T.C. Memo. 2003-104
UNITED STATES TAX COURT
ERYCK C. ASTON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2427-01. Filed April 16, 2003.
Eryck C. Aston, pro se.
Joan E. Steele, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: Respondent determined a deficiency of
$2,104 and additions to tax of $73.64 and $101.85 pursuant to
sections 6651(a)(1)1 and 6654(a) in petitioner’s 1999 Federal
income tax.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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The issues for decision are: (1) Whether petitioner had a
deficiency for 1999, as determined by respondent; (2) whether
petitioner is liable for an addition to tax for failing to file a
Federal income tax return for 1999; (3) whether petitioner is
liable for an addition to tax for failing to make estimated tax
payments for 1999; and (4) whether petitioner engaged in behavior
warranting the imposition of a penalty pursuant to section
6673(a).
FINDINGS OF FACT
None of the facts have been stipulated. At the time he
filed his petition, petitioner resided in Billings, Montana.
During 1999, petitioner was employed by the Kmart Corp.
(Kmart) in Billings, Montana. In 1999, Kmart paid petitioner
$21,078.12 in wage income. During 1999, Kmart withheld zero
Federal income tax, $1,306.84 of Social Security tax, and $305.63
of Medicare tax. Petitioner made no estimated income tax
payments for 1999.
Petitioner submitted an unsigned Form 1040A, U.S. Individual
Income Tax Return, for 1999 to respondent. Petitioner listed
zero as the amount of his wages, total income, adjusted gross
income, taxable income, and total tax. On the line for
nontaxable income earned petitioner listed “ALL”. Petitioner
claimed a refund of $1,926.12 for amounts withheld for Federal
income tax ($1,612.47) and estimated tax payments ($313.65).
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Both pages of the Form 1040A were stamped “under duress” and
“without prejudice”. Petitioner attached 30 pages to the Form
1040A reciting statements, contentions, and arguments that the
Court finds to be frivolous and/or groundless.
OPINION
I. The Deficiency
As a general rule, the taxpayer bears the burden of proving
the Commissioner’s deficiency determinations incorrect. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Section
7491(a), however, provides that if a taxpayer introduces credible
evidence and meets certain other prerequisites, the Commissioner
shall bear the burden of proof with respect to factual issues
relating to the liability of the taxpayer for a tax imposed under
subtitle A or B of the Code.
We found petitioner’s testimony to be evasive, vague,
conclusory, and/or questionable. Petitioner introduced no
credible evidence regarding his income for 1999, and he
introduced no evidence to establish that he met the prerequisites
of section 7491(a).2 Accordingly, petitioner bears the burden of
2
The documentary evidence the Court received from
petitioner at trial consisted of: (1) A letter from respondent
to petitioner regarding respondent’s making third party contacts,
(2) documents regarding the seizure of property from petitioner,
(3) documents regarding the alleged theft of property from
petitioner by his ex-wife, and (4) a 12-page letter from
petitioner to respondent containing numerous frivolous and
groundless arguments regarding why he was not subject to Federal
income tax.
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proof.3
A. Income From Kmart
Section 61 defines gross income as all income from whatever
source derived. Gross income includes compensation for services.
Sec. 61(a)(1).
In 1999, petitioner received $21,078.12 in wages from Kmart.
In motions, at trial, and on brief, petitioner advanced shopworn
arguments characteristic of tax protester rhetoric that has been
universally rejected by this and other courts. Wilcox v.
Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C. Memo.
1987-225; Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir.
1986). We shall not painstakingly address petitioner’s
assertions “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, 1417
(5th Cir. 1984).
B. Losses
Section 165(a) provides that there shall be allowed as a
deduction any loss sustained during the taxable year and not
compensated by insurance or otherwise. Section 165(c) limits the
loss deduction for individuals to losses incurred in a trade or
business, losses incurred in a transaction entered into for
profit, and certain casualty losses. Petitioner argues that he
3
We note, however, that our resolution of this issue does
not depend on which party bears the burden of proof.
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is entitled to a loss deduction for 1999 related to (1) property
seized by the Government, and (2) theft of his property by his
ex-wife, Lonnie Probst.4
In 1992, the Department of the Treasury, Bureau of Alcohol,
Tobacco and Firearms (ATF), seized 17 firearms, assorted
ammunition, and destructive devices (firearms) from petitioner.
The firearms seized by ATF were used or acquired by petitioner in
violation of chapter 53 of the Internal Revenue Code and subject
to forfeiture pursuant to that law.5
On December 7, 1999, ATF sent petitioner a letter notifying
him that administrative forfeiture proceedings regarding the
firearms had “commenced in accordance with the provisions of 31
U.S.C. 9703(o) and 19 U.S.C. 1602-1624.” ATF informed petitioner
that he could contest the forfeiture of the firearms by filing a
claim for the seized property and a cost bond or a request for a
waiver of the cost bond by December 30, 1999.
On January 31, 2000, ATF sent petitioner a letter
acknowledging that on December 28, 1999, petitioner filed a claim
and a request for waiver of the cost bond to contest the
forfeiture of the firearms and informing petitioner that the
matter was referred to the U.S. Attorney’s Office for the
4
Petitioner did not claim these losses on his unsigned
Form 1040A for 1999 that he submitted to respondent.
5
Petitioner testified that he was imprisoned from 1994
through 1998 for “Department of Treasury tax violations”.
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District of Utah.
Petitioner testified that Ms. Probst stole jewelry,
automobiles, and other property from petitioner. A letter and a
memorandum dated February 18, 1999, from Dennis Paxinos, a
Yellowstone County attorney, stated that Mr. Paxinos had reviewed
the two volumes of materials petitioner had sent to him and that
he (Mr. Paxinos) could not in good faith file a criminal
complaint for theft against Ms. Probst. Mr. Paxinos stated that
petitioner’s allegations that Ms. Probst and others had stolen
property from petitioner were previously reviewed in 1996, and
based on his review of the current file Mr. Paxinos concluded
that Ms. Probst had the authority to take the allegedly stolen
property and had a claim of right, title, or ownership on the
allegedly stolen property.
The Court is not required to accept petitioner’s
unsubstantiated testimony. Wood v. Commissioner, 338 F.2d 602,
605 (9th Cir. 1964), affg. 41 T.C. 593 (1964). As previously
stated, we found petitioner’s testimony to be vague, conclusory,
and/or questionable. Under the circumstances presented here, we
are not required to, and generally do not, rely on petitioner’s
testimony to sustain his burden of proof. Lerch v. Commissioner,
877 F.2d 624, 631-632 (7th Cir. 1989), affg. T.C. Memo. 1987-295;
Geiger v. Commissioner, 440 F.2d 688, 689-690 (9th Cir. 1971),
affg. per curiam T.C. Memo. 1969-159; Tokarski v. Commissioner,
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87 T.C. 74, 77 (1986).
Even if we were to accept petitioner’s testimony, the
evidence does not establish that any of the alleged losses (from
the seizure of the firearms or the alleged theft of property)
occurred in 1999.
C. Conclusion
Based on the foregoing, we sustain respondent’s deficiency
determination.
II. Additions to Tax
Section 7491(c) provides that the Commissioner shall bear
the burden of production with respect to the liability of any
individual for additions to tax. “The Commissioner’s burden of
production under section 7491(c) is to produce evidence that it
is appropriate to impose the relevant penalty”. Swain v.
Commissioner, 118 T.C. 358, 363 (2002); see also Higbee v.
Commissioner, 116 T.C. 438, 446 (2001). If a taxpayer files a
petition alleging some error in the determination of the penalty,
the taxpayer’s challenge generally will succeed unless the
Commissioner produces evidence that the penalty is appropriate.
Swain v. Commissioner, supra at 364-365. The Commissioner,
however, does not have the obligation to introduce evidence
regarding reasonable cause or substantial authority. Higbee v.
Commissioner, supra at 446-447.
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A. Section 6651(a)(1)
Respondent determined that petitioner is liable for an
addition to tax pursuant to section 6651(a)(1). Section
6651(a)(1) imposes an addition to tax for failure to file a
return on the date prescribed (determined with regard to any
extension of time for filing), unless such failure is due to
reasonable cause and not due to willful neglect.
Respondent introduced as evidence the Form 1040A for 1999
that petitioner submitted to respondent.6 This return was not
signed. Such unsigned tax return submitted to the Commissioner
is insufficient to avoid the addition to tax pursuant to section
6651(a)(1). Vaira v. Commissioner, 52 T.C. 986, 1004-1006
(1969), revd. on other grounds 444 F.2d 770 (3d Cir. 1971); see
also Dixon v. Commissioner, 28 T.C. 338, 347-348 (1957) (the
submission of an unsigned tax return to the Internal Revenue
Service is not the making of an income tax return). We conclude
that respondent satisfied his burden of production regarding this
issue. Thus, petitioner must come forward with evidence
6
Petitioner testified that the first name on the Form
1040A is spelled “Ercyk” whereas petitioner’s first name is
spelled “Eryck”; however, he did not testify that the Form 1040A
was not his. This appears to be no more than a typographical
error given that petitioner’s name, correctly spelled, and
signature appears on documents attached to the Form 1040A and
petitioner testified that his Social Security number is listed on
the Form 1040A.
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sufficient to persuade the Court that respondent’s determination
is incorrect or that an exception applies. Rule 142(a); Welch v.
Helvering, 290 U.S. at 115; see Higbee v. Commissioner, supra at
447.
Petitioner presented no evidence that he timely filed a
return for 1999 or that his failure to file was due to reasonable
cause and not due to willful neglect. We hold that petitioner is
liable for the addition to tax pursuant to section 6651(a)(1).
B. Section 6654(a)
Section 6654 imposes an addition to tax for failure to pay
estimated income tax. Respondent submitted petitioner’s Form W-
2, Wage and Tax Statement, for 1999 from Kmart and a Form 4340,
Certificate of Assessments, Payments, and Other Specified
Matters, for petitioner’s 1999 tax year. The forms indicate that
petitioner did not have any Federal income tax withheld and did
not make any estimated income tax payments for 1999. We conclude
that respondent satisfied his burden of production regarding this
issue. Thus, petitioner must come forward with evidence
sufficient to persuade the Court that respondent’s determination
is incorrect or that an exception applies. Rule 142(a); Welch v.
Helvering, supra at 115; see Higbee v. Commissioner, supra at
447.
Petitioner presented no evidence that he had any income tax
withheld, paid any estimated income taxes for 1999, or that an
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exception pursuant to section 6654(e) applies. We hold that
petitioner is liable for the addition to tax pursuant to section
6654(a).
III. Section 6673 Penalty
Section 6673(a)(1) authorizes this Court to require a
taxpayer to pay to the United States a penalty not to exceed
$25,000 if the taxpayer took frivolous positions in the
proceedings or instituted the proceedings primarily for delay. A
position maintained by the taxpayer is “frivolous” where it is
“contrary to established law and unsupported by a reasoned,
colorable argument for change in the law.” Coleman v.
Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).
At trial, the Court advised petitioner that the arguments he
was advancing were frivolous and groundless. Furthermore, the
Court directed petitioner to several opinions of the U.S. Court
of Appeals for the Ninth Circuit, the court to which this case is
appealable, holding petitioner’s arguments to be frivolous and
groundless.7
Petitioner filed numerous frivolous documents and motions
with the Court before and after the trial. Petitioner’s
position, based on stale and meritless contentions, is manifestly
7
The Court apprised petitioner of the following cases:
Schramm v. Commissioner, 988 F.2d 121 (9th Cir. 1993), affg. T.C.
Memo. 1991-523; United States v. Ferrel, 925 F.2d 1471 (9th Cir.
1991); and Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988),
affg. T.C. Memo. 1987-225.
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frivolous and groundless, and he has wasted the time and
resources of this Court. Accordingly, we shall impose a penalty
of $2,500 pursuant to section 6673.
To reflect the foregoing,
Decision will be
entered for respondent.