TAX COURT OPINION

Case: James M. Ramalho
Docket Number: 18987-14
Judge: Gustafson
Opinion Type: bench
Filed: 07/07/2015
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES M. RAMALHO, Petitioner, v. ) ) ) SYM ) Docket No. 18058-14 L, 18987-14. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to the opinion of the Court as set forth in the transcript of the proceedings at Boston, Massachusetts, on June 11, 2015, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above cases before the undersigned judge at Boston, Massachusetts, containing his oral fimdings of fact and opinion rendered at the trial session at which these cases was heard. In accordance with the oral findings of fact and opinion, decisions will be entered for respondent in docket No. 18058-14L, sustaining the determination by IRS Appeals and imposing a penalty of $5,000 under section 6673(a), and in docket No. 18987-14, sustaining the deficiency determined by the IRS, and imposing an additional penalty of $5,000 under section 6673(a). (Signed) David Gustafson Judge Dated: Washington, D.C. July 7, 2015 SERVED Jul 09 2015 Capital Reporting Company 3 1 2 3 4 5 6 Bench Opinion by Judge David Gustafson June 11, 2015 James M. Ramalho v. Commissioner Docket Nos. 18058-14L and 18987-14 THE COURT: The Court has decided to render the following as its oral Findings of Fact and 7 Opinion in these cases. This bench opinion is made 8 9 10 11 12 13 14 15 16 17 18 19 20 pursuant to the authority granted by Section 7459(b) of the Internal Revenue Code, and Tax Court Rule 152; and it shall not be relied on as precedent in any other case. By a notice of determination issued July 1, 2014, the IRS Office of Appeals sustained the filing of a notice of federal tax lien against Mr. Ramalho for the collection of unpaid income tax for the years 2005, 2007, 2008, and 2009, prompting Mr. Ramalho to timely mail the petition in Docket No. 18058-14L on July 31, 2014. By a notice of deficiency issued May 12, 2014, the Internal Revenue Service (IRS) determined a deficiency in the federal income tax of 21 Petitioner James M. Ramalho for the year 2011, 22 23 24 25 prompting Mr. Ramalho to timely mail the petition in Docket No. 18987-14 on August 11, 2014. By orders in both cases issued May 6, 2015, we granted summary judgment in favor of respondent and ordered 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 petitioner to appear and to show cause why he should not be held liable for a penalty under Section 6673(a). The hearing in these cases was held in Boston, 5 Massachusetts, on June 8, 2015. Mr. Ramalho 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 represented himself, and respondent was represented by Sheida Lahabi and Nina P. Ching. BACKGROUND Previous cases On February 28, 2011, Mr. Ramalho filed a fr.ivolous petition in this Court, which was entered as Docket No. 4763-11. By our order of June 1, 2011, we dismissed the petition for failure to state a claim, and we warned Mr. Ramalho: "I.R.C. Section 6673(a)(1) authorizes the Tax Court to require a taxpayer to pay the United States a penalty not in excess of $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay, or that the taxpayer's position in such proceeding is frivolous or groundless. We take this opportunity to admonish petitioner that the Court will consider imposing such a penalty should petitioner continue to advance arguments that are frivolous or groundless, or that are interposed primarily for delay. " Mr. Ramalho 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 filed a motion to vacate decision that repeated his frivolous arguments, and the motion was summarily denied on June 28, 2011. On May 10, 2011, Mr. Ramalho filed another frivolous petition in this Court, which was entered as Docket No. 10927-11. The IRS moved to dismiss the case for failure to state a claim; and on July 22, 2011--notwithstanding our recent orders in Docket No. 4763-11--Mr. Ramalho filed a response that was frivolous. In our order of August 2, 2011, we held "that petitioner is liable for a penalty under Section 6673 in the amount of $5,000.00." Mr. Ramalho appealed, and the United States Court of Appeals for the First Circuit held: "After careful consideration of the parties' appellate contentions and the record, we conclude that the Tax Court neither erred nor abused its discretion. *** Furthermore, because this appeal was objectively frivolous, we grant the government's unopposed motion for sanctions and award the sum of $2,000. Fed. R. App. P. 38." Ramalho v. Shulman, No. 11-2164 (1st 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Cir. May 4 2012). 23 Current cases 24 25 On July 31, 2014, Mr. Ramalho filed a frivolous petition that was entered as Docket No. 18058-14L; 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 and on August 11, 2014, he filed another frivolous petition that was entered as Docket No. 18987-14. In each case, the Government filed a motion for summary judgment and for imposition of a penalty under Section 6673(a) for maintaining frivolous litigation. We ordered Mr. Ramalho to respond to the motions, but he did not do so. By our orders of May 6, 2015, we granted the IRS's motion for summary on the merits of the cases, 10 and in the order in each case we stated: "The IRS's 11 motion also asks us to impose .a penalty under Section 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6673(a). The IRS makes a showing that Mr. Ramalho has made frivolous contentions, that he was previously warned about the Court's discretion to impose a penalty on a litigant who makes such contentions, and that previous penalties imposed against Mr. Ramalho have not deterred him. Before deciding whether to impose a penalty and in what amount, we would like to hear from Mr. Ramalho. It is therefore ORDERED that the Court will hear arguments on the IRS's motion for imposition of a penalty under Section 6673(a) during or soon after the calendar call in Boston beginning at 10:00 on June 8, 2015, at which Mr. Ramalho shall appear and shall show cause why penalties should not be imposed 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 against him." Mr. Ramalho appeared for the hearing on June 8, 2015. The Court began by reminding Mr. Ramalho that the purpose of the hearing was not to revisit the 5 merits of the case but only the penalty, and that Mr. 6 7 8 9 10 11 12 13 14 Ramalho should explain reasons why, even though his positions had been frivolous, the Court should not enter a penalty against him. The Court particularly warned him that reasserting his frivolous positions would not help him but might aggravate his liability for penalty. Despite that warning, Mr. Ramalho re-argued his frivolous positions. The Court interrupted him to point out that he was disregarding the Court's 15 warning, but he persisted. The Court finally 16 17 18 19 20 21 22 23 24 instructed him to stop speaking unless he had something to say that might mitigate his liability for penalty, and he had nothing to say. The Court asked him whether he had learned his lesson and would stop filing frivolous lawsuits, and he replied that he could go so far as to say that he would not file any more suits in the Tax Court, evidently leaving open the prospect of his making frivolous arguments in tax litigation elsewhere (such as Federal District 25 Court or the Court of Federal Claims). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company DISCUSSION 8 Section 6673(a) authorizes the Tax Court to impose a penalty not in excess of $25,000 whenever it appears that a taxpayer has instituted or maintained proceedings primarily for delay or that "the taxpayer's position in such proceeding is frivolous or groundless". The same reasons that we do not dignify frivolous arguments by refuting them in lengthy opinions, see Wnuck v. Commissioner, 136 T.C. 498, 501-513 (2011), militate against lengthy discussions penalizing those arguments. See Leyshon v. Commissioner, T.C. Memo. 2015-104, at *29-*30. In determining whether to impose a penalty and in what amount, we consider any relevant facts and circumstances, Leyshon at *24, and these are the facts and circumstances that affect our decision here: Mr. Ramalho has filed two previous cases in the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Court in which he has advanced frivolous positions. 20 21 22 In both cases, he has been warned--and in the second case he was held liable for a penalty of $5,000 and an additional $2,000 on appeal--but the prior 23 warnings and $7,000 penalties did not deter him from 24 25 filing frivolous petitions. However, after filing his petitions in these cases, he took no further 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 action, even disregarding the Court's order to respond to the IRS's motion for summary judgment. It thus appears that he filed the cases not really intending to prosecute them, but only to let the clock run, thereby deferring the assessment of liabilities of about $14,000 in Docket No. 18987-14 and deferring collection of more than $200,000 of liabilities in Docket No. 18058-14L. He put the IRS to the trouble of filing an answer and motion for summary judgment in each case, and put the Court to the trouble of acting on those motions--effort well spent where a good-faith dispute is at issue, but a waste of time and effort in cases like these. He claims he will not further burden the Tax Court in the future with his frivolous arguments but evidently reserves the right to burden other courts. We conclude that penalties totaling $10,000 are appropriate in these cases (i.e., $5,000 in each case), and we will exercise our discretion to impose such penalties. CONCLUSION Decisions will be entered in favor of respondent--in No. 18058-14L, sustaining the determination by IRS Appeals and imposing a penalty of $5,000 under Section 6673(a), and in No. 18987-14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 sustaining the deficiency determined by the IRS, and imposing an additional penalty of $5,000 under Section 6673(a). This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 10:10 a.m., above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com