T.C. Memo. 2007-262
UNITED STATES TAX COURT
JOHN O. GREEN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3885-05. Filed August 30, 2007.
John O. Green, pro se.
W. Lance Stodghill, for respondent.
MEMORANDUM OPINION
HALPERN, Judge: Respondent has determined a deficiency in,
and additions to, petitioner’s 2001 Federal income tax as
follows:
Additions to Tax
Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654(a)
$8,624 $1,861.42 $1,199.58 $325.82
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Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and in effect for
2001, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
Respondent concedes the section 6651(a)(2) addition to tax
of $1,199.58, and we accept that concession. Petitioner’s
principal defense to the deficiency and the remaining additions
to tax is that the Court lacks jurisdiction to hear this case.
If we should decide that issue adversely to him, petitioner’s
fallback position is that no “presumption of correctness”
attaches to respondent’s determinations. Petitioner also
disputes the remaining additions to tax.
Background
This case was called from the calendar of the Court at the
commencement of the Court’s trial session beginning at 10 a.m. on
December 12, 2005, in the Casey U.S. Courthouse, 515 Rusk Ave.,
Houston, Texas. It was set for trial at 2 p.m. on that day. At
the call of the calendar, we received and filed petitioner’s
motion to dismiss for lack of jurisdiction (the motion to
dismiss). The motion to dismiss consists of some 15 pages, and
it is supported by 10 exhibits, consisting of an additional 27
pages. At the start of the trial, we received respondent’s oral
objection to the motion to dismiss. We denied the motion to
dismiss, informing petitioner that we were doing so because we
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had not had adequate time to address the motion before trial. We
invited petitioner to offer during the trial any evidence that
supported his claim that we lacked jurisdiction and to argue the
merits of the claim on brief. Petitioner rested his case without
testifying, calling any witnesses, or offering any evidence at
all.
Respondent called no witnesses but did offer into evidence
certified transcripts of account of the Forms 1040, U.S.
Individual Income Tax Return for petitioner for his tax years
ending December 31, 2000 and 2001 (the transcripts of account).
The Court overruled petitioner’s relevancy objections and
instructed the parties to address on brief petitioner’s argument
that the transcripts of account had not been shown to be
authentic because, although they were accompanied by certificates
under seal and signed (the certificates), the certificates did
not bear any date.
Petitioner filed a petition and an amended petition. At the
time he filed the amended petition, petitioner’s mailing address
was in Spring, Texas. Petitioner, although proceeding pro se, is
an attorney admitted to practice before this court.
Attached to the petition is a copy of what petitioner
describes in the petition as an “alleged” notice issued by the
Internal Revenue Service (IRS) for 2001. The attachment is a
two-page letter dated November 29, 2004 (the November 29 letter),
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addressed to petitioner, stating that it is a notice of
deficiency, and setting forth (1) a deficiency in income tax of
$8,624 for 2001 and (2) additions to tax for that year of
$1,861.42 under section 6651(a)(1), $1,199.58 under section
6651(a)(2), and $325.82 under section 6654(a). The November 29
letter is signed by Lynne Walsh, Field Director, Compliance
Services, Brookhaven Service Center.
Attached to the amended petition as exhibit A is a document
that consists of the first page of the November 29 letter and
four additional pages (the four additional pages), including a
two-page “Tax Calculation Summary”. That summary shows, among
other things, how the $8,624 deficiency in income tax was
calculated, that petitioner was classified as a “non-filer”, and
the sources, kinds, and amounts of income that were reported to
the IRS by payers and taken into account by it in determining
petitioner’s income and the deficiency. Those sources and the
associated kinds and amounts of income are as follows: (1) Texas
Department of Criminal Justice, wages, $21,475; (2) Bloodworth &
Green, from Schedule K-1, Partner’s Share of Income, Deductions,
Credits, etc., $26,723; and (3) Harris County Federal Credit
Union, interest, $138. Hereafter, we shall use the term “notice”
to refer collectively to the November 29 letter and the four
additional pages.
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Discussion
I. Introduction
Although in the petition and amended petition petitioner
assigns numerous errors to respondent’s determinations and makes
various averments in support thereof, on brief petitioner states
the nature of the controversy between him and respondent to be
the jurisdiction of the Court “on the points raised in
Petitioner’s Motion to Dismiss.” He describes the issues to be
decided as whether (1) “the Court has jurisdiction to decide this
matter” (we assume respondent’s determinations), and (2) if we
determine we do have jurisdiction, respondent has “lost the
presumption of correctness.” He also claims that he is not
liable for the remaining additions to tax. We shall address
those issues. We deem petitioner to have abandoned any other
errors he assigned. See Mendes v. Commissioner, 121 T.C. 308,
312-313 (2003) (“If an argument is not pursued on brief, we may
conclude that it has been abandoned.”).
II. Jurisdiction
A. Introduction
We have subject matter jurisdiction to redetermine a
deficiency if the Commissioner has issued a valid notice of
deficiency and the taxpayer has timely filed a petition. Secs.
6212 and 6213; Rules 13, 20; e.g., Monge v. Commissioner, 93 T.C.
22, 27 (1989). Because petitioner timely filed the petition,
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the sole jurisdictional issue is whether respondent issued a
valid notice of deficiency. Petitioner has presented no evidence
that the notice is invalid, and, as set forth below, petitioner’s
attacks on the notice are without merit. Contrary to the order
of the Court, petitioner did not file an opening brief.
Respondent did file an opening brief, and, in that brief, he
addresses the arguments that he believes were clearly raised by
petitioner. Petitioner filed an answering brief, and, in that
brief, directed his arguments to the points respondent raised.
We assume that those points define the dispute between the
parties. See Mendes v. Commissioner, supra.
B. The Legal Sufficiency of the Notice
Petitioner contests the sufficiency of the notice. For the
Secretary to issue a notice of deficiency, section 6212 requires
that he determine a deficiency, send notice of that deficiency to
the taxpayer’s last known address, include with that notice
notice of the taxpayer’s right to contact the local office of the
taxpayer advocate, and provide the taxpayer with contact
information for that office. Section 7522(a) provides that the
notice of deficiency “shall 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.” The section further provides: “An inadequate
description under the preceding sentence shall not invalidate
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such notice.” We have said: “‘[T]he 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)). We have examined the notice, and we find that it is
sufficient.
C. Return Requirement
Petitioner insists that a deficiency in tax can be
determined only on the basis of a return of tax (either made by
the taxpayer or prepared by the Secretary. See sec. 6020(b).).
Petitioner is wrong. No return is necessary to determine a
deficiency. E.g., Roat v. Commissioner, 847 F.2d 1379, 1381-1382
(9th Cir. 1988); Clark v. Campbell, 501 F.2d 108, 117 (5th Cir.
1974) (“the Service may determine a deficiency in the absence of
a return”).
D. Authority To Sign the Notice
Petitioner challenges the authority of Lynne Walsh to sign
the November 29 letter. It is well settled that the Secretary or
his delegate may issue notices of deficiency. Secs. 6212(a),
7701(a)(11)(B) and (12)(A)(i) (allowing redelegations of that
authority); e.g., Everman v. Commissioner, T.C. Memo. 2003-137.
Delegation Order 4-8, set forth at Internal Revenue Manual (IRM)
sec. 1.2.43.2, delegates authority to issue notices of deficiency
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to, among others, “Wage & Investment * * * Directors: * * * Field
Compliance Services”. Lynne Walsh, Field Director, Compliance
Services, Brookhaven Service Center, was a proper delegate of the
Secretary to issue (sign) the notice. Furthermore, there is no
requirement that a notice of deficiency be signed. E.g., Pendola
v. Commissioner, 50 T.C. 509, 513-514 (1968).
E. Withdrawal of the Notice
Petitioner argues that the notice was withdrawn “because it
was processed in error”. To support that claim, petitioner asks
the Court to examine entries in a transcript of his individual
master file (the transcript or the IMF, as appropriate) that he
states he obtained from the IRS pursuant to a Freedom of
Information Act request. Although respondent describes the
transcript as an unauthenticated document that petitioner failed
to introduce into evidence, he meets petitioner’s argument with
respect to the transcript head on. We assume, therefore, that
respondent accepts the authenticity of the transcript and has
waived his argument that petitioner did not introduce it into
evidence.
An IMF is a file maintained by the IRS that contains coded
information relevant to the tax status of an individual. United
States v. Buford, 889 F.2d 1406, 1407 n.1 (5th Cir. 1989). In
order to decipher the coded information, a code book is needed.
Id. at 1407. There appear to be two relevant entries on the
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transcript: (1) Code 494, “90 Day Statutory Notice of Deficiency
Issued”, processing date: Nov. 16, 2004, and (2) code 495, “90
Day Notice Processed in Error”, processing date: Mar. 14, 2005.
Petitioner has failed to provide us with a code book to interpret
those entries. Nevertheless, petitioner argues that the purpose
of the second entry “is patently clear – the purported notice of
deficiency was withdrawn because it was ‘processed in error’”.
Respondent argues that petitioner misunderstands the coded
entries and their shorthand explanations. Respondent argues:
The Transaction Code Pocket Guide, Document 11734 (Rev.
6-2004), more fully describes TC 495 as “Closure of TC
4942 or correction of TC 494 processed in error.”
Hence, TC 495 is not used solely to withdraw a notice
processed in error. Indeed, IRM sec. 4.19.2.2.15(3)(b)
instructs tax examiners to utilize TC 495 to reverse TC
494 prior to routing newly docketed Tax Court cases to
the Appeals Function. Thus, the presence of TC 495
does not mean that a notice of deficiency has been
withdrawn.
2
Transaction Code 494 denotes the issuance of a
notice of deficiency. See Transactions Code Pocket
Guide, Document 11734 (Rev. 6-2004).
We accept that an IMF contains coded information. Without
evidence as to the meaning of that information, however, we are
unable to find that the entry petitioner relies on indicates that
the notice was withdrawn. Petitioner bears the burden of proof.
See Rule 142(a). Petitioner declined to offer any evidence.
Petitioner has failed to carry his burden of proving that the
notice was withdrawn.
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Finally, petitioner has cited no authority that a notice of
deficiency can be withdrawn. The Internal Revenue Code allows
for a notice of deficiency to be rescinded in certain limited
circumstances. See sec. 6212(d). None of the circumstances
apply in this case.
III. Presumption of Correctness
We often state as a general rule that the Commissioner’s
determination set forth in a notice of deficiency is presumed
correct. E.g., Rozzano v. Commissioner, T.C. Memo. 2007-177. On
brief, petitioner argues that the usual presumption of
correctness is overcome in this case because “the evidence is
unmistakably clear; the purported Notice of Deficiency was
‘processed in error’”. Petitioner cites no authority in support
of that argument; moreover, petitioner’s claim is fatally
weakened by the same interpretive difficulty concerning the
“processed in error” language that undermines his claim that the
notice was withdrawn. Petitioner has failed to show that the
usual presumption does not attach to the determinations in the
notice.
IV. Additions to Tax
A. Section 6651(a)(1)
Section 6651(a)(1) provides for an addition to tax in the
event a taxpayer fails to file a timely return (determined with
regard to any extension of time for filing), unless it is shown
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that such failure is due to reasonable cause and not due to
willful neglect. The amount of the addition is equal to 5
percent of the amount required to be shown as tax on the
delinquent return for each month or fraction thereof during which
the return remains delinquent, up to a maximum addition of 25
percent for returns more than 4 months delinquent.
B. Section 6654
Section 6654 provides for an addition to tax in the event of
an underpayment of a required installment of individual estimated
tax. Sec. 6654(a) and (b). Each required installment is equal
to 25 percent of the “required annual payment”, which, in turn,
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 individual
filed a return for the immediately preceding taxable year, 100
percent of the tax shown on that return. Sec. 6654(d)(1)(A) and
(B)(i) and (ii). The due dates of the required installments for
a calendar taxable year are April 15, June 15, and September 15
of that year and January 15 of the following year. Sec.
6654(c)(2). An individual’s tax, for purposes of section 6654,
consists of income and self-employment tax determined before the
application of any wage withholding credits which, under section
6654(g)(1), are treated as payment of estimated tax. See sec.
6654(f). Section 6654(e) provides certain specified exceptions
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to the applicability of section 6654, none of which cover
petitioner.
C. Transcripts of Account
Respondent asks us to find from the transcripts of account
that petitioner did not file an income tax return for 2001, he
made no estimated tax payments for that year, and, ultimately, he
is liable for the section 6651(a)(1) and 6654 additions to tax
respondent determined. Petitioner objects to the receipt of the
transcripts of account into evidence on the ground that
respondent failed to properly authenticate them, since the
certificates accompanying them were not dated.
Domestic public records under seal are self-authenticating
pursuant to rule 902(1) of the Federal Rules of Evidence, and
that rule has no requirement that a date accompany the seal and
signature required by the rule. Petitioner offered no authority
to the contrary, and we have found none. We accept the
transcripts of account as authentic.
D. Burden of Production
Respondent bears the burden of production with respect to
the section 6651(a)(1) and 6654 additions to tax. See sec.
7491(c). In order to carry that burden, respondent must produce
sufficient evidence establishing that it is appropriate to impose
the additions. See Higbee v. Commissioner, 116 T.C. 438, 446-447
(2001). Once respondent has done so, the burden of proof is upon
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petitioner to show that respondent’s determination of the
additions is incorrect. See id. at 447.
By the petition and the amended petition, petitioner as much
as concedes that he filed no return for 2001. The transcript of
account confirms that he filed no return for 2001, and we so
find. Respondent has carried his burden of production, and
petitioner has failed to prove that respondent’s determination of
the section 6651(a)(1) addition to tax is incorrect. The
transcripts of account also show that petitioner made no payments
of estimated tax for 2001 and filed no return for 2000, and we so
find. Respondent has carried his burden of production, and
petitioner has failed to prove that respondent’s determination of
the section 6654 addition to tax is incorrect.
V. Section 6673(a)(1) Penalty
In pertinent part, section 6673(a)(1) provides a penalty of
up to $25,000 if the taxpayer has instituted or maintained
proceedings before the Tax Court primarily for delay or the
taxpayer’s position in the proceeding is frivolous or groundless.
“The purpose of section 6673 is to compel taxpayers to think and
to conform their conduct to settled principles before they file
returns and litigate.” Takaba v. Commissioner, 119 T.C. 285, 295
(2002). “A taxpayer’s position is frivolous ‘if it is contrary
to established law and unsupported by a reasoned, colorable
argument for [a] change in the law.’” Id. at 287 (quoting
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Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986)). “‘The
inquiry is objective. If a person should have known that his
position is groundless, a court may and should impose
sanctions.’” Id.
Petitioner is a lawyer, admitted to practice before this
court. Nevertheless, his filings are studded with frivolous
arguments and groundless claims, mostly abandoned in favor of his
unsuccessful defense that we lack jurisdiction in this case. For
instance, in the petition, he makes the following claims: He is
a nonresident alien; he is not a citizen or resident of the
United States; he has no income subject to taxation by the United
States, and he has not withheld any moneys on behalf of any
Federal entity, resident, nonresident person, or entity. He adds
that, if the United States proved that the source of his income
was from a domestic corporation of the United States or is
otherwise directly connected to doing business in the United
States, then, since that would be new knowledge to him, it would
warrant abatement of the penalty and interest on the tax due. He
claims that the Secretary failed to notify him
that he was the recipient of “federal income” from a
“U.S. Corporation” that was synonymous in scope to the
“United States” [See 28 U.S.C. sec. 3002(15) (2000).]
and, therefore, petitioner would be compelled to
acknowledge that a “RETURN” of that income is required
under the local laws of the District of Columbia, the
IRC approved August 16, 1954, re-designated the IRC of
1986.
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Attached to petitioner’s declaration in support of the
motion to dismiss is a copy of what he describes as a sworn
statement that he sent to respondent on September 21, 2004,
“rebutting purported ‘wage’ and ‘income’ assertions” by
respondent. In that statement, petitioner claims among other
things: “I am a non-resident alien of the United States. I am a
citizen and resident of the State of Texas”. Also: “Since I am
a non-resident alien of the United States, and the ‘Texas
Department of Criminal Justice’ is not a federal entity or an
entity who’s situs is within a federal possession or territory,
the money I may have received from this ‘PAYER’, as wages are not
taxable income per the ‘IRC’.”
In the amended petition, petitioner makes additional,
frivolous arguments and groundless claims; e.g., he is not
required to file an income tax return because the form does not
contain an Office of Management and Budget number, which
petitioner believes is required on the form. That is a familiar
tax-protester argument rejected out of hand by the courts. See,
e.g., United States v. Kerwin, 945 F.2d 92 (5th Cir. 1991);
McDougall v. Commissioner, T.C. Memo. 1992-683, affd. without
published opinion 15 F.3d 1087 (9th Cir. 1993).
Petitioner has made frivolous arguments and groundless
claims, and we can see no purpose for those arguments and claims
other than to delay respondent’s collection of taxes due and
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owing. On the premises stated, we shall require petitioner to
pay a penalty to the United States pursuant to section 6673(a)(1)
of $2,500.
VI. Conclusion
Taking into account respondent’s concession of the section
6651(a)(2) addition to tax,
An appropriate order
and decision will be entered.