651(g)(2) provides that the in the case of any
return made by the Commissioner under sec. 6020(b), such return
shall be treated as the return filed by the taxpayer for purposes
of determining the amount of the addition to tax under sec.
6651(a)(2).
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301.6651-1(c)(1), Proced. & Admin. Regs. “Willful neglect” means
a conscious, intentional failure or reckless indifference.
United States v. Boyle, supra at 245.
In the present case, petitioner failed to pay his tax
liability for either 1996 or 1997. Petitioner’s professed belief
that he is not a taxpayer within the scope of the Internal
Revenue Code does not, as a matter of law, constitute reasonable
cause for petitioner’s failure to pay his tax liabilities. See
Rowlee v. Commissioner, supra; Ebert v. Commissioner, supra.
In view of the foregoing, we hold that petitioner is liable
for the additions to tax under section 6651(a)(2) as determined
by respondent in the notice of deficiency.
D. Addition to Tax for Failure To Pay Estimated Tax
Section 6654 imposes an addition to tax for failure to pay
estimated tax. As applicable herein, imposition of the addition
is mandatory whenever prepayments of tax, either through
withholding or the making of estimated quarterly tax payments, do
not equal the percentage of total liability required under the
statute. See sec. 6654(a); Niedringhaus v. Commissioner, 99 T.C.
202, 222 (1992); Grosshandler v. Commissioner, 75 T.C. 1, 20-21
(1980). Thus, in the present case, we need not address any issue
relating to reasonable cause and lack of willful neglect;
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extenuating circumstances are simply irrelevant.6 See Estate of
Ruben v. Commissioner, 33 T.C. 1071, 1072 (1960); see also
Grosshandler v. Commissioner, supra at 21.
In view of the foregoing, we hold that petitioner is liable
for the additions to tax under section 6654 as determined by
respondent in the notice of deficiency.
E. Penalty Under Section 6673
At trial, respondent orally moved for the imposition of a
penalty against petitioner pursuant to section 6673.
As relevant herein, 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 proceeding is
frivolous or groundless.
The record in this case convinces us that petitioner was not
interested in disputing the merits of either the deficiencies in
income taxes or the additions to tax determined by respondent in
the notice of deficiency. See Coleman v. Commissioner, 791 F.2d
68, 71 (7th Cir. 1986). Rather, the record demonstrates that
petitioner regards this case as a vehicle to protest the tax laws
of this country and espouse his own misguided views.
6
We should not be understood to imply that petitioner had
reasonable cause or that there were any extenuating circumstances
relating to petitioner’s failure to pay estimated tax.
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Coleman v. Commissioner, supra.
Petitioner's position, at trial, consisted solely of tax
protester rhetoric. Based on well-established law, petitioner's
position is frivolous and groundless. See Crain v. Commissioner,
737 F.2d 1417, 1417 (5th Cir. 1984) ("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.").
We are also convinced that petitioner instituted and
maintained this proceeding primarily, if not exclusively, for
purposes of delay. Having to deal with this matter wasted the
Court's time, as well as respondent's. Moreover, taxpayers with
genuine controversies may have been delayed.
At trial, the Court acquainted petitioner with the pertinent
provisions of section 6673. Nevertheless, petitioner persisted
with his protest agenda.
In view of the foregoing, we will grant respondent’s oral
motion and require petitioner to pay a penalty to the United
States in the amount of $500 pursuant to the provisions of
section 6673(a)(1). See Coleman v. Commissioner, supra at 71-72;
Crain v. Commissioner, supra at 1417-1418.
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Conclusion
Reviewed and adopted as the report of the Small Tax Case
Division.
To give effect to the foregoing,
An order granting respondent’s
oral motion and entering decision
for respondent will be entered.