TAX COURT OPINION

Case: Robert Dunlap Pace, III
Docket Number: 11308-14
Judge: Thornton
Opinion Type: bench
Filed: 01/25/2018
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 ROBERT DUNLAP PACE, III, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent I ) ) ) ) ) Docket No. 11308-14. ) ) ) ORDER 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 the pages of the transcript of the trial in the above case before Judge Michael B. Thornton at Los Angeles, California, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In ccordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Michael B. Thornton Judge Dated: Washington, D.C. January 25, 2018 SERVED JAN 3 0 2018 Bench Opinion by Judge Michael B. Thornton January 8, 2018 Robert Dunlap Pace, III v. Commissioner of Internal 3 Revenue Docket No. 11308-14 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. Except as otherwise provided by Rule 152(c) 1 2 3 4 5 6 7 8 9 10 of the Tax Court Rules of Practice and Procedure, the 11 oral findings of fact and opinion shall not be relied 12 13 upon as precedent in any other case. This bench opinion is made pursuant to the - 14 authority granted by section 7459(b) and Rule 152. 15 Section references are to the Internal Revenue Code in 16 effect for the taxable year at issue. All rule 17 references are to the Tax Court Rules of Practice and 18 Procedure. 19 This case was tried on January 8, 2018, in Los 20 Angeles, California. Petitioner appeared pro se. 21 Vladislav M. Rozenzhak appeared on behalf of 22 respondent. By notice of deficiency, respondent 23 determined a $26,302.00 deficiency in petitioner's 2011 24 Federal income tax and additions to tax of: $5,917.95 25 under section 6651(a)(1); $2,630.20 under section Cribers (973)406-2250loperations@escribersaiet|www.esaibers.net 1 2 3 4 5 6 7 8 9 10 11 6651(a)(2); and $520.73 under section 6654(a). The parties have agreed that the correct deficiency for 2011 is $5,000. The only issues remaining for decision are whether petitioner is liable for the additions to tax just listed. Findings of Fact Petitioner worked for a paving company from 1983 to 2009. While employed there he made contributions to an investment program sponsored by his employer. In 2010 he changed jobs and rolled these investments over into a Roth IRA with U.S. Bank.- He 12 was 60 years old at the time. 13 14 15 16 In 2010 petitioner's new employer -- a construction company -- went out of business. In 2011 he received $111,662 in retirement distributions from the Roth IRA. His only other source of income for 2011 17 was $11,700 in unemployment compensation. 18 Petitioner did not file an income tax return 19 for 2011. Petitione'r has failed to make any payments 20 21 22 toward the amount required to be shown as a tax on his income tax return fo'r 2011. Petitioner did not file an income tax return in 2010, although he was required to 23 do so. 24 Opinion 25 Respondent determined in the notice of 973)406-2250loperationspescribersmet|www.esaibersaet 5 1 2 3 4 5 6 7 8 9 deficiency that petitioner is liable for additions to tax in 2011 under sections 6651(a)(1) and (2) and 6654. These three additions to tax are not subject to section 6751(b). See sec. 6751(b)(2)(A). The Commissioner bears the burden of production with respect to these additions to tax, but the burden of proof remains on petitioner as to any defense. Sec. 7491(c). Section 66$1(a)(1) imposes an addition to tax for failure to timelý file a tax return unless that 10 failure is due to reasonable cause and not willful 11 neglect. Petitioner does not dispute that he did not file 12 a 2011 tax return for Federal income tax. Respondent has 13 met his burden of production with respect to 6651(a)(1). 14 15 16 Section 6651(a)(2) imposes an addition to tax for failure to timel pay a tax shown on a return unless that failure is due to reasonable cause and not willful 17 neglect. The addition to tax under section 6651(a)(2) 18 applies only when an amount of tax is shown on a return. 19 Cabirac v. Commissioner, 120 T.C. 163, 170 (2003). 20 Substitutes for return (SFR) are treated as returns for 21 22 23 purposes of determining the addition to tax under section 6651(a)(2). See sec. 6020(b); Wheeler v. Commissioner, 127 T.C. 200, 208-209 (2006), aff'd, 521 F.3d 1289 (10th 24 Cir. 2008). Petitioner has not disputed the validity of . 25 the SFR respondent prepared for 2011, nor has he argued (973)406 2250 ] operations@escribers.net| www.esaibersaet 6 1 2 3 4 5 6 7 8 9 that he has paid any portion of the amounts shown on the SFR. Respondent has met his burden of production with respect to an addition to tax under section 6651(a)(2), adjusted to account for the parties' agreement with' respect to the defic ency. Petitioner offered the same defense with respect to both the failure to file and failure to pay additions to tax for 2011. He argues that he thought he did not have a filing requirement or tax liability for 2011 10 because his bank advised him in 2010 that distributions 11 12 13 from his Roth IRA woùld not be taxable. Petitioner has, however, failed to support his testimony with any other evidence of the bank's advice, and respondent made his 14 determination on the basis of the bank's information 15 reporting that the distributions were taxable income. 16 Consequently, even if the bank initially told petitioner 17 18 19 that his distributions would not be taxable, it subsequently revised or superseded that advice in its formal tax reporting idocuments. Petitioner's testimony 20 did not rule out the possibility that he in fact received 21 22 23 24 these information reports and so was informed of his taxable income. Petitioner asserts that he was under significant financial and personal stress in 2011. Although we are 25 sympathetic to these asserted circumstances, we are not [973)406-2250|operations@escribersnet|www.escribers.net 1 2 3 4 5 6 7 8 9 10 11 12 convinced that they amount to reasonable cause for failure to file or failure to pay additions to tax. Petitioner has not demonstrated that these circumstances rendered him unable to verify his filing requirement or unable to pay. As we understand it, petitioner's argument is essentially that he did not think he had a filing requirement. But ignorance of the law is no defense.. See, e.g., Riggins v. Commissioner, T.C. Memo. 2017-106. Therefore, as petitioner has raised no other defenses, we conclude that he is liable for additions to tax for 2011 under section 6651(a)(1) and (2). Section 6654 imposes an addition to tax on an 13 individual taxpayer who underpays his estimated tax. The 14 addition to tax is calculated with reference to four 15 required installment payments of the taxpayer's estimated 16 17 18 tax liability. Sec. 6654(c)(1). Each required installment of estimated tax is equal to 25% of the required annual payment. Sec. 6654(d)(1) (A). The 1 19 required annual payment is equal to the lesser of (1) 90% 20 of the tax shown on the individual's return for that year 21 22 23 24 25 (or, if no return is filed, 90% of his or her tax for such year), or (2) if the individual filed a return for the immediately preceding taxable year, 100% of the tax shown on that return. Sec. 6654(d) (1) (B). Petitioner does not dispute that he did not (973)406-2250|operations@escribersmet|wwycesaibersaet 1 2 3 4 5 make any estimated payments toward his 2011 Federal income tax liabilitý. Respondent has introduced an account transcript for petitioner's 2010 tax year, showing that petitioner did not file in 2010. Respondent has therefore met his burden of production 6 with respect to section 6654(a) for 2011. Petitioner 7 8 9 10 11 12 13 14 has not asserted any defenses to the section 6654(a) addition to tax, nor are we aware of any that apply. Accordingly, we fin petitioner liable for an addition to tax for 2011 under section 6654(a). Because the parties have made concessions resulting in a decreased deficiency for 2011, ' respondent's original computations of the additions to tax must be adjusted to reflect these changes. 15 Accordingly, the additions to tax will be computed, and 16 decision entered, under Rule 155. This concludes the Court's findings of fact and opinion in this case. (Whereupon, at 3:56 p.m., the above-entitled matter was concluded.) 17 18 19 20 21 22 23 24 25 (973)406-2250|operations@escribers,net|www.escribers.net