T.C. Memo. 2007-68
UNITED STATES TAX COURT
CHRISTINA L. BELMONT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15985-04. Filed March 22, 2007.
Christina L. Belmont, pro se.
Katherine Lee Kosar, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HAINES, Judge: Respondent determined a deficiency in
petitioner’s 2001 Federal income tax of $4,333, as well as
additions to tax under section 6651(a)(1) and (2) of $975 and
$542, respectively, and section 6654 of $171.1
1
Unless otherwise indicated, all section references are to
(continued...)
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The issues for decision are: (1) Whether petitioner
received but did not report income from E.J. Famiano &
Associates, Inc. (Famiano), of $5,924 and from Fidelity Services
Co. (Fidelity) of $18,239 during 2001; (2) whether petitioner is
liable for the additional tax under section 72(t) for early
distributions from a retirement plan; (3) whether petitioner is
liable for additions to tax under sections 6651(a)(1)2 and 6654;
and (4) whether a section 6673(a) penalty should be imposed.3
FINDINGS OF FACT
Petitioner resided in Lakewood, Ohio, at the time the
petition was filed. Petitioner was born July 17, 1950.
Petitioner filed joint Federal income tax returns with her
husband, Randy A. Belmont, for 1991 through 1998. The tax
returns were prepared by John D. Barber, a certified public
accountant. Petitioner testified that she filed a joint Federal
income tax return with her husband for 1999, but the return and
the identity of the preparer are not in the record. Petitioner
1
(...continued)
the Internal Revenue Code (Code), as amended. Amounts are
rounded to the nearest dollar.
2
Respondent has conceded the sec. 6651(a)(2) addition to tax
of $542.
3
In the notice of deficiency respondent determined that
petitioner was entitled only to the standard deduction, one
personal exemption, and tax rates applicable to a single
individual. Petitioner did not present any evidence or make any
arguments with respect to deductions, exemptions, or marital
status. We conclude that she has abandoned any argument with
respect to these issues.
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has not filed a Federal income tax return for any tax year after
1999 through the date of trial. She has paid no Federal income
tax for 2001. In August 2003, she wrote a letter to the
Department of the Treasury which stated that she was not required
to keep books and records and asked the Department of the
Treasury to cite any statute which made her liable to pay Federal
income tax. She did not receive a response.
On May 28, 2004, respondent mailed a notice of deficiency to
petitioner for 2001. The notice of deficiency correctly
identified petitioner’s address and Social Security number. The
notice of deficiency identified petitioner as Christina L. Gore,
rather than Christina L. Belmont, the name she currently uses.4
Respondent determined, using third-party payor information,
that petitioner owed $4,333 in Federal income tax on the basis of
wage income of $5,924 received from Famiano and distributions of
$18,239 received from a Fidelity IRA. In the notice of
deficiency, respondent also determined additional tax of 10
percent for early distributions from a retirement plan pursuant
to section 72(t), allowed a standard deduction, allowed one
personal exemption, calculated tax using single individual rates,
and asserted additions to tax pursuant to sections 6651(a)(1) and
6654 of $975 and $171, respectively.
4
Petitioner used the name Gore before she was divorced in
1980.
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Petitioner mailed her petition on August 25, 2004, and it
was filed September 2, 2004. Trial was held on March 27, 2006.
OPINION
Petitioner admits she received the notice of deficiency and
that it correctly states her Social Security number and address.
Petitioner contends, however, that the notice of deficiency is
invalid because it identifies her by her previous married name,
Christina L. Gore, rather than her current married name of
Christina L. Belmont.
The Code does not prescribe the form the notice of
deficiency must take, but it must “describe the basis for, and
identify the amounts (if any) of, the tax due, interest,
additional amounts, additions to the tax, and assessable
penalties included in such notice.” Sec. 7522. An inadequate
description does not invalidate the notice. Id. We have stated:
“‘the notice is only to advise the person who is to pay the
deficiency that the Commissioner means to assess him; anything
that does this unequivocally is good enough.’” Jarvis v.
Commissioner, 78 T.C. 646, 655-656 (1982) (quoting Olsen v.
Helvering, 88 F.2d 650, 651 (2d Cir. 1937)). The notice of
deficiency petitioner received was sufficient to fairly advise
her of the basis for the deficiency in income tax and additions
to tax and the year and amounts thereof. The notice of
deficiency is valid.
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Petitioner admits that in 2001 she received wages of $5,924
from Famiano and distributions from Fidelity totaling $18,239
which she used to pay living expenses.
Section 72(t)(1) imposes a 10-percent additional tax on
early distributions from qualified retirement plans. Qualified
retirement plans include individual retirement accounts (IRAs) as
defined in section 408(a) and (b). Sec. 72(t)(1). There is no
dispute that petitioner’s Fidelity IRA was a “qualified
retirement plan” for purposes of section 72(t).
The 10-percent additional tax does not apply to certain
distributions from qualified retirement plans, including
distributions made after an employee attains age 59½. Sec.
72(t)(2)(A)(i). Petitioner was born in 1950. The distribution
from her IRA was made in 2001. Because petitioner had not
attained the age of 59½ in the year 2001, the exception found in
section 72(t)(2)(A)(i) does not apply.
Petitioner has not argued, and the record is devoid of any
evidence which would indicate, that petitioner is qualified for
any other exception to section 72(t)(1). For the foregoing
reasons, we hold that petitioner is liable for a 10-percent
additional tax on the early distribution from her Fidelity IRA.
Respondent determined that petitioner is liable for
additions to tax under section 6651(a)(1) for failure to file an
income tax return for 2001 and under section 6654(a) for failure
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to make estimated tax payments for 2001. Respondent bears the
burden of production with respect to petitioner’s liability for
the additions to tax. Sec. 7491(c); Higbee v. Commissioner, 116
T.C. 438, 446-447 (2001). To meet his burden of production with
respect to section 6651, respondent must come forward with
sufficient evidence indicating that it is appropriate to impose
the addition to tax. Id.
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 petitioner can
establish that such failure is due to reasonable cause and not
due to willful neglect. On cross-examination by respondent’s
counsel, petitioner admitted that she did not file a Federal
income tax return for 2001. Respondent has met his burden of
production. We find that the failure to file a Federal income
tax return for 2001 was not due to reasonable cause and was due
to willful neglect. Therefore, we hold that petitioner is liable
for the section 6651(a)(1) addition to tax for 2001.
A taxpayer has an obligation to pay estimated tax for a
particular year only if he has a “required annual payment” for
that year. Sec. 6654(d). A “required annual payment” is equal
to the lesser of (1) 90 percent of the tax shown on the
individual’s return for that year (or, if no return is filed, 90
percent of his or her tax for such year), or (2) if the
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individual filed a return for the immediately preceding taxable
year, 100 percent of the tax shown on that return. Sec.
6654(d)(1)(A), (B), and (C); Wheeler v. Commissioner, 127 T.C.
200, 210-212 (2006); Heers v. Commissioner, T.C. Memo. 2007-10.
Respondent’s burden of production under section 7491(c) with
respect to the section 6654(a) addition to tax has been satisfied
by proof at trial that petitioner’s Federal income tax liability
is $4,333, petitioner had no withholding credits, and she made no
estimated payments for 2001. Petitioner also admitted that she
had not filed a Federal income tax return for 2000. Petitioner
offered no evidence whatsoever to refute respondent’s evidence or
to establish a defense to respondent’s determination that
petitioner is liable for the section 6654 addition to tax.
Consequently, we find that respondent’s determination that
petitioner is liable for the section 6654 addition to tax must be
sustained.
Section 6673(a)(1) authorizes the Court to require a
taxpayer to pay the United States a penalty in an amount not to
exceed $25,000 whenever the taxpayer’s position is frivolous or
groundless or the taxpayer has instituted or pursued the
proceeding primarily for delay. Respondent has not asked the
Court to impose a penalty under section 6673(a) against
petitioner. However, the Court may, sua sponte, impose this
penalty. Pierson v. Commissioner, 115 T.C. 576, 580 (2000);
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Rewerts v. Commissioner, T.C. Memo. 2004-248; Jensen v.
Commissioner, T.C. Memo. 2004-120.
Petitioner had complied with the tax laws by filing Federal
income tax returns in the 1990s. When she was asked by
respondent’s counsel on cross-examination whether she intended to
file all delinquent returns for 2000 forward, her answer was
evasive. At the conclusion of the trial the Court asked whether
petitioner thought she was subject to the tax laws of the United
States. Petitioner responded that she did not know; that the
income tax laws pertain to tobacco, firearms and liquor; and that
taxes were supposed to be done by apportionment. She also
testified, consistently with her August 2003 letter to the
Department of the Treasury, that she wants a citation for the law
which makes her liable to pay Federal income tax. Petitioner did
not cooperate with respondent to prepare this case for trial.
Petitioner’s actions evidence an intention to delay the
proceedings, and her arguments are frivolous and without merit.
It is truly unfortunate that she turned from being a taxpayer who
complies with the law into a tax protester. However, petitioner
was not warned until the conclusion of the trial that a penalty
might be imposed under section 6673(a). For this reason only, we
decline to impose a penalty under section 6673(a); but we
strongly admonish petitioner that if she persists in failing to
file her income tax returns and in pursuing tax-protester
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arguments, we will not be so favorably inclined in the future.
In reaching our holdings herein, we have considered all
arguments made, and, to the extent not mentioned above, we find
them to be moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be
entered for respondent.