T.C. Summary Opinion 2009-79
UNITED STATES TAX COURT
MORRIS E. GEORGE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16522-07S. Filed May 19, 2009.
Morris E. George, pro se.
Kathleen K. Raup, for respondent.
GOLDBERG, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. Pursuant to section
7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent
for any other case. Unless otherwise indicated, subsequent
section references are to the Internal Revenue Code in effect for
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the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
The issue for decision is whether petitioner is liable for
self-employment tax on $20,794 he received from Staffing Plus,
Inc., in 2003.1
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time petitioner
filed his petition, he resided in Pennsylvania.
During 2003 petitioner attended Winchester University while
working as a self-employed social worker counseling children with
behavior problems. He graduated in 2006 with a degree in
sociology. During 2003 petitioner also worked at three part-time
jobs. The sole income in dispute is $20,974 he received from
Staffing Plus, Inc. (Staffing Plus). Staffing Plus contracted
with school districts to provide social workers and under this
arrangement assigned petitioner to various schools to provide
counseling. Petitioner did not receive vacation time or sick
leave from either Staffing Plus or the school districts.
1
The notice of deficiency included a sec. 6651(a)(1)
addition to tax for failure to file (late filing of) the 2003
Federal income tax return. Petitioner did not dispute the
addition in his petition or at trial. Therefore, petitioner is
deemed to have conceded the issue. See Rule 34(b)(4); Swain v.
Commissioner, 118 T.C. 358, 364-365 (2002).
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Staffing Plus reported the $20,974 on Form 1099-MISC,
Miscellaneous Income. On June 14, 2006, petitioner filed his
2003 Federal income tax return reporting wages of $3,644 from his
three part-time jobs but omitting the $20,974 he received from
Staffing Plus. In a letter dated July 6, 2006, the Internal
Revenue Service notified petitioner that he had failed to report
the $20,974 in income. On July 14, 2006, petitioner filed a
second Form 1040, U.S. Individual Income Tax Return, for 2003
reporting the $20,974 from Staffing Plus as “Other income” on
line 21 of the Form 1040, but he did not compute self-employment
tax.
Respondent issued a notice of deficiency dated May 24, 2007,
determining an increase in Federal income tax of $2,964 based on
petitioner’s failure to report self-employment tax on the $20,974
and other related computational adjustments and a $712.50
addition to tax under section 6651(a)(1) for petitioner’s failure
to timely file his 2003 tax return.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct, and the taxpayer bears
the burden of showing that the determination is in error. Rule
142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). Under
section 7491(a), the burden may shift to the Commissioner
regarding factual matters if the taxpayer produces credible
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evidence and meets the other requirements of the section.
Petitioner did not argue for a burden shift, and he did not
fulfill the requirements of section 7491(a); therefore, the
burden remains with him. With respect to the addition to tax
under section 6651(a)(1), section 7491(c) places the burden of
production on the Commissioner.
Section 1401 imposes a tax on self-employment income for old
age, survivors, disability insurance, and hospital insurance.
Sec. 1401(a) and (b); sec. 1.1401-1(a), Income Tax Regs.
Petitioner’s liability for self-employment tax therefore turns on
whether he had self-employment income.
Services performed as an independent contractor give rise to
self-employment income. See sec. 1402(c)(2) and (3); Jackson v.
Commissioner, 108 T.C. 130, 133-134 (1997). Initially, we read
the petition as raising the issue of whether petitioner is
subject to self-employment tax. Petitioner implies that he is an
employee and not an independent contractor. However, the
following reasons leave no doubt that petitioner was an
independent contractor during 2003 when he received the $20,974.
First, petitioner acknowledged to respondent in a discussion
before trial that the $20,794 from Staffing Plus was properly
categorized as “Other income” unlike the compensation received
from the three part-time jobs which he reported as wages.
Second, petitioner conceded in the stipulation of facts and on
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record that he was an independent contractor. Third, Staffing
Plus reported the $20,974 on a Form 1099-MISC and not on a Form
W-2, Wage and Tax Statement.
Petitioner’s sole argument at trial was that he was unable
to pay the self-employment tax because he had to pay college
expenses, medical bills, and other personal expenses. The
statute simply does not provide an exception for inability to
pay. The statute imposes self-employment tax on taxpayers with
net earnings from self-employment of $400 or more. Sec.
1402(b)(2). Accordingly, for the foregoing reasons, we sustain
respondent’s determination that petitioner is subject to self-
employment tax.
To reflect our disposition of the issue,
Decision will be entered
for respondent.