T.C. Summary Opinion 2002-134
UNITED STATES TAX COURT
PEDRO PELAYO-ZABALZA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12940-01S. Filed October 15, 2002.
Pedro Pelayo-Zabalza, pro se.
Christian A. Speck, 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 that the petition was filed.1 The decision to
be entered in this case is not reviewable by any other court, and
this opinion should not be cited as authority.
1
All subsequent section references are to the Internal
Revenue Code in effect for 2000, the taxable year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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Respondent determined a deficiency in petitioner’s Federal
income tax for the taxable year 2000 in the amount of $4,679.
After a concession by respondent,2 the issues for decision
by the Court are as follows:
(1) Whether petitioner is entitled to head of household
filing status. We hold that he is not.
(2) Whether petitioner is entitled to an earned income
credit. We hold that he is not.
An adjustment to the amount of petitioner's standard
deduction is a purely mechanical matter, the resolution of which
is dependent on our disposition of the disputed issue regarding
petitioner’s filing status.
Background
This case was deemed to be submitted fully stipulated, and
the facts stipulated are so found. Petitioner resided in
Sacramento, California, at the time that his petition was filed
with the Court.
Throughout the taxable year 2000, petitioner was married to
Rita Pelayo and lived with her, together with the couple’s two
daughters, in Sacramento, California.
During 2000, petitioner was employed as a laborer and
received wages in the amount of $11,767. Rita Pelayo was also
2
Respondent concedes that petitioner is entitled to
deductions for dependency exemptions for his two minor daughters,
Alejandra Anae and Araceli.
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employed in 2000 and received wages in the amount of $2,576.
Petitioner timely filed a Form 1040A, U.S. Individual Income
Tax Return, for the taxable year 2000. On his return, petitioner
designated his filing status as head of household and claimed the
standard deduction in the amount corresponding to that filing
status. Petitioner also claimed: (1) Deductions for dependency
exemptions for his two minor daughters, Alejandra Anae and
Araceli, and (2) the maximum earned income credit. Petitioner
did not claim a child tax credit.3
Petitioner reported on his income tax return for 2000 the
wages that he received, and he attached to his return a Form W-2,
Wage and Tax Statement, from each of his two employers.
Petitioner did not report on his return the wages that his spouse
received, nor did he attach to his return the Form W-2 from her
employer.
Petitioner’s income tax return for 2000 was prepared by Juan
E. Hernandez of Zeta Enterprise in Sacramento, California.
Petitioner sought the assistance of a return preparer because he
was unable to prepare a return himself. Petitioner is a native
speaker of Spanish, and his ability to speak and understand
English is extremely limited.
3
Petitioner reported zero tax on line 26 of his Form 1040A
and was therefore ineligible for a child tax credit. See sec.
24.
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The record does not disclose whether Rita Pelayo filed an
income tax return for the taxable year 2000.4
In the notice of deficiency, respondent determined that
petitioner’s filing status was “married filing separately” rather
than “head of household”. Respondent also determined that
petitioner was not entitled to either (1) deductions for
dependency exemptions or (2) an earned income credit. Respondent
also adjusted the amount of petitioner’s standard deduction to
correspond with the determined filing status. Finally,
respondent did not make any allowance for a child tax credit.
Discussion5
A. Filing Status
In order to qualify for “head of household” filing status,
an individual must satisfy several requirements. One of those
requirements relates to the individual’s marital status. Thus,
as relevant herein, section 2(b)(1) provides that “an individual
shall be considered a head of a household if, and only if, such
individual is not married at the close of his taxable year”.
4
Rita Pelayo did not sign petitioner’s Form 1040A, nor is
there any indication on such form that it is intended as a joint
return. See sec. 6013(a).
5
We decide the issues in this case without regard to the
burden of proof. Accordingly, we need not decide whether the
general rule of sec. 7491(a)(1) is applicable in this case. See
Higbee v. Commissioner, 116 T.C. 438 (2001).
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The parties stipulated that petitioner was married to Rita
Pelayo and lived with her throughout the taxable year 2000.
Under such circumstances, petitioner does not qualify for “head
of household” filing status. Cf. secs. 2(c), 7703(b) (regarding
certain married individuals living apart who are treated as not
married).
In view of the foregoing, we sustain respondent’s
determination on this issue.6
B. Earned Income Credit
In the case of an eligible individual, section 32(a) allows
an earned income credit against the individual's income tax
liability. However, in the case of an individual who is married
as of the close of his taxable year, the credit is only available
if the individual files a joint return with the individual’s
spouse. Sec. 32(d); see sec. 7703(a)(1).
The parties stipulated that petitioner was married to Rita
Pelayo and lived with her throughout the taxable year 2000. Cf.
sec. 7703(b). Under such circumstances, petitioner would only
qualify for the earned income credit if he filed a joint return.
6
Because of the modest amount of petitioner’s income,
respondent’s adjustments related to filing status and the amount
of the standard deduction may have no tax effect. If these
adjustments do have a tax effect, then, as part of the Rule 155
computation, the parties shall consider the applicability of the
child tax credit under sec. 24.
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Sec. 32(d). Unfortunately for petitioner, he did not do so.7
In view of the foregoing, we sustain respondent’s
determination on this issue.
C. Conclusion
We are satisfied that petitioner is a conscientious taxpayer
who tried to fulfill his Federal income tax obligations by
securing the assistance of a professional tax return preparer.
Unfortunately for petitioner, his preparer gave him erroneous
advice. Although this fact might have insulated petitioner from
liability for a penalty if respondent had determined one, a
taxpayer’s good-faith reliance on a professional tax preparer
does not insulate the taxpayer from liability for the underlying
tax itself.
Reviewed and adopted as the report of the Small Tax Case
Division.
7
There is nothing in the record to suggest that, as of the
date that respondent sent the notice of deficiency, petitioner
and Rita Palayo had attempted to file a joint return for the
taxable year 2000. Inasmuch as petitioner filed a petition in
respect of such notice, he is precluded from filing a joint
return for that year. See sec. 6013(b)(2); cf. Phillips v.
Commissioner, 86 T.C. 433, 441 n.7 (1986), affd. on this issue
851 F.2d 1492 (D.C. Cir. 1988).
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To give effect to respondent’s concession and our
disposition of the disputed issues,
Decision will be entered
under Rule 155.8
8
We expect the parties to reflect clearly in their Rule
155 computation the amount of whatever deficiency, deficiency to
be paid, or overpayment that may exist in this case. In this
regard, we note that respondent’s trial memorandum states that
“Petitioner’s earned income credit request and request for refund
of his federal tax withholding * * * were frozen prior to the
issuance of the deficiency notice”. Thus, although a technical
deficiency may exist, see sec. 6211(a),(b)(1), (4), no part of
that deficiency may remain to be paid, and petitioner may be
entitled to a refund of all or part of the tax withheld from his
wages.