T.C. Memo. 2009-154

UNITED STATES TAX COURT

RICHARD JOHN FLORANCE, JR., Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 26283-07. Filed June 29, 2009.

Richard John Florance, Jr., pro se.

Adam Flick, for respondent.

MEMORANDUM OPINION

MORRISON, Judge: This case is before this Court on

respondent IRS’s Motion for Summary Judgment and Motion to Impose

a Penalty Under Section 6673 and petitioner Richard John
- 2 -

1Unless otherwise indicated, all section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule references are to

the Tax Court Rules of Practice and Procedure. Florance resided in the State

of Texas at the time he filed his petition and thus this case is appealable to

the Court of Appeals for the Fifth Circuit.

Florance’s cross-motions for the same.1

Background

Florance did not file an income tax return for the calendar

year 2003. On August 14, 2007, the IRS sent Florance a notice of

deficiency (Notice) for the 2003 taxable year in which it

determined a deficiency of $1,131, and additions to tax under

section 6651(a)(1) of $254.48 and under section 6651(a)(2) of

$214.89. Florance filed a petition with this Court on November

14, 2007 challenging the determinations in the Notice on the

grounds that he did not consent to becoming a taxpayer and

therefore is not subject to the income tax laws of the United

States. On January 14, 2008, the IRS filed a Motion to Dismiss

for Failure to State a Claim Upon Which Relief Can Be Granted and

to Impose a Penalty Under Section 6673. On January 23, 2008,

this Court ordered Florance to file an amended petition stating

with specificity each error the IRS is alleged to have made in

the Notice and stating facts upon which Florance based each

allegation of error; the Court also permitted Florance to file an

objection to the IRS motion. On February 7, 2008 Florance filed

three documents with this Court. The first was Florance’s

Response to Commissioner’s Motion to Dismiss, which put forward
- 3 -

2Custer v. Commissioner, T.C. Memo. 2008-266 (using the term “tax

defier”).

3In his filings with this Court, Florance challenged the authority of

Special Trial Judges to rule in his case. Special Trial Judges are authorized

to preside over motions sessions of this Court and to make any appropriate

order disposing of motions not dispositive of a case. See sec. 7443A(b)(7)

(“The chief judge may assign–- * * * any other proceeding which the chief

judge may designate, to be heard by the Special Trial Judges of the court.”);

Rule 181; Deleg. Order No. 45, 126 T.C. VI, sec. 3(a) (2006). Moreover, a

Special Trial Judge may hear and make the decision of the Court in a case,

such as this one, where the amount of the deficiency placed in dispute does

not exceed $50,000. Sec. 7443A(b)(3), (c); Rule 182; Deleg. Order No. 44, 126

T.C. V, sec. 1(c) (2006).

tax-defier2 arguments in a tone disrespectful to this Court. The

second was Florance’s Motion to Strike, in which he sought to

“strike Comm’r’s [sic] improperly joined motionS [sic] under TCR

54,” and generally challenged the assignment of his case to any

Special Trial Judge. In the third, Florance’s Declination to

Amend, Florance declined to amend his petition, arguing that he

had “satisfied all the requirements for a petition in this forum”

and once again objected to the assignment of his case to a

Special Trial Judge. The case was called from the calendar for

the motions session of this Court on March 5, 2008, before Chief

Special Trial Judge Peter J. Panuthos.3 There was no appearance

by or on behalf of Florance. Counsel for the IRS appeared and

requested that the Court deny the IRS’s own motion to dismiss

because it discovered that Florance had earned additional income

beyond that determined in the Notice. The Court agreed and

extended the time in which the IRS had to file an answer to

Florance’s petition until April 4, 2008. The IRS, in its answer
- 4 -

filed on March 26, 2008, asserted that Florance received an

additional $54,000 of nonemployee compensation that was omitted

from the Notice. The IRS therefore asserted that the total

deficiency increased to $18,026, and the additions to tax under

section 6651(a)(1) and (2) increased to $4,055.85 and $4,326.24,

respectively. Exhibit A to the answer included calculations of

the increased deficiency and additions to tax.

Florance’s bounty of motions continued unabated. In

Florance’s Motion to Strike I.R.C. Section 7443A and Florance’s

Motion to Strike TCR 182, both filed June 9, 2008 he again

challenged the authority of Special Trial Judges to rule in his

case. In Florance’s Motion for Default Judgment, filed on the

same date, he made the moot argument that the IRS did not file

its motion to dismiss timely. All of Florance’s motions up to

this point were denied by this Court. The IRS then filed a

Request for Admission of Facts on September 19, 2008 in which it

requested that Florance admit that he filed no return for the

2003 taxable year and that he earned the items of income alleged

in the Notice and the answer; Florance responded by objecting on

grounds of relevance. 

This case was called from the calendar for the trial session

of this Court on December 2, 2008 at Dallas, Texas. There was no

appearance by or on behalf of Florance. Counsel for the IRS

appeared and was heard. This case was recalled from the calendar
- 5 -

on December 3, 2008. Again there was no appearance by or on

behalf of Florance. Counsel for the IRS appeared and filed with

this Court a Motion for Summary Judgment and a Motion to Impose a

Penalty Under Section 6673. Attached to the Motion for Summary

Judgment were Exhibit A, a certified copy of an Information

Returns Processing transcript of Florance’s account for the 2003

taxable year containing summaries of his Form 1099 information

returns and Exhibit B, a certified copy of a transcript of his

account for the same year showing that he filed no tax return,

that the IRS prepared a substitute for return on his behalf, and

that he paid no estimated taxes nor had any income tax

withholding credits in 2003. This Court ordered that Florance

file with this Court, on or before January 2, 2009, a response to

both of the IRS’s motions. On January 5, 2009, Florance filed:

(1) Petitioner’s Response to Commissioner’s Motion for Summary

Judgment, (2) Petitioner’s Response to Motion for Sanctions (Sec.

6673), (3) Petitioner’s (Cross-)Motion for Summary Judgment, and

(4) Petitioner’s Motion for Sanctions (Sec. 6673). In his

response to Commissioner’s Motion for Summary Judgment and

(Cross-)Motion for Summary Judgment, he accused this Court of

criminal conduct, objected again to the authority of Special

Trial Judges, alleged that no material dispute of fact existed in

the case (entitling him to summary judgment), and objected to the

introduction into the evidentiary record of the IRS’s exhibits. 
- 6 -

He also alleged that the IRS had no standing in this Court. In

his Response to Motion for Sanctions (Sec. 6673), Florance argued

that he is not a taxpayer as the term is used in the Internal

Revenue Code and therefore is not subject to the sanctions

regimes of section 6673. In his Motion for Sanctions (Sec.

6673), Florance asserted that the IRS’s conduct was

“reprehensible” and therefore he should be awarded $250,000 in

sanctions under section 6673(a)(2).

Discussion

Florance is no stranger to this Court. In Florance v.

Commissioner, T.C. Memo. 2005-60, affd. 174 Fed. Appx. 200 (5th

Cir. 2006) and Florance v. Commissioner, T.C. Memo. 2005-61,

affd. 174 Fed. Appx. 200 (5th Cir. 2006). Florance asserted

similar tax defier arguments for the 1994 through 1997 tax years

and was sanctioned by this Court under section 6673 in the

respective amounts of $10,000 and $12,500. In this case he asks

us to consider his frivolous arguments once again.

I. Motion and Cross-Motion for Summary Judgment

The parties have cross-moved for summary judgment. Summary

judgment is intended to expedite litigation and avoid unnecessary

and expensive trials. FPL Group, Inc. & Subs. v. Commissioner,

116 T.C. 73, 74 (2001). A motion for summary judgment will be

granted if the pleadings, answers to interrogatories,

depositions, admissions, and other acceptable materials, together
- 7 -

with the affidavits, if any, show that there is no genuine issue

as to any material fact and that a decision may be rendered as a

matter of law. Rule 121(b); Elec. Arts, Inc. v. Commissioner,

118 T.C. 226, 238 (2002). A partial summary adjudication may be

made which does not dispose of all the issues in the case. Rule

121(b); Tracinda Corp. v. Commissioner, 111 T.C. 315, 323-324

(1998). The moving party has the burden of proving that no

genuine issue of material fact exists and that it is entitled to

judgment as a matter of law. Rauenhorst v. Commissioner, 119

T.C. 157, 162 (2002). 

A. Deficiency Determined in the Notice of Deficiency

Florance bears the burden of proof with respect to the

deficiency of $1,131 determined in the Notice. Rule 142(a). The

deficiency corresponds to $8,000 in nonemployee compensation, $4

of partnership losses of an ordinary character, and $6 of

interest income, as shown by the certified Information Returns

Processing transcript attached as an exhibit to the motion for

summary judgment. He did not appear at the trial session to

contest the deficiency nor did he provide any evidence in any of

his submissions to this Court to prove that he did not earn the

income the IRS alleged. Accordingly, we sustain the IRS’s

deficiency determination in the Notice.

B. Increased Deficiency

The IRS bears the burden of proof with respect to the
- 8 -

increased deficiency asserted in its answer. Rule 142(a). The

increased deficiency corresponds to $54,000 in nonemployee

compensation, as shown by the certified Information Returns

Processing transcript. This amount is includable in gross

income. See sec. 61. The IRS also provided an accurate

explanation of the calculations used to determine the additional

deficiency based on the additional income in the schedules

attached as an exhibit to the answer. We find that the IRS has

met its burden of proof with respect to the increased deficiency

by producing the certified transcript of information returns and

the calculation sheet.

C. Additions to Tax

1. Burdens of Production and Proof

Section 7491(c) provides that the IRS bears the burden of

production with respect to the liability of any individual for

any penalty or addition to tax. “The Commissioner’s burden of

production under section 7491(c) is to produce evidence that it

is appropriate to impose the relevant penalty, addition to tax,

or additional amount”. Swain v. Commissioner, 118 T.C. 358, 363

(2002); Higbee v. Commissioner, 116 T.C. 438, 446 (2001). If a

taxpayer files a petition alleging an error in the determination

of an addition to tax or penalty, the taxpayer’s challenge will

succeed unless the IRS produces evidence that the addition to tax

or penalty is appropriate. Swain v. Commissioner, supra at 364-
- 9 -

365. The IRS, however, does not have the obligation to introduce

evidence regarding reasonable cause or substantial authority. 

Higbee v. Commissioner, supra at 446. The IRS carries the burden

of proof, not merely the burden of production, with respect to

any amount of an addition to tax or penalty attributable to an

increased deficiency. Rule 142(a).

2. Section 6651(a)(1) Failure-To-File Addition to Tax

The IRS determined that Florance was liable for a $4,055.85

addition to tax under section 6651(a)(1) for 2003. Section

6651(a)(1) imposes an addition to tax for failure to file a

return on the date prescribed (determined with regard to any

extension of time for filing), unless such failure is due to

reasonable cause and not due to willful neglect. The late filing

addition to tax is 5 percent for each month such failure

continues, not to exceed 25 percent in the aggregate. Sec.

6651(a)(1). The 5 percent addition to tax is reduced by the

amount of the addition under to tax section 6651(a)(2) for

failure to pay, that is, 0.5 percent for each month in which both

additions to tax apply. Sec. 6651(c)(1). Therefore, the

effective late filing rate for the maximum 5-month period in

which both additions to tax apply is 4.5 percent per month. Sec.

6651(a)(1), (c)(1). 

The IRS submitted a certified transcript of Florance’s

account for the 2003 taxable year. The transcript states that he
- 10 -

did not file a return nor pay any tax for 2003. His failure to

file was not due to reasonable cause. Accordingly, the IRS has

met its burdens of production and proof for the late filing

addition to tax for 2003. Florance is therefore liable for the

section 6651(a)(1) addition to tax for 2003.

3. Section 6651(a)(2) Failure-To-Pay Addition to Tax

The IRS determined that Florance was liable for a $4,326.24

addition to tax under section 6651(a)(2) for 2003. Section

6651(a)(2) imposes an addition to tax for failure to pay tax

shown on a return on or before the date prescribed for payment

(determined with regard to any extension of time for payment),

unless such failure is due to reasonable cause and not due to

willful neglect. Sec. 301.6651-1(a)(2), Proced. & Admin. Regs. 

The late payment addition to tax is 0.5 percent for each month

such failure continues, not to exceed 25 percent in the

aggregate. Sec. 6651(a)(2). When a taxpayer does not file a

return, the IRS may create a substitute for return meeting the

requirements of section 6020(b). Such a return is treated as the

tax return filed by the taxpayer for purposes of the section

6651(a)(2) addition to tax. Secs. 6020(b), 6651(g)(2). 

The IRS submitted a certified transcript of Florance’s

account for the 2003 taxable year. The transcript states that

Florance did not pay any estimated taxes nor have any income tax

withheld for 2003; he did not file a return accompanied by any
- 11 -

payment. The IRS prepared a substitute for return on his behalf

for 2003 that meets the requirements of section 6020(b). The

calculations in Schedule 4 of Exhibit A to the answer reflect the

amount of the addition to tax through the date the schedule was

produced, as noted on the bottom of the schedule itself.

Florance’s failure to pay timely was not due to reasonable cause.

Consequently, the IRS has met its burdens of production and proof

for the late payment addition to tax for 2003. Florance is

therefore liable for the section 6651(a)(2) addition to tax for

2003.

II. Sanctions Under Section 6673

Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty not to exceed

$25,000 if the taxpayer took frivolous or groundless positions in

the proceedings or instituted the proceedings primarily for

delay. A position maintained by the taxpayer is frivolous where

it is “contrary to established law and unsupported by a reasoned,

colorable argument for change in the law.” Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); see also Hansen v.

Commissioner, 820 F.2d 1464, 1470 (9th Cir. 1987) (section 6673

penalty upheld because taxpayer should have known the claim was

frivolous).

Florance filed numerous frivolous motions challenging the

authority of this Court and more generally the internal revenue
- 12 -

laws of the United States. The motions also contained

disrespectful language directed at the Court’s Judges and

employees. We will not painstakingly address petitioner’s

assertions “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).

We conclude Florance’s position was frivolous and groundless

and that he instituted and maintained these proceedings primarily

for delay. Accordingly, pursuant to section 6673(a)(1), and in

view of Florance’s repetitive abuse of the resources of this

Court both at these proceedings and in the past, we hold Florance

is liable for a $15,000 penalty. See Stearman v. Commissioner,

436 F.3d 533, 540 (5th Cir. 2006), affg. T.C. Memo. 2005-39.

 Finally, we address Florance’s Motion for Sanctions (Sec.

6673). Section 6673(a)(2) authorizes this Court to require

counsel or the United States, in the case of counsel for the IRS,

to pay excess costs, expenses, and attorneys’ fees if counsel has

multiplied the proceedings in any case unreasonably and

vexatiously. Florance’s motion is without merit. Counsel for

the IRS has filed appropriate motions before this Court and

otherwise conducted himself in a professional manner.

After carefully considering the parties’ submissions and the

issues presented, we conclude that we can decide this case in
- 13 -

full for respondent as a matter of law upon the existing record

as no material facts are in dispute. 

In reaching our holding, we have considered all arguments

made, and to the extent not mentioned, we conclude that they are

moot, irrelevant, or without merit.

To reflect the foregoing, 

An appropriate order and

decision will be entered.