TAX COURT OPINION

Case: Ruth Ann Thacker
Docket Number: 24818-12S
Judge: Guy
Opinion Type: bench
Filed: 07/15/2013
Pages: 6

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 RUTH ANN THACKER, ET AL., Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 24818-12S, ) 24819-12S. ) ) ) OR D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript of the trial in these cases before Special Trial Judge Daniel A. Guy, Jr., at Columbus, Ohio, on June 19, 2013, containing his oral findings of fact and opinion rendered at the trial session at which the cases were heard. In accordance with the oral findings of fact and opinion, decisions will be entered for respondent. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. July 15, 2013 SERVED Jul 16 2013 Capital Reporting Company Bench Opinion by Special Trial Judge Daniel A. Guy, 3 Jr. June 19, 2013 Ruth Ann Thacker, et. al. v. Commissioner Docket No. 24818-12S, 24819-12S THE COURT: The Court has decided to render oral findings of fact and opinion in these consolidated cases, and the following represents the 1 2 3 4 5 6 7 8 9 Court's oral findings of fact and opinion. The oral 10 11 12 13 14 15 16 17 18 19 20 21 findings of fact and opinion shall not be relied upon as precedent in any other case. These proceedings for the redetermination of a deficiency are small tax cases conducted pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. 22 Hereinafter in this bench opinion, section references 23 24 25 are to the Internal Revenue Code of 1986, as amended, in effect for 2010, and Rule references are to the Tax Court Rules of Practice and Procedure. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 Petitioners, husband and wife, resided in 2 Ohio at the time the petitions were filed, and they 3 4 appeared at trial pro se. Anita A. Gill appeared on behalf of respondent. The parties filed with the 5 Court stipulations of facts, with accompanying 6 7 8 9 exhibits, that are incorporated herein by this reference. The issue for decision is whether petitioners were obliged to account for Social 10 Security disability benefits (SSD benefits) of 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $51,438 that Mr. Thacker received in 2010 when they computed and reported their Federal income tax liability for that year. Mrs. Thacker testified that she called the Internal Revenue Service (IRS) before preparing the couple's tax return and she was advised by an IRS employee that SSD benefits are not included in gross income. Relying on this advice, petitioners prepared and filed their joint Federal income tax return for 2010 reporting gross income of $26,614, exclusive of Mr. Thacker's SSD benefits. Respondent issued a notice of deficiency to petitioners setting forth his determination that they were obliged to include $13,083 of Mr. Thacker's SSD benefits in gross income for 2010. Their failure to do so resulted in an income tax deficiency of $1,595 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 for that year. Petitioners timely filed separate petitions for redetermination with the Court pursuant to section 6213(a). Before trial, the Court granted respondent's motion to consolidate the cases for purposes of trial and opinion. See Rule 141(a). We begin with the fundamental principle of Federal tax litigation that the Commissioner's determinations normally are presumed correct. See INDOPCO Inc. v. Commissioner, 503 U.S. 79, 84 (1992); 10 Welch v. Helvering, 290 U.S. 111, 115 (1933). 11 12 13 14 15 16 17 18 19 20 21 22 Section 61(a) provides the general rule that gross income includes all income from whatever source derived. Before 1984, Social Security benefits were excludable from gross income. See, e.g., Rev. Rul. 70-217, 1970-1 C.B. 13. However, this practice ended with the enactment of section 86 as part of the Social Security Act Amendments of 1983, Pub. L. 98-21, sec. 121(a), 97 Stat. 80. Section 86 requires the inclusion in gross income of up to 85% of Social Security benefits received, including SSD benefits. See Reimels v. Commissioner, 123 T.C. 245, 247 (2004), aff'd, 436 F. 3d 344 (2nd 23 Cir. 2006); Seaver v. Commissioner, T.C. Memo. 2009- 24 25 270; Maki v. Commissioner, T.C. Memo. 1996-209. Section 86(a) provides the general rule 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 that gross income includes Social Security benefits in the amount equal to the lesser of: (1) one-half of the Social Security benefits received during the year, or (2) one-half of the excess over certain base amounts. The base amount for the year in issue for a joint return is $32,000. Sec. 86(c) (1) (B). Consistent with the foregoing, and absent some exception, Mr. Thacker's SSD benefits constitute taxable income and were required to be reported on petitioners' tax return. Petitioners do not contest the amount of the deficiency that respondent determined. Rather, they assert that they should not be held liable for the tax deficiency because Mrs. Thacker was erroneously advised by an IRS employee that Mr. Thacker's SSD benefits were not subject to Federal income tax. The Court has previously held that the authoritative sources of Federal tax law are statutes, regulations, and judicial case law and not informal IRS publications and statements. See Zimmerman v. Commissioner, 71 T.C. 367, 371 (1978), 22 aff'd without published opinion, 614 F.2d 1294 (2d 23 Cir. 1979); Green v.Commissioner, 59 T.C. 456, 458 24 25 (1972). Additionally, in order to ensure uniform enforcement of the Internal Revenue Code, the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 Commissioner must follow authoritative sources of Federal tax law and may correct mistakes of law made by IRS agents or employees. See Dixon v. United States, 381 U.S. 68, 72 (1965); Automobile Club of 5 Michigan v. Commissioner, 353 U.S. 180, 183-184 6 7 8 9 10 11 12 (1957); Keel v. Commissioner, T.C. Memo. 1997-278. Although it is unfortunate that petitioners received unhelpful or incorrect tax advice from an IRS employee, that advice does not have the force of law. It follows that respondent is not barred from applying the law as enacted and determining petitioners' correct tax liability in this case. 13 Consistent with the preceding discussion, decision 14 will be entered for respondent. This concludes the 15 Court's oral findings of fact and opinion in this case. (Whereupon, at 11:15 a.m., the above- entitled matter was concluded.) 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com