TAX COURT OPINION

Case: David R. Mills
Docket Number: 20500-11
Judge: Carluzzo
Opinion Type: bench
Filed: 06/10/2013
Pages: 7

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 DAVID R. MILLS, ) Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) Docket No. 20500-11 ) ) ) ) ORDER Pursuant to the determination of the Court as set forth in its bench opinion rendered on May 23, 2013, 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 case before Special Trial Judge Lewis R. Carluzzo at Los Angeles, California, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. It is further ORDERED that in accordance with respondent's declaration, filed May 23, 2013, petitioner, on or before June 28, 2013, tender to respondent's counsel $755 for costs incurred by respondent on account of petitioner's failure to engage in the stipulation process required pursuant to Rule 91 of the Tax Court Rules of Practice and Procedure. It is further ORDERED that on or before July 15, 2013, respondent report in writing to the Court as to whether such costs have been paid. In accordance with the oral findings of fact and opinion, decision will be entered for respondent with respect to the deficiency and for petitioner with respect to the section 6662(a) accuracy-related penalty; and the decision will also show that petitioner is liable to the United States for a $5,000 section 6673 penalty. Dated: Washington, D.C. June 10, 2013 (Signed) Lewis R. Carluzzo Special Trial Judge SERVED JUN 1 1 2013 Capital Reporting Company 3 1 Bench Opinion by Special Trial Judge Lewis R. 2 Carluzzo 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 May 23, 2013 David R. Mills v. Commissioner Docket No. 20500-11 THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion (bench opinion). Unless otherwise noted, section references made in this bench opinion are to the Internal Revenue Code 1986, as amended, in effect for the relevant period. And Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redetermination of the deficiency has been assigned in accordance with section 7443A(b) (3) and Rule 182. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. Except as provided in Rule 152(c), this Bench Opinion shall not be relied upon as precedent. David R. Mills is self-represented. Ronald S. Chun appeared on behalf of Respondent. In a notice of deficiency dated June 1, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 2011 (notice), respondent determined a deficiency in, and a section 6662(a) penalty with respect to petitioner's 2009 Federal income tax. The issues for decision are:. (1) whether respondent erred with respect to any of the adjustments to income shown in the notice; and (2) whether the positions taken and 7 maintained by petitioner in this proceeding subject 8 9 10 11 12 13 14 15 16 17 18 19 20 him to the imposition of a section 6673 penalty. Some of the facts have been deemed admitted for purposes of this case pursuant to Rule 91(f), and those facts are so found. At the time the petition was filed petitioner lived in California. During 2009 Petitioner had at least three sources of income: (1) he was employed as a car salesman and was compensated as such pursuant to his contracts of employment with his employer or employers; (2) he received a distribution as a result of a class action lawsuit against one of his employers that was settled during the year in issue; and (3) he received commissions from the Amway 21 Corporation (Amway). 22 23 24 25 None of the above-referenced items of income are reported on petitioner's 2009 Federal income tax return. In fact, the return shows zeros on all lines except those relating to: (1) his 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 identifying information and filing status; (2) his claim for a standard deduction; (3) his claim for exemption deductions; (4) Federal income taxes 4 withheld from his compensation by his employer or 5 employers; and (5) his claim for a refund of those 6 withholdings. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The above-referenced items of income are shown in the notice along with an adjustment to the number of dependency exemption deductions claimed on the return. In addition to the tax imposed by section 1, the deficiency determined in the notice also takes into account a section 1401 tax imposed on certain of the items of income attributed to petitioner in the notice. A section 6662(a) penalty is imposed on the underpayment of tax required to be shown on petitioner's 2009 return, which underpayment is computed with reference to income tax withholding credits not claimed on petitioner's 2009 return. See sec. 1.6664-3(c), Income Tax Regs. Respondent now concedes that penalty. The petition makes no reference to any of the adjustments made in the notice; it makes no reference to the imposition of a section 1401 tax; and it makes no reference to the imposition of a section 6662(a) penalty. Instead, in the petition 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company petitioner: (1) challenges respondent's authority to have issued the notice; and, (2), claims a refund for some of the income tax withholdings withheld from his 6 wages. Nothing in the petition filed in this case, or in petitioner's presentation at trial shows that any of the adjustments made in the notice have been made in error. Other than a document that does not take into account the deficiency here in dispute, petitioner has submitted no evidence that shows his 2009 Federal income tax liability has been overpaid. To the extent that petitioner takes the position that the income items attributed to him in the notice do not constitute income, his position is rejected 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 without further comment. Because he failed to 16 17 18 19 20 21 22 23 24 25 challenge the disallowance of the dependency exemption deductions or the imposition of the section 1401 tax on certain of the income shown in the notice, those items are bcing conceded. To the extent he takes a position that the notice is somehow or another invalid, that position is rejected for the same reasons previously explained to him in docket number 3441-08 and docket number 9715-10 (previously docketed cases). The evidence in this case shows that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 petitioner was engaged in income generating 2 activities during the year in issue, and he readily 3 admits to engaging in those activities. See 4 Weimerskirch v. Commissioner, 596 F.2nd 358 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (9th Cir. 1979). The evidence further shows petitioner failed to report the income he received from those activities or to pay the tax attributable to such income. Lastly we note that respondent has requested the imposition of a section 6673 penalty. Respondent points out that the position taken by petitioner in this case with respect to the omitted income items is similar to, if not the same position taken by petitioner and rejected by the Court in the previously docketed cases. Petitioner's position that the notice is invalid for the reasons he advances is frivolous, as he was previously advised. His position on the point has been expressly rejected in at least two other Tax Court cases that he initiated. The reasons for the rejection have been explained in detail in those cases. He obviously 22 must have known that the position he has taken in 23 24 25 this case would be rejected as well. That being so, we find that petitioner, armed with such knowledge that his positions are frivolous, initiated and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 continued to prosecute this case primarily for delay. Our finding on this point is supported by his failure to engage in the stipulation process required by Rule 91 requiring respondent to resort to Rule 91(f) in order to attempt properly to prepare this case for trial. Consequently, petitioner is subject to a section 6673 penalty, albeit in an amount reduced to take into account respondent's concession of the section 6662(a) penalty. Furthermore, respondent's costs attributable to the Rule 91(f) proceedings will be imposed upon petitioner. His failure to pay those costs could result in a dismissal of this case and a decision entered against him. See Rule 53. To reflect the foregoing, an appropriate order will be issued, and in due course a decision will be entered for respondent with respect to the deficiency and for petitioner with respect to the section 6662(a) penalty. The decision will also show that petitioner is liable to the United States for a $5,000 section 6673 penalty. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 3:00 p.m., the 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