T.C. Memo. 2005-12
UNITED STATES TAX COURT
ROBERT RODRIGUEZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10391-03. Filed January 26, 2005.
Robert Rodriguez, pro se.
Jonae A. Harrison, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Chief Judge: Respondent determined deficiencies in
and additions to petitioner’s Federal income tax as follows:
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Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)
1997 $3,536 $738.75 $154.66
1 1
1998 2,119 526.75 --
1999 2,794 674.00 129.95
2000 9,027 1,990.25 418.92
1
Includes additional amounts not reflected in the original
notice of deficiency. The Court has jurisdiction to redetermine
such increased amounts of the deficiency and any addition to tax
if the Secretary makes a claim at the hearing. Sec. 6214(a).
Respondent moved at trial to amend his answer to reflect these
increases, and petitioner did not object.
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
Petitioner petitioned the Court to redetermine the
deficiencies and additions to tax.
We must decide whether:
1. Petitioner had unreported income of $30,372, $21,091,
$25,661 and $51,612 determined by respondent for the tax years
1997, 1998, 1999, and 2000, respectively.
2. Petitioner is liable for the additions to tax determined
by respondent under section 6651(a)(1).
3. Petitioner is liable for the additions to tax determined
by respondent under section 6654(a).
4. A penalty shall be imposed on petitioner under section
6673 for advancing frivolous and/or groundless claims.
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FINDINGS OF FACT1
At the time the petition was filed, petitioner resided in
Phoenix, Arizona. Petitioner did not file tax returns for the
taxable years 1997, 1998, 1999, and 2000. For the years in
question, petitioner received income in the following amounts:
Year Payor Amount Total
1997 Rescue Industries, Inc. $30,372 $30,372
1998 Rescue Industries, Inc. 6,527
Rescue Rooster, LLC 10,903
Laboratory Sciences of AZ, LLC 3,661 21,091
1999 Rescue Rooster, LLC 5,341
Laboratory Sciences of AZ, LLC 1,627
Devau Human Resources 7,744
Metro Lock Services, Inc. 10,949 25,661
2000 Devau Human Resources 8,121
Cox Communications, Inc. 43,491 51,612
Respondent received information from third parties showing that
petitioner derived income in the amounts determined above.
Withholding was taken from petitioner’s wages in the amounts of
$581, $12, $98, and $1,067 for the years 1997, 1998, 1999, and
2000, respectively. Petitioner’s filing status was “Single” for
all years.
Petitioner did not cooperate with respondent at any time
during the review process, failing to meet with or to provide
1
The parties’ stipulation of facts and exhibits submitted
therewith are incorporated herein by this reference.
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respondent with any information that would enable respondent to
properly determine petitioner’s tax liability.
OPINION
A. Burden of Proof
Generally, respondent’s deficiency determinations set forth
in the notices of deficiency are presumed correct, and petitioner
bears the burden of showing that the determination is in error.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). There
are exceptions to that Rule. Section 7491 shifts the burden of
proof to respondent if the taxpayer meets certain preliminary
conditions. Here, not only did petitioner fail to cooperate with
respondent in any regard, but he did not produce one scintilla of
evidence with respect to any matter in this case. See sec.
7491(a). Therefore, section 7491(a) does not apply in this case.
Another case in which the burden may shift to respondent
concerns the determination that there is unreported income.
Under the holdings of the U.S. Court of Appeals for the Ninth
Circuit (to which an appeal would normally lie for petitioner)
respondent is required to build an evidentiary foundation to
support a determination of unreported income. See Weimerskirch
v. Commissioner, 596 F.2d 358 (9th Cir. 1979), revg. 67 T.C. 672
(1977). Respondent issued subpoenas to six of petitioner’s
former employers. At trial, to substantiate the determination
that petitioner received the income alleged, respondent provided
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Forms W-2, Wage and Tax Statement, payroll records, and
declarations from employers as to the validity of these
underlying documents. Therefore, respondent has made a
sufficient showing to shift to petitioner the obligation to show
that respondent’s determination is in error.
However, with respect to the additions to tax, section
7491(c) requires that respondent bear the burden of production.
To meet this burden, respondent must present evidence indicating
that it is appropriate to impose an addition to tax. See Higbee
v. Commissioner, 116 T.C. 438, 446 (2001).
B. Respondent’s Deficiency Determinations
This is not the first time that petitioner has appeared
before this Court with substantially similar issues. Petitioner
advanced many of the same arguments in this case as he had in a
prior case involving his 1994 through 1996 tax years. See
Rodriguez v. Commissioner, T.C. Memo. 2003-105. As before,
petitioner alleged that he did not receive the income, that his
filing status was married, and that respondent failed to consider
vague and nebulous “deductions, allowances and expenses provided
for by law” (that petitioner never specifically identifies).
Petitioner objected to the admission of respondent’s evidence
based on “timeliness”, hearsay, and lack of personal knowledge.
Petitioner argues that he has no way of cross-examining the
people who made the declarations, that the underlying documents
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are secondary evidence, and that respondent has no personal
knowledge as to the validity of the documents. The documents
were received into evidence over the objection of petitioner.
We find that the evidence provided by respondent was
reliable in that it met the hearsay and authentication exceptions
in rules 803(6) and 902(11) of the Federal Rules of Evidence.
All of the underlying documents were kept in the regular course
of business, and the declarations of the validity of these
documents were made by people familiar with their use.
Petitioner did not introduce any evidence to refute the validity
of the evidence. In addition, petitioner has again failed to
provide any evidence that the income determined by respondent is
in error or that he is entitled to file a return claiming marital
status or any deductions. The failure of petitioner to present
any evidence leaves the Court no basis for making any findings
that support petitioner’s assertions.
Petitioner also argued that he was prejudiced by the
documents offered by respondent due to the lack of a fair
opportunity to inspect the documents. Petitioner’s claim is
without merit. First, some of the documents had petitioner’s
signature on them, indicating he was familiar with the evidence
presented. Second, the documents offered at trial were
related to petitioner’s wage income. We find it extremely
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difficult to believe that petitioner was blind-sided by this
evidence.
Finally, petitioner had an opportunity to obtain the
evidence presented at trial. Respondent contacted petitioner to
coordinate a conference for December 15, 2003, before trial.
Petitioner stated he could not attend that meeting and instead
informed respondent that he would be making discovery requests of
respondent. However, petitioner failed to take steps to meet
with respondent at any other time or to engage in any discovery
whatsoever. Instead, on February 19, 2004, petitioner objected
on the basis of self-incrimination and the Fifth Amendment to all
of respondent’s proposed stipulations of fact, except for the two
relating to the notices of deficiency and petitioner’s residence.
Petitioner thus failed to cooperate with respondent and thwarted
respondent’s attempts to stipulate facts by asserting baseless
constitutional arguments. The Court’s patience for such
arguments in this civil case wears thin where there is no
indication that petitioner’s cooperation with respondent’s
requests would lead to criminal prosecution. Petitioner cannot
now claim that he is prejudiced or that he did not have an
opportunity to challenge respondent’s evidence. Accordingly, we
again find that it was proper for respondent to have determined
income for the subject years from the information received from
third parties and that respondent’s determination and the
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increased amount of unreported income for all years in question
is sustained. See Hardy v. Commissioner, 181 F.3d 1002, 1005
(9th Cir. 1999), affg. T.C. Memo. 1997-97.
C. Additions to Tax
Section 6651(a)(1) imposes an addition to tax for failing to
timely file a required Federal income tax return, unless it is
shown that the failure was due to reasonable cause and not
willful neglect. Petitioner was required to file Federal income
tax returns for each of the subject years because his income
exceeded the maximum amount to be exempt from filing in each of
the taxable years. Secs. 6012, 6072.
As was the situation in petitioner’s prior case, respondent
offered Forms 4340, Certificate of Assessments, Payments and
Other Specified Matters, and the testimony of a revenue agent as
proof that petitioner failed to file returns for the subject
years. Once again, petitioner failed to introduce any evidence
indicating that he filed the returns or that his failure to file
was reasonable. Accordingly, we again hold that petitioner is
liable for the additions to tax under section 6651(a)(1). United
States v. Boyle, 469 U.S. 241, 245 (1985); Cluck v. Commissioner,
105 T.C. 324, 338-339 (1995).
Section 6654 imposes an addition to tax on an underpayment
of estimated tax. Again, Forms 4340 and the testimony of the
revenue agent establish that petitioner failed to pay the
required estimated tax for 1997, 1999, and 2000. Furthermore, no
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evidence has been presented that petitioner paid the estimated
tax for the subject years or that any of the exceptions to the
addition to tax under section 6654(e) are available.
Accordingly, we sustain respondent’s determinations.
D. Penalty Under Section 6673(a)
Respondent moved the Court, before trial, to impose a
$25,000 penalty under section 6673(a). 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
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.
At the beginning of trial, the Court explained the motion to
petitioner and then asked if petitioner objected to the motion.
The following restates the Court’s explanation and how petitioner
replied:
THE COURT: Well, let me make sure you understand
what this motion is trying to accomplish. This motion
is a motion for sanctions pursuant to Section 6673
* * * .
That particular section of the Code permits this
Court, if it should find that you’re just bringing this
action for purposes of delay, or if it should find that
your arguments are frivolous, without merit, it can
fine you up to $25,000 for such activity * * * you
don’t object to that?
* * * * *
[Mr. Rodriguez]: No, I don’t object.
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Petitioner’s only argument is that he believed that he did
not have an opportunity to challenge any of the “hearsay or
secondary information” that was presented at trial.
As was explained to petitioner at trial, he had the
opportunity to call his own witnesses, offer any documents, and
present his own testimony, but he chose not to do so. As
discussed, he was not prejudiced by not receiving the documents
presented by respondent until trial. Moreover, sanctions of
$10,000 have previously been imposed against petitioner for the
1994, 1995, and 1996 tax years for advancing the same arguments
as he has in this case. See Rodriguez v. Commissioner, T.C.
Memo. 2003-105. The opinion admonishing petitioner for his
previous conduct in 3 taxable years was filed on April 17, 2003.
Id. Nonetheless, petitioner had the audacity to once again
petition the Court to redetermine his tax liability for
4 subsequent taxable years less than 3 months later, on July 1,
2003, and to continue to submit the same baseless arguments in
this case as had been presented in his earlier case.
In his prior case, as in this case, petitioner was warned
before trial by respondent and during trial by the Court that his
position would warrant a penalty of up to $25,000. Petitioner’s
arguments are the same frivolous and groundless arguments that we
previously found were instituted primarily for delay. Petitioner
continues in his failure to cooperate with respondent and to
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advance the same frivolous arguments with the Court after
repeated warnings. Accordingly, we hold that petitioner is
liable for a $25,000 penalty under section 6673.
We have considered all arguments and have found those
arguments not discussed herein to be irrelevant and/or without
merit. To reflect the foregoing,
An appropriate order and
decision will be entered
for respondent.