T.C. Memo. 2008-258
UNITED STATES TAX COURT
KRIS A. MISSALL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 26642-07. Filed November 17, 2008.
Kris A. Missall, pro se.
Heidi I. Hansen, for respondent.
MEMORANDUM OPINION
HALPERN, Judge: This case is before us to redetermine
deficiencies in, and additions to, tax determined by respondent.
Respondent has moved for summary judgment and to impose a penalty
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under section 6673 (the motion).1 Petitioner objects (the
response). We shall grant the motion in both respects. We shall
also strike this case from the trial session of the Court set to
begin December 2, 2008, in Phoenix, Arizona, and enter a decision
for respondent.
This Court may grant summary judgment “if the pleadings,
answers to interrogatories, depositions, admissions, and any
other acceptable materials, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that a decision may be rendered as a matter of law.” Rule
121(b). In pertinent part, Rule 121(d) provides: “When a motion
for summary judgment is made and supported * * *, an adverse
party may not rest upon the mere allegations or denials of such
party’s pleading, but such party’s response * * * must set forth
specific facts showing that there is a genuine issue for trial.”
In support of his request for summary judgment, respondent
sets forth the following facts with respect to his
determinations, which facts petitioner does not contest and which
we shall take as true for purposes of disposing of the motion.
By notice of deficiency dated August 1, 2007, respondent
determined deficiencies in, and additions to, tax as follows:
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654
2002 $37,869 $8,520.53 $9,467.25 $1,265.50
To be
2003 40,298 9,067.05 determined 1,054.63
To be
2004 8,925 2,008.13 determined 259.07
By the amended petition, petitioner assigns error to
respondent’s determinations, claiming only that he is exempt from
Federal income tax.
In further support of his request for summary judgment,
respondent relies on a declaration of Jeanne M. Bechtold (the
declaration), a tax compliance officer employed by the Internal
Revenue Service (IRS) in its Phoenix, Arizona, office. Ms.
Bechtold attests to the authenticity of 14 exhibits (Exs. 1
through 14) attached to the declaration. Exhibits 6 through 8
consist of the Information Returns Processing File On-Line
Transcripts (IRPs) for petitioner for taxable years 2002 through
2004. The 2002 IRP shows that petitioner had self-employment
compensation from Water Resources International, Inc., of
$114,378. The 2003 and 2004 IRPs show that petitioner had self-
employment compensation from Arizona Environmental Progress,
Inc., of $126,913 and $37,329, respectively. Exhibits 2 through
5 consist of Forms 4340, Certificate of Assessments, Payments,
and Other Specified Matters. The Forms 4340 show that petitioner
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failed to file Federal income tax returns for 2001, 2002, 2003,
and 2004.
Petitioner does not challenge the declaration except with
respect to the accuracy of the amounts of self-employment income
derived from the IRPs. Petitioner states: “The figures used in
* * * [the section of the motion entitled ‘Applicability of
Income Tax’] are inaccurate.” Petitioner neither denies that he
received self-employment income nor states to what extent the
figures are inaccurate. Petitioner has not carried his burden
under Rule 121(d) of showing that there is a material issue of
fact in dispute with respect to the claim in the declaration that
he received self-employment income in the amounts set forth
therein. See generally Thorpe v. Commissioner, T.C. Memo. 1997-
342 (granting partial summary judgment where taxpayer failed to
come forward with any evidence of specific amounts excludable
from gross income as damages received on account of personal
injuries or sickness). We accept the facts set forth in the
declaration as true for purposes of disposing of respondent’s
request for summary judgment. Respondent has established that
petitioner failed to report income in the amounts stated in the
declaration for the years in issue and failed to file returns for
those years.
Petitioner’s only defense to respondent’s determinations is
his claim that he is exempt from Federal income tax. Petitioner
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cites nothing persuasive in support of that claim. In one of the
documents received by the IRS and attached to the declaration
petitioner asserts that he is a “Utah Sole Corporation” “exempt
from Federal Income Tax under Section 501(d) of the Internal
Revenue code”. Section 501(d) applies to “Religious or apostolic
associations or corporations”. Petitioner has shown nothing to
support the claim that he is an organization of any kind. Nor is
there any merit to petitioner’s implied claim in the response
that compensation for labor is not subject to tax. Section 61
provides in part: “(a) General Definition--. Except as
otherwise provided in this subtitle, gross income means all
income from whatever source derived, including (but not limited
to) the following items: (1) Compensation for services,
including fees, commissions, fringe benefits, and similar items”.
In United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981),
the Court of Appeals said: “Compensation for labor or services,
paid in the form of wages or salary, has been universally, [sic]
held by the courts of this republic to be income, subject to the
income tax laws currently applicable.” Petitioner claims that he
has “many more court cases regarding my position showing just the
opposite is true”, yet petitioner cites neither cases nor other
persuasive authority in support of that claim. Thus, petitioner
has made no legal argument that precludes summary judgment in
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respondent’s favor with respect to the deficiencies in tax
determined by respondent.
The Commissioner bears the burden of production with respect
to penalties and additions to tax. Sec. 7491(c).
Notwithstanding that petitioner did not specifically assign error
to respondent’s determinations of additions to tax under sections
6651 and 6654, respondent has carried that burden. Section
6651(a)(1) imposes an addition to tax when a taxpayer fails to
file a timely return. 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. Respondent
offered uncontroverted evidence that petitioner failed to file
Federal income tax returns for the 3 years in issue (i.e., 2002,
2003, and 2004). Because the returns for these years are all
more than 4 months late, section 6651(a)(1) imposes on petitioner
the maximum 25-percent addition to tax for each year.
Section 6651(a)(2) imposes an addition to tax when a
taxpayer fails to pay the amount of tax shown on a return by the
prescribed date. The amount of the addition is equal to 0.5
percent of the tax for each month or fraction thereof during
which the tax remains unpaid, up to a maximum addition of 25
percent. Under section 6020(b), when any taxpayer fails to make
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any return required by law, the IRS (acting for the Secretary of
the Treasury) must make a return from such information as it can
obtain. Under section 6651(g)(2), any return so made is treated
as the taxpayer’s return for purposes of section 6651(a)(2).
Respondent offered uncontroverted evidence that petitioner
failed to pay any Federal income tax for the 3 years in issue.
Because the IRS made a return for each year pursuant to section
6020(b), section 6651(a)(2) imposes on petitioner an addition to
tax for each year.
Section 6654 imposes an addition to tax when a taxpayer
fails to pay a required installment of estimated income tax.
Each required installment is equal to 25 percent of the required
annual payment. Sec. 6654(d)(1)(A). The required annual payment
is the lesser of (1) 90 percent of the tax shown on the return
for the taxable year (or, if the taxpayer filed no return, 90
percent of the tax for that year), or (2) 100 percent of the tax
shown on the return, if any, for the preceding taxable year.
Sec. 6654(d)(1)(B). Respondent offered uncontroverted evidence
that petitioner failed to file a return for every year in issue
and for every year preceding a year in issue. Thus, petitioner’s
required annual payment for each year in issue was 90 percent of
the tax for that year. Because petitioner failed to pay any
Federal income tax for the 3 years in issue, section 6654 imposes
on petitioner an addition to tax for each year.
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Under section 6673(a)(1)(A) and (B), this Court may require
a taxpayer to pay a penalty not in excess of $25,000 if (1) the
taxpayer has instituted or maintained a proceeding primarily for
delay or (2) the taxpayer’s position is “frivolous or
groundless”. We can see no reason for this case other than
delay. Moreover, petitioner’s whole case is groundless, and his
arguments are frivolous. A taxpayer’s position is frivolous if
it is contrary to established law and unsupported by a reasoned,
colorable argument for change in the law. E.g., Nis Family Trust
v. Commissioner, 115 T.C. 523, 544 (2000). Petitioner has
offered no plausible argument that he is exempt from Federal
income tax; indeed, his arguments employ familiar tax-protester
rhetoric that has been universally rejected by this and other
courts. See, e.g., Crain v. Commissioner, 737 F.2d 1417 (5th
Cir. 1984); Williams v. Commissioner, 114 T.C. 136 (2000).
Petitioner has failed to report substantial amounts of income for
3 years and deserves a substantial penalty for initiating this
proceeding. We shall, therefore, require petitioner to pay a
penalty under section 6673(a)(1) of $5,000.
An appropriate order will
be issued, and decision will
be entered under Rule 155.