T.C. Memo. 2010-137

UNITED STATES TAX COURT

CARL COOK, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17963-08. Filed June 22, 2010.

Carl Cook, pro se.

Randall L. Eager, for respondent.

MEMORANDUM OPINION

COHEN, Judge: Respondent determined deficiencies and

additions to tax as follows:
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 Additions to Tax 

Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654

2003 $77,371 $17,408.48 1$18,955.90 --

2004 13,731 3,089.48 1 $393.49

2005 15,206 3,421.35 1 609.96

2006 15,064 3,389.40 1 712.90

 

1The addition to tax will continue to accrue from the due

date of the return at a rate of 0.5 percent for each month, or

fraction thereof, of nonpayment, not exceeding 25 percent.

The issue for decision is whether petitioner has shown any error

with respect to the amounts determined in the statutory notices. 

As discussed below, none of the facts have been stipulated, and

the evidence is too sparse for meaningful findings of fact. 

Unless otherwise indicated, all section references are to the

Internal Revenue Code in effect for the years in issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

Background

Petitioner resided in Detroit, Michigan, at the time he

filed his petition. During the years in issue, petitioner was

employed as a fireman for the City of Detroit.

Petitioner failed to file Federal income tax returns for the

years in issue. After receiving information returns reporting

income paid to petitioner, the Internal Revenue Service (IRS)

prepared a substitute for return under section 6020(b) for each

year. On May 8, 2008, the IRS sent petitioner two notices of

deficiency, one notice for 2003, 2004, and 2005 and a separate
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notice for 2006. The notices determined that petitioner received

wages of $66,263 in 2003, $75,273 in 2004, $81,927 in 2005, and

$82,483 in 2006, and that in 2003 petitioner received a

distribution of $156,747 from an individual retirement account

(IRA) administered by John Hancock Life Insurance Co. In

addition, the notices determined that petitioner had unreported

income from a State income tax refund in 2003 and interest income

in 2003, 2004, and 2005. The notices allowed petitioner the

standard deductions for single individuals of $4,750 for 2003,

$4,850 for 2004, $5,000 for 2005, and $5,150 for 2006.

The petition filed in this case reflected as its source

“http://www.patriotnetwork.info/Tax Court petition new.htm” and

contained a hodgepodge of frivolous, irrelevant, and spurious

arguments common to petitions filed by followers of Robert

Clarkson (Clarkson) and his Patriot Network, an organization that

promotes tax avoidance and frustration and delay of collection

efforts by the IRS. See, e.g., Rice v. Commissioner, T.C. Memo.

2009-169; Marett v. Commissioner, T.C. Memo. 2009-14, affd. 345

Fed. Appx. 869 (4th Cir. 2009). The form calls for a general

denial of tax liability; a claim of various deductions and

exemptions and filing status other than allowed in the statutory

notices; an assertion that the figures used “stem from illegal

immigrants” using the taxpayer’s Social Security number; an

allegation that penalties should be waived because “the Internal
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Revenue Code is so complex and confusing”; a claim for credit

“for the illegal telephone excise tax for each year”; a claim of

deductible expenses of tax preparation and advice on filing (even

though no returns were filed); and a claimed lack of records

justifying reconstruction and estimates, with a citation of and

quotation from Cohen v. Commissioner, 266 F.2d 5 (9th Cir. 1959)

[remanding T.C. Memo. 1957-172].

Although he resided in Detroit, petitioner requested

Columbia, South Carolina, as the place of trial, a common

practice among followers of Clarkson. By notice served September

29, 2009, this case was set for trial in Columbia on March 1,

2010. Included with the notice setting case for trial was the

Court’s standing pretrial order that, among other things,

required the parties to stipulate to matters in accordance with

Rule 91 and to exchange before trial documents to be used at

trial. 

Petitioner refused to enter into any stipulation with

respect to the facts of this case. He refused to meet with

respondent’s counsel or to turn over any records of his alleged

deductions. Instead, he submitted frivolous and untimely motions

and a pretrial memorandum repeating allegations from the petition

and adding additional ones, such as an unexplained reference to

the Fifth Amendment privilege against self-incrimination. When

the case was called for trial, petitioner filed a motion in
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limine, requesting that respondent be denied the opportunity to

admit evidence not made available to petitioner before January

15, 2010, one of the many errors made by petitioner in

interpreting deadlines for discovery under the Tax Court Rules

and for the exchange of documents under the standing pretrial

order. (This is apparently another misguided tactic promoted by

petitioner’s source of documents. See Sullivan v. Commissioner,

T.C. Memo. 2010-138, filed this date.) Among his primary

contentions are that respondent is relying on hearsay and that

the third-party reports of his income relied on by respondent

have not been “authenticated or certified”.

Discussion

Petitioner testified that he failed to file tax returns for

the years in issue because he thought that his deductions for

business expenses and charitable contributions would result in no

tax liabilities. When describing his alleged deductions, he

acknowledged that he was employed by the City of Detroit as a

fireman, and he claimed to have incurred expenses for meals,

special clothing, travel, a vehicle, and a cellular telephone and

to have made charitable contributions and incurred medical

expenses. He denied, however, receiving Forms W-2, Wage and Tax

Statement, and he denied having any recollection of his earnings

during the years in issue. He also denied having any

recollection of receiving an IRA distribution in 2003.
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A well-established principle in tax litigation is “that the

Commissioner’s determination of tax liability is entitled to a

presumption of correctness and that the burden is on the taxpayer

to prove that the determination is erroneous.” Boles Trucking,

Inc. v. United States, 77 F.3d 236, 239 (8th Cir. 1996) (citing

Helvering v. Taylor, 293 U.S. 507, 515 (1935), and Day v.

Commissioner, 975 F.2d 534, 537 (8th Cir. 1992), affg. in part

and revg. in part T.C. Memo. 1991-140). 

Two statutory provisions modifying that well-established

principle are relevant in the context of this case. Section

6201(d) provides that in any court proceeding, if a taxpayer

asserts a reasonable dispute with respect to any item of income

reported on an information return and has fully cooperated, the

Commissioner shall have the burden of producing reasonable and

probative information concerning the deficiency in addition to

the information return.

Section 7491(a) provides in part:

SEC. 7491. BURDEN OF PROOF.

(a) Burden Shifts Where Taxpayer Produces Credible

Evidence.--

(1) General rule.--If, in any court

proceeding, a taxpayer introduces credible

evidence with respect to any factual issue

relevant to ascertaining the liability of the

taxpayer for any tax imposed by subtitle A or B,

the Secretary shall have the burden of proof with

respect to such issue.
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(2) Limitations.--Paragraph (1) shall apply

with respect to an issue only if--

(A) the taxpayer has complied with the

requirements under this title to substantiate

any item;

(B) the taxpayer has maintained all

records required under this title and has

cooperated with reasonable requests by the

Secretary for witnesses, information,

documents, meetings, and interviews * * *

Neither of the above provisions alters petitioner’s burden

in this case. The records of the IRS received in evidence

pursuant to rules 803(8) and 902(4) of the Federal Rules of

Evidence reflect the information returns on which the notices of

deficiency were based. The evidence at trial included records of

John Hancock Life Insurance Co. showing the distribution to

petitioner of $156,747.19 in 2003 and a copy of a Form 1099-R,

Distributions From Pensions, Annutities, Retirement or ProfitSharing Plans, IRAs, Insurance Contracts, etc., used to report

the distribution. These records were received in accordance with

rules 803(6) and 902(11) of the Federal Rules of Evidence.

Petitioner admitted that he received wages from the City of

Detroit. He did not identify any error in amounts respondent

determined, choosing instead to deny any recollection of the

amounts received or his rates of pay during the years in issue. 

He also denied recollection of a distribution from an IRA in 2003

or receipt of any Forms W-2 or 1099 showing the income reported

by the payors. His denials are not credible, and he has not
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asserted a “reasonable dispute” within the meaning of section

6201(d) with respect to the items of income included in the

notices of deficiency.

Petitioner’s implausible denials, along with his pursuit of

frivolous arguments, undermine the reliability of his testimony.

That testimony is not credible for purposes of section

7491(a)(1), and he did not substantiate any item, maintain any

records, or cooperate with reasonable requests for information

for purposes of section 7491(a)(2). The burden of proof did not

shift to respondent in this case. Unlike the circumstances in

Cohen v. Commissioner, 266 F.2d 5 (9th Cir. 1959) relied on by

petitioner, this record gives us no reason to doubt the validity

of the determinations in the notices of deficiency.

Even at face value, petitioner’s claims of deductible

business expenses and charitable contributions were less, in

total, than the standard deduction that he was allowed for each

year. He has not satisfied the requirements for deductions for

special clothing. See Yeomans v. Commissioner, 30 T.C. 757, 767-

769 (1958); Alami El Moujahid v. Commissioner, T.C. Memo. 2009-

42. To be entitled to employee business expense deductions for

meals, cellular phone usage, and vehicle expenses, he would have

to substantiate the amount, time, place, and business purpose of

each item in accordance with sections 274(d) and 280F(d)(1) and

(4). He has not produced any of the required substantiation, and
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no amounts in excess of the standard deductions are allowable. 

He has not identified any entitlement to exemptions or credits or

shown that his filing status is other than single for the years

in issue.

Under section 7491(c), respondent has the burden of

production with respect to the additions to tax. Respondent

produced transcripts reflecting petitioner’s failure to file

returns and certificates of the preparation of substitutes for

returns under section 6020(b), and petitioner acknowledged his

failure to file. He has not shown reasonable cause for that

failure. His claim that he believed that he did not have tax

liabilities is not credible, and, in any event, the obligation to

file returns is based on receipt of gross income, such as wages,

not taxable income. See sec. 6012(a). Respondent has satisfied

the burden of production with respect to the additions to tax

under section 6651(a)(1) and (2). See, e.g., Higbee v.

Commissioner, 116 T.C. 438, 447-448 (2001).

 The IRS records received under rules 803(8) and 902(4) of

the Federal Rules of Evidence, as described above, reflect the

absence of any withholding or other payments of taxes with

respect to the income attributed to petitioner for 2003, 2004,

2005, and 2006. Because he failed to file returns for the years

in issue, estimated payments of 90 percent of his taxes due for

2004, 2005, and 2006 were required and, because they were not
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made, additions to tax apply for those years. Sec. 6654(a),

(d)(1)(B). Respondent’s burden of production has been met, and

petitioner has not asserted, and the record does not suggest,

that any exception to this addition to tax is applicable. See

Grosshandler v. Commissioner, 75 T.C. 1, 20-21 (1980).

Respondent’s counsel requested at trial that a penalty under

section 6673 be imposed. The Court can only speculate that,

faced with a substantial tax liability in 2003 because of high

earnings and a large IRA distribution, petitioner began a course

of noncompliance and tax defiance. He did not seek competent tax

advice but adopted the tactics of others who publish or print

materials from the Internet, perpetuate specious legal arguments

suggested by those materials but unrelated to the facts of the

cases, and then plead for special treatment because of their pro

se status. Although we are not now imposing that penalty,

petitioner is cautioned that a penalty in an amount not in excess

of $25,000 may be awarded against him in the future if he

institutes or maintains proceedings in this Court primarily for

delay, takes positions that are frivolous or groundless, or

unreasonably fails to pursue available administrative remedies. 

See sec. 6673(a)(1). 

By petitioner’s reference to the Fifth Amendment privilege

against self-incrimination, we infer that he is also aware of

substantial civil and criminal penalties that may be imposed for
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noncompliance with his tax obligations. See secs. 6651(f)

(fraudulent failure to file penalty), 6663 (fraud penalty), 7201

(felony tax evasion), 7203 (misdemeanor willful failure to file). 

He and others similarly situated should keep these possibilities

in mind when they engage in the misguided programs reflected in

the record here.

For the foregoing reasons,

 Decision will be entered

for respondent.