Greendyk v. Comm'r

T.C. Memo. 2005-108

UNITED STATES TAX COURT

THOMAS GREENDYK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10185-03. Filed May 12, 2005.

P failed to file a Federal income tax return for the
2000 year. R subsequently determined a deficiency and
additions to tax, which P then contested primarily on the
basis of inapplicability of the filing requirement.

Held: P is liable for the deficiency determined by R
and for additions to tax under secs. 6651(a)(1) and 6654,
I.R.C.

Philip A. Putman, for petitioner.

Jonae A. Harrison, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

WHERRY, Judge: Respondent determined a Federal income tax

deficiency for petitioner’s 2000 taxable year in the amount of
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$55,388, and additions to tax pursuant to section 6651(a)(1) and

(2) in the amounts of $7,537.27 and $3,182.40, respectively, and

pursuant to section 6654(a) in the amount of $1,670.89.1 After

concessions,2 the issues for decision are:

(1) Whether petitioner is liable for a deficiency in the

amount of $55,388 for the 2000 taxable year;

(2) whether petitioner is liable for additions to tax under

sections 6651(a) and 6654(a);

(3) whether the Court should impose a penalty, sua sponte,

under section 6673.

FINDINGS OF FACT

The exhibits admitted at trial are incorporated herein by

this reference.3 At the time this petition was filed, petitioner

resided in St. Davids, Pennsylvania.

In 2000, Petitioner received $117,307.32 in wages from

Unisys Corporation (Unisys) and $60,745 in “stocks/bonds sales”

and interest from E Trade Securities, Inc. Unisys withheld

1
Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
2
By answer, respondent conceded the sec. 6651(a)(2)
addition to tax and sought a correlative increase of $837.48 in
the sec. 6651(a)(1) addition to tax, for a total of $8,374.75, on
grounds that the limitations contained in sec. 6651(c)(1) no
longer applied.
3
The parties did not file a stipulation of facts.
 - 3 -

$20,815.04 in Federal income tax from petitioner’s wages in 2000.

As petitioner acknowledged in his petition, he did not file a tax

return for 2000. This failure to file is also reflected by a

Form 3050, Certification of Lack of Record, dated September 23,

2004. However, during 2001, petitioner wrote a lengthy

“Affidavit Statement”, addressed to the Internal Revenue Service,

purportedly with respect to the 2000 taxable year, containing tax

protester rhetoric. Respondent issued a notice of deficiency on

March 24, 2003, and determined the above-stated deficiency and

additions to tax. Petitioner timely filed a petition disputing

the determinations.4

At trial, petitioner did not personally appear, nor did his

representative introduce any evidence on his behalf. Respondent,

in contrast, provided several documents in support of

respondent’s position. Among other things, respondent offered

petitioner’s Form W-2, Wage and Tax Statement, for the 2000

taxable year from Unisys showing the amount paid to petitioner

and electronic representations of petitioner’s checks from Unisys

showing the amounts deposited.5

4
The Court on June 25, 2003, filed as a petition a letter
received from petitioner. By an order dated June 30, 2003, the
Court directed petitioner to file an amended petition complying
with the Rules of the Court as to form and content of a proper
petition. Petitioner filed an amended petition on Nov. 10, 2003.
5
The copies of petitioner’s Form W-2 and electronic
representations of petitioner’s checks from Unisys for 2000 were
(continued...)
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OPINION

I. Contentions of the Parties

Petitioner contends that he is not required to file a

Federal income tax return for 2000. Specifically, he asserts

that he did not generate a sufficient amount of income to require

him to file a return. Petitioner further argues that since he

did not have an income tax liability for the previous tax year,

he is not required to file estimated taxes. In addition,

petitioner has a history of espousing tax protester arguments in

opposition to the filing requirement of section 6011.

Respondent claims that petitioner earned income in the form

of wages, interest, and capital gain for 2000. Since petitioner

did not appear at trial, nor did he or his counsel provide any

evidence or documentation to the contrary, respondent contends

that the determination of petitioner’s tax liability and

additions to tax are correct.

II. Petitioner’s Income Tax Liability

A. General Rules

In general, the Commissioner’s determination of a taxpayer’s

tax liability is presumed correct, and the taxpayer bears the

burden of proving that respondent’s determination is improper.

5
(...continued)
accompanied by the affidavit of a legal assistant employed by
Unisys, who certified that they were true and correct copies of
the originals.
 - 5 -

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The

“presumption of correctness” is appropriate where respondent has

furnished evidence linking the taxpayer to the “tax generating

activity.” Gold Emporium, Inc. v. Commissioner, 910 F.2d 1374,

1378 (7th Cir. 1990), affg. Malicki v. Commissioner, T.C. Memo.

1988-559. The Court is satisfied that respondent has provided

sufficient evidence linking petitioner to the income underlying

the statutory notice of deficiency.6 Although section 7491 may

shift the burden to respondent in specified circumstances,

petitioner here did not satisfy the prerequisites under section

7491(a)(1) and (2) for such a shift. Consequently, except for

additions to tax subject to section 7491(c), petitioner bears the

burden of persuasion and the burden of production in this case.

B. Filing Requirement

The Code imposes a Federal tax on the taxable income of

every individual. Sec. 1. Gross income for the purposes of

calculating taxable income is defined as “all income from

whatever source derived”. Sec. 61(a). Every U.S. resident

individual whose gross income for the taxable year equals or

exceeds the exemption amount is required to make an income tax

return. Sec. 6012(a)(1)(A). Petitioner had gross income

totaling $117,307 from wages and at least $60,745 from

6
As previously mentioned, respondent provided petitioner’s
Form W-2 and electronic representations of checks from Unisys
showing amounts paid to petitioner.
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investments for taxable year 2000. The filing threshold for

spouses filing a joint return for taxable year 2000 was $12,950.7

Petitioner’s gross income exceeded the filing threshold for the

2000 taxable year, and petitioner was, therefore, required to

file an income tax return.8

C. Petitioner’s Taxable Income

Petitioner did not attend the trial, nor did he file any

briefs with the Court in support of his position. While

petitioner’s counsel was present at trial to represent

petitioner, neither petitioner nor petitioner’s counsel offered

any reason for petitioner’s absence. Presumably, many facts

relevant to a determination of petitioner’s taxable income would

be peculiarly within petitioner’s personal knowledge and purview.

The fact that petitioner did not appear at trial and did not call

any witnesses or present any evidence is an indication that any

facts which could have been presented by him at trial would have

7
Although petitioner does not allege that he was married at
the end of 2000, petitioner indicated that his marital status on
his Form W-4, Employee’s Withholding Allowance Certificate, for
2001 was married. In any case, the filing threshold for 2000 for
the single filing status and married filing separately filing
status were even lower, $7,200 and $2,800, respectively.
8
In the “Affidavit Statement”, contained in the record,
petitioner makes reference to the constitutionality of the filing
requirement. Our tax system, the Code, and the Tax Court have
been firmly established as constitutional. Crain v.
Commissioner, 737 F.2d 1417, 1417-1418 (5th Cir. 1984); Ginter v.
Southern, 611 F.2d 1226, 1229 (8th Cir. 1979); Rev. Rul. 2005-19,
2005-14 I.R.B. 819.
 - 7 -

been unfavorable to his position. See McKay v. Commissioner, 886

F.2d 1237, 1238 (9th Cir. 1989), affg. 89 T.C. 72 (1987); Wichita

Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946)

(“The rule is well-established that the failure of a party to

introduce evidence within his possession and which, if true,

would be favorable to him, gives rise to the presumption that if

produced it would be unfavorable.”), affd. 162 F.2d 513 (10th

Cir. 1947); see also Little v. Commissioner, T.C. Memo. 1996-270

(“The Wichita Terminal presumption generally applies where the

party failing to produce the evidence has the burden of proof.”).

Petitioner had the opportunity to call witnesses to testify, or

testify himself, on his behalf. However, petitioner did neither.

Petitioner also chose not to participate in the stipulation

process. The Court therefore sustains the deficiency determined

by respondent.

III. Additions to Tax

The Commissioner bears the burden of production in any court

proceeding with respect to an individual’s liability for

penalties or additions to tax. Sec. 7491(c). To meet this

burden, the Commissioner must come forward with sufficient

evidence indicating that it is appropriate to impose the relevant

penalty or addition to tax. Higbee v. Commissioner, 116 T.C.

438, 446 (2001). In instances where an exception to the penalty

or addition of tax is afforded upon a showing of reasonable
 - 8 -

cause, the taxpayer bears the burden of showing such cause. Id.

at 447. Respondent also has the burden of proof with respect to

any increases in amount over those shown in the notice of

deficiency. Rule 142(a).

Section 6651(a)(1) provides for a 5-percent addition to tax

for each month or portion thereof that the return is filed late,

not to exceed 25 percent in the aggregate, unless such failure to

file on time is due to reasonable cause and not due to willful

neglect. Although not defined in the Code, “reasonable cause” is

viewed in the applicable regulations as the “exercise of ordinary

business care and prudence”. Sec. 301.6651-1(c)(1), Proced. &

Admin. Regs; see also United States v. Boyle, 469 U.S. 241, 246

(1985). “Willful neglect” can be interpreted as a “conscious,

intentional failure or reckless indifference.” United States v.

Boyle, supra at 245. With respect to section 6651(a) penalties,

reliance on misguided constitutional beliefs is not reasonable.

Edwards v. United States, 680 F.2d 1268, 1271 n.2 (9th Cir.

1982); see also Ginter v. Southern, 611 F.2d 1226, 1229 (8th Cir.

1979).

Based on the record in this case, the Court concludes that

respondent’s relevant burdens of production and proof have been

met. Specifically, respondent provided a Form 4340, Certificate

of Assessment, Payments and Other Specified Matters, showing that

petitioner did not file a return for the 2000 taxable year.
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Petitioner has not provided any evidence that his failure to file

was due to reasonable cause. Therefore, the Court sustains the

imposition of an addition to tax under section 6651(a)(1).

Section 6654(a) provides for an addition to tax for failure

to pay estimated income tax where there has been an underpayment

of estimated taxes by a taxpayer. In general, taxes withheld on

wages will be deemed a payment of estimated tax with an equal

part of such amount withheld deemed paid on each due date for

such taxable year. Sec. 6654(g)(1). The record indicates that

petitioner made estimated tax payments for 2000 in the amount of

$21,889. However, the correct payment amount for 2000 was

$26,955.50, and the Court finds that petitioner’s estimated tax

payments were not sufficient to avoid an addition to tax.

Petitioner did not appear at trial or submit a brief, and he has,

therefore, not demonstrated that his situation falls within any

of the specified exceptions under section 6654(e). Therefore,

the Court will enter a decision that petitioner is also liable

for this addition to tax in the amount of $300.70 as computed in

respondent’s Exhibit 6-R.

IV. Section 6673 Penalty

Section 6673 allows this Court to award a penalty to the

United States in an amount not in excess of $25,000 for

proceedings instituted by the taxpayer primarily for delay or for

proceedings in which the taxpayer’s position is frivolous or
 - 10 -

groundless. “A petition to the Tax Court, or a tax return, is

frivolous if 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)(imposing

penalties on taxpayers who made frivolous constitutional

arguments in opposition to the income tax). Courts have ruled

that constitutional defenses to the filing requirement, such as

petitioner has apparently espoused, are groundless and wholly

without merit. Ginter v. Southern, supra at 1229; see also

Williams v. Commissioner, T.C. Memo. 1999-277; Morin v.

Commissioner, T.C. Memo. 1999-240; Sochia v. Commissioner, T.C.

Memo. 1998-294 (all of which imposed a section 6673 penalty for

tax protester arguments).

Groundless litigation diverts the time and energies of
judges from more serious claims; it imposes needless costs
on other litigants. Once the legal system has resolved a
claim, judges and lawyers must move on to other things.
They cannot endlessly rehear stale arguments. Both
appellants say that the penalties stifle their right to
petition for redress of grievances. But there is no
constitutional right to bring frivolous suits, see Bill
Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731, 743, 103
S.Ct. 2161, 2170, 76 L.Ed.2d 277 (1983). People who wish to
express displeasure with taxes must choose other forums, and
there are many available. * * * [Coleman v. Commissioner,
supra at 72.]

Respondent has not sought a section 6673 penalty in this

case, and the Court declines to impose such a penalty today.

Petitioner did not submit any frivolous documents directed to the

Court, although such arguments were submitted to petitioner’s
 - 11 -

employer, Unisys. Neither petitioner nor his attorney submitted

a brief on petitioner’s behalf or presented any frivolous

arguments. The Court, therefore, concludes that it is not

appropriate to impose a penalty in the instant case, but the

Court explicitly admonishes petitioner that he may, in the

future, be subject to a penalty under section 6673 for any

proceedings instituted or maintained primarily for delay or for

any proceedings which are frivolous or groundless.

The Court has considered all of petitioner’s contentions,

arguments, requests, and statements. To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

To reflect the foregoing and concessions made by respondent,

An appropriate decision

will be entered for respondent

with respect to the deficiency

and additions to tax under

sections 6651(a)(1) and 6654

and for petitioner with

respect to the addition to tax

under section 6651(a)(2).