TAX COURT OPINION

Case: Alexander Hyatt
Docket Number: 22711-09L
Judge: Colvin
Opinion Type: bench
Filed: 10/28/2010
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 ALEXANDER HYATT, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) Docket No. 22711-09L. O R 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 petitioner and to respondent a copy of transcript of the above case before Judge James S. Halpern at New York, New York (Westbury) on September 23, 2010, containing his oral conclusion of trial. fact and opinion rendered at the trial of the pages of the findings of the In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered. (Signed) James S. Halpern Judge Dated: Washington, D.C. October 28, 2010 QE ED NOV 1 2010 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 3 BENCH OPINION BY JUDGE JAMES S. HALPERN ALEXANDER HYATT V. COMMISSIONER DOCKET NO.: 22711-09L DATE: September 23, 2010 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. 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. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rüles of Practice and Procedure. Petitioner resided in New York at the time he filed the petition. Petitioner bears the burden of proof. This case is before the Court pursuant to a petition filed under Section 6330(d) for review of a determination by Respondent's Office of Appeals. By Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, dated August 19, 2009 (the notice), Appeals determined that it was appropriate to proceed by levy to collect Petitioner's 2004 and 2005 Federal Income Tax liabilities. Heritage Reporting Corporation (202) 628-4888 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 4 Petitioner assigns error to the notice on the ground that the determination contained in the notice is arbitrary and capricious in that it fails to address the issues he raised. In support of his assignment of error, Petitioner claims that (1) no evidence was presented to him of a substitute for return, (2) he was not provided with any rebuttal to his explanation as to why he was not required to file an income tax return, and (3) again, the IRS is in default in not explaining to him why he must file a return. At trial, we received into evidence the record of Petitioner's hearing before Appeals. Respondent determined deficiencies in tax of $10,469 and $9,259, along with additions to tax, for Petitioner's 2004 and 2005 taxable years, respectively. The notice of intent to levy that triggered this case shows that, as of January 1, 2009, Petitioner owed the total amount of $34,607.21 for 2004 and 2005. We offered him the opportunity, but Petitioner failed to show that his underlying liabilities for those years was any less than determined by Respondent. Petitioner is mistaken that Respondent must prepare a substitute for return on a taxpayer's behalf Heritage Reporting Corporation (202) 628-4888 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 5 before determining a deficiency in tax. E.g., Watson v Commissioner, T.C. Memo, 2007-146. Petitioner has been before this Court on previous occasions, see docket numbers 7221-07L, 26157-08, 8771-08L, and we have no doubt that he knows he is required to file Federal Income Tax returns. We quote from our bench opinion in docket number 26157- 08: Suffice it to say that Petitioner is a taxpayer subject to the Federal Income Tax who is obliged to file a Federal Income Tax return and pay Federal income tax on his income, specifically including wages, capital gain, and interest. See sections 1, 61(a) (1), (3) and (4), 6012(a) (1), 7701(a) (1) and (14). See also United States v Romero, 640 F.2d 1014, 1016 (9th Cir. 1981) ("Compensation for labor or services, paid in the form of wages or salary, has been universally held by the courts of this republic to be income, subject to the income tax laws currently applicable."); Monaco y Commissioner, T.C. Memo. 1998-284, categorically rejecting the argument that the Commissioner may not determine a deficiency without first making an assessment, and affirming the principle that a taxpayer's failure to report tax on a return does not prevent the Heritage Reporting Corporation (202) 628-4888 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 6 Commissioner from determining a deficiency in that taxpayer's income tax. Petitioner has failed to demonstrate error in Appeals' s determinations to proceed with collection by levy of Petitioner's 2004 and 2005 liabilities, and we sustain those determinations. As relevant herein, section 6673 (a) (1) authorizes the Tax Court to require a taxpayer to pay to 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 are convinced that Petitioner has no legitimate grounds for challenging the notice. Rather, Petitioner's arguments in this case and Petitioner's previous appearances before this Court demonstrate that Petitioner regards this case as a vehicle to protest the tax laws of this country and espouse his own misguided views. A petition to this Court is frivolous "if 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). Petitioner's position, as set forth in the Heritage Reporting Corporation (202) 628-4888 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 7 petition, his motion for summary judgment, together with his memorandum in support of that motion, and during the trial of this case, is principally an argument that he has no obligation to file tax returns unless, perhaps, the Commissioner can prove to him that he has such an obligation. Based on well- established law, Petitioner's position is frivolous and groundless. E.g., Johnston v Commissioner, T.C. Memo. 2004-107 (holding frivolous the contentions that the Commissioner cannot determine a deficiency for a year for which a return was not filed and that a taxpayer's failure to file a return shields the taxpayer from tax liability). We are also convinced that Petitioner instituted and maintained this proceeding primarily, if not exclusively, for purposes of delay. Having to deal with this matter wasted the Court's time, as well as Respondent's. In Petitioner s three prior appearances before this Court, he attracted penalties under Section 6673(a) (1) of $5,000, $7,500 and $10,000, in docket numbers 7221-07L, 26157-08, and 8771-08L, respectively. Petitioner has not been deterred, and we think it appropriate to penalize him to the maximum extent possible. We therefore shall impose on him a Heritage Reporting Corporation (202) 628-4888 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 8 6673(a) (1) penalty of $25,000. We shall enter an Order And Decision (1) ordering and deciding that Respondent may proceed with levies for 2004 and 2005 and (2) ordering and deciding that Petitioner is liable for a penalty under section 6673(a) (1) of $25,000. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 3:08 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888