T.C. Memo. 2017-197
UNITED STATES TAX COURT
JOHN HOBART ZENTMYER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5692-17. Filed October 4, 2017.
John Hobart Zentmyer, pro se.
Monica I. Cendejas, for respondent.
MEMORANDUM OPINION
JACOBS, Judge: Petitioner failed to file a Federal income tax return or pay
income tax for 1996. After petitioner was convicted of income tax evasion, among
other things, and served time in prison, the Internal Revenue Service (IRS)
prepared a substitute for return. On December 12, 2016, the IRS mailed petitioner
a notice of deficiency for 1996. On March 8, 2017, petitioner filed a petition in
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[*2] this Court, using the standard form provided by the Court. Petitioner filled in
all of the lines on the form and attached a document as his petition.
On April 26, 2017, respondent filed a motion to dismiss for failure to state a
claim upon which relief can be granted (motion to dismiss) under Rule 40. On
May 9, 2017, the Court ordered petitioner to state his objections to respondent’s
motion to dismiss or file an amended petition containing clear and concise
assignments of each and every error that petitioner alleges to have been committed
by respondent, by May 30, 2017.
On May 30, 2017, petitioner sent a document to the Court which
incorporated his (1) amended petition; (2) reply to respondent’s motion to dismiss;
and (3) motion for partial summary judgment. The Court separated this document
into its three component elements. The amended petition was filed as of May 30,
2017; the reply to respondent’s motion to dismiss and the motion for summary
judgment were filed June 5, 2017. On July 7, 2017, respondent filed a first
supplemental motion to dismiss for failure to state a claim upon which relief can
be granted (supplemental motion to dismiss). On August 22, 2017, petitioner filed
a response to respondent’s supplemental motion to dismiss. Finally, on September
5, 2017, petitioner filed a motion for judgment on the pleadings.
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[*3] For the reasons stated infra, we will grant respondent’s motion to dismiss as
supplemented by respondent’s supplemental motion to dismiss and deny as moot
petitioner’s motion for partial summary judgment and his motion for judgment on
the pleadings. Unless otherwise indicated, all section references are to the Internal
Revenue Code (Code) as amended and in effect for the year at issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Background
The following facts are not in dispute and are derived from the pleadings,
the parties’ motions, and supporting exhibits attached thereto. The facts are stated
solely for purposes of deciding the motions before us. See Hahn v. Commissioner,
110 T.C. 140, 141 (1998); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), aff’d, 17 F.3d 965 (7th Cir. 1994). At the time petitioner filed his petition,
he resided in California.
In the notice of deficiency respondent determined an income tax deficiency
of $256,365, a section 6651(a)(1) addition to tax of $57,682, a section 6651(a)(2)
addition to tax of $64,091, and a section 6654 addition to tax of $13,645. The
deficiency in tax is related to petitioner’s conviction in the U.S. District Court for
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[*4] the Central District of California on January 31, 2005.1 Petitioner was
convicted of one count of making a false statement to a financial institution in
violation of title 18 U.S.C. sec. 1014; one count of income tax evasion in violation
of section 7201; and multiple counts of structuring financial transactions in
violation of title 31 U.S.C. sec. 5324(a)(3) and (d)(1). Petitioner was sentenced to
33 months in prison and, inter alia, ordered to pay tax restitution of $264,335 to
the United States pursuant to the terms of 18 U.S.C. sec. 3612(f)(3)(A).
Petitioner makes his views clear on the first page of his petition, wherein he
states:
[t]his Notice [of deficiency] shows an adjustment to a conclusion of
law predicated on what appears to be Respondent’s implication that
in 1996 Petitioner received a certain amount of something, and then
claims that this adjustment resulted in a deficiency attributed to
Petitioner.
One can only speculate about whether there might have been a worker
bee in a particular federal office who led to this adjustment suddenly
popping up after a period of more than 20 years had elapsed, but this
revelation is of no consequence because Petitioner’s instant challenge
shifts the burden of proof to Respondent such that the Notice is void
unless Respondent can validate the purported deficiency.
Thereafter, petitioner criticizes the notice of deficiency, asserting that it is
inadequate as a matter of law.
1
Petitioner’s conviction was entered on February 7, 2005.
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[*5] “We determined that you owe” is not legal support for the imposition
of the purported tax but merely shows that Respondent went through
the motions to satisfy itself that Petitioner is in arrears. “How we
figured the deficiency” is not legal support for the amount due but is
merely a statement which implies that Respondent used certain
statute(s) that set forth the various formulae used for its calculations.
“Amount due” is not legal support for the exaction from Petitioner’s
personal property but is merely the amount determined by
Respondent’s unsupported calculations.
In elaborating his position, petitioner includes numerous arguments. First,
petitioner asserts that the notice of deficiency is inadequate because “the laws that
led to the [IRS’] conclusions are nowhere to be found in Respondent’s Notice.”
Next, petitioner asserts that the IRS failed to define the adjustments
determined in the notice of deficiency.
These adjustments appear to be the result of Respondent’s belief that
Petitioner is somehow culpable because he had received 738,690.20
un-denominated things. (Id.) Nowhere in this form 4549-A is there
any definitive statement as to what these things might be, but
whatever they are, the end result is that purportedly Petitioner is
supposed to supply 1,137,309.17 of them to the government.
In the temporal realm (the real world), one cannot receive an
abstraction. One can only receive actual physical objects, all of
which are classified as personal property and further denominated by
name, such as tennis ball or dollar bill. Respondent’s Notice appears
to imply that Petitioner received a certain number of un-denominated
physical items, as can be inferred from the numbers therein alleging
various amounts. If this assumption is accurate, it forms the only
antecedent fact in the entire instant matter: [sic] According to
Respondent, Petitioner received 738,690.20 items of un-denominated
personal property (the “total adjustments”). This implication and all
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[*6] other assertions in Respondent’s Notice are conclusions of law, not
stipulations of fact, which appear to have been derived from the
application of undisclosed law to the singular factual implication that
Petitioner received a certain amount of personal property.
Third, petitioner asserts that in the notice of deficiency the IRS failed to
define the tax determined.
There are only three logical options for creating an arrearage
traceable to the receipt of personal property: (1) a tax on the value of
the property received, (2) an excise on the event of the receipt, or (3)
a tax on the increase in net worth of the recipient. Respondent’s
Notice does not disclose which of these three options is the basis for
the purported “amount due” from Petitioner or whether Respondent
chose another option based on logic, but Regardless [sic] of what
Respondent believes is being taxed, the Notice does not disclose the
specific statutes that purportedly support the tax itself or the amount
Respondent claims is due.
Fourth, petitioner asserts that the IRS’ aforementioned failures signify that
the IRS is taxing only an undefined abstraction.
Without specifically defining, as opposed to merely labeling [sic],
what is being taxed, Respondent is claiming that an undefined
abstraction is taxable and asking Petitioner and this Court to assume
without that it truly is taxable. Therefore, to satisfy Respondent’s
burden of proof by at least attempting to legitimize the amount due,
and regardless of the legal basis Respondent believes supports this
amount or what Respondent believes is being taxed, Respondent must
disclose (1) the statute or case law that defines legally, rather than
merely labels, what Respondent claims is being taxed, and (2) the
statute that imposes a tax on what has just been defined.
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[*7] Fifth, petitioner asserts that the statutes “disclosed” in the notice of
deficiency involve only penalties and interest. “There are no statutes disclosed
that support Respondent’s legal conclusions about what Respondent is purporting
to tax, why Respondent believes that whatever is being taxed is taxable, or that
require Petitioner to supply any of his personal property to the government.”
Petitioner further asserts that the penalties imposed would apply only if petitioner
were required to file a tax return and that respondent has failed to make such a
showing.
Finally, petitioner asserts that the Form 4549-A, Income Tax Examination
Changes, attached to the notice of deficiency is in error because his last name was
misspelled as “Zentmeyer” and, consequently he, John Zentmyer, was never a
party to the examination.
Respondent did not file an answer to the petition. Rather, as stated supra
p. 2, respondent filed a motion to dismiss. In his motion respondent asserts that
the petition does not meet the requirements of Rule 34(b) and that “[p]etitioner’s
disjointed filing raises several frivolous arguments” and that his contentions “bear
no merit with regard to whether the determinations set forth in the notice of
deficiency are erroneous.” Thus, respondent concludes, “[t]he document filed as
the Petition does not comply with the Rules of the Tax Court as to the form and
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[*8] content of the Petition and fails to state a claim upon which relief can be
granted.”
In his amended petition, petitioner states:
B. In accordance with T.C. rule 34(b), Petitioner assigns the
following single dispositive error to Respondent’s notice:
Respondent has already admitted in error his belief that Petitioner
received income. In his answering MTD, Respondent states:
“[N]owhere in the petition does [Petitioner] state any facts indicating
that he did not receive the income that is the subject of the notice of
deficiency.” (MTD at 4.)
C. With this statement Respondent admits that he has not alleged
facts in his form 4549-A because he knows, or certainly should know,
that Petitioner could not have received income because as a matter of
law no one has ever received income.
Continuing, petitioner states:
Respondent appears to believe that the legal definition of income is
“everything that comes in,” but the U.S. Supreme Court put this
definition on the ash heap of mistaken beliefs many years ago with
the definition of income that remains legally valid today and that is
binding precedent for the instant case:
“‘Income may be defined as the gain derived from capital, from labor
[the work of a company’s employees], or from both combined,’
provided it be understood to include profit gained through a sale or
conversion of capital assets[.]”--Eisner v. Macomber, 252 U.S. 189,
207 (1920).
In his supplemental motion to dismiss respondent asserts that “[s]imilar to
the original petition, petitioner fails to state any facts indicating that he did not
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[*9] receive the income that is the subject of the notice of deficiency” and indeed
that the amended petition surpasses the original petition in raising frivolous
arguments.
In his response to respondent’s supplemental motion to dismiss, petitioner
asserts that “[r]espondent admitted that Petitioner received income in his original
Motion to Dismiss (MTD. at 4), which satisfies the rule 34(b) format. However,
the legal reasoning behind this conclusion appears to have escaped Respondent’s
attention; therefore, Petitioner will again explain it but with more detail and legal
authority.” Petitioner argues:
Although Respondent is attempting to collect an un-apportioned
direct tax by re-naming Petitioner’s personal property “income” and
then taxing this purported income rather than the underlying property,
his form 4549-A contains no facts or law with which to support either
his methodology or his calculations. Therefore, as Petitioner stated in
his earlier submissions and re-states here, with no facts or law to
support Respondent’s calculations, they cannot be correct as a matter
of law.
Petitioner maintains that “income” is “classified as an abstractions [sic] because it
has no mass, shape or color, which means that income is incapable of being
received.” And he concludes:
Respondent’s all-encompassing claim that wages are income may be
true for some recipients under some circumstances, but lower court
decisions that ignore the Supreme Court’s binding definition of the
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[*10] generic term “income” do not have the force of law except for the
cases in which they were issued.
Discussion
The Commissioner’s determinations in the notice of deficiency are
presumed correct, and the taxpayer bears the burden of proving error. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). In challenging the
Commissioner’s determination, a petition filed by a taxpayer should be simple,
concise, and direct. Rule 31(b). The petition must provide the basis on which the
taxpayer disagrees with the determinations, supporting facts, and a prayer setting
forth the relief sought. Rule 34(b). Specifically, Rule 34(b)(4) requires that the
petition provide “[c]lear and concise assignments of each and every error which
the petitioner alleges to have been committed by the Commissioner in the
determination of the deficiency or liability. * * * Any issue not raised in the
assignments of error shall be deemed to be conceded.” While we construe all
pleadings to do substantial justice, Rule 31(d), we may dismiss a petition for
failure to state a claim upon which relief can be granted under Rule 40. Dismissal
for failure to state a claim is appropriate where, even if all of the allegations
contained in a pleading are true, a claim fails as a matter of law. See Phillips v.
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[*11] Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008); Cohen v.
Commissioner, 139 T.C. 299 (2012), aff’d, 550 F. App’x 10 (D.C. Cir. 2014).
Upon review of petitioner’s petition and his amended petition, we find that
no justiciable issue has been raised. Consequently, we will grant respondent’s
motion to dismiss, as supplemented.
Petitioner has failed to assert any error in the notice of deficiency. Instead,
he has drafted a rambling collection of tax-protester arguments. As has been said
on many occasions by many courts: “We perceive no need to refute these
arguments with somber reasoning and copious citation of precedent; to do so
might suggest that these arguments have some colorable merit.” Crain v.
Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984); see Rapp v. Commissioner,
774 F.2d 932, 936 (9th Cir. 1985). Nonetheless, in the hope that this opinion may
deter individuals from raising these “points” in the future, we will briefly address
petitioner’s assertions.
Most of petitioner’s assertions may be grouped into two categories: (1) the
notice of deficiency did not spell out the laws under which the determinations
were made and (2) the IRS’ determinations were undefined abstractions and
petitioner was unable to determine whether he owed a “dollar” or a “tennis ball”.
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[*12] With respect to the first group of assertions, we have held that it is not
necessary to include a statutory citation for each adjustment. Wheeler v.
Commissioner, 127 T.C. 200, 205 (2006) (citing Jarvis v. Commissioner, 78 T.C.
646, 655-656 (1982)), aff’d, 521 F.3d 1289 (10th Cir. 2008). With respect to the
second group of assertions, we cannot help but observe that these are
quintessential examples of frivolous arguments. The Form 886-A, Explanation of
Items, attached to the notice of deficiency clearly includes U.S. dollar symbols, i.e.
“$”, and it is obvious to any reasonable person what the IRS’ deficiency
determination is. Income is not an abstraction. Were we to accept petitioner’s
position, the 16th Amendment, authorizing the income tax, would be meaningless.
Petitioner’s final assertion--that the Form 4549-A attached to the notice of
deficiency is addressed to “John Zentmeyer” rather than petitioner, John
Zentmyer--is also frivolous. The spelling of petitioner’s surname on the form is
obviously a typographical error.
Petitioner’s amended petition is no better than the original petition.
Petitioner asserts that not only did he not receive income, but “as a matter of law
no one has ever received income”, citing the Supreme Court’s holding in Eisner v.
Macomber, 252 U.S. 189, 207 (1920). In Macomber the Supreme Court decided
that a shareholder-taxpayer did not realize gain on the receipt of a stock dividend.
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[*13] The Court did not hold that no one has ever received income. Indeed, in
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430-431 (1955), the Supreme
Court emphatically held that the definition of income in Macomber “was not
meant to provide a touchstone to all future gross income questions.” In other
words, the Supreme Court said that Macomber does not hold what petitioner
claims it holds. The Code provides that gross income includes all income from
whatever source derived unless excluded by law. Sec. 61; Commissioner v.
Kowalski, 434 U.S. 77, 82-83 (1977); Commissioner v. Glenshaw Glass Co., 348
U.S. at 430.
To conclude, we find that petitioner has failed to raise a justiciable issue in
his petition. We therefore will grant respondent’s motion to dismiss filed April
26, 2017, as supplemented by respondent’s supplemental motion to dismiss filed
July 7, 2017, and dismiss petitioner’s petition. Finally, we will deny as moot
petitioner’s motion for partial summary judgment as well as petitioner’s motion
for judgment on the pleadings.
We caution petitioner that raising frivolous arguments similar to the ones
herein in the future may subject him to penalties imposed by the Court. See sec.
6673.
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[*14] In the light of the foregoing,
An appropriate order and order
of dismissal will be entered.