T.C. Memo. 2009-92
UNITED STATES TAX COURT
ROBERT RODRIGUEZ,1 Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 17099-07, 20488-07. Filed April 30, 2009.
Robert Rodriguez, pro se.
Heather D. Horton, for respondent.
MEMORANDUM OPINION
HALPERN, Judge: By notices of deficiency respondent
determined deficiencies in, and additions to, petitioner’s
Federal income tax for his taxable (calendar) years 2004 and 2005
as follows:
1
The cases were consolidated by order of the Court dated
Dec. 2, 2008.
- 2 -
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2)1 Sec. 6654
2004 $24,573 $1,210.05 $645.36 $94.19
2005 20,092 997.88 221.75 108.11
1
Respondent concedes the sec. 6651(a)(2) additions to tax
for both years.
Respondent has also moved for the imposition of penalties under
section 6673.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue. At
the time the petitions in these cases were filed, petitioner
lived in Arizona.
Background
Petitioner filed no Federal income tax return for either
2004 or 2005. Respondent based his determination of the 2004 and
2005 deficiencies principally on his receipt of information
returns from Coxcom, Inc., Atlanta, Georgia, and Arizona Federal,
Phoenix, Arizona (the information returns). The information
returns report the following payments to petitioner:
Year Payor Nature of Payment Amount
2004 Coxcom Wages $110,898
Arizona Fed. Interest 17
2005 Coxcom Wages 99,536
Arizona Fed. Interest 38
- 3 -
Discussion
I. Deficiencies in Tax
Petitioner assigns error to the deficiencies in tax
respondent determined and, in support of those assignments, avers
that he “did not receive any taxable income from any taxable
source during [either of the years in issue]”.
The calculation of “taxable income” begins with the
determination of “gross income”. See secs. 61(a), 62, and 63(a)
and (b). That both compensation for services and interest are
items of gross income is beyond dispute. Sec. 61(a)(1), (4).
Section 1.61-2(a)(1), Income Tax Regs., makes explicit that
“Wages” are income to the recipient “unless excluded by law.”
Petitioner does not argue that his wages are excluded from gross
income by any provision of law. Nevertheless, these cases
involve unreported income, and, unless the parties stipulate to
the contrary, the venue for appeal is the Court of Appeals for
the Ninth Circuit. See sec. 7482(b)(1)(A), (2). Petitioner does
argue that we are bound by a line of cases of the Court of
Appeals for the Ninth Circuit beginning with Weimerskirch v.
Commissioner, 596 F.2d 358 (9th Cir. 1979), revg. 67 T.C. 672
(1977), to which we defer in accordance with the doctrine of
Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985
(10th Cir. 1971). E.g., Nicholls v. Commissioner, T.C. Memo.
2006-218. The general rule established by that line of cases is
- 4 -
that, for the Commissioner to prevail in a case involving
unreported income, there must be some evidentiary foundation
linking the taxpayer with the alleged income-producing activity.
See Weimerskirch v. Commissioner, supra at 362.2 Transcripts of
the information returns were received in evidence and show the
payment to petitioner of both wages and interest. Petitioner
does not challenge the accuracy of the information on the
transcripts, only that he did not receive income from any taxable
source. He claims: “I looked at section 861 and the definition
in the Internal Revenue Code specifically states that sources of
income are from foreign entities, corporations.” Apparently,
petitioner is relying on the discredited tax-protester argument
that the regulations under section 861 establish that a citizen’s
income in the form of remuneration for services and bank interest
2
Although Weimerskirch v. Commissioner, 596 F.2d 358 (9th
Cir. 1979), revg. 67 T.C. 672 (1977), dealt specifically with
illegal unreported income, it is now well established that the
Court of Appeals for the Ninth Circuit applies the Weimerskirch
rule in all cases of unreported income where the taxpayer
challenges the Commissioner’s determination on the merits. E.g.,
Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982) (in
that case, involving unreported income from an income-generating
auto repair business owned by the taxpayer, the court stated:
“We note, however, that the Commissioner’s assertion of
deficiencies are presumptively correct once some substantive
evidence is introduced demonstrating that the taxpayer received
unreported income. Weimerskirch v. Commissioner, 596 F.2d 358,
360 (9th Cir. 1979).”); Petzoldt v. Commissioner, 92 T.C. 661,
689 (1989) (“the Ninth Circuit requires that respondent come
forward with substantive evidence establishing a ‘minimal
evidentiary foundation’ in all cases involving the receipt of
unreported income to preserve the statutory notice’s presumption
of correctness”).
- 5 -
received from sources within the United States is not taxable
income. See Takaba v. Commissioner, 119 T.C. 285, 294-295
(2002). We have said: “The 861 argument is contrary to
established law and, for that reason, frivolous.” Id. at 295.
Petitioner has no reasonable dispute with respondent’s reliance
on the information returns, see sec. 6201(d), and respondent has
provided an evidentiary foundation linking petitioner with the
wages and interest in issue to satisfy the rule established by
the Weimerskirch line of cases.
Petitioner has failed to show any error in the deficiencies,
and we sustain them in whole.
II. Additions to Tax
A. Introduction
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 the taxpayer
shows 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.
Section 6654(a) and (b) provides for an addition to tax in
the event of an individual’s underpayment of a required
- 6 -
installment of estimated tax. As relevant to these cases, each
required installment of estimated tax 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). 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).
B. Burden of Production
In pertinent part, section 7491(c) provides: “the Secretary
shall have the burden of production in any court proceeding with
respect to the liability of any individual for any * * * addition
to tax”. The Commissioner’s burden of production under section
7491(c) is to produce evidence that imposing the relevant
addition to tax is appropriate. Swain v. Commissioner, 118 T.C.
358, 363 (2002).
C. Discussion
1. Section 6651(a)(1)
Respondent’s evidence shows that petitioner did not file a
Federal income tax return for either 2004 or 2005, and we so
find. Respondent’s evidence also shows that, for each of those
- 7 -
years, petitioner had income sufficient to require him to file a
return, i.e., income above the exemption amounts, and we so
find.3 Petitioner claims: “Nobody has told me that I am
required to file” and “There is no law specifically stating in
the Internal Revenue Code that says that I am required to file a
Form 1040.” The history that we recite infra in our discussion
of the penalty makes perfectly clear that, given petitioner’s
history with the Federal income tax, those are ridiculous
arguments. Petitioner has failed to show that his failures to
file were due to reasonable cause and not due to willful neglect.
Petitioner is liable for the section 6651(a)(1) additions to tax
as computed by respondent.
2. Section 6654
Respondent’s evidence also shows that petitioner did not
file a Federal income tax return for 2003, and we so find.
Petitioner’s required annual payments for both 2004 and 2005 were
therefore 90 percent of his tax for the year. Because petitioner
failed to make the required installment payments of his Federal
income tax for the 2 years in issue, section 6654 imposes on
3
Sec. 6012(a) requires every individual having gross income
exceeding a certain minimum amount to file an income tax return.
Petitioner’s gross income exceeded the exemption amounts of
$3,100 and $3,200 and the standard deductions of $4,850 and
$5,000 for 2004 and 2005, respectively. See sec. 151(d); Rev.
Proc. 2003-85, sec. 3.16(1), 2003-2 C.B. 1184, 1188; Rev. Proc.
2004-71, sec. 3.17(1), 2004-2 C.B. 970, 974.
- 8 -
petitioner an addition to tax for each year. Petitioner is
liable for the section 6654 additions to tax as computed by
respondent.
III. Penalties
Under section 6673(a)(1), 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 these cases other than delay. Moreover,
petitioner’s cases are 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 2 years and
deserves a substantial penalty for initiating this proceeding.
Moreover, respondent has brought to our attention
petitioner’s history of incurring section 6673 penalties in this
Court. In Rodriguez v. Commissioner, T.C. Memo. 2003-105, affd.
- 9 -
127 Fed. Appx. 914 (9th Cir. 2005), we dealt with petitioner’s
1994 through 1996 tax years, and in Rodriguez v. Commissioner,
T.C. Memo. 2005-12, we dealt with petitioner’s 1997 through 2000
tax years. In both cases petitioner failed to file returns
reporting income reported to the Commissioner by third parties,
and in both cases he made arguments similar to those he makes
here. In the first case, we imposed on him a section 6673
penalty of $10,000, and, in the second, we imposed on him a like
penalty of $25,000. Subsequently, petitioner twice again
petitioned the Court, in docket Nos. 7334-04 and 527-05,
incurring in each case a section 6673 penalty.
Petitioner is disrupting the orderly processes of the Court
and wasting both the Court’s and the Government’s limited
resources with the meritless arguments he continues to make. We
shall, therefore, require petitioner to pay a penalty under
section 6673(a)(1) of $25,000 in each of these consolidated
cases.
Appropriate orders and
decisions will be entered for
respondent.