T.C. Memo. 1999-35

UNITED STATES TAX COURT

DAVID C. SYLVESTER, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10777-97. Filed February 4, 1999.

David C. Sylvester, pro se.

Jeremy L. McPherson, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

 GOLDBERG, Special Trial Judge: This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182. 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.
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1 Respondent has conceded that petitioner is not liable for

the addition to tax under sec. 6651 for failure to file a Federal

income tax return for the 1994 tax year.

Respondent determined a deficiency in petitioner's 1994

Federal income tax in the amount of $2,644 and additions to tax

pursuant to sections 6651 and 6654 in the amounts of $661 and

$136.26, respectively.

After a concession by respondent,1 the issues for decision

are: (1) Whether petitioner is exempt from Federal income

taxation because of his status as a member of the Seneca Nation;

(2) whether $50 of income is includable in the 1994 tax year if

petitioner is not exempt from Federal income taxation; (3)

whether petitioner is entitled to claim head-of-household filing

status for 1994; (4) whether petitioner is entitled to claim a

dependency exemption deduction under section 151 for the 1994 tax

year with respect to his son; and (5) whether petitioner is

liable for an addition to tax pursuant to section 6654 for

failure to pay estimated income tax for the 1994 tax year.

Some of the facts have been stipulated and are so found. 

The stipulation of facts and the attached exhibits are

incorporated herein by this reference. At the time that the

petition was filed, petitioner resided in Sacramento, California.

FINDINGS OF FACT

Petitioner is a member of the Seneca Nation. The Seneca

Nation is a member of the Iroquois Confederacy of the Six
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Nations. Other members include the Mohawk, Oneida, Onondaga,

Cayuga, and Tuscarora nations. 

In 1994, petitioner was employed by Schindler Elevator

Corporation (Schindler) and was, apparently later in 1994, also

employed by Dover Elevator Company (Dover).

Schindler paid petitioner $16,005 in wages for the 1994 tax

year and withheld FICA taxes from petitioner's wages, but did not

withhold any Federal income tax. Dover paid petitioner $440 in

wages in 1994. Dover withheld FICA and $27 of Federal income

tax. The State of California also paid petitioner unemployment

compensation in the amount of $7,360 in 1994.

In 1996, petitioner was contacted by the Internal Revenue

Service (IRS) because he had failed to file a 1994 Federal income

tax return. In response to the IRS letter, petitioner mailed a

copy of a 4-page affidavit to the IRS which he had signed on

April 6, 1988. 

In the affidavit, petitioner contended that he was exempt

from paying Federal income tax because he was a member of the

Seneca Nation. Petitioner has apparently mailed a copy of this

affidavit to the IRS for every tax year from 1988 to 1994. 

Petitioner has not filed a Federal income tax return since 1988.

On September 16, 1996, the IRS mailed a letter to petitioner

which stated that based on (unspecified) information provided by

petitioner, petitioner was not legally required to file a Federal
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2 Petitioner's oral motion to withdraw his Tax Court petition

was made at the call of the calendar on Mar. 2, 1998, and was

denied. 

income tax return for the 1994 tax year. The IRS mailed similar

letters to petitioner for the 1989-93 tax years. 

In a notice of deficiency dated April 18, 1997, respondent

determined a deficiency in petitioner's 1994 Federal income tax

in the amount of $2,644. The deficiency is based on petitioner's

failure to report wage income of $16,445, interest income of $50,

and unemployment income of $7,360. Respondent calculated the

deficiency based on single-filing status, one personal exemption

allowance, and the standard deduction.

In January 1998, after the filing of the petition in this

case, petitioner filed his 1994 Federal income tax return with

the IRS in Ogden, Utah. Petitioner sought to withdraw his Tax

Court petition and litigate the issue of the taxability of his

income in a United States District Court.2

OPINION

1. Federal Income Tax Exemption

Petitioner contends that he is exempt from Federal income

tax based on language contained in the Treaty of the Six
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3 The treaty is known as the Treaty of Canadaigua or the

Treaty of the Six Nations, Nov. 11, 1794, 7 Stat. 44. 

4 The treaty is known as the Treaty of Peace and Amity or the

Treaty of Ghent, Dec. 24, 1814, 8 Stat. 218, T.S. 109.

5 The treaty is known as the Treaty of Amity, Commerce, and

Navigation or the Jay Treaty, Nov. 19, 1794, 8 Stat. 116, T.S.

105.

Nations,3 the Treaty of Ghent,4 and the Jay Treaty.5 Petitioner

further contends that he is exempt from taxation under the

provisions of article 1, section 2, clause 3 of the U.S.

Constitution, and section 2 of the 14th Amendment to the

Constitution. 

In further support of his claim of a Federal income tax

exemption, petitioner also apparently contends that he was

specifically hired by his employer because he is a member of the

Seneca Nation and that this is an additional reason for exempting

his wages from the Federal income tax. Petitioner testified that

he was hired to work "high rise" specifically because he was an

Indian: "[O]ne of the reasons why [I] got the job was the Indians

back in New York, all worked high rise." 

Petitioner contends that "The Federal Government and

Congress intended to exempt Indians from taxation by a guarantee

of total [tax] exemption through several treaties made with them

et al."

In Lazore v. Commissioner, 11 F.3d 1180 (3d Cir. 1993),

affg. in part and revg. in part on another ground T.C. Memo.
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6 Specifically, U.S. Const. art. I, sec. 2, cl. 3, and U.S.

Const. amend. XIV, sec. 2. These are the same provisions on

which petitioner relies.

7 It should also be noted that the taxpayer in Nephew v.

Commissioner, T.C. Memo. 1989-32, submitted essentially the same

affidavit as petitioner.

1992-404, the taxpayer, a member of the Mohawk Nation, contended

that members of the Iroquois Confederacy of the Six Nations were

exempt from Federal income taxation on the basis of the same

legal sources petitioner now relies on: The Treaty of the Six

Nations, the Jay Treaty, the Treaty of Ghent, and the

Constitution.6

The United States Court of Appeals for the Third Circuit

held that neither the treaties nor the cited provisions of the

Constitution created a Federal income tax exemption for members

of the Iroquois Confederacy of the Six Nations. 

This Court has also specifically held that members of the

Seneca Nation were not exempt from Federal income taxes based on

the same legal sources relied on by petitioner.7 Nephew v.

Commissioner, T.C. Memo. 1989-32. 

Existing case law is clear and specific. We find that

petitioner is not exempt from taxation because of his status as a

member of the Seneca Nation. Additionally, petitioner's apparent

contention that his income is somehow attributable to his status

as a member of the Seneca Nation is vague and unsupported by the

record, and we find that none of petitioner's income was derived
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8 This income was characterized as bond interest by petitioner

and as "proceeds from broker transactions" by respondent.

directly or indirectly from the use of Indian land, or from

services performed on Indian land, or related in any way to

petitioner's status as a member of the Seneca Nation. Respondent

is sustained on this issue. 

We hold that petitioner is not exempt from Federal income

taxes either because of his status as a member of the Seneca

Nation, or because of the source of his income in this case. 

Furthermore, petitioner was required to file an income tax return

for 1994 because he meets the requirements of section 6012. 

2. Bond Interest Income

Petitioner does not question the inclusion in gross income

of wages and unemployment compensation if he is found to be

subject to the Federal income tax. However, petitioner contests

the inclusion of $50 of bond interest income8 for the 1994 tax

year. 

Respondent determined that petitioner received $50 in

taxable proceeds in 1994 from A.G. Edwards & Sons, Inc. (A.G.

Edwards). Respondent based his determination on a Form 1099-B

received from A.G. Edwards. At trial, petitioner admitted that

he received $50 of bond interest, but argued that the amount is
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9 Petitioner included the $50 in the $16,495 amount reported

on line 7 as Wages, salaries, tips, etc., on his 1994 income tax

return. 

not properly includable in the 1994 tax year because he did not

purchase any "stocks or bonds" until 1997.9

In this case, petitioner does not contest the amount of

income received from bond interest. Petitioner's sole contention

is that the interest income was not includable in income for the

1994 tax year because he "thinks" that he did not purchase or own

any stocks or bonds until 1997. Petitioner offered to provide

documentation of his contention to this Court, but failed to do

so. 

Upon the basis of the record, we find that petitioner

received $50 in gross income from A.G. Edwards for the 1994 tax

year. Respondent is sustained on this issue.

3. Head-of-Household Status

Petitioner contends that his correct filing status is head

of household. 

Petitioner testified that his 13-year-old son lived with him

for the entire taxable year, and both parties have stipulated

that petitioner was unmarried at all times during 1994.

Section 2(b) defines a head of household, in pertinent part,

as an individual who is not married as of the end of the tax year

and who maintains as his home a household which constitutes for

more than one-half of such taxable year the principal place of

abode of an unmarried son as a member of that household.
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Upon the basis of the record, we find that petitioner

satisfied the head of household filing requirements of section

2(b). We therefore hold that petitioner is entitled to file as

head of household for the 1994 tax year.

4. Dependency Exemption Deductions

Petitioner claimed a dependency exemption deduction on his

1994 Federal income tax return.

Deductions are a matter of legislative grace, and the

taxpayer bears the burden of proving that he is entitled to any

deductions claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79,

84 (1992). 

Section 151 allows a taxpayer to deduct an exemption amount

for each dependent as defined in section 152. The term

"dependent" includes a taxpayer's son over half of whose support

for the calendar year is received from the taxpayer. Sec.

152(a)(1). 

Petitioner testified that his son lived with him for the

entire 1994 tax year, and it is clear from the record that

petitioner met the support requirement of section 152 by

providing over half of his son's support for the 1994 tax year. 

We find that petitioner satisfied the requirements of

section 151, and, therefore, hold that petitioner is entitled to

a dependency exemption deduction for his son for the 1994 tax

year.
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5. Addition to Tax

Section 6654(a) imposes an addition to tax where prepayments

of tax, either through withholding or estimated quarterly tax

payments during the year, do not equal the percentage of total

liability required under the statute. However, the addition to

tax is not imposed if the taxpayer can show that one of several

statutory exceptions applies. Sec. 6654(e).

Petitioner is a cash-method taxpayer whose tax year is the

12-month calender year. It is undisputed that he did not have

any Federal income tax liability for the 1993 tax year. 

Additionally, petitioner is a United States citizen. 

Section 6654(e)(2) states that no addition to tax will be

imposed for any taxable year if: (A) the preceding taxable year

was a taxable year of 12 months; (B) the taxpayer did not have

any liability for tax for the preceding taxable year; and (C) the

individual was a citizen or resident of the United States

throughout the preceding taxable year.

Upon the basis of the record, we find that petitioner meets

the requirements of section 6654(e)(2) and is therefore not

liable for an addition to tax under section 6654(a) for the 1994

tax year. 

To reflect the foregoing,

Decision will be entered

under Rule 155.