T.C. Summary Opinion 2003-151
UNITED STATES TAX COURT
JOHNY L. DOTSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7888-02S. Filed October 14, 2003.
Johny L. Dotson, pro se.
Rollin G. Thorley, for respondent.
PAJAK, 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. Unless otherwise
indicated, section references are to the Internal Revenue Code in
effect for the years in issue. The decision to be entered is not
reviewable by any other court, and this opinion should not be
cited as authority.
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Respondent issued two separate notices of deficiency for
taxable years 1998 and 1999, respectively. Respondent determined
deficiencies in petitioner's Federal income taxes and additions
to tax in the following amounts:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)
1998 $1,530 $382.50 -
1999 2,122 530.50 $102.70
This Court must decide: (1) Whether petitioner has
unreported taxable income for 1998 and 1999; (2) whether
petitioner is liable for section 6651(a)(1) additions to tax for
failure to file Federal income tax returns for 1998 and 1999; and
(3) whether petitioner is liable for the section 6654(a) addition
to tax for failure to pay estimated income tax for 1999.
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in Las Vegas, Nevada, at the time
he filed his petition.
During the taxable years in issue, petitioner received the
following payments in the following amounts:
1998
Nonemployee compensation $ 1,562
Rent 13,523
Interest 21
$15,106
1999
Nonemployee compensation $ 5,224
Rent 10,725
Interest 13
$15,962
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Petitioner did not file Federal income tax returns for 1998
and 1999. Respondent received information reports and prepared
substitutes for return for 1998 and 1999. Respondent determined
that petitioner had unreported income of $15,106 and $15,962 for
1998 and 1999, respectively.
Section 61(a) provides that gross income includes all income
from whatever source derived unless excludable by a specific
provision of the Code. Compensation, interest, and rents are
enumerated sources of income includable in gross income. Sec.
61(a)(1), (4), and (5).
Petitioner stipulated to receipt of nonemployee
compensation, rent, and interest in the amounts determined in the
notices of deficiency. At trial, petitioner testified that he
did not file Federal tax returns for 1998 and 1999. Petitioner
began to make tax protester type arguments, but upon admonition
by the Court as to potential penalties associated with advancing
such arguments, petitioner concluded his testimony. Petitioner
offered no evidence as to the excludability of any of the amounts
he received during 1998 and 1999. We find that petitioner had
unreported income in 1998 and 1999 in the amounts determined by
respondent.
We further find that respondent has satisfied his burden of
production with respect to the imposition of the additions to tax
under sections 6651(a)(1) and 6654(a). Sec. 7491(c).
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As to the section 6651(a)(1) additions to tax for 1998 and
1999, section 6651(a)(1) imposes an addition to tax for failure
to timely file a tax return, unless such failure is due to
reasonable cause and not willful neglect. Additions to tax under
section 6651(a)(1) are imposed unless the taxpayer establishes
that the failure was due to reasonable cause and not willful
neglect. The taxpayer must prove both reasonable cause and a
lack of willful neglect. Crocker v. Commissioner, 92 T.C. 899,
912 (1989). “Reasonable cause” requires the taxpayer to
demonstrate that he exercised ordinary business care and
prudence. United States v. Boyle, 469 U.S. 241, 246 (1985).
Willful neglect is defined as a “conscious, intentional failure
or reckless indifference.” Id. at 245.
Petitioner did not file tax returns for 1998 and 1999.
Petitioner offered no evidence that he had reasonable cause and a
lack of willful neglect. Rather, in tax protester fashion,
petitioner testified that he did not file tax returns for 1998
and 1999 because, under the Internal Revenue Code, “there’s no
requirement to file without tax liability first * * * [and] it
has to be recorded” and that “I have no liability”. Such a
position does not demonstrate reasonable cause. Thus, we
conclude that petitioner is liable for the additions to tax under
section 6651(a)(1) for 1998 and 1999.
We next consider whether petitioner is liable for the
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addition to tax under section 6654 for failure to pay estimated
taxes for 1999. Section 6654(c) imposes a requirement that
estimated taxes be paid in installments. If a taxpayer fails to
pay a sufficient amount of estimated taxes, section 6654(a)
provides for a mandatory addition to tax in the absence of
exceptions not applicable here. Grosshandler v. Commissioner, 75
T.C. 1, 20-21 (1980). Petitioner did not file a tax return for
1999, and there is no evidence that any tax was withheld from the
income he received in 1999. Accordingly, we find that petitioner
is liable for the addition to tax under section 6654 for 1999.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.