TAX COURT OPINION

Case: Stephen Hollis Briggs & Patricia Ann Briggs
Docket Number: 11940-12
Judge: Buch
Opinion Type: bench
Filed: 02/09/2015
Pages: 7

CZ UNITED STATES TAX COURT WASHINGTON, DC 20217 STEPHEN HOLLIS BRIGGS & PATRICIA ANN BRIGGS, Petitioners, v. ) ) ) ) ) Docket No. 11940-12. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to both petitioners and respondent a copy of the pages of the transcript of the trial in this case that contain the oral findings of fact and opinion that was rendered at the trial session at Salt Lake City, Utah. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. February 9, 2015 SERVED Feb 09 2015 O Capital Reporting Company 3 1 2 3 Bench Opinion by Judge Ronald L. Buch December 1, 2014 Stephen Hollis Briggs Docket No. 11940-12 4 Patricia Ann Briggs 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 THE FOLLOWING REPRESENTS THE COURT'S ORAL FINDINGS OF FACT AND OPINION. THESE FINDINGS OF FACT AND OPINION MAY NOT BE RELIED ON AS PRECEDENT IN ANY OTHER CASE, AND THIS OPINION IS IN CONFORMITY WITH SECTION 7459(b) AND RULE 152(a). FINDINGS OF FACT Mr. and Mrs. Briggs filed a 2009 income tax return. They mailed it on December 31, received by the IRS on January 3", 2011. That return reported zero tax liability, and included with it attached substitutes for W-2 Form Number 4852. Although they included those forms, as they've stipulated in the stipulation of facts, they did indeed receive compensation for services provided. That compensation notwithstanding the arguments presented by Petitioner is indeed income subject to the income tax. We have said and, in fact, the Ninth 24 Circuit has said, that we need not address frivolous 25 arguments, and I have attempted to do so on the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 record today, just to explain to Petitioners that indeed their arguments are frivolous. The Ninth Circuit has said in Cranc versus Commissioner, we perceive no need to refute frivolous arguments with somber reasoning and copious citation of precedent. To do so might suggest that these arguments have some colorable merit. That's 737 F. 2d., 1417, and I apologize, that's Fifth Circuit, 1984. 10 And then in Wnuck versus Commissioner, 11 which I cited a moment ago to the Petitioner, we have 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stated that it's doubtful whether tax jurisprudence would be much advanced by issuing yet another opinion affirming the obvious truisms of the tax law. That's 136 T.C. 498 at Page 511 in 2011. The Commissioner bears the burden of production on penalties. Here the Commissioner has satisfied his burden by showing that the return was, in fact, filed late, that the amount of the deficiency exceeds the threshold amount for a substantial understatement. Accordingly, Respondent has met his burden on penalties. And that brings us to the remaining issue of sanctions under Section 6673, and I'm -- I'm a little troubled here. We have a motion from 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 Respondent. I don't need a motion on this. The 2 Court can on its own motion impose sanctions under 3 4 5 6 7 8 9 Section 6673 and I'm inclined to do so. I can impose sanctions up to $25,000. That amount is out of proportion to the case, and I think what I'd rather do is provide a -- I'll call it an incentive to not pursuing frivolous arguments any further. Just to give you an idea of how frivolous 10 these arguments are, you have in your introductory 11 brief before the United States Tax Court,. you focus 12 13 on the definition of an employee. Employee includes an officer, employee or elected official of the 14 United States, and the definition goes on. 15 16 17 The term employee also includes an officer of a corporation. Includes not mean it excludes other people. When you perform services for Christus 18 Health Utah, for example, you're an employee. And 19 20 21 22 23 24 25 the income tax applies to you. And to read that definition as the word "includes" meaning is limited to, "is" just does not appear in there anywhere. And that appears to be the reading Petitioners have given to it. I can impose a sanction up to $25,000. Again, it's out of proportion to the magnitude of the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 case. Mr. and Mrs. Briggs, based on the amounts reported, you also -- I don't want to impose a sanction that would be an extraordinary burden. My hope is to impose a small sanction and encourage you not to pursue these kinds of arguments further. The 6 Courts of Appeal can and will impose higher 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 sanctions. So I'm going to impose a 6673 penalty of $500, but again, it's a caution. If you come back before our Court, the next time another Judge might go for a higher amount, and if you take an appeal, which you are welcome to do. You have the right to appeal this opinion. But this is in all honesty, this is intended as a friendly caution. If you take an appeal, you run the substantial risk that a Court of Appeals imposes an even higher sanction. So I hope you take all of that into account and hope you take a look at the Wnuck opinion. Mr. Sorensen mentioned an opinion by the name of Waltner. That happens to be an opinion that I wrote. That opinion addresses many of the arguments that I see not only in your introductory brief but also in the document titled Motion to Take Judicial Notice. And again, identifying those arguments as frivolous, so 25 with that the Court will draft its decision. I 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 7 1 2 3 4 don't think there's anything that needs a decision under 155. Mr. Sorensen? MR. SORENSEN: No, Your Honor. THE COURT: Okay. So a decision document 5 will be forthcoming and my understanding is the main 6 7 8 9 10 11 12 13 14 15 16 17 18 19 entrance to the building is accessible for exiting, even though we are now beyond hours. So with that, Mr. Sorensen, any questions? MR. SORENSEN: No, questions, Your Honor. THE COURT: Mr. Briggs, any questions? MR. BRIGGS: When can we expect a decision? THE COURT: I expect that -- I'm guessing here that the decision will be entered on Friday, and then it will be mailed out probably -- we'll send it out from Washington, D.C. It should go out on Friday, so however long it takes the mail to get here, so I suspect you'll get it sometime late next week. MR. BRIGGS: So there is no need for a 20 brief afterwards? 21 THE COURT: Absolutely no need for a brief. 22 Mr. Briggs, again, unfortunately most people that 23 24 25 present the arguments that you've been presenting today have been told these arguments by someone else, they've been led down this path, or I should say 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 misled down this path, and it never ends well. My 8 hope is that you'll take my suggestions and not continue down this path, because it has the potential to lead to greater sanctions. So with that, I think we are now done for the day. Any further questions, Mr. Briggs or Mrs. Briggs? MR. BRIGGS: No, Your Honor. THE COURT: So with that we'll just go off the record. Nobody needs to get up when I get up. (Whereupon, at 6:15 p.m., the above- entitled matter was concluded.) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 2 4 25 866.488.DEPO www.CapitalReportingCompany.com