TAX COURT OPINION

Case: Walter Jesse Lawrence
Docket Number: 20370-09
Judge: Colvin
Opinion Type: bench
Filed: 01/03/2011
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 WALTER JESSE LAWRENCE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) Docket No. 20370-09. 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 the pages of the transcript the trial in the above case before Judge Joseph Robert Goeke at findings petitioner and to respondent a copy of of Tampa, Florida, on October 28, 2010, containing his oral of fact and opinion rendered at the conclusion of the trial. In accordance with the oral fincings ož fact and opinion, a decision will be entered for respgndent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. January 3, 2011 SERVED JAN - 5 2011 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 Bench Opinion by Judge Josep1 Robert Goeke Walter Jesse Lawrence v. Conmissioner Docket No.: 20370-09 Thursday, October 28, 2010 3 THE COURT: The Colrt 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. The Oral Findings of Fact and Opinion shall not be relied upon as precedent in any other case. This case is a deficiency case and the Court has jurisdiction because the Petitioner timely filed a Petition after the issuance of three Notices of Deficiency by Respondent. The Bench Opinion is- rendered pursuant to Tax Court Rule of Practice and Procedure 152 and Internal Revenue Code Section 7459 (b) . Hereinafter Code Section references are to the Internal Revenue Code and Rule references are to the Tax Court Rule of Practice and Procedure. In this case the I-etitioner has the burden of proof pursuant to Tax Court Rule 142 (a) and because Petitioner has failed to esi:ablish that he adequately cooperated with the Interna:. Revenue Service during 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 the audit pursuant to the Code Section 7491. Petitioner resided in Florida at the time the Petition was filed in this case. Respondent issued three Notices of Deficiency to the Petitioner. They are respectively for the years 2003, 2004 and 2005. In these Notices of Deficiency, Respondent détermined that Petitioner had pension and annuity inccme, which was received from General Motors, and thEt the Petitioner also had some small amount of wages jn each of the years in question. Petitioner failed to file income tax returns for any of the three years 7.n question, and in the Notice of Deficiency computations Respondent allowed the standard deduction and a personal exemption. Respondent determined defic:.encies in income tax in each of the three years and additions to tax under Section 6651(a) (1) (2) and -.- strike thgt. Additions to tax were simply under Section 6651(1)and ( ). The Notices of Deficiency were issued on May 29th, 2009 and July 1st, 2009. On August 25th, 2009, the Petitioner filed a Petizion for all three years. On October 5th, 2009, Respondent filed a motion to dismiss for failure to state a claim upon which relief can be granted, and Respondant also sought a penalty Heritage Reporting Corporation (202) 625-4888 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 under Section 6673. Petitioner filed a reply in opposition and also attached an Amended Petition in his response to Respondent's motion to dismiss. This Court, by Order dated November 9th, 2009, denied Respondent's mction to dismiss and stated further that the Court, as test it could discern, found that Petitioner had raised seven issues in his Amended Petition. Those ,issues are: Whether Respondent bears the burden of proof under Section 7491(a), which we previously discussed; two, whether Respondent may not tax the payments from GM because Petitioner had listed these payments as exempt property in a prior bankruptcy proceeding; three, whether the pension paymente are not taxable because the Petitioner did not have unrestricted dominion and control over them; four, whether the IRS tax tables violate the Administrative Procedures Act; five, whether the third party information relied upon by Respondent was properly linked to the Petitioner; six, whether ERISA laws do not permit a general creditor, like the IRS, to reach the benefits of an ERISA qualified profit-sharing plan; and, seven, whether the IRS' current levy on Petitioner's pension payments violates the Fifth Amendmen: and is unconstitutional. Respondent filed an Answer to the Amended 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 Petition on December 29th, 2309 and the pleadings in this matter are closed. The case came to trial in Tampa, Florida, on October 23th, 2010, which is today. At that trial Petitioner testified and introduced further documents. Petitioner's testimony was totally focused on his argument that he did not have access to the pension payments because of the prior IRS levy and that, therefore, he should not be taxed upon the payments. We will take up Petitioner's arguments as raised in his Amended Petition in order. As previously stated we have fcund that Petitioner does not qualify under Section 7491 to shift the burden of proof to Respondent. In orcer to do that Petitioner must introduce credible evid.ence with respect to the factual issues relevant to a.scertain his liability. The issues before the Court, based upon Petitioner's own testimony, are legal in nature, and the facts as alleged by Petitioner are not such that they would require Respondent to assume the burden of proof under Section 7491. In addition, as we've stated previously, there's been no showing that Petitioner cooperated with the Interna Revenue Service in a sufficient manner in the course of his audit such that Section 7491 should apply. 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 We now move to the second issue raised in Petitioner's Amended Petitio:1, which relates to the manner in which the Petitioner listed the pension payments in a prior bankrupt:y proceeding. This is not a collection case under section 6320 or 6330. This is a Court of limited jarisdiction, and our jurisdiction in this case is to determine the underlying tax liability of the Petitioner. We determine that based upon the merits and the facts as they relate to the three years before us. Therefore, we do not have jurisdiction to determine whether it is appropriate for the Respondent to collect money from Petitioner's pension from aeneral Motors. Whether or not property is exempt under the Bankruptcy Laws does not ffect whether the amounts in question are income. PetitioÊerff provided no legal basis upon which the listinc of his pension funds as exempt property requires that they are no longer to be treated as income to him in subsequent years. Therefore, we finc that Petitioner's listing of the property as exempt in the bankruptcy proceeding has no effect upon whether he e taxable under the income tax laws upon the payment of these pension funds under Section 61. Petitioner's next argument is that he did 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 not receive control over the pension payments because they were subject to a prior IRS levy and that, therefore, he should not be :axed on the payments. He argues that he never received the funds and therefore lacked dominion and control over the amounts in question and should not, therefore, be taxed upon them. Petitioner testified and argued this point extensively at trial. Generally pension income is gross income under Section 61(a) (11). It is also well settled that actual receipt of cash is not necessary for a party to receive income. Amos v. Commissioner 47 T.C. 65, 70 (1966) citing Crane v. Commissioner 331 U.S. (1) 1947. The discharge by a third person of an obligation to him is equivalent to the receipt of the person taxed if the obligation is the obligation of the person taxed. Old Colory Trust Company v. Commissioner 379 U.S. 716, ",29 (1929). It is not a prerequisite to inclusion ir. income, for purposes of Section 61, that the payment s be made to the taxpayer in cash. Tucker v. Commissioner 69 T.C. 675 (1978). Petitioner does nct'maintain that the amounts levied upon that wefe designated to him from the GM pension did not pay a debt he owned. He simply maintains that he never recuived those amounts. 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 Accordingly, Petitioner's third argument fails and is - not exempt from taxation upoa the pension payments made to him by General Motgr3. The next etarge-of whether the tax tables violate the Administrative Procedures Act. This Court has consistently found that such protestor-like arguments lack merit. Cullen v. Commissioner T.C. Memo 1992-516. Respondent publishes tax tables for each year in revenue procedures and includes those tax tables in the instructions to Form 1040. See, for example, Revenue Procedure 2002-70, 2002-2 CB 845. Petitioner fails to establish that he is relieved of his duty to pay tax because of any actions by Respondent relative to the publication of tax tables. Therefore, we find that Petitioner's fourth argument also fails. Petitioner next argues that Respondent failed to link the third party information received by Respondent to him and to his own personal income- producing activities. It is not disputed that the Petitioner was entitled to 2ension and gocial ecurity - income. Petitioner's argument is rather that a levy by the Internal Revenue Service to pay his tax liabilities prevented him from receiving the income. 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 10 Therefore, we find that Petilioner's fifth allegation is without merit. . In his sixth allegation Petitioner turns to the ERISA laws and afgues they do not permit a creditor to reach the benefits of a pension fund. Because we do not have jurisdiction to review the propriety of Respondent's levy upon the pension proceeds, we do not address this issue, it is not before us. Petitioner's final =allegation focuses on a Fifth Amendment argument that Respondent's current levy violates the Fifth Amerdment. Once again, the propriety of the levy is not within our jurisdiction in this case and we do not consider that question. We note that the retitioner has failed to establish that there is a m:.scalculation in Respondent's Notices of Def:.ciency relative to the amounts of the pension payments in question, and simply maintains that becau e those amounts were subject to levy by the Inte nal Revenue Service he is not taxable on those amount For the reasons stated previously we find this to be a specious argument. Because Petitione:: failed to file returns and failed to pay taxes and has also failed to provide a reasonable basis for that, we uphold Respondent's 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 11 addition to tax determinatio:ss. The only remaining question is whether Petitioner should be liable Eor sanctions in this situation. We admonish the Petitioner that should he continue to pursue the arguments that he s not taxable because the pension amounts are subject to levy, he will subject himself to sanctions in the future, but we choose not to impose those sanctions in this case. According to our analysis a decision will be entered to Respondent. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 3:50 p.m, the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // Heritage Reporting Corporation (202) 6 8-4888