T.C. Memo. 2006-146
UNITED STATES TAX COURT
HENRY LINK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 11065-04, 20809-04.1 Filed July 10, 2006.
Henry Link, pro se.
J. Craig Young, for respondent.
MEMORANDUM OPINION
WELLS, Judge: Respondent determined deficiencies in tax and
additions to tax for petitioner’s taxable years 1998, 1999, 2000,
2001, and 2002. After concessions the amounts remaining in
dispute are as follows:
1
These cases are consolidated for trial, briefing, and
opinion.
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Year Deficiency Sec. 6651(a)(1)
1998 $742 $185.50
1999 $725 $181.25
2000 $692 $173
2001 $652 $163
2002 $584 $146
The issues we must decide are:
1. Whether the Court should grant petitioner’s motion to
reopen the record in order to allow petitioner to introduce
evidence that he had the opportunity to introduce at trial but
failed to introduce or offer.
2. Whether certain interest and pension income received by
petitioner during each taxable year in issue is includable in
gross income.
3. Whether petitioner’s correct filing status for each
taxable year in issue is that of an unmarried individual.
4. Whether petitioner is entitled to claim an additional
personal exemption for his alleged wife for each taxable year in
issue.
5. Whether petitioner has substantiated certain Schedule
A, Itemized Deductions, for each taxable year in issue.
6. Whether petitioner’s failure to file Federal income tax
returns for each taxable year in issue was due to reasonable
cause and not due to willful neglect.
7. Whether the Court should grant respondent’s motion to
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impose a penalty pursuant to section 6673.
All section references are to the Internal Revenue Code, as
amended, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
Background
At the time of filing the petition in the instant case,
petitioner resided in Greenville, South Carolina. Petitioner is
affiliated with the “Patriot Network”, a tax protester
organization that promotes tax protester arguments. Petitioner
failed to file Federal income tax returns and pay taxes for
taxable years 1998, 1999, 2000, 2001, and 2002. Based on Forms
1099 issued by third parties, respondent determined that
petitioner had received: (1) Interest income of $13, $21, $30,
$39, and $1,881 in taxable years 1998 through 2002, respectively;
and (2) $12,948 of taxable pension income during each taxable
year in issue. Respondent determined deficiencies in income tax
and section 6651(a)(1) and section 66542 additions to tax and
sent petitioner separate notices of deficiency for each taxable
year in issue. Respondent computed the deficiencies using the
tax rates under section 1(c) for an unmarried individual who is
not a head of household or a surviving spouse. Respondent also
determined that petitioner was entitled to one personal exemption
and one standard deduction for each tax year. Petitioner timely
2
Respondent now concedes the sec. 6654 additions to tax.
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petitioned this Court.
Discussion
As a general rule, the Commissioner’s determinations in the
notice of deficiency are presumed correct, and the burden of
proving an error is on the taxpayer.3 Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Under section 7491(c), the
Commissioner’s burden of production is to produce evidence that
it is appropriate to impose the relevant penalty, addition to
tax, or additional amount. Higbee v. Commissioner, 116 T.C. 438,
446 (2001). The Commissioner, however, does not have the
obligation to introduce evidence regarding reasonable cause. Id.
at 446-47.
We first address petitioner’s motion to reopen the record.
Petitioner contends that he is entitled to an additional
dependent exemption for his wife. Despite several requests by
respondent’s counsel for any documents relevant to issues in the
instant case, petitioner refused to provide any evidence that
proved he was married. Petitioner appeared at trial and again
refused to provide any evidence, contending that he believed that
he did not have to prove facts known in his community.
Petitioner also contended that a house fire had destroyed many of
3
Sec. 7491(a)(1) does not apply in the instant case because
petitioner refused to comply with respondent’s requests for
information and documents. See sec. 7491(a)(2).
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his documents several years earlier. Shortly after trial, on
January 24, 2006, petitioner filed a motion to reopen the record
in order to submit evidence of his marriage.4
Respondent contends that this Court should deny petitioner’s
motion because respondent had requested the evidence from
petitioner, and petitioner had numerous chances to provide the
evidence prior to and at trial and repeatedly refused and failed
to do so. In the alternative, respondent requests that, if this
Court grants petitioner’s motion, respondent be allowed
additional time to subpoena petitioner’s spouse’s son to prove
that petitioner’s spouse has her own income and cannot be claimed
as petitioner’s dependent.5 We deny petitioner’s motion to
reopen the record to admit the evidence because it is the policy
of the Court to try all of the issues raised in a case in one
proceeding to avoid piecemeal and protracted litigation. Haft
Trust v. Commissioner, 62 T.C. 145, 147 (1974), vacated 510 F.2d
43 (1st Cir. 1975). Petitioner was given ample opportunity to
4
Specifically, petitioner sought to introduce a marriage
certificate and his spouse’s Social Security number.
5
In petitioner’s motion he states that, because he was so
angered by respondent’s refusal to accept his word as proof of
his marital status, he forgot that he was able to provide the
requested information. Petitioner further states that he
retrieved his spouse’s Social Security number from her son who
handles all her banking. Petitioner also states that his wife
receives Social Security income. Respondent cites sec. 151(b)
and Turner v. Commissioner, T.C. Memo. 2004-251, for the
proposition that any income petitioner’s spouse receives, however
small, bars petitioner from claiming his spouse as a dependent.
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provide this evidence both prior to and at trial, and he
stubbornly refused to do so. Moreover, petitioner refused to
abide by the Court’s standing pretrial order that requires all
documents that a party expects to utilize at trial be provided to
the other party at least 14 days in advance of the trial
calendar. Accordingly, petitioner’s motion to reopen the record
is denied.
Gross income includes interest and pension income. Sec.
61(a)(4), (11). Petitioner does not deny that he received the
interest and pension income but argues that the pension income is
“labor property” and that the interest income is so insignificant
that it falls below the threshold requiring him to file. We
understand petitioner’s argument to mean that he receives his
pension income from his former employer for whom he once
performed services (or labor), and that any amount he receives in
exchange for his labor is a nontaxable exchange of equal value.
That argument has been rejected by every court that has addressed
the issue and is the type of frivolous tax protester argument
that wastes the Court’s time and resources. We do not address
petitioner’s “labor property” argument with somber reasoning and
copious citations of precedent, as to do so might suggest that
petitioner’s argument possesses some degree of colorable merit.
See Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
Petitioner’s total pension and interest income for each taxable
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year in issue exceeded the sum of the standard deduction and
personal exemption. Sec. 6012(a)(1). Accordingly, petitioner
was required to file income tax returns for taxable years 1998
through 2002.
A taxpayer may claim married filing jointly status if he and
his spouse are legally eligible to file jointly and in fact do
file. See secs. (1)(a), 6013; Columbus v. Commissioner, T.C.
Memo. 1998-60, affd. without published opinion 162 F.3d 1172
(10th Cir. 1998). Petitioner did not file tax returns during
each year in issue. As noted above, petitioner was given
multiple opportunities to present corroborating evidence
regarding his marital status but stubbornly refused to do so. We
therefore do not accept petitioner’s uncorroborated assertion of
his marital status. Consequently, we hold that petitioner has
failed to prove that his filing status is not that of an
unmarried individual. Rule 142(a); Welch v. Helvering, supra.
Accordingly, petitioner is not entitled to married filing jointly
status.
A taxpayer filing a separate return may claim an exemption
for his spouse if his spouse has no gross income and is not the
dependent of another taxpayer. Sec. 151(b). Petitioner contends
that he is entitled to claim his spouse as a dependent. Even
assuming that petitioner is married, petitioner presented no
evidence that his spouse does not have any income of her own.
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See Turner v. Commissioner, T.C. Memo. 2004-251; sec. 1.151-1(b),
Income Tax Regs. Petitioner’s motion to reopen the record
states that his spouse receives Social Security income.
Accordingly, we hold that petitioner is not entitled to an
additional exemption under section 151. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
In his petition to this Court, petitioner claimed that he
had several deductible Schedule A expenses including church
donations, medical expenses, State and local taxes, and a
casualty loss. Petitioner has not presented any evidence
substantiating these expenses or showing that such expenses
totaled more than the standard deduction. At trial, petitioner
offered no testimony or other evidence concerning such expenses.
Accordingly, we hold that petitioner is not entitled to any
claimed Schedule A expenses. Rule 142(a); Welch v. Helvering,
supra.
Section 6651(a)(1) imposes an addition to tax for a failure
to file an income tax return. A taxpayer may be relieved of the
addition to tax, however, if he can demonstrate that the “failure
* * * [is] due to reasonable cause and not due to willful
neglect”. Higbee v. Commissioner, 116 T.C. at 446-447. Willful
neglect means intentional failure or reckless indifference.
United States v. Boyle, 469 U.S. 241, 245 (1985). Section
301.6651-1(c)(1), Proced. & Admin. Regs., provides that, if a
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taxpayer exercises ordinary business care and prudence and is
nevertheless unable to file on time, then the delay is due to
reasonable cause. Petitioner did not timely file tax returns
during the years in issue because he believed that his pension
income was a nontaxable exchange of equal value for his labor and
that filing income tax returns is merely voluntary. Petitioner’s
misguided interpretations of the Constitution and other typical
tax protester arguments are not reasonable cause. See Yoder v.
Commissioner, T.C. Memo. 1990-116. Accordingly, we hold that
petitioner is liable for the addition to tax under section
6651(a)(1) for taxable years 1998 through 2002.
Section 6673(a)(1) provides that this Court may require the
taxpayer to pay a penalty not in excess of $25,000 whenever it
appears to this Court: (a) The proceedings were instituted or
maintained by the taxpayer primarily for delay; (b) the
taxpayer’s position is frivolous or groundless; (c) or the
taxpayer unreasonably failed to pursue available administrative
remedies. Respondent has moved that the Court impose a penalty
in the instant case because petitioner admitted at trial that he
received the amounts in dispute but argued his pension income was
nontaxable “labor property” and that our “Marxist” tax system is
voluntary. Petitioner received several warnings that this Court
could impose a penalty if petitioner persisted in raising
frivolous arguments. Despite being warned, petitioner
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nonetheless appeared at trial and raised frivolous arguments.
Accordingly, we shall impose a penalty on petitioner of $1,500
pursuant to section 6673.
To reflect the foregoing,
Appropriate orders and
decisions will be entered.