Title: Combs v. Dept. of Rev.

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed:  November 9, 2000
IN THE SUPREME COURT OF THE STATE OF OREGON
ROBERT R. COMBS,
Appellant,
	v.
DEPARTMENT OF REVENUE,State of Oregon,
Respondent.
(OTC 4398; SC S46958)
	En Banc
	On appeal from the Oregon Tax Court.*
	Submitted on the record August 15, 2000.
	Robert R. Combs, appellant pro se, filed the brief.
	James C. Wallace, Assistant Attorney General, Salem, filed
the brief for respondent.  With him on the brief was Hardy Myers,
Attorney General.
	DURHAM, J.
	The judgment of the Oregon Tax Court is affirmed.
	*15 OTR 60 (1999).
	DURHAM, J.
	Taxpayer appeals from a judgment of the Oregon Tax Court
granting summary judgment to the Department of Revenue
(department).  Taxpayer did not file an Oregon personal income
tax return for the year 1996, although he received $28,019 in
wages and $2,408 in unemployment compensation during that year. 
A magistrate upheld the department's assessment of personal
income taxes against taxpayer, and taxpayer appealed to the Tax
Court.  The Tax Court determined that taxpayer's position on
appeal was groundless and lacked any objective reasonable basis,
and awarded the department $1,200 in damages.  ORS 305.437. (1) 
Taxpayer appealed to this court.  
	Taxpayer does not dispute that he received wages and
unemployment compensation in 1996.  He contends, however, that
his wages are not subject to Oregon's personal income tax because
only "gain or profit" is taxable as income under the Internal
Revenue Code, and he did not gain or profit from his labor. 
Taxpayer explains the foregoing statement by arguing that,
because he exchanged his labor for compensation equal to the
value of that labor, he had no gain or profit and, therefore, no
taxable income.
	Taxpayer's argument is incorrect.  Oregon income tax law
incorporates the definition of "taxable income" stated in the
federal Internal Revenue Code.  See ORS 316.022(6) ("'Taxable
income' means the taxable income as defined in * * * the Internal
Revenue Code[.]"); ORS 316.012 ("Any term used in this chapter
has the same meaning as when used in a comparable context in the
laws of the United States relating to federal income taxes[.]"). 
When considering whether funds received by a taxpayer constitute
state taxable income, this court applies pertinent administrative
and judicial interpretation of the federal income tax law. 
Baisch v. Dept. of Rev., 316 Or 203, 209-10, 850 P2d 1109 (1993);
see also ORS 316.007 ("It is the intent of the Legislative
Assembly * * * to make the Oregon personal income tax law
identical in effect to the provisions of the federal Internal
Revenue Code relating to the measurement of taxable income[.]");
ORS 316.032(2) ("Insofar as is practicable * * *, the department
shall apply and follow the administrative and judicial
interpretations of the federal income tax law.").
	Section 61(a)(1) of the Internal Revenue Code defines "gross
income" to include "[c]ompensation for services."  26 USC §
61(a)(1) (1994).  Federal courts repeatedly have rejected, as
frivolous and without basis in the Code, the argument made here
by taxpayer that wages are not taxable income.  See, e.g.,
Sullivan v. United States, 788 F2d 813, 815 (1st Cir 1986)
("Courts uniformly have rejected as frivolous the argument[] that
money received in compensation for labor is not taxable income  
* * *."); Olson v. United States, 760 F2d 1003, 1005 (9th Cir
1985) (supporting similar rule); Connor v. C.I.R., 770 F2d 17, 20
(2d Cir 1985) (same).  We have discovered no federal
administrative or judicial authority to the contrary.  
	We conclude that taxpayer's position has no objective
reasonable basis in federal or state law.  Therefore, his
argument is frivolous, ORS 305.437(2), and groundless, see
Detrick v. Dept. of Rev., 311 Or 152, 157, 806 P2d 682 (1991)
(defining "groundless," in the context of ORS 305.437, as "devoid
of factual or legal support.")  
	The Tax Court found that taxpayer's belief in his argument
appeared to be sincere, but that, regardless of the sincerity of
his beliefs, taxpayer had wasted the time and resources of the
department and the Tax Court by asserting his frivolous position. 
Under the circumstances presented here, ORS 305.437(1) required
the Tax Court to include an award of damages to the department in
its judgment.  Taxpayer does not contest the amount of damages
that the Tax Court awarded.  Consequently, we conclude that the
Tax Court's award of damages was correct.  
	The judgment of the Oregon Tax Court is affirmed.

1. 	ORS 305.437 provides in part:
"(2) As used in this section, a taxpayer's
position is 'frivolous' if there was no objective
reasonable basis for asserting the position."