T.C. Memo. 2008-81
UNITED STATES TAX COURT
GARY L. AND KAREN L. BOGGS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1836-06. Filed April 2, 2008.
Gary L. and Karen L. Boggs, pro sese.
Louis H. Hill, for respondent.
MEMORANDUM OPINION
CHIECHI, Judge: Respondent determined a deficiency of
$30,937.42 in, and an accuracy-related penalty of $5,040.55 under
- 2 -
section 6662(a)1 on, petitioners’ Federal income tax for their
taxable year 2003.
We must decide whether to sustain the determinations in the
notice of deficiency that respondent issued to petitioners for
their taxable year 2003. We shall sustain those determinations.
Petitioners resided in Loveland, Ohio, at the time they
filed the petition.
Petitioners jointly filed Form 1040, U.S. Individual Income
Tax Return, for their taxable year 2003 (2003 return). In that
return, petitioners showed on page 1, line 7, “Wages, salaries,
tips, etc.” of $253,979.16. Petitioners included with their 2003
return Form W-2, Wage and Tax Statement, issued to petitioner
Gary L. Boggs (Mr. Boggs), which showed that during 2003 Mr.
Boggs’s employer Makino, Inc., paid Mr. Boggs “WAGES, TIPS, OTHER
COMPENSATION” of $253,979.16. In petitioners’ 2003 return,
petitioners showed on page 1, line 21, “Other income. * * * IRC
104(A)(2); IRC 167(A)” of “($75,600)".
Petitioners included with their 2003 return a 53-page
document (including an exhibit) that was entitled “FORMAL TAX
RETURN PROTEST WITH MEMORANDUM OF LAW” (2003 return protest) and
that was addressed to the Internal Revenue Service Center in
1
All section references are to the Internal Revenue Code in
effect for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
- 3 -
Cincinnati, Ohio. Petitioners signed their 2003 return and their
2003 return protest on August 10, 2004.
Petitioners’ 2003 return protest contains statements,
contentions, arguments, and demands that the Court finds to be
frivolous and groundless. For example, in the first three pages
of their 2003 return protest, petitioners assert in part:
FOR THE RECORD: The undersigned is filing the
attached Federal Individual Income tax return, for the
year 2003, by special appearance, “under protest,
without prejudice”, as required by law by the Commis-
sioner of Internal Revenue * * *
* * * * * * *
As well, the attached Federal Individual Income
tax return, for the year 2003, by special appearance,
“under protest, without prejudice”, is not a frivolous
document, for NOWHERE in the document does the under-
signed state that “wages and salary do not constitute
taxable income”. The IRS will try to make this claim,
and it is false and fraudulent, and strictly fabricated
by the IRS.
* * * * * * *
FOR THE RECORD: Because the IRS has failed re-
peatedly in the duty to answer the undersigned’s,
request for proper filing information, pursuant to 26
USC § 6001, the tax status of the undersigned is un-
known for lack of notice (due process). The IRS does
not honor a request for a “Determination Letter” pursu-
ant to 26 CFR § 601.201(a)(3). Therefore, the under-
signed has submitted this tax return and filled in the
lines on the face tax return with the so called help of
the IRS instruction booklet by guessing at the law
because the instruction book has no statutes or regula-
tions listed. It would strongly appear that the IRS is
attempting to circumvent due process by not being up
front with the law, as the IRS has placed the under-
signed in an impossible position as to following the
proper procedures, which is a violation of law * * *
- 4 -
* * * * * * *
Therefore, because it is now well known that the IRS
will not answer on point questions about an individuals
tax status, the undersigned exercises his right to file
this hereto attached IRS 1040 return under protest,
without prejudice. If what the undersigned has stated
regarding the IRS’s refusal to answer on point ques-
tions about an individuals tax status, then please
inform the undersigned in writing of this change in
policy. The specific information needed by the under-
signed is the “taxing statute” which applied to my
occupation as a private sales engineer, same said as a
private independent contractor, and the statutes and
regulations which apply to the process of filing a
return and supplying the proper information on the
return. If the undersigned cannot receive the proper
information from the IRS, how can a tax return be filed
under the penalties of perjury. * * *
* * * * * * *
FOR THE RECORD: As stated before, the undersigned
is a private independent contractor, in the field of
manufacturing and machine tool sales, serving the
private sector, and does not in any way or form, oper-
ate in the capacity of a trust, estate, partnership,
syndicate, group, pool, joint venture, organization,
corporation association, joint-stock company, and
insurance company, nor any of the like which are cre-
ated or organized in the United States or under the law
of the United States or of any State. Nor does the
undersigned do any such work for any source under the
control of the Federal or State governments. There-
fore, pursuant to the following 12 points of protest,
and concerning the rate of tax as set forth in the 1040
instruction booklet, * * * which relates to the rate as
set forth in 26 USC § 1(d)), the undersigned holds the
general legal position that he is not constitutionally
to be found within the scope or purview of the statutes
which impose a income tax under 26 U.S.C. (IRC) § 1(a),
(b), (c), or (d), as those statutes impose an excise
(income) tax upon individuals who have been given a
government source privilege and economic position by
statute, regulations, or executive order. * * *
The undersigned does not apologize for the length
of this document, the responsibility for the purposeful
- 5 -
complication of the tax code, and the many court cases
which undermined it, were not the work of the under-
signed, but of an elite group of past and present
government employees and officers, hell bent on de-
stroying the simplistic of the original code. It is
not for the government employee, or officer to shrug
the responsibility of reading this document because of
its length. As government employees, or officers must
accept the responsibility their positions impose upon
them by law, just as the private citizens must accept
their duties. [Reproduced literally.]
In the remaining 50 pages of their 2003 return protest,
petitioners continue to advance frivolous and groundless state-
ments, contentions, arguments, and demands, including the follow-
ing:
The Corporation is allowed to deduct all production
cost, be it what ever, yet the human machine under the
IRS applied Income Tax Law is not allowed to deduct for
all production cost, because the IRS does not allow a
deduction for human maintenance nor deprecation for the
human machine itself, which produces the machine tool
sales services, that the undersigned supplies to the
private sector. In retrospect, as an example, the
Corporation in the printing business, is allowed to
deduct for the printing press, its maintenance and
repair cost, and the mental and physical labor required
to operate the press to produce the printed material.
The corporation is also allowed to deduct for the
building and its maintenance that shelters the printing
press and the labors who operate the press, 24 hours of
the day and 365 days of the year. Yet, this human
machine is not allowed to deduct for its needed shelter
nor its maintenance cost.
* * * * * * *
Under the IRS’s general interpretation of the Internal
Revenue Code (IRC) regarding a “trade or business”, the
undersigned’s has been reduced to a human machine, that
produces printed material by contract for private
sector consumption. This human machine is compensated
on a fee basis for its time engaged in the labors of a
specific service to the private sector. Unlike an
- 6 -
artificial entity, such as a corporation, this human
machine has only one life time, with a certain number
of hours of life. The hours of life expended by this
human machine, in providing machine tool sales service
cannot be recovered, as such, once an hour is spent in
rendering service, it can never be retrieved, and there
is nothing to make this human machine whole for the
loss of life, except for the compensation as rendered
by the private sector customers. * * *
* * * * * * *
Yet, a human life is limited, and as such can be mea-
sured only in years, months, weeks, days, or even
hours. The question becomes, what is a hour of human
life worth, is it 100.00 is it 20.00, there can only
one judge of what an hour of life is worth, and that is
the value that the human being personally assigns to
it. So the human being is allowed as a matter of right
to negotiate by contract the level of compensation for
the loss of life, its called a private contract. The
compensation given to the private citizen or servant
for loss of life, is excluded as income under the 16th
Amendment. * * * [Reproduced literally.]
Respondent issued a notice of deficiency to petitioners for
their taxable year 2003 (2003 notice). In that notice, respon-
dent determined to disallow the $75,600 negative amount of “Other
income” that petitioners reported on page 1, line 21, of their
2003 return ($75,600 negative amount). In the notice, respondent
also determined that petitioners are liable for the accuracy-
related penalty under section 6662(a).2
Petitioners filed a 20-page petition commencing the instant
case. The petition contains statements, contentions, and argu-
2
Respondent made certain other determinations in the notice
that are computational in that their resolution depends upon
whether the Court sustains respondent’s determination to disallow
the $75,600 negative amount.
- 7 -
ments that the Court finds to be frivolous and groundless. For
example, in the petition, petitioners assert in part:
the Commissioner’s Notice of Deficiency or income tax
examination for the year 2003, at page 4, item 1(a)
identified as “Other Income” in the amount of
75,600.00. No such income (profit or gain) was re-
ceived by this petitioner. This amount as listed, only
represents a return or restoration of capital. The
amount of life hours expended in human capital was
2,520, this does not include the hours in preparation
for the task to be accomplished, yet only the hours of
life lost in performing the task.
* * * * * * *
* * * the Commissioner’s Notice of Deficiency or income
tax examination for the year 2003, at page 5, item
17(a) identified as (Accuracy-IRC 6662 - $5,040.55.
This petitioner objects, as this is a accuracy penalty,
for filing a false tax return, this cannot be applied,
because this petitioner filed the IRS expected tax
return under protest, without prejudice. The IRS Form
1040 has never been approved under law by the OMB.
* * * * * * *
Labor is human capital, each type of human capital
is subject to depreciation * * *
* * * * * * *
Under the IRS’s false interpretation of the Inter-
nal Revenue Code (IRC) this petitioner has been reduced
to a human machine, that produces services by contract
for private sector consumption. This human machine is
compensated on a fee basis for its time engaged in the
labors of a specific service to the private sector.
Unlike an artificial entity, such as a corporation,
this human machine has only one lifetime, with a cer-
tain number of hours of life. The hours of life ex-
pended by the human machine, in providing service
cannot be recovered, as such, once an hour is spent in
rendering service, it can never be retrieved, and there
is nothing to make this human machine whole for the
loss of life, except for the compensation as rendered
by the private sector customers. * * *
- 8 -
* * * * * * *
Yet, human life is limited, and as such can be measured
only in years, months, weeks, days, or even hours. The
legal question becomes, what is a hour of human life
worth, is it 100.00 or is it 20.00, there can only be
one judge of what an hour of life is worth, and that is
the value that the human being personally assigns to
it. Each type of human capital is subject to deprecia-
tion. So the human being is allowed as a matter of
right to negotiate by contract the level of compensa-
tion for their loss of life, its called a citizens
private service contract. The compensation given to
the private citizen or servant for loss of life, is
excluded as income under the 16th Amendment. * * *
* * * * * * *
* * * the compensation given to the private servant or
worker for loss of life, is “a restoration of capital
for taxation purposes”, and therefore because it is not
a gain or profit, it is excluded as the type of income
under the 16th Amendment. The labor of a private
citizen is property, and capital is property. A return
of original capital or investment is not a taxable
event under Sixteenth Amendment * * *
* * * * * * *
* * * The right to life is a personal and natural right
of this petitioner, the loss of life is a personal
injury, this natural and absolute right to life is lost
when the government purportedly imposes a tax upon the
compensation received for such said loss (hours, days,
weeks) of life. In other words, the government is
imposing a tax upon “my loss of life”, and the greater
my loss of life, the greater the tax imposed. This
action in the course of due process, is wholly uncon-
stitutional. * * * [Reproduced literally.]
In an Order dated September 18, 2007, the Court indicated
that the petition contains statements, contentions, and arguments
that the Court finds to be frivolous and groundless. In that
Order, the Court also reminded petitioners about section
- 9 -
6673(a)(1) and admonished them that if they continued to advance
frivolous and/or groundless statements, contentions, and argu-
ments, the Court would impose a penalty not in excess of $25,000
on them under that section.
On September 18, 2007, petitioners submitted to the Court
(1) a pretrial memorandum for petitioners with a “Memorandum of
Law and Facts” attached (collectively, petitioners’ pretrial
memorandum) that the Court had filed and (2) a document entitled
“PETITIONERS’ OBJECTIONS TO RESPONDENT’S STIPULATION OF FACTS”
that the Court did not have filed. Petitioners’ pretrial memo-
randum contains statements, contentions, and arguments that the
Court finds to be frivolous and groundless. For example, in
petitioners’ pretrial memorandum, petitioners indicated that they
expected to make the following three motions:
1. Motion by the petitioners to strike agency argu-
ments of law, as presented by respondent upon the U.S.
Tax Court record, for IRS’s failure to exhaust adminis-
trative remedies.
2. Motion by the petitioners to strike the alleged
Commissioner’s Notice of Deficiency as legally invalid.
3. Motion by the petitioners to stand upon the law
brief as attached to the purported 2003 tax return.
[Reproduced literally.]
In petitioners’ pretrial memorandum, petitioners listed the
following as the issues that they intended to raise in this case:
1. Whether the respondent’s IRS Form 4549A is a valid
Notice of Deficiency, see memorandum of law and exhib-
its in the hereto following.
- 10 -
2. Whether the IRS’s Form 1040 has a legally valid
OMB number, and does it give a valid Tennessen Warning
(Notice) with or upon the face of the form, see memo-
randum of law and exhibits in the hereto following.
3. Whether the IRS, under their primary jurisdiction
was required to answer the legal issues as raised by
the petitioner in the tax return protest document, see
memorandum of law in the hereto following.
4. Whether the IRS can impose a tax without setting
forth the Congressional taxing statute, as has been
done in the IRS Form 4549A, and the following state-
ments as set forth by the respondent in the filed
pretrial document.
“1. Whether petitioners are entitled to claim a
deduction for depreciation of “human capital” for
the taxable year 2003 in the amount of $75,600.
2. Whether petitioners are liable for the accu-
racy related penalty under the provisions of
I.R.C. 6662(a) for the taxable year 2003 in the
amount of $5,040.55.
3. Whether petitioners are entitled to claim a
deduction for itemized deductions for the taxable
year 2003 in the amount of $2,268.00. (This is a
computational adjustment.)
4. Whether petitioners are entitled to claim
exemptions for the taxable year 2003 in the amount
of $6,588.00. (This is a computational adjust-
ment.)
5. Whether petitioners are liable for alterna-
tive minimum tax for the taxable year 2003 in the
amount of $5,866.13, (This is a computational
adjustment.)” [Reproduced literally.]
In petitioners’ pretrial memorandum, petitioners indicated
that they “do not intend to call any witnesses, but reserves
[sic] the right to cross examine, the respondent.”
In an Order dated September 20, 2007, the Court again
reminded petitioners about section 6673(a)(1) and again admon-
ished them that if they continued to advance frivolous and/or
- 11 -
groundless statements, contentions, and arguments, the Court
would impose a penalty on them under that section.
When this case was called from the calendar for the Court’s
trial session in Cincinnati, Ohio, the Court reminded petition-
ers, once again, about section 6673(a)(1) and admonished them,
once again, that if they continued to advance frivolous and/or
groundless statements, contentions, and arguments, the Court
would impose a penalty on them under that section.
This case was recalled for a pretrial conference on the
record. At that pretrial conference, the Court and the parties
discussed petitioners’ refusal to sign a stipulation of facts
containing only three paragraphs that stipulated (1) the resi-
dence of petitioners at the time they filed the petition,
(2) their 2003 return, and (3) the 2003 notice. In support of
their refusal to stipulate those matters, petitioners raised what
the Court finds to be frivolous and groundless contentions and
arguments. For example, in refusing to stipulate their 2003
return, Mr. Boggs stated: “the 1040 we believe is an incorrect
document in some relevance.” The Court asked Mr. Boggs to
explain why the document was “an incorrect document”. According
to Mr. Boggs, the 2003 return is “missing several key require-
ments”. At that point during the pretrial conference, the Court
again reminded petitioners about section 6673(a)(1) and again
admonished them that if they continued to advance frivolous
- 12 -
and/or groundless statements, contentions, and arguments, the
Court would impose a penalty on them under that section. Peti-
tioners agreed to stipulate their residence at the time they
filed the petition, their 2003 return, and the 2003 notice.
At the pretrial conference, the Court asked petitioners what
issues they intended to raise at trial. Mr. Boggs responded that
petitioners intended to argue at trial that the $75,600 negative
amount is correct because it is a “restoration of capital, return
to capital.” The Court asked Mr. Boggs what was the “capital” to
which he was referring. Mr. Boggs responded “Human capital.”
The Court told Mr. Boggs that petitioners’ position was frivo-
lous.
This case was recalled for trial. The Court made the
stipulation of facts and the exhibits attached thereto (i.e.,
petitioners’ 2003 return and the 2003 notice) part of the record
in this case. Before the trial began, the Court focused peti-
tioners on the 2003 notice and the disallowance by respondent of
the $75,600 negative amount. The Court asked petitioners whether
it was their position that that negative amount is correct, to
which Mr. Boggs responded that that was their position. The
Court asked petitioners to explain their position. The following
exchange took place:
MR. BOGGS: The deduction was based upon my under-
standing of the case law that provided that any part of
a wage is a -- includes a return on human capital. And
based on human capital not being taxable under the
- 13 -
Sixteenth Amendment, I adjusted -- that number is
calculated at 48 weeks a year, five days a week, ten
and a half hours a day, times $30 an hour. * * *
THE COURT: A deduction for human capital.
MR. BOGGS: A non-taxable restoration of human
capital.
THE COURT: Right. So you’re basically trying to
depreciate human capital.
MR. BOGGS: I don’t think depreciation is the
correct word. I don’t believe depreciation is the
correct word. It’s a return of human capital. Any
part of my human machine, my human body, has a -- has a
labor content, has a waste content, if you will. Once
I’ve used it up, I can’t get it back. That is my
capital.
THE COURT: And I told you earlier and I’ll tell
you again, that is a frivolous argument. It is one I
will reject and it is one as to which if you make it, I
will impose sanctions.
* * * * * * *
* * * And there is no evidence to introduce with
respect to that, that’s just shear argument on your
part. [Reproduced literally from transcript.]
The Court explained to petitioners that the purpose of a
trial is to introduce evidence into the record on which the Court
may find facts. The Court further advised petitioners that there
would be no need for a trial if they intended to advance at trial
only arguments about the law. The Court informed petitioners
that caselaw is not evidence, although one can rely on caselaw in
order to support a legal argument.
After the Court explained the purpose of a trial and the
difference between evidence and argument, Mr. Boggs stated:
- 14 -
Yes. And I -- and if I may just add, I had requested
-- I did not wish to come to Tax Court. I had re-
quested to settle this at the administrative level and
we had submitted several documents to try to obtain the
proper taxing statute and obtain the proper -- the
proper, if you will, evidence so that I would not have
to go -- come to Tax Court, and to get a proper legal
opinion at the administrative [level] * * * [Repro-
duced literally from transcript.]
Mr. Boggs then reaffirmed petitioners’ position regarding
the $75,600 negative amount as follows:
The case law that I presented in the argument -- in the
arguments all along, support the -- in my belief, in my
understanding of the law, support that a deduction is
valid. * * * [Reproduced literally from transcript.]
Based upon the exchange between the Court and Mr. Boggs when
this case was recalled for trial, the Court concluded that a
trial was not necessary in this case, and the case was submitted
on the basis of the stipulation of facts and exhibits that were
part of the record.
Petitioners bear the burden of proving that respondent’s
determinations in the 2003 notice are erroneous. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933).
Petitioners proffered no evidence and advanced no argument
establishing that respondent’s determinations in the 2003 notice
are wrong. Instead, despite the Court’s repeated warnings to
petitioners, they persisted in advancing statements, contentions,
and arguments in support of their position in this case that the
Court finds to be frivolous and groundless. On the record before
us, we shall sustain the determinations in the 2003 notice.
- 15 -
We turn now to section 6673(a)(1), a provision that the
Court brought to petitioners’ attention on numerous occasions.
Section 6673(a)(1) authorizes the Court to impose a penalty in
favor of the United States in an amount not to exceed $25,000
whenever it appears that a taxpayer’s position in a proceeding is
frivolous and/or groundless or that the taxpayer institutes or
maintains a proceeding in the Court primarily for delay.
Despite repeated admonitions to petitioners that the Court
would impose a penalty on them under section 6673(a)(1) if they
continued to advance frivolous and/or groundless statements,
contentions, and arguments, they continued to do so throughout
the course of the proceedings in this case.
On the record before us, we find that petitioners’ position
in this case is frivolous and groundless and that petitioners
instituted and maintained this case primarily for delay. Accord-
ingly, we shall impose a $10,000 penalty on petitioners under
section 6673(a)(1).
We have considered all of petitioners’ statements, conten-
tions, arguments, and requests that are not discussed herein, and
we find them to be without merit and/or irrelevant.
To reflect the foregoing,
Decision will be entered for
respondent.