T.C. Memo. 2006-241
UNITED STATES TAX COURT
JOHN S. COOPER, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15613-04. Filed November 9, 2006.
John S. Cooper, Jr., pro se.
James C. O’Leary, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Judge: Respondent determined an $8,044 deficiency
in petitioner’s 2002 Federal income tax and additions to tax
under sections 6651(a)(1)1 and 6654(a) in the amounts of
$2,059.13 and $268.26, respectively. Respondent also determined
1
Section references are to the Internal Revenue Code as
amended and in effect for the period under consideration. Rule
references are to this Court’s Rules of Practice and Procedure.
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an addition to tax under sec. 6651(a)(2). In his petition,
petitioner questioned the entire deficiency, alleging that
respondent was in error and more specifically that respondent’s
agent had no authority to conduct an examination and that
petitioner was not afforded due process2 during the
administrative examination procedures. Respondent has orally
moved that the Court award sanctions under section 6673, alleging
that petitioner’s position is frivolous and interposed merely for
delay. We consider the following issues in this opinion: (1)
Whether petitioner has shown that respondent’s determination is
in error, and (2) whether petitioner is liable for the additions
to tax under sections 6651(a)(1), 6651(a)(2), and 6654(a); and
(3) whether damages should be awarded under section 6673.
2
Petitioner has not made clear how he was not afforded “due
process” or what he means by that term.
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FINDINGS OF FACT3
Petitioner, had his legal residence in Hyattsville,
Maryland, at the time his petition was filed. During 2002
petitioner received wages, in the amount of $51,021 from Equant,
Inc. He also received $16 in interest from Washington Gas Light
Federal Credit Union. Petitioner did not file a Federal income
tax return for the 2001, 2002, or 2003 tax year. On May 28,
2004, respondent mailed to petitioner a statutory notice of
deficiency determining an $8,044 income tax deficiency for
petitioner’s 2002 tax year. In determining the income tax
deficiency, respondent afforded petitioner a $4,700 standard
deduction, one $3,000 personal exemption, and single filing
status to determine the tax rate.
Petitioner did not make any estimated tax payments for 2002,
and his Federal income tax withholding was limited to $819 for
3
The parties’ stipulation of facts and the exhibits are
incorporated by this reference. At trial, petitioner objected to
the stipulation of facts that he had entered into some time prior
to the scheduled trial date. The stipulation is brief and
contains basic information including the notice of deficiency,
petitioner’s address at the time the petition was filed, and the
facts that he received wage and interest income during 2002.
Respondent’s counsel told petitioner if he did not stipulate the
income figures, respondent would call witnesses to testify about
those items. Petitioner did not wish having his employer called
to testify and agreed to the stipulation. At trial, petitioner,
claiming duress, attempted to repudiate his agreement and force
respondent to prove the items of income. Under those
circumstances, the Court held that petitioner was bound to his
stipulation and that respondent would be prejudiced if the
stipulation was nullified.
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the entire year. Respondent prepared a substitute return for
petitioner’s 2002 tax year under section 6020(b).
OPINION
The main thrust of petitioner’s position is that he owes no
tax because “respondent still has yet to identify a statutory
duty (obligation) to petitioner, which shows a tax due and owing
to the U.S. Treasury.” Petitioner also contends that respondent
has failed to “show who created the Notice of Deficiency * * *,
if the individual had proper authority * * *, or if procedures
were followed in determining a deficiency existed.”
First we address whether respondent has any burden to show
that his determination of the 2002 income tax deficiency is
correct.4 Generally, taxpayers bear the burden of proving that
the Commissioner’s determination is in error. Rule 142(a); Welch
v. Helvering, 290 U.S. 111, 115 (1933). The burden of proof with
respect to a factual issue relevant to liability for tax may
shift to respondent where a taxpayer produces credible evidence
and certain other statutory requirements are met by the taxpayer.
Sec. 7491(a). In this case, petitioner has not produced any
credible evidence and has not shown that he meets the statutory
criteria for shifting the burden to respondent.
4
Respondent has admitted that he has the burden of
production with respect to the additions to tax and penalties.
See sec. 7491(c).
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Accordingly, petitioner has the burden of showing that
respondent’s income tax deficiency determination is in error.
Petitioner received income from wages and interest during
his 2002 tax year. Petitioner has made several arguments in
support of his position that respondent’s determination is either
erroneous or “fraudulent”, but he has stipulated and has not
otherwise denied the receipt of the wage and interest income for
his 2002 tax year. We note that all of petitioner’s arguments
are specious and without substance, and many of them have been
offered by others who are merely attempting to avoid the payment
of Federal tax. Accordingly, we hold that petitioner has not
shown that respondent’s $8,044 income tax determination is in
error.
Next, we consider whether petitioner is liable for additions
to tax under section 6651(a)(1) and (2) for failure to file a
2002 income tax return or to pay the tax due for that year.
Section 6651(a)(1) provides for an addition to tax for failure to
file, unless it is shown that the failure is due to reasonable
cause and not due to willful neglect. Similarly, section
6651(a)(2) provides for an addition to tax for failure to pay the
amount shown as tax on any return, unless it is shown that the
failure is due to reasonable cause and not due to willful
neglect.
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Respondent has satisfied his burden of production with
respect to the addition to tax under section 6651(a)(1) by means
of documents and testimony showing that petitioner failed to file
a 2002 Federal tax return. In addition, respondent caused to be
prepared, for petitioner’s 2002 tax year, a substitute return
under the criteria of section 6020(b). See Cabirac v.
Commissioner, 120 T.C. 163, 170-173 (2003). Accordingly,
respondent has met his burden of producing evidence that would
support an addition for failure to pay the tax due for that year
under section 6651(a)(2). Petitioner presented no evidence
showing that his failure to file or pay was due to reasonable
cause and not due to willful neglect. As already mentioned,
petitioner has advanced several specious arguments as to why he
should not have to file or pay tax. None of his arguments
suffice to show that he had “reasonable cause” for his failure to
file or pay. Accordingly, we hold that petitioner is liable for
the additions to tax for failure to file and failure to pay under
section 6651(a)(1) and (2), respectively.
Next, we consider whether petitioner is liable for the
addition to tax under section 6654(a) for failure to make
estimated payments. The required annual payment of estimated
tax, as it relates to this case, equals 90 percent of
petitioner’s tax for 2002. Sec. 6654(d)(1)(B)(i). Petitioner’s
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income tax deficiency for 20025 is $8,044 (“required annual
payment”), petitioner’s withholding from wages was $819, and he
made no payments of estimated tax. Clearly he has not made the
required annual payment of the statute. There are other
exceptions to the obligation to make estimated tax payments set
forth in section 6654, but we do not find that petitioner comes
within those exceptions. Accordingly, we hold that petitioner is
liable for the section 6654(a) addition to tax for failure to
make estimated tax payments.
Finally, we consider respondent’s oral motion that sanctions
be awarded under section 6673 due to petitioner’s advancing
frivolous and groundless arguments and/or maintaining this
proceeding for delay. On at least two occasions prior to trial,
respondent advised petitioner that section 6673 sanctions would
be sought in this case. On brief, petitioner contended that his
position is not frivolous. He states: “Mere questions about
what laws, information, and procedures the respondent
relied upon to conclude a deficiency exists [do] not constitute a
frivolous position or argument.”
Petitioner here has made a concentrated effort to avoid the
payment of his Federal tax obligation. He did not file a 2002
5
Other measures of the required annual payment are
inapplicable because respondent produced evidence that petitioner
failed to file a return for his 2001 and 2002 tax years. See
sec. 6654(d)(1)(B)(i) and (ii); Nicholls v. Commissioner, T.C.
Memo. 2006-218.
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return and his withholding was limited. Throughout petitioner’s
dealings with respondent and the Court, he provided nothing but
specious and well-worn arguments, all of which represent nothing
more that a baseless collateral attack on the real question of
whether he had a Federal tax liability for 2002. The vast
majority of petitioner’s arguments have already been addressed by
this and other courts and are not worthy of further analysis by
this Court. The remainder are irrelevant to the question we
consider.
At trial, petitioner attempted to thwart the litigation
process by attempting to withdraw from his agreed stipulation at
the last minute. He presented no evidence or meaningful
testimony at the trial and merely forced respondent and the Court
to the expense and use of time to air his groundless and
sophistic technical arguments, all of which were designed to
delay the reporting and payment of petitioner’s 2002 tax
liability. Taxpayers, who have been issued a notice of
deficiency, have a right to avail themselves of this Federal tax
forum. Petitioner, by his failure to present evidence and the
frivolousness of his argument has abused that right. It appears
to the Court that the only reason petitioner pursued this
litigation is for the purpose of delay.
Under those aggravated circumstances, we hold that
petitioner is liable for a $10,000 penalty under section 6673.
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To reflect the foregoing,
Order and decision will be
entered for respondent.