T.C. Memo. 2008-198
UNITED STATES TAX COURT
ILYA ROYTBURD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5355-06. Filed August 26, 2008.
Ilya Roytburd, pro se.
Harry J. Negro, for respondent.
MEMORANDUM OPINION
HALPERN, Judge: By notice of deficiency dated December 9,
2005 (the notice), respondent determined deficiencies in, and
additions to, petitioner’s Federal income tax as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654
2002 $27,306 $6,144 To be determined $912
2003 14,423 1,672 To be determined 174
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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. All dollar amounts have been rounded to the nearest
dollar. Petitioner bears the burden of proof. See Rule 142(a).1
Background
Petitioner filed a petition, an amended petition, and a
second amended petition. Petitioner showed his address in each
as being in Newtown, Pennsylvania.
Respondent moved to dismiss for failure to state a claim
upon which relief can be granted and to impose a penalty under
section 6673 (the motion). The motion was called for hearing on
August 9, 2006, and petitioner and respondent’s counsel appeared
and were heard. Thereafter, we disposed of the motion by order
of the same date, granting in part and denying in part. In that
order, we stated: “Petitioner’s second amended petition contains
nothing but frivolous and groundless arguments that merit no
extended discussion.” We found, however, that certain
allegations made by petitioner at the hearing could be construed
as petitioner’s assertion that respondent erred in the notice in
1
Petitioner makes no argument that the burden of proof has
shifted to respondent pursuant to sec. 7491(a), nor would we
sustain that argument since, among other things, as discussed
infra, petitioner has introduced no credible evidence that the
bank deposits herein described have a nontaxable source. See
sec. 7491(a)(1).
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making a positive adjustment of $38,767 to petitioner’s 2002
taxable income on account of unexplained deposits to petitioner’s
bank account at Sovereign Bank and in determining that he was
liable for self-employment tax on that income. We advised
petitioner that bank deposits are prima facie evidence of income,
and we pointed him to authority for that proposition. We deemed
petitioner to have conceded all adjustments to income made by
respondent in the notice except for the aforementioned $38,767
adjustment and the related determination of self-employment tax
liability. We further deemed petitioner to have conceded all
additions to tax determined in the notice. We denied without
prejudice that portion of the motion asking for a penalty under
section 6673. We reviewed for petitioner’s benefit the
provisions of section 6673(a)(1), and we warned him: “Petitioner
is herewith expressly advised that the Court may very well impose
on him a substantial penalty under section 6673 if he persists in
advancing frivolous or groundless arguments or if he should
subsequently be found to have instituted or to have maintained
this action primarily for delay.”
Subsequently, on November 26, 2007, we held a trial. At the
trial, respondent conceded that the $38,767 adjustment was
overstated by $7,000 and that petitioner had no liability for
self-employment tax. We accepted those concessions. The only
issue left for disposition was respondent’s positive adjustment
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of $31,767 to petitioner’s 2002 income. The adjustment is
described in the notice as an increase in petitioner’s taxable
income resulting from an analysis of his 2002 bank deposits. At
trial, in support of the adjustment, respondent proffered bank
records pertaining to a savings account in petitioner’s name at
Sovereign Bank and showing, among other things, deposits and wire
transfers into the account as follows:2
Date Amount Source
Jan. 16, 2002 $18,000 Wire transfer
July 18, 2002 10,000 Wire transfer
Oct. 7, 2002 1,326 Deposit
Nov. 1, 2002 2,441 Deposit
Total $31,767
The two wire transfers were received by Sovereign Bank from First
Clearing Corp. The November 1, 2002, deposit was of a check from
the Travelers Indemnity Co. The October 7, 2002, deposit is
unexplained. At trial, petitioner acknowledged receiving a check
for an insurance claim. He also acknowledged receiving a check
for unemployment compensation. He testified that the wire
transfers were of money that he moved from other money market
2
The records were accompanied by a certification of
records by an official of Sovereign Bank. We reserved ruling on
the admissibility of the records to give petitioner a chance to
argue on brief that the records should not be admitted into
evidence. Since petitioner’s brief contains no argument on that
score, we deem no objection to be made, and we receive the
records into evidence without objection.
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accounts. He offered no further explanation, or particulars, of
the deposits.
At the conclusion of the trial, the Court requested seriatim
briefs, respondent going first. The Court directed petitioner to
the requirements of Rule 151, which, among other things, sets
forth the requirements for the form and content of briefs.
Respondent’s brief complies with the requirements of Rule 151,
containing, among other things, proposed findings of fact and a
legal argument. Petitioner answered respondent’s brief with a
document that fails to comply with the requirements of Rule 151.
It neither proposes any findings of fact nor makes any objection
to respondent’s proposed findings of fact. See Rule 151(e)(3).
It contains only tax-protester rhetoric. In substantial part, it
reads as follows:
Respondent served Petitioner with a Notice of
Deficiency apparently based upon Respondent’s mistaken
belief that the Petitioner, for the time period stated
in the Notice, was, in fact, a “U.S. citizen.” And,
moreover, a “taxpayer” as defined in 26 USC 7701.
Petitioner has not conducted his life as a “U.S.
citizen” for many years, having learned (discovered)
the differences between a natural born American Citizen
of the state and that of a 14th Amendment federal
citizen –- subject. Petitioner has long rejected the
status of “U.S. citizen”, and any writings or
statements to the contrary (by Petitioner) were based
upon government deceit and deception in failing to
advise Petitioner of the consequences of that “status.”
Petitioner denies being (for the period at issue)
a resident and/or citizen of the United States and is
in fact domiciled in the sovereign Republic of
Pennsylvania, and claiming state Citizenship. * * *
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Respondent may have jurisdiction to assess “U.S.
citizens”, wherever “resident”, but again, Petitioner
rejects that status * * * .
The tax at issue Respondent seeks to impose upon
Petitioner goes far beyond Congress’ constitutionally
delegated powers * * * .
* * * * * * *
Before Tax Court can proceed to adjudicate the
matters herein, Respondent must first establish that
Petitioner is/was a “U.S. citizen” during the period at
issue.
Absent the required personam jurisdiction, this
case must be dismissed.
[signature]
Ilya Roytburd
Sovereign American Citizen
Discussion
I. Deficiencies in Tax
The only adjustment relating to the deficiencies in tax
determined by respondent in the notice that remains at issue is
respondent’s adjustment for 2002 of (after a concession) $31,767
on account of unexplained bank deposits. Respondent has produced
evidence of those deposits, and petitioner does not contradict
the fact of the deposits. Moreover: “A bank deposit is prima
facie evidence of income and respondent need not prove a likely
source of that income.” Tokarski v. Commissioner, 87 T.C. 74, 77
(1986). Petitioner bears the burden of proving that the income
was from a nontaxable source or otherwise excluded from his gross
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income by law. See, e.g., Mantakounis v. Commissioner, T.C.
Memo. 2002-306.
Petitioner makes no argument on brief concerning the bank
deposits, and that failure is sufficient for us to conclude that
he has abandoned the controversy with respect to those items.
See Rybak v. Commissioner, 91 T.C. 524, 566 n.19 (1988).
Moreover, at trial, petitioner’s only explanation of the
unexplained deposits was by generalized, uncorroborated, and
self-serving testimony that the unexplained deposits were
primarily from purported other bank accounts. Petitioner did not
identify those accounts. He provided no statements showing
deposits to and withdrawals from those accounts, nor did he call
any financial adviser or other person who could have corroborated
his claim that he was merely redepositing already taxed or
nontaxable funds. Petitioner had ample time and opportunity to
obtain corroborating evidence. We had advised him in our order
disposing of the motion that respondent had identified
unexplained deposits to his Sovereign Bank account and that
unexplained bank deposits were prima facie evidence of income.
We need not accept self-serving testimony, even if unopposed.
Fleischer v. Commissioner, 403 F.2d 403, 406 (2d Cir. 1968),
affg. T.C. Memo. 1967-85; see also Tokarski v. Commissioner,
supra at 77 (“Under all the circumstances, we are not required to
accept the self-serving testimony of petitioner * * * as
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gospel.”). Moreover, we are entitled to infer from petitioner’s
failure to offer evidence concerning the source of the deposits
that such evidence would have been unfavorable to petitioner’s
case. See Wichita Terminal Elevator Co. v. Commissioner, 6 T.C.
1158, 1165 (1946), affd. 162 F.2d 513 (10th Cir. 1947).
Petitioner has failed to prove that deposits to his Sovereign
Bank account in 2002 totaling $31,767 were from a nontaxable
source or otherwise excluded by law. We sustain respondent’s
determination of a deficiency in tax for 2002 on account of the
omission of that amount from petitioner’s taxable income.
II. Section 6673 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.
We have already determined that the second amended petition
contains nothing but frivolous and groundless arguments. In our
order disposing of the motion, we warned petitioner that we might
impose on him a substantial penalty under section 6673 if he
persisted in advancing frivolous or groundless arguments or if he
should subsequently be found to have instituted or to have
maintained this action primarily for delay. Petitioner’s brief,
which we have set forth in substantial part, shows that he has
persisted in that sanctionable conduct. Moreover, we can see
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little reason for petitioner’s having instituted this proceeding
but to delay the collection of Federal income tax due and owing.
Petitioner has not only wasted his time, but he has also wasted
the time of respondent’s employees, officers, and counsel, not to
mention the waste of the Court’s time in disposing of this case.
“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). Petitioner is deserving of a substantial penalty. We
shall exercise our authority under section 6673(a)(1) and require
petitioner to pay to the United States a penalty of $5,000.
III. Conclusion
To reflect the foregoing,
An appropriate order will
be issued, and decision will
be entered under Rule 155.