TAX COURT OPINION

Case: David R. Mills
Docket Number: 8946-12
Judge: Kroupa
Opinion Type: bench
Filed: 05/16/2013
Pages: 8

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 DAVID R. MILLS, Petitioner, v. COMMISSIONER OF INTERNAL REVENIJE, Respondent. ) ) ) ) ) ) ) ) ) ORDE R Docket No. 8946-12 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 this case before Judge Diane L. Kroupa in Los Angeles, California on May 1, 2013, containing her oral findings of fact and opinion rendered at the trial session at which the case was heard. 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, D.C. May 16, 2013 SERVED Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 Bench Opinion by Judge Diasne ·L. Kroupa May 1, 2013 David R. Mills v. Commissioner Docket No. 8946-12 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. THESE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. 13 All section references are to the Internal Revenue 14 Code for 2010, and all Rule references are to the Tax 15 Court Rules of Practice and Procedure. Petitioner appeared pro se and Ron -Gham appeared ChuA otg on behalf of respondent. FINDINGS OF FACT The facts are derived from the statements deemed admitted under Rule 91(f). The stipulation of facts and accompanying exhibits to the Rule 91(f) 16 17 18 19 20 21 22 motion are incorporated by this reference. The facts 23 24 are so found. Petitioner resided in Los Angeles, 25 California when he filed the petition. 866.488.DEPO www.CapitalReportingCompany.com Capital.ReportingCompany 1 2 3 4 5 6 7 8 9 10 11 12 13 Petitioner provided services to car dealerships, had a relationship with Amway and received two distributions from his individual retirement account (IRA) in 2010 before he was 59 1/2. Petitioner filed a document on a purported 1040 showing zero on each income line. Petitioner did seek, however, on the purported 1040 to claim itemized deductions, exemptions and amounts withheld from amounts reflected on.Forms W-2 and Forms 1099. He also submitted four Forms 4852, the standard fare for tax defiers, to seek a refund of all Federal income tax withheld,.local income tax withheld, social securi·ty tax withheld and Medicare tax 14 withheld from amounts petitioner received in 2010. 15 16 17 18 19 20 21 22 He also prepared "corrected" 1099's to zero out amounts received from Amway Corp. and American Honda Imports. Respondent determined a $28,330 deficiency in petitioner's Federal income tax for 2010 and a $6, 667 accuracy-related penalty under section 6662. Respondent concedes the accuracy-related penalty because petitioner failed to file a valid return. 23 Petitioner timely filed a petition containing only 24 25 tax-protester arguments. At trial, petitioner made no legitimate arguments. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company OPINION 5 Petitioner is no stranger to this Court. He filed a petition at docket no. 3441-08 involving tax years 2004. and 2005. He made arguments that this 1 2 3 4 5 Court and every other court has found to be frivolous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 and to lack merit. We therefore sustained respondent's determinations in the deficiency notice and we imposed a $20,000 penalty against him under section 6673. Petitioner appealed our decision to the Ninth Circuit Court of Appeals (No. 09-72165). The Ninth Circuit affirmed our decision in an unpublished order dated July 22, 2011. Petit·ioner also filed.a petition at docket no. 9715-10 involving tax year 2006. We again sustained respondent's determinations in the deficiency notice and again imposed a penalty against petitioner under section 6673; this time in the maximum amount of $25,000. Again, petitioner appealed our decision to the Ninth Circuit (No. 11- 72982) and the Ninth Circuit dismissed his appeal in an unpublished order dated November 14, 2011. As to these two earlier cases, respondent has informed the 23 Court that petitioner has thwarted respondent's 24 ability to collect the unpaid tax amounts. 25 Here, we begin by discussing two 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 fundamental principles of tax litigation. First, the presumption of correctness attaches to the deficiency determination because the deficiency notice shows that respondent possessed direct evidence of payments to petitioner, and nothing in the record reflects that petitioner failed to receive the amounts. See Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982); Banister v. Commissioner, T.C. Memo. 2008-201. It is also a fundamental tax principle that gross income includes all income from whatever source derived, including wages, nonemployee compensation, interest, dividends and distributions from qualified plans. Sec. 61(a) (1). Petitioner argues, however, that he is not an employee as defined in section 3401(c). Simply put, he is. Pehhoner P:titiconr follows in the footsteps of DUC numerous others who have unsuccessfully attempted to avoid paying Federal income taxes. We need not discuss petitioner's erroneous positions at length. See Wnuck v. Commissioner, 136 T.C. No.-fi- (2011). P To refute petitioner's arguments with somber reasoning and conspicuous citation of precedent might suggest that these arguments have some colorable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 merit. Crain v. Commissioner, 737 F.2d 1417, 1418 25 (5th Cir. 1984). We therefore sustain respondent's 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 determinations in the deficiency notice. Respondent also moved to conform the pleadings under Rule 41 to the evidence presented. The record is unclear, however, what additional amounts respondent seeks other than the amounts set forth in the deficiency notice. We thus deny respondent's oral motion to the extent that respondent seeks an increased deficiency. We similarly deny petitioner's oral motion for summary 10 judgment in his favor. Petitioner's motion lacks 11 merit. Petitioner is not entitled to judgment in his 12 13 14 15 16 17 18 19 20 21 22 23 24 25 favor based on the positions he espouses. Finally, we now address whether it is appropriate to impose a penalty against petitioner under section 6673, which authorizes the Tax Court to require a taxpayer to pay to the United States a penalty up to $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 proceedings is frivolous or groundless. See sec. 6673; Scruggs v. Commissioner, T.C. Memo. 1995-355, aff'd without published opinion 117 F.3d 1433 (11th Cir. 1997). The purpose of section 6673 is to compel taxpayers to think and to conform their conduct to settled tax principles. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Coleman v. Commissioner, 791 F.2d 68,71 (7'" Cir. 1986); see also Grasselli v. Commissioner, T.C. Memo. 1994-581. Petitioner has not heeded our warnings in the past nor have our past sanctions against him had the desired deterrent effect. Respondent moved to impose a penalty of $25,000 under section 6673. In this proceeding now before the Court, petitioner again asserts nothing but frivolous and groundless positions. It is apparent from the entire record that petitioner instituted or maintained this proceeding primarily, if not exclusively, as a protest against the Federal income tax system. We are convinced that no purpose would be served in repeating all that has been said about his frivolous and misguided arguments. Wnuck v. Commissioner, 136 T.C. 498 (2011). Petitioner's tactics have consumed valuable Government resources. These tactics should not be condoned. They damage the integrity of the Federal tax litigation system because the time and attention the Court and respondent must devote to these frivolous arguments deprives other taxpayers with genuine tax controversies. See Abrams v. Commissioner, 82 T.C. 403, 412 (1984). When the 25 Court has been faced with groundless arguments that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 wa:ste the Court's and respondent's limited time and resources, we have consistently found that the taxpayer deserves a penalty under section 6673(a) (1), and that penalty should be substantial if it is to have the desired deterrent effect. Petitioner 1s pro se and seeks leniency from the Court. We will grant no leniency. 8 Petitioner has studied the law and acts as if he is 9 smarter than the average person because, according to 10 11 12 him, he is the only person who correctly interprets the tax laws. Moreover, pro se status is not a license to litter the dockets of the Federal courts 13 with ridiculous allegations. Parker v. Commissioner, 117 F.3d 785 (5th Cir 1997). We therefore shall require petitioner to pay a $25,000 penalty pursuant to section 6673(a) (1). To reflect the foregoing, decision will be entered for respondent and a $25,000 penalty will be imposed against petitioner under section 6673. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 9:19 a.m., the above- entitled matter was concluded.) 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com