TAX COURT OPINION

Case: Gill Tai'A Thompson
Docket Number: 25826-10L
Judge: Kroupa
Opinion Type: bench
Filed: 11/15/2012
Pages: 11

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 GILL TAI'A THOMPSON, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ORDER Docket No. 25826-10L Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of proceedirigs of this case before Judge Diane L. Kroupa in Reno, Nevada on October 3, 2012, containing her oral findings of fact and opinion rendered at the trial session at which this case was calendared. In accordance with the oral findings of fact and opinion, an appropriate decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Date: Washington, DC November 15, 2012 SERVED 30V 2 1 2012 Capital Reporting Company Gill Tai'A Thompson 10-03-2012 3 1 THE COURT: The Court has decided to render 2 oral findings of Fact and Opinion in this case and 3 the following represents the Court's oral findings of 4 Fact and Opinion. These oral findings of Fact and 5 Opinion shall not be relied upon as precedent in any 6 other case. 7 8 9 10 11 12 13 14 15 16 17 18 19 .This bench ·opinion is- nade pursuant··to the authority granted in section 7459 (b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the yea'rs at issue as later defined, and all Rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving a proposed levy to collect petitLoner's unpaid liabilities for frivolous return penalties under section 6702 for 1990, 1992, 1995, 2005, 2006, 2007 and 2008 as well as income tax for 2004 (collectively the years at issue). Petitioner appeared pr se, and David 20 Sorenson appeared on behalf of r spondent. 21 FINDINGS OF FACT 22 Certain facts have been stipulated. The stipulation 23 of facts the parties filed, with:accompanying 24 exhibits, is incorporated by this reference, and the 25 facts are so found. The record in this case and the (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Con pany Gill Tai'A Thompson 10-)3-2012 1 stipulation of facts and exhibits are lengthy and 2 3 4 5 6 7 voluminous . We will summarize the facts in this bench opinion. Petitioner resided in 3parks, Nevada at the time he filed the collection review petition. Petitioner has been a coach driver for various employers through the years, including 8 Western Village Inn and Casino, Golden State Coaches 9 dba Frontier Tours, and Transit Management 10 (collectively "employers") . Pet tioner was paid for 11 his work and the employers withheld amounts from 12 petitioner's paychecks for Feder 1 income tax, social 13 security taxes, and Medicare taxes. The employers 14 15 issued petitioner a Form W-2, Wage and Tax Statement. Petitioner had a consistent pattern of 16 providing the Service with inforÅtation. He would 17 18 file a return reporting zero on äll the lines for income and seek a refund of all taxes withheld. In 19 doing so he asserted that the employers erroneously 20 withheld as there was no tax liability or payment of 21 "wages" as defined in sections 3401 and 3121 made to 22 petitioner as a private sector citizen, from a 23 federal entity nor was petitioner engaged in any 24 business or trade, nor the officer of a corporation, 25 nor federal privileged activities nor gains or (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Co pany Gill Tai'A Thompson 10 03-2012 5 1 profits. Other times he would file returns reporting 2 income but.later file a Form 104DX amended return 3 attaching a--F-rem 4852, a substitute for a W-2, the 4 5 6 7 8 9 10 11 standard fare by which tax protestors reduce or zero out their income. Here, petit1oner prov1ded a statement that his employer refuses to issue him a corrected W-2 reflecting no wages earned. He also stated that his employer listed payments as wages that petitioner vehemently rejec ed. On the amended return, petitioner eliminated th wages that he received and sought a refund of 11 tax amounts 12 withheld. 13 Respondent advised petitioner in writing 14 that he had submitted frivolous tax returns and 15 provided him time to withdraw the frivolous returns. 16 Petitioner declined. Petitioner continued to make 17 frivolous arguments in support of his position. 18 Accordingly, respondent assessed frivolous return 19 penalties under section 6702 against petitioner and 20 sent notices advising him of the assessments. When 21 petitioner failed to pay the liabilities, respondent 22 sent to petitioner a Final Notic of Intent to Levy 23 and Notice of Your Right to a Hearing under section 24 25 6330 . Petitioner timely requested a hearing. Petitioner failed to offer any collection (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Gill Tai'A Thompson 10 03-2012 6 1 alternatives. Respondent subsequently issued a 2 Determination Notice upholding respondent's proposed 3 collection action with respect to petitioner's 4 5 liabilities for each of the years at issue. It was later discovered that the Settlement Officer 6 erroneously determined that petitioner could not 7 contest the frivolous return penalties during the 8 hearing. It was wrong because petitioner had not 9 received a statutory notice regarding the frivolous 10 return penalties nor had petiti ner otherwise had an 11 opportunity. to contest the pena ties. The case was 12 remanded to Appeals for a supplemental hearing. 13 Again petitioner failed to offer any collection 14 alternatives. Respondent issued a Supplemental 15 Notice of Determination Concern1ng Collection 16 Action(s,) under section. 6320 and/or 6330 upholding 17 18 19 20 21 22 23 24 respondent's proposed collection action with respect to petitioner's liabilities for each of the years at issue. Petitioner timely filed a petition with this court. At trial the parties focused on the frivolous return penalties. The parties stipulated that the section 6702 penalties had to be reviewed on 25 a de novo basis and the income tax liability for 2004 (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Con pany Gill Tai'A Thompson 10 03-2012 1 2 had to be reviewed for an abuse of discretion. Petitioner said that his wife wanted him to 3 put this all behind them and we ur derstood petitioner to agree. 4 5 OPINION 6 Petitioner has followed in the footsteps of numerous 7 others who have unsuccessfully at empted to avoid 8 paying Federal income taxes. Petitioner wants only 9 to contest his liability for the frivolous return 10 penalties in this collection review matter. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We begin by noting that we have jurisdiction to review a determination notice issued under section 6330 where the underlying tax liability consists of frivolous return penalties. See Callahan v. Commissioner, 130 T.C. 44, 47-49 (2008) . We also note that petitioner may contest the frivolous return penalties before this Court. See id. at 49-50. We now focus on our standard of review. Where the validity of the underlying tax liability is properly at issue, as the case is here with the frivolous return penalties, we will review the matter de novo. See Callahan v. Comm1ssioner, supra at 50; Sego v. Commissioner, 114 T.C. 604, 610 (2000). We review all other matters for an abuse of discretion. See Callahan v. Commissioner, supra at 50-51; Sego v. (866) 448 - DEPO www.CapitalRepor gCompany.com 2012 Capital Reporting Company Gill Tai'A Thompson 10-03-2012 8 1 Commissioner, supra at 610. 2 We now turn to the frivolous return 3 penalties. A civil penalty for filing frivolous 4 5 6 returns may be assessed against a taxpayer if three requirements are met. First, the taxpayer must file a document that purports to be an income tax return. 7 Sec. 6702 (a) (1). Second, the pur orted return must 8 9 lack the information needed to gauge the substantial correctness of the self-assessment or contain 10 information indicating the self-assessment is 11 substantially incorrect. Id. Third, the taxpayer's 12 position must be frivolous or demonstrate a desire to 13 delay or impede the administration of Federal income 14 tax laws. Sec. 6702 (a) (2). We generally look to the 15 16 face of the documents to determine whether a taxpayer is liable for a frivolous return penalty as a matter 17 of law. See Yuen v. United States, 290 F. Supp. 2d 18 19 1220, 1224 (D. Nev. 2003). Petitioner's Forms 1040A and 1040X 20 purported to be income tax returns filed to obtain a 21 tax refund. See Callahan v. Comm1ssloner, supra at 22 53. Petitioner attached a Form 4852 showing zero 23 wages from his employers during the years at issue. 24 Respondent has thus satisfied the first requirement. 25 Respondent has satisfied the second element (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Con(cid:16)040pany Gill Tai'A Thompson 10-03-2012 9 1 2 3 4 5 as well. Petitioner claimed on the purported returns and on the attached Forms 4852 that petitioner received no wages from his employers during any of the years at issue. The same Forms 4852, however, indicated that petitioner's employers had withheld 6 certain taxes on wages paid to petitioner. 7 Petitioner attached an explanatory letter making 8 patently erroneous assertions, including that the 9 wages received from his employers were unprivileged, 10 private sector receipts not constituting wages and 11 not connected with a trade or bus ness . The 12 purported returns did not contain information on 13 which the substantial correctness of the self- 14 15 assessment might be determined. Finally, respondent has satisfied the third 16 element by showing that the purported returns 17 18 reflected frivolous positions. Courts have found arguments frivolous when taxpayers argue, as does 19 petitioner, that wages are not income. See, e.g. 20 Tornichio v. United States, 263 F Supp.2d 1090 (N.D. 21 Ohio 2002). Petitioner advanced meritless tax- 22 protester arguments that are not worthy of further 23 analysis. See Wnuck v. Commissioner, 136 T.C. No. 24 24 (2011); Crain v. Commissioner, î37 F.2d 1417, (5th 25 Cir. 1984) . We therefore find that petitioner is (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Conipany Gill Tai'A Thompson 10-03-2012 10 1 2 liable for the frivolous return penalties under section 6702 because all of the el ments have been 3 met. 4 5 6 AS to either the frivolous return penalties or the income tax liability for 2004, petitioner has failed to advance arguments or pre:sent evidence 7 allowing us to conclude that the determination to 8 sustain the proposed collection acition was arbitrary, 9 capricious, or without sound basisi in fact or 10 otherwise an abuse of discretion. See, e.g., 11 Giamelli v. Commissioner, 129 T.C. 107, 112, 12 115(2007). Petitioner did not pro'vide any collection 13 alternatives or present any other defenses. The 14 15 record indicates that the only issues petitioner raised throughout the administrative process and in 16 his petition and correspondence with respondent were 17 18 frivolous tax-protester arguments. We therefore conclude that respondent's determination to proceed 19 with the proposed collection action is not an abuse 20 of discretion. 21 Petitioner told the Court he is heeding his 22 wife's pleas to put all these tax issues behind them. 23 The Court interpreted this to mean that petitioner 24 would pay the tax liabilities outstanding and file 25 correct returns in the future reporting his wages and (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Con pany Gill Tai'A Thompson 10-03-2012 11 1 other income received. We will take petitioner at 2 his word and assume he will pay the tax liabilities 3 at issue. We warn petitioner, however, that we will 4 5 6 7 consider imposing a substantial pe,nalty under section 6673 if he raises these frivolous arguments in the future and wastes the Court's and respondent's limited resources. Section 6673 authorizes the Tax 8 Court to regulre a taxpayer to pay to the United 9 States a penalty up to $25, 000 whenever it appears 10 that proceedings have been instituted or maintained 11 primarily for delay or that the taxpayer's position 12 13 14 15 16 17 in such proceedings is frivolous r groundless . See sec. 6673; Scruggs v. Commissioner, T.C. Memo. 1995- 355, affd. without published opin on 117 F.3d 1433 (11th Cir. 1997) . The purpose of section 6673, like that of section 6702, is to compel taxpayers to think and to conform their conduct to settled tax 18 principles . See Coleman v. Commis sioner, 791 F. 2d 19 20 68, 71 (7th Cir. 1986). To reflect the foregoing, decision will be 21 entered for respondent and an app opriate order will 22 be issued sustaining the determinations set forth in 23 the Supplemental Notice of Determínation Concerning 24 Collection Action(s) Under Section 6320 and/or 6330, 25 upon which this case is based, regarding the unpaid (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Gill Tai'A Thompson 10 03-2012 tax liabilities for the years at issue. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. 12 (Whereupon, at 1:53 p.m., the bench opinion in the entitled matter was adjourned.) 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) 448 - DEPO www.CapitalReportingCompany.com 2012