T.C. Memo. 2005-60
UNITED STATES TAX COURT
RICHARD JOHN FLORANCE, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11782-03. Filed March 29, 2005.
Richard John Florance, Jr., pro se.
Adam L. Flick, for respondent.
MEMORANDUM OPINION
VASQUEZ, Judge: This case is before the Court on
respondent’s motion for summary judgment and motion to impose a
penalty under section 6673.1
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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Background
By notice of deficiency, respondent determined a deficiency
of $3,300 and additions to tax of $825 and $176.55 pursuant to
sections 6651(a)(1) and 6654(a), respectively, in petitioner’s
1997 Federal income tax.
On July 17, 2003, petitioner invoked the jurisdiction of
this Court by filing an improper petition.
On July 21, 2003, the Court ordered petitioner to file a
proper amended petition on or before September 19, 2003.
On August 13, 2003, petitioner filed a status report
acknowledging receipt of the Court’s July 21, 2003, order and
stating that the case could be resolved without an amended
petition once “Regional or District Counsel” was assigned.
On September 17, 2003, petitioner filed an amended petition.
Petitioner requested that this case be conducted under the small
tax case procedure. In the amended petition, petitioner noted
that in the notice of deficiency respondent made an adjustment
for $15,000 in wages he admitted he received in 1997 but failed
to include an additional $37,000 in wages petitioner received
during 1997.
On December 15, 2003, petitioner filed a motion for judgment
on the pleadings. Petitioner characterized the primary issue in
his case as whether he was a “taxpayer” and asserted that he had
challenged this issue. The motion for judgment on the pleadings
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also contained other frivolous and groundless statements,
contentions, and arguments.
On January 9, 2004, the Court denied petitioner’s motion for
judgment on the pleadings.
By notice dated February 10, 2004, the Court set this case
for trial at the Court’s Dallas, Texas, session beginning April
26, 2004. This notice specifically stated: “YOUR FAILURE TO
APPEAR MAY RESULT IN DISMISSAL OF THE CASE AND ENTRY OF DECISION
AGAINST YOU.”
On March 8, 2004, petitioner filed a motion for continuance.
On March 17, 2004, the Court denied petitioner’s motion for
continuance. The Court also ordered that petitioner’s request
for admissions be returned to petitioner unfiled, and that
petitioner and respondent meet as soon as practical for purposes
of informal discovery and to complete a stipulation of facts as
required by Rule 91 (March 17 order). In the March 17 order, we
stated: “Respondent further objects that petitioner’s request
document ‘requests respondent to admit to matters that are
irrelevant, conclusions of law, frivolous arguments and not
properly discoverable.’ We do not disagree.”
On March 18, 2004, petitioner filed a motion to remove the
small tax case designation and another document the Court filed
as petitioner’s pretrial memorandum. The pretrial memorandum
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contained frivolous and groundless statements, contentions, and
arguments.
On March 19, 2004, the Court granted petitioner’s motion to
remove the small tax case designation and ordered respondent to
file an answer to the amended petition on or before April 19,
2004.
On March 25, 2004, petitioner filed a notice of
nonacquiescence to the March 17 order and a motion for
continuance.
On March 30, 2004, the Court denied petitioner’s motion for
continuance.
On April 2, 2004, respondent filed an answer. In the
answer, respondent affirmatively alleged that (1) he received a
proposed set of stipulations from petitioner, (2) petitioner
attached a Form W-2, Wage and Tax Statement, for 1997 from
Enterprise Network Systems, Inc., listing petitioner’s name and
address and $37,019.21 in wages paid to petitioner, (3) the Form
W-2 has a typographical error in which the numerals in
petitioner’s Social Security number have been transposed, (4) on
the basis of petitioner’s admission of receipt of this income in
his amended petition and the Form W-2 respondent proposed an
increased deficiency for petitioner for 1997, and (5) the total
deficiency for 1997 is $12,006. Additionally, upon the basis of
the additional unreported income from Enterprise Network Sys.,
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Inc., not contained in the notice of deficiency, respondent also
asserted that the total additions to tax pursuant to sections
6651(a) and 6654(a) are $3,001.50 and $642.33, respectively.
That same day, petitioner filed a motion to shift the burden
of proof to respondent pursuant to section 7491 and a motion for
interlocutory review of the March 17 order.
On April 9, 2004, petitioner filed a notice of refusal to
stipulate.
On April 13, 2004, the Court denied petitioner’s motion for
interlocutory review. In order to give petitioner time to file a
reply to the answer, the Court also ordered this case stricken
from the Court’s Dallas, Texas, session beginning April 26, 2004,
and continued it generally.
On April 22, 2004, petitioner filed a motion for stay, an
objection regarding the docket sheet, a second motion for
judgment on the pleadings, and a motion for interlocutory appeal.
In the objection, petitioner objected to the capitalization
of certain letters of his name and to the address listing
petitioner as a “resident” of a State “via the identifier of
‘TX.’” Petitioner claimed he was not a resident of that State.
In his objection regarding the docket sheet, beneath his
signature, petitioner listed his address as 1908 Vassar Drive,
Richardson, Texas 75081. This is the same address that
petitioner had listed in his imperfect petition.
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In the motion for interlocutory review, petitioner requested
interlocutory review of all the orders of the Court and stated:
“This notice intends also to cover prospectively any such order
as it becomes a decision of the Tax Court.”
On April 28, 2004, the Court denied petitioner’s motion for
stay, motion for judgment on the pleadings, and motion for
interlocutory appeal.
On May 12, 2004, the Court notified respondent that
petitioner had filed on April 2, 2004, a motion to shift the
burden of proof and that if there was an objection, a notice of
objection had to be filed on or before June 1, 2004.
On May 28, 2004, respondent filed an objection to
petitioner’s motion to shift the burden of proof, and pursuant to
Rule 37, filed a motion for entry of order that undenied
allegations in the answer to the amended petition be deemed
admitted.
On June 4, 2004, the Court denied petitioner’s motion to
shift the burden of proof. The Court also notified petitioner
that respondent had filed on May 28, 2004, a motion for an order
that the specified affirmative allegations in the answer be
deemed admitted; that if petitioner filed a reply as required by
Rule 37 on or before June 24, 2004, respondent’s motion would be
denied; and that if petitioner did not file a reply, the Court
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would grant respondent’s motion and deem admitted for purposes of
this case the affirmative allegations in the answer.
On June 21, 2004, petitioner filed a reply. In the reply,
petitioner admitted respondent received a proposed set of
stipulations from petitioner; petitioner attached the Form W-2
for 1997 from Enterprise Network Sys., Inc., listing petitioner’s
name and address; and petitioner admitted that the Form W-2 has a
typographical error in which the numerals in petitioner’s Social
Security number have been transposed. Petitioner denied that a
deficiency exists or that any additions to tax are justified.
On June 22, 2004, the Court denied respondent’s motion for
entry of order that undenied allegations in the answer to the
amended petition be deemed admitted.
By notice dated June 30, 2004, the Court set this case for
trial at the Court’s Dallas, Texas, session beginning December 6,
2004. This notice specifically stated: “YOUR FAILURE TO APPEAR
MAY RESULT IN DISMISSAL OF THE CASE AND ENTRY OF DECISION AGAINST
YOU.” Attached to this notice was the Court’s standing pretrial
order.
On November 12, 2004, the Court lodged respondent’s
objection to petitioner’s request for admissions. Respondent
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attached a copy of petitioner’s request for admissions to his
objection.2
On November 16, 2004, pursuant to Rule 90, the Court ordered
petitioner to file his request for admissions. Petitioner failed
to do so.
On November 22, 2004, petitioner filed a status report. The
status report alleged criminal conduct by the Court and contained
disrespectful and vulgar statements directed to the Court.
Petitioner failed to appear at the call or recall of his
case.
On December 13, 2004, respondent filed a motion for summary
judgment and a motion to impose a penalty under section 6673.
Petitioner filed no response to either motion.
Discussion
A. Motion for Summary Judgment
Rule 121(a) provides that either party may move for summary
judgment upon all or any part of the legal issues in controversy.
Full or partial summary judgment may be granted only if it is
demonstrated that no genuine issue exists as to any material fact
and a decision may be rendered as a matter of law. Rule 121(b);
Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.
17 F.3d 965 (7th Cir. 1994).
2
We note that petitioner’s requests included: “‘Taxpayer’
means fiduciary”, “‘United States’ is a federal corporation”, and
“‘UNITED STATES OF AMERICA’ is another federal corporation”.
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We conclude that there is no genuine issue as to any
material fact and that a decision may be rendered as a matter of
law.
1. Deficiency Determined in the Notice of Deficiency
Petitioner did not appear at trial. We previously ruled
that the burden of proof did not shift to respondent pursuant to
section 7491(a). Petitioner bears the burden of proof for the
deficiency determined in the notice of deficiency. See Rule
142(a). Petitioner failed to produce any evidence to rebut the
deficiency determined by respondent in the notice of deficiency.
Accordingly, we sustain respondent’s deficiency determination
contained in the notice of deficiency.3
2. Increased Deficiency
Respondent bears the burden of proof on the increased
deficiency. See id. The increased deficiency derives from
$37,019.21 in wages paid to petitioner by Enterprise Network
Sys., Inc. This amount is income to petitioner. See sec. 61.
Petitioner, as early as the amended petition, admitted
receiving this income and provided respondent a document to
support this admission. Petitioner further admitted that this
amount was not included in the notice of deficiency.
3
We note that, in the alternative, we could have dismissed
this portion of the case pursuant to Rule 123(b). Cf. White v.
Commissioner, T.C. Memo. 1997-459.
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Accordingly, we conclude that petitioner is liable for the
increased deficiency.
3. Additions to Tax
a. Burden of Production: Section 7491(c)
Section 7491(c) provides that the Commissioner will bear the
burden of production with respect to the liability of any
individual for additions to tax and penalties. “The
Commissioner’s burden of production under section 7491(c) is to
produce evidence that it is appropriate to impose the relevant
penalty, addition to tax, or additional amount”. 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 an addition
to tax or penalty, the taxpayer’s challenge will succeed unless
the Commissioner produces evidence that the addition to tax or
penalty is appropriate. Swain v. Commissioner, supra at 363-365.
The Commissioner, however, does not have the obligation to
introduce evidence regarding reasonable cause or substantial
authority. Higbee v. Commissioner, supra at 446-447.
b. Section 6651(a)(1)
Respondent determined that petitioner is liable for an
addition to tax pursuant to section 6651(a)(1) for 1997. Section
6651(a)(1) imposes an addition to tax for failure to file a
return on the date prescribed (determined with regard to any
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extension of time for filing), unless such failure is due to
reasonable cause and not due to willful neglect.
Respondent submitted a certified transcript of petitioner’s
account for 1997. The certified transcript states that
petitioner did not file a return for 1997. Accordingly,
respondent has met his burden of production for the section
6651(a)(1) addition to tax for 1997.
Petitioner has not established that his failure to timely
file for 1997 was due to reasonable cause. See Higbee v.
Commissioner, supra at 446-447. Accordingly, petitioner is
liable for the section 6651(a)(1) addition to tax for 1997.
c. Section 6654(a)
Section 6654 imposes an addition to tax for failure to pay
estimated income tax. Respondent submitted petitioner’s Form W-2
for 1997 from Enterprise Network Sys., Inc., and a certified
transcript of petitioner’s account for 1997. The forms indicate
that petitioner did not have any Federal income tax withheld and
did not make any estimated income tax payments for 1997. We
conclude that respondent has 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. See Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933); see Higbee v. Commissioner, supra at
447.
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We find that petitioner had no income tax withheld and paid
no estimated income taxes for 1997 and that no exception pursuant
to section 6654(e) applies. We hold that petitioner is liable
for the addition to tax pursuant to section 6654(a).
4. Section 6673
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 or groundless 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); see also Hansen v.
Commissioner, 820 F.2d 1464, 1470 (9th Cir. 1987) (section 6673
penalty upheld because taxpayer should have known claim was
frivolous).
Petitioner filed numerous frivolous documents and motions
with the Court. Petitioner has 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 will not painstakingly address petitioner’s assertions
“with somber reasoning and copious citation of precedent; to do
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so might suggest that these arguments have some colorable merit.”
Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
We conclude petitioner’s position was frivolous and
groundless and that petitioner instituted and maintained these
proceedings primarily for delay. Accordingly, pursuant to
section 6673(a) we hold petitioner is liable for a $10,000
penalty.
To reflect the foregoing,
An appropriate order and
decision will be entered.