TAX COURT OPINION

Case: Keith William Brown
Docket Number: 5817-18
Judge: Thornton
Opinion Type: bench
Filed: 03/14/2019
Pages: 13

UNITED STATES TAX COURT WASHINGTON, DC 20217 CLC KEITH WILLIAM BROWN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 5817-18. ) ) ) ) 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 accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155, Tax Court Rules of Practice and Procedure. (Signed) Michael B. Thornton Judge Dated: Washington, D.C. March 14, 2019 SERVED Mar 14 2019 RECEIVED IN THE UNITED STATES TAX COURT In the Matter of: KEITH WILLIAM BROWN, Petitioner, ) ) ) ) Docket No. 5817-18 ) ) v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Pages: 1 through 11 Place: Los Angeles, California Date: March 4, 2019 IN THE UNITED STATES TAX COURT In the Matter of: KEITH WILLIAM BROWN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Docket No. 5817-18 ) ) ) ) ) ) ) ) Edward R. Roybal Center & Fed. Bldg. 255 East Temple Street Room 1167, Los Angeles, California 9t 012 llth Floor March 4, 2019 The above-entitled matter came on for bench opinion, pursuant to notice at 2:11 p.m. BEFORE: HONORABLE MICHAEL B. THORUTON Judge APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 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 $73)406-2250loperatiöns@escribers.net|wwwescribersmt P R O C E E D I N G S 2 (2:11 p.m.) THE CLERK: Calling from the calendar docket number 5817-18, Keith William Brown. (Whereupon, a bench opinion wap rendered.) 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 $73)406-2250 operËio e riberin wwwescribérsmt Bench Opinion by Judge Michael B. Thornton March 4, 2019 3 Keith William Brown v. Commissioner of 1nternal Revenue Docket No. 5817-18 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. Except as otherwise provided by Rule 152(c) of the Tax Court Rules of Practice and Procedure, the oral 1 2 3 4 5 6 7 8 9 10 findings of fact and opinion shall not be relied upon as 11 Precedent in any other case. 12 This bench opinion is made pursuant to the 13 authority granted by section 7459(b) and Rule 152. 14 Section references are to the Internal Revenue Code in 15 effect for the taxable year at issue. All rule r'67 16 references are to the Tax Court Rules of Practice and 17 Procedure. All monetary amounts are rounded to the 18 19 nearest dollar. This case was tried on March 4, 2019 in Los 20 Angeles, California. Petitioner appeared pro se. Ms. 21 Sheri A. Wight appeared on behalf of respondent. When 22 Petitioner filed his petition he resided in California. 23 By notice of deficiency, respondent determined a 24 deficiency in petitioner's 2012 Federal income tax of 25 $6,561, an addition to tax under section 6651(a)(1) of (973)406-2256|operationseescribetsnetlwww.escribers.net $1,476, an addition to tax under section 6651(a)(2) of 4 $1,640, and an addition to tax under section 6654 of $118. Findings of Fact During 2012 petitioner was employed by Advanced Constructors Corporation and received wages of $50,858. Advanced Constructors Corporation issued a Form W-2, Wage and Tax Statement, to petitioner reflecting these wages. Petitioner also received unemployment compensation of $900 from the Employment Development Department and a State 1 2 3 4 5 6 7 8 9 10 income tax refund of $140 from the State of California. 11 All of the foregoing income items were reflected on 12 13 14 information returns issued to petitioner and filed with the Internal Revenue Service (IRS). Although petitioner was obligated to file a 15 Federal income tax return for 2012 he did not file a 16 return nor did he make any payments toward his Federal 17 18 income tax liabilities for that year. Respondent prepared a substitute for return for 19 the 2012 tax year, and issued to petitioner the notice of 20 deficiency that is at issue in this case. Petitioner timely petitioned this Court for redetermination of the income tax deficiency and additions to tax. Respondent now concedes that the State income tax refund of $140 is nontaxable income for the 2012 tax year. 21 22 23 24 25 973)4069250|operationseerribersät|wwwächbersäet 5 1 2 3 4 5 6 7 8 9 10 11 12 13 Opinion Respondent's determinations in a notice of deficiency are generally presumed correct, and petitioner bears the burden of proving them erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Moreover, deductions are a matter of legislative grace, and the taxpayer bears the burden of proving that he is entitled to any claimed deductions. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Petitioner does not contend that section 6201(a) or 7491(a) shifts the burden of production or proof to respondent, and the record does not permit us to conclude that the requirements of section 7491(a) are met so as to shift the burden of production or 14 Proof to respondent. In sum petitioner bears the burden 15 of proof. 16 Section 61 provides that gross income includes 17 all income from whatever source derived, unless the 18 19 taxpayer can establish that the specific item of income is nontaxable. Commissioner v. Glenshaw Glass Co., 348 U.S. 20 426, 429-430 (1955). Petitioner has not meaningfully 21 disputed receiving the various items of income as 22 determined in the notice of deficiency. Rule 34(b)(4) 23 provides that the petition shall contain "[c]lear and 24 concise assignments of each and every error which the 25 petitioner alleges to have been committed by the (973)406-2250|operatl @enlbetsnet wwwieriben.net Commissioner in the determination of the deficiency". In 6 his petition, as his basis for disagreeing with the determination in the notice of deficiency, petitioner states: "irreconcilable differences". And for the facts upon which he relies: "the facts are many and span a period of 37 years, beginning in 1981". Petitioner testified that he does not dispute the "numbers" in the notice of deficiency, and he has not presented any relevant evidence or made any judicially cognizable argument to properly challenge his 2012 underlying liability. Accordingly, we affirm respondent's determinations in the notice of deficiency as relate to 1 2 3 4 5 6 7 8 9 10 11 12 13 petitioner's underlying 2012 liability, except for the 14 15 16 17 18 19 $140 adjustment for a State income tax refund, which respondent has conceded. The petition contains no specific allegations or supporting facts regarding the section 6651(a)(1) and (2) and section 6654 additions to tax. Petitioner's frivolous arguments at trial and the documents he has filed with the 20 Court similarly do not specifically address any issue 21 22 23 24 25 regarding the additions to tax. We deem petitioner to have conceded the additions to tax and hold that respondent has no burden of production under section 7491(c) as to the section 6651(a)(1) and (2) and section 6654 additions to tax. See Rule 34(b); see also Funk v. . (973)406-2250|operst$2rseescribersnet[www.escribersaiet 7 Commissioner, 123 T.C. 213, 217-218 (2004); Swain v. Commissioner, 118 T.C. 358, 363-365 (2002). But even if we were to assume, for the sake of argument, that petitioner had properly stated a claim with respect to these additions to tax, respondent has satisfied any burden of production that might arise in this regard under section 7491(c). Section 6651(a)(1) provides for an addition to tax when a taxpayer fails to file a timely return, unless the taxpayer establishes that the failure was due to reasonable cause and not willful neglect. Petitioner has not put forth any argument to establish that his failure to file was due to reasonable cause and not due to willful 1 2 3 4 5 6 7 8 9 10 11 12 13 14 neglect. And his gross income exceeded the maximum amount 15 16 17 18 to be exempt from filing for the year. See secs. 6012, 6072. Respondent has met any burden of production under section 7491(c). Section 6651(a)(2) provides for an addition to 19 tax for failure to timely pay the amount of tax shown on a 20 21 return, unless the taxpayer establishes that the failure was due to reasonable cause and not willful neglect. This 22 addition to tax applies only when an amount of tax is 23 24 shown on a return. See Cabirac v. Commissioner, 120 T.C. 163, 170 (2003), aff'd without published opinion, 94 25 A.F.T.R.2d (RIA) 2004- 5490 (3d Cir. 2004); Burr v. 1973y406F2250|òperitiònseurséribers.netjhèscribersnet Commissioner, T.C. Memo. 2002-69, aff'd, 56 F.App'x 150 (4th Cir. 2003). Petitioner failed to file a return, and, 8 as evidenced by Form 13496, IRC Section 6020(b) 1 2 3 4 Certification, respondent made a substitute for return 5 6 7 8 9 (SFR) pursuant to section 6020(b) that qualifies as a return for purposes of section 6651(a)(2). See sec. 6651(g) (2); Wheeler v. Commissioner, 127 T.C. 200, 208-209 (2006), aff'd, 521 F.3d 1289 (10th Cir. 2008); Grandy v. Commissioner, T.C. Memo. 2012-196, slip op. at 13. 10 Because petitioner has failed to show reasonable cause for 11 12 failing to pay timely the tax due as shown on the SFR, we hold that petitioner is liable for the section 6651(a)(2) 13 addition to tax. 14 Section 6654 provides for an addition to tax 15 when a taxpayer fails to pay a required installment of 16 17 18 19 estimated income tax. Each required installment is equal to 25% of the required annual payment. Sec. 6654(d) (1) (A). The required annual payment is equal to the lesser of (1) 90% of the tax shown on the return for 20 the taxable year (or, if the taxpayer filed no return, 90% 21 of the tax for that year), or (2) 100% of the tax shown on 22 23 the return, if any, for the preceding taxable year. Sec. 6654(d)(1) (B). The parties have stipulated Forms 4340, 24 Certificate of Assessments, Payments, and Other Specified 25 Matters, for tax years 2011 and 2012, which together 13)406-150|.cperationseescribers.netlwww.escribers.net demonstrate that petitioner has a Federal income tax 9 liability for 2012, made no estimated income tax payments for 2012, and filed no Federal income tax returns for 2011 and 2012. Respondent has satisfied any burden of production for the section 6654 addition with respect to the year at issue. The Court reminds petitioner that section 6673(a)(1) authorizes this Court to require a taxpayer to pay to the United States a penalty not in excess of 1 2 3 4 5 6 7 8 9 10 $25,000 whenever it appears that: (1) the taxpayer has 11 12 13 instituted or maintained proceedings primarily for delay; (2) the taxpayer's position is frivolous or groundless; or (3) the taxpayer unreasonably failed to pursue 14 administrative remedies. The purpose of section 6673 is 15 16 17 18 19 20 to compel taxpayers to conform their conduct to settled tax principles and to deter the waste of judicial resources. See Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); Salzer v. Commissioner, T.C. Memo. 2014- 188, 2014 WL 4547041, at *11. Although we decline to impose a section 6673 penalty today, we strongly warn 21 petitioner that he may be subject to a section 6673 22 penalty, even upon the Court's own motion, if he persists 23 in maintaining proceedings in this Court primarily for 24 25 delay or continues to press frivolous arguments. We have considered the remaining arguments made 73)406-2250|opefationseescribersnetJwwvrascribeanet 10 by the parties, and to the extent not discussed above, we conclude those arguments are irrelevant, moot, or without 1 2 3 merit. To reflect the foregoing and respondent's concession, a decision will be entered under Rule 155. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 2:21 p.m., the above-entitled matter was concluded.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pn)406-22solopembonseescremetlwwwéaibeisnet CERTIFICATE OF TRANSCRIBER AND PROOFREADER 11 CASE NAME: Keith William Brown v. Commissioner DOCKET NO.: 5817-18 We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 11 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Troy Ray on March 4, 2019 before the United States Tax Court at its session in Los Angeles, CA, in accordance with the 1 2 3 4 5 6 7 8 9 10 applicable provisions of the current verbatim reporting 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. Meribeth Ashley, CET-507 Transcriber 3/10/19 Date Jessica Hernandez Proofreader 3/11/19 Date $73)40 2250|óperstlönseescribersnet|wwwescribersmet