T.C. Memo. 2012-34
UNITED STATES TAX COURT
SAM WILLIAM PALMER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1398-10. Filed February 6, 2012.
Sam William Palmer, pro se.
Dessa J. Baker-Inman, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
PARIS, Judge: On October 19, 2009, respondent issued to petitioner a notice
of deficiency which determined a Federal income tax deficiency of $656
-2-
and additions to tax under section 6651(a)(1)1 and (2) of $147.60 and $91.84,
respectively, for petitioner’s 2006 tax year. Petitioner filed a timely petition with
this Court. The issues for decision are: (1) Whether respondent’s New York office
has the authority to issue a notice to petitioner, who resided in Oklahoma at the time
the notice of deficiency was issued and (2) whether petitioner is liable for an income
tax deficiency and additions to tax in the amounts determined by respondent for tax
year 2006.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulation of facts and the
exhibits attached thereto are incorporated herein by this reference. At the time the
petition was filed, petitioner resided in Oklahoma.
Petitioner did not file an income tax return for tax year 2006 and made no
payments in regard to his tax liability for that year. Consequently, respondent filed
a substitute for return for petitioner on August 3, 2009, pursuant to section 6020(b)
stating that, for his tax year 2006, petitioner received $15,019 in funds, composed of
rents or royalties of $14,615, dividends of $54, and interest of $350. Petitioner does
not argue that he did not receive these funds; rather, petitioner argues
1
All section references are to the Internal Revenue Code (Code) in effect for
the period at issue, and all Rule references are to the Tax Court Rules of Practice
and Procedure, unless otherwise indicated.
-3-
that the New York office of the Internal Revenue Service (IRS) does not have the
authority to issue a notice of deficiency to him because the New York office did not
provide petitioner with confirmation that the Secretary of the Treasury delegated his
authority to the New York office to issue a notice of deficiency to him. Petitioner
argues that because the New York office is not within petitioner’s geographical
district, which consists of Oklahoma, Texas, and Arkansas, the New York office has
no authority to issue him a notice of deficiency.
OPINION
Jurisdiction of the IRS
Petitioner does not argue that he did not receive a notice of deficiency and
should not have to pay taxes. Rather, petitioner argues that the notice of deficiency
sent to him from the New York office is invalid as the New York office has no
authority over him because he lives in Oklahoma and is accountable only to the IRS
office which encompasses the IRS district in which he lives.
Petitioner argues that the IRS’ Holtsville, New York, office has no authority
to issue a notice of deficiency to him as he does not live in the geographic district
which encompasses New York and has offered nothing to show that this office has
been delegated authority to issue such notice by the Secretary of the Treasury.
-4-
Specifically, in his letter to the Holtsville, New York, office, petitioner asked the
New York office to provide him with “proof that you have been properly delegated
by the Secretary of [sic] Treasury.” Pursuant to the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. No. 105-206, sec. 1001(a), 112 Stat.
at 686, the IRS replaced its original national/regional/district structure with
organizational units that served particular industries or groups of taxpayers. See
also Notice 2010-53, 2010-31 I.R.B. 182.
The arguments that petitioner has raised have been deemed frivolous by this
Court and many others. See Nestor v. Commissioner, 118 T.C. 162, 165-166
(2002) (holding that the Secretary or his delegate may issue a notice of deficiency
pursuant to sections 6212(a) and 7701(a)(11)(B) and (12)(A)(i)); Reynolds v.
Commissioner, T.C. Memo. 2006-192 (holding that a notice of deficiency prepared
and issued by a compliance center director is valid without obligating the director to
produce a copy of the delegation order). It is well established that the Secretary or
his delegate is authorized by statute to issue notices of deficiency, secs. 6212(a),
7701(a)(11)(B), (12)(A)(i), and it is well established that the director of an IRS
compliance center is an authorized delegate, e.g., Hughes v. United States, 953 F.2d
531, 536 (9th Cir. 1992) (holding that the Commissioner’s delegation of authority to
district directors and the subsequent delegation to local IRS employees
-5-
is a valid delegation of authority); Reynolds v. Commissioner, T.C. Memo. 2006-
192; see also Pendola v. Commissioner, 50 T.C. 509, 512 (1968) (holding that the
section 301.6212-1 is clear that District Directors have authority to send deficiency
notices and there is no provision in the Code or the regulations which limits their
authority to send deficiency notices to taxpayers within a particular district); sec.
301.6212-1, Proced. & Admin. Regs. Accordingly, this Court finds that petitioner’s
argument is consistent with other tax-protester arguments previously deemed
frivolous and rejects it as such.
Petitioner’s 2006 Income Tax Liability
In general, the Commissioner’s determinations in the notice of deficiency are
presumed correct, and the taxpayer bears the burden of disproving these
determinations. See Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).
The burden on factual issues that affect a taxpayer’s liability may shift to the
Commissioner if “a taxpayer introduces credible evidence with respect to * * * such
issue.” See sec. 7491(a)(1). However, this provision does not apply if the taxpayer
has failed to comply with the substantiation requirements. See sec. 7491(a)(2)(A).
Petitioner has not offered any evidence regarding the substance of the tax
issues involved with this case. Petitioner has the burden of proof to produce
-6-
credible evidence to substantiate why he is excluded from filing tax returns or
paying taxes on his income. See Rule 142; Welch v. Helvering, 290 U.S. at 115.
Petitioner has offered only one letter into evidence, a letter he wrote to respondent
in response to the notice of deficiency that was mailed to him from the IRS’ New
York office. Petitioner has offered no substantive evidence as to why the
determined deficiency or the additions to tax are incorrect. Because petitioner has
failed to meet his burden of proof and offer any substantive evidence as to why the
determined deficiency is incorrect, this Court sustains respondent’s determination
for petitioner’s 2006 tax year as set forth in the notice of deficiency.
Additions to Tax
Section 6651(a)(1) imposes an addition to tax on taxpayers who fail to file a
timely tax return for any given tax period. Petitioner stipulated that he did not file
an income tax return for tax year 2006. Consequently, this Court sustains the
determined section 6651(a)(1) addition to tax for petitioner’s tax year 2006.
Section 6651(a)(2) is an addition to tax imposed on taxpayers for their failure
to pay timely the amount of tax they owe for the tax year. By his own admission,
petitioner failed to file his tax return. Moreover, respondent submitted an official
transcript for petitioner’s 2006 tax year which shows that respondent filed a
substitute for return pursuant to section 6020(b) on August 3, 2009, and
-7-
that no deposits or payments have ever been made on the account. Consequently,
this Court finds that petitioner has failed to make any payments toward his tax
liability for his tax year 2006 and sustains the addition to tax under section
6651(a)(2).
The Court has considered all arguments the parties have made, and to the
extent not discussed herein, we find they are meritless, moot, or irrelevant.
To reflect the foregoing,
Decision will be entered
for respondent.