T.C. Summary Opinion 2004-108
UNITED STATES TAX COURT
HUGH POWELL ARVIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6892-03S. Filed August 5, 2004.
Hugh Powell Arvin, pro se.
D. Sean McMahon, for respondent.
DEAN, 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. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code in effect for the years at 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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In four separate notices of deficiency, respondent
determined deficiencies in petitioner's Federal income taxes and
additions to tax as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)
1997 $3,839 $488.25 –-
1998 4,674 569.50 –-
1999 3,971 974.25 $188.20
2000 5,319 1,329.75 284.10
The issues for decision are: (1) Whether petitioner had
unreported income in the amounts respondent determined, (2)
whether petitioner is liable for additions to tax under section
6651(a)(1) for failure to file timely Federal income tax returns
for taxable years 1997 through 2000, and (3) whether petitioner
is liable for additions to tax under section 6654(a) for failure
to pay estimated income taxes.
Background
The stipulation of facts and the exhibits received into
evidence are incorporated herein by reference. Petitioner
resided in Hopkinton, Massachusetts, at the time the petition was
filed.
Respondent obtained copies of Forms W-2, Wage and Tax
Statement, issued by Non Stop Sales & Service, Inc., which show
that petitioner was paid $9,720, $9,940, $3,375, and $2,025 for
tax years 1997, 1998, 1999, and 2000, respectively. Petitioner
stipulated that he received $19,671 and $16,130 from Electronic
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Designs, Inc., during tax years 1997 and 1998. Additionally,
respondent obtained copies of Forms W-2 issued by the
International, Inc., which show that petitioner was paid $5,478,
$18,965, and $23,812 for tax years 1998, 1999, and 2000,
respectively. According to Forms 1099-G, Statement for
Recipients of Certain Government Payments, petitioner also
received unemployment compensation from the Commonwealth of
Massachusetts during the 1998, 1999, and 2000 tax years of
$1,212, $3,257, and $521, respectively.
On or about August 1, 1998, petitioner submitted to
respondent a Form 1040, U.S. Individual Income Tax Return, for
1997. Petitioner did not attach any Forms W-2 to the Form 1040.
Petitioner entered zeros on all lines of the income portion of
his Form 1040, specifically including those lines that report
wages, dividends, total income, and adjusted gross income. He
also indicated that his taxable income and tax were zero.
Petitioner claimed a refund of $1,886, the full amount of Federal
income tax that had been withheld from his wages by his
employers.1
Petitioner submitted to respondent a Form 1040 for 1998.
Petitioner did not attach to the return Forms W-2 or 1099-G.
Petitioner entered zeros on all lines of the income portion of
1
The actual amount withheld by petitioner's employers was
$1,886.52.
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the Form 1040, including those lines that report wages,
dividends, total income, and adjusted gross income. He also
indicated his taxable income and tax to be zero. Petitioner
claimed a refund of $2,397.09, which was the amount of Federal
income tax that had been withheld from his wages by his
employers.
Petitioner attached to his Form 1040 for each of the 1997
and 1998 years a two-page typewritten statement that lists
numerous reasons why he believes that he is not required to pay
income tax.
Petitioner submitted to respondent a five-page typewritten
document which purports to be a legal notice that he is a
nontaxpayer (legal notice) for 1999 and 2000. The legal notice
contained numerous statements that show petitioner's continuing
belief that he is not required to file a return or pay income
tax.
Petitioner does not dispute receiving the amounts of income
respondent determined in the notices of deficiency. Petitioner
filed a petition with this Court alleging that respondent erred
in determining his deficiencies and his taxable income and
demanding the case be transferred to respondent's Appeals Office.
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Respondent sent a letter to petitioner scheduling an Appeals
Office conference. Petitioner did not appear at the conference
and failed to contact the officer before the date of the
conference.
Discussion
Section 7491(a)(1)2 provides that the burden of proof may,
under certain conditions, shift to the Commissioner. Because
petitioner failed to meet the requirements of section 7491(a)(2),
the burden of proof does not shift to respondent.
Petitioner's objections to respondent's adjustments are
those typical of so-called tax protesters. In his trial
memorandum, petitioner relies on Brushaber v. Union Pac. R.R.,
240 U.S. 1, 19 (1916), to support his propositions that the
Sixteenth Amendment did not give the Federal Government any new
taxing powers and that income tax is actually an excise tax,
which can only be assessed against those who are licensed or
incorporated. However, petitioner's argument is baseless.
In Brushaber, the Court found the 1913 income tax law
to be constitutional. The Court also noted that in
Pollock v. Farmers' Loan and Trust Co., 158 U.S. 601
(1895) it had previously found the taxing of income
from professions, trades, employments or vocations to
be constitutional in the form of an excise tax. In
light of the [S]ixteenth [A]mendment, however, all
2
Sec. 7491 is effective with respect to court proceedings
arising in connection with examinations by the Commissioner
commencing after July 22, 1998, the date of its enactment by sec.
3001(a) of the Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, 112 Stat. 726.
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taxation of income, "from whatever source derived," was
found to be constitutional in Brushaber. [Martin v.
Commissioner, 756 F.2d 38, 40 (6th Cir. 1985), affg.
T.C. Memo. 1983-473.]
On the basis of well-established law, the Court finds that
petitioner's position is frivolous and groundless. The Court
sees no need to further address petitioner's arguments. See
Crain v. Commissioner, 737 F.2d 1417 (5th Cir. 1984).
Additions to Tax Under Sections 6651(a)(1) and 6654
Respondent determined additions to tax under section
6651(a)(1) for petitioner's failure to timely file Federal income
tax returns for 1997, 1998, 1999, and 2000. The addition to tax
for failure to file a return timely will be imposed if a return
is not timely filed unless the taxpayer shows that the delay was
due to reasonable cause and not willful neglect. Sec.
6651(a)(1).
Although petitioner submitted Forms 1040 for tax years 1997
and 1998, respondent does not recognize them as returns because
petitioner stated that he had zero gross income, owed zero tax,
and requested refunds of the amounts withheld. This Court has
previously held that "zero returns" are not recognized as returns
that fulfill a taxpayer's obligation to file. Hill v.
Commissioner, T.C. Memo. 2003-144; Rayner v. Commissioner, T.C.
Memo. 2002-30, affd. 70 Fed. Appx. 739 (5th Cir. 2003); see also
Rev. Rul. 2004-34, 2004-12 I.R.B. 619.
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The documents petitioner submitted for tax years 1999 and
2000 are not recognized by respondent as returns because they do
not constitute Forms 1040 and they fail to provide any
information required by Form 1040, specifically the amount of
petitioner's income for each year.
None of the documents submitted by petitioner constitute
returns. Therefore, petitioner has yet to file any returns.
Petitioner has not offered any evidence that his failure to file
is due to reasonable cause and not to willful neglect.
Respondent's determinations that petitioner is liable for the
additions to tax under section 6651(a)(1) are sustained.
Respondent also determined an addition to tax under section
6654 for petitioner's underpayment of estimated tax for 1999 and
2000. This addition to tax is mandatory and automatic, subject
to certain exceptions provided by section 6654(e). Grosshandler
v. Commissioner, 75 T.C. 1 (1980). Petitioner failed to offer
any evidence that he fits within any of the listed exceptions.
Respondent's determinations that petitioner is liable for section
6654 additions to tax are sustained.
Petitioner did not introduce any evidence to show that he is
not liable for the income tax deficiencies and additions to tax
under sections 6651(a)(1) and 6654; accordingly, respondent's
determinations for all 4 years are sustained.
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We note that section 6673(a)(1) authorizes the Court to
require a taxpayer to pay to the United States a penalty of up to
$25,000 whenever it appears that the proceeding has been
instituted or maintained by the taxpayer primarily for delay or
that the taxpayer's position in such proceedings is frivolous or
groundless. In this case, we conclude that the position advanced
by petitioner is frivolous and groundless. Nevertheless,
respondent has not asked for penalties under section 6673 to be
imposed, and we choose not to do so at this time. We caution
petitioner that such penalties under section 6673 may be imposed
if he continues to advance the same frivolous and groundless
arguments in the future.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the forgoing,
Decision will be
entered for respondent.