T.C. Memo. 2006-144
UNITED STATES TAX COURT
JOHN H. WEBSTER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24277-04. Filed July 6, 2006.
John H. Webster, pro se.
Huong T. Duong, for respondent.
MEMORANDUM OPINION
VASQUEZ, Judge: This case is before the Court on
respondent’s motion for summary judgment and 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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Respondent determined a deficiency of $22,285 in
petitioner’s 1998 Federal income tax, a section 6651(a)(1)
addition to tax of $10,585.38, and a section 6654(a) addition to
tax of $1,011.45. In his answer, respondent adjusted the amount
of the section 6651(a)(1) addition to tax to $5,571.25.2
The issues for decision are: (1) Whether petitioner is
liable for the deficiency determined by respondent; (2) whether
petitioner is liable for the failure to file addition to tax
under section 6651(a)(1); (3) whether petitioner is liable for
the failure to pay estimated tax addition to tax under section
6654(a); and (4) whether petitioner is liable for the penalty
pursuant to section 6673.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time he filed the
petition, petitioner resided in Santa Clara, California.
2
Respondent attached a Form 4549, Income Tax Examination
Changes, to the notice of deficiency. In the Form 4549,
respondent asserted a sec. 6651(a)(1) addition to tax of
$5,014.13 and a sec. 6651(a)(2) addition to tax of $5,571.25.
These additions to tax were consolidated on the first page of the
notice of deficiency where respondent asserted a sec. 6651(a)(1)
addition to tax in the amount of $10,585.38. In his answer,
respondent concedes the sec. 6651(a)(2) addition to tax asserted
in Form 4549, and as a result, increased the sec. 6651(a)(1)
addition to tax initially asserted in Form 4549 to the maximum
amount of 25 percent of the amount required to be shown as tax on
the return.
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In 1998, petitioner received $68,532 from Focaltron
Corporation as nonemployee compensation and $32 from Wells Fargo
Bank as interest income.
Petitioner admits that he did not file a Federal income tax
return for tax year 1998 and did not make any payments for tax
year 1998.
Discussion
I. 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.
Summary judgment may be granted 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). As the party who moved for summary judgment,
respondent has the burden of showing there is no genuine issue as
to any material fact and that he is entitled to judgment as a
matter of law. Nis Family Trust v. Commissioner, 115 T.C. 523,
536, 537-538 (2000).
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.
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II. The Deficiency
Section 61 defines gross income as all income from whatever
source derived. Gross income includes, among other things,
compensation for services and interest. Sec. 61(a).
Petitioner admits that he received the income listed in the
notice of deficiency. However, petitioner contends, inter alia,
that:
All Fedral [sic] income taxes levyed [sic] against me
from 1998 to the present should be voided since during
this time I have not been a tax filer or tax payer
[sic] as defined in the US Tax Code, nor has any of the
moneys I received resulted from interstate commerence
[sic] or otherwise met the definition of “Taxable Gross
Income” per that Tax Code. To make sure that I have
not missed anything I have specifically requested that
the IRS notify me of any law or code that actually
requires me to file or pay Federal Income Tax. They
have not notified me of any such law or code.
In addition the Federal Government has in general
exempted me from any so called “Social Contract” to pay
taxes by an Agency of that Government having violated
my rights and thereby that Government has failed to
uphold its part of that “Social Contract”.
Petitioner advanced these and other arguments in filings and at
the summary judgment hearing. These arguments are 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 shall not
painstakingly address petitioner’s assertions “with somber
reasoning and copious citation of precedent; to do so might
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suggest that these arguments have some colorable merit.” Crain
v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
Accordingly, we conclude that petitioner is liable for the
deficiency determined by respondent.
III. Additions to Tax and Penalty
A. Section 6651(a)(1)
Respondent determined that petitioner is liable for an
addition to tax pursuant to section 6651(a)(1). Section
6651(a)(1) imposes an addition to tax for failure to file a
return on the date prescribed (determined with regard to any
extension of time for filing), unless it is shown that such
failure is due to reasonable cause and not due to willful
neglect. See Higbee v. Commissioner, 116 T.C. 438, 446-447
(2001). Petitioner conceded that he did not file a return for
1998, and there is no showing that his failure to file was due to
reasonable cause and not due to willful neglect. Accordingly, we
hold that petitioner is liable for the addition to tax under
section 6651(a)(1).
B. Section 6654(a)
Section 6654 imposes an addition to tax for failure to pay
estimated income tax. The section 6654 addition to tax is
mandatory unless the taxpayer comes within one of the limited
statutory exceptions. Spurlock v. Commissioner, T.C. Memo. 2003-
248.
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Form 4340, Certificate of Assessments, Payments, and Other
Specified Matters; Form 1099-MISC; and the stipulation of facts
establish that petitioner failed to pay any estimated tax for
1998.
Petitioner does not qualify for any of the exceptions listed
in section 6654(e). Accordingly, we hold that petitioner is
liable for the addition to tax pursuant to section 6654(a).
C. Section 6673
Under section 6673, this Court may require a taxpayer to pay
a penalty not to exceed $25,000 if the taxpayer takes a frivolous
position in the proceeding or institutes the proceeding 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).
Petitioner’s protester rhetoric is manifestly frivolous and
groundless. He has wasted the time and resources of this Court
on more than one occasion.3 Petitioner’s insistence on making
protester type arguments after he was warned both in the current
proceedings and in prior proceedings before this Court indicates
3
Petitioner was before this Court regarding his 1997 tax
year, advancing similar protester arguments. Webster v.
Commissioner, T.C. Summary Opinion 2002-43. We sustained
respondent’s determination and warned petitioner that the
imposition of a sec. 6673 penalty was likely if petitioner
returned to this Court advancing similar arguments. Id.
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an unwillingness on the part of petitioner to respect the tax
laws of the United States. Petitioner has had a fair warning
that penalties would be imposed if he continued to make frivolous
arguments. Accordingly, we shall impose a penalty on petitioner
pursuant to section 6673 in the amount of $2,500.
To the extent not herein discussed, we have considered the
parties’ other arguments and found them to be irrelevant or
meritless.
To reflect the foregoing,
An appropriate order and
decision will be entered.