TAX COURT OPINION

Case: James J. Pappert
Docket Number: 18010-10
Judge: Thornton
Opinion Type: bench
Filed: 12/22/2011
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES J. PAPPERT, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 18010-10. Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith the pages of the the to petitioner and to respondent a copy of transcript of Thornton at Philadelphia, Pennsylvania, on December 6, 2011, containing his oral findings of fact and opinion rendered at conclusion of in the above case before Judge Michael B. the trial. the trial In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Michael B. Thornton Judge Dated: Washington, D.C. December 22, 2011 gggo orc 23 zott 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 3 Bench Opinion by Judge Thornton . December 6, 2011 Pappert v. Commissioner Docket No. 18010-10 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 findings of fact and opinion shall not be relied upon as.precedent. This bench opinion is made pursuant to the authority granted by § 7459(b) and Rule 152. Section references are to the Internal Revenue Code in effect for the taxable years at issue. Rule references are to the Tax Court Rules of Practice and Procedure. All dollar amounts are rounded to the nearest dollar. This case was tried on December 5, 2011, in Philadelphia, Pennsylvania. Petitioner James J. Pappert tried his case pro se. Carol Lynn Moran represented Respondent. Respondent determined a $44,750 deficiency in Petitioner's 2007 federal income tax and determined that Petitioner was liable for additions to tax under §§ 6651(a) (1), 6651(a) (2) and 6654. The issues for decision in this case are: 1) Whether Petitioner has 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 a deficiency of $44,750 in his 2007 federal income tax and 2) whether Petitioner is liable for additions to tax pursuant to §§ 6651(a) (1), 6651(a) (2) and 6654 of $10,069, $5,146 and $2,037, respectively. Findings of Fact. In 2007, Petitioner received $72,996 from Martin P. Valderrama, TA MV Foods in nonemployee compensat.ion and $62,681 from DHC Enterprises Corporation in nonemployee compensation, as reported to the IRS by third parties. Petitioner did not file a federal income tax return for 2007 or pay any portion of his 2007 federal tax liability. Respondent prepared a substitute for return based on the information reported by third parties. Opinion. At the trial, the only issue that Petitioner raised was that Respondent's agents did not have proper authority to sign the notice of deficiency and the § 6020(c) certification for substitute for return due to a lack of delegation of authority from the Secretary. This argument is without merit. The authority to determine and issue notices of deficiency is vested by statute in the Secretary of the Treasury or his delegate. Sections 6212(a), 7701(a) (11) (B) and (12) (A) (i). Similarly, the authority to prepare a substitute for return is vested Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 by statute in the Secretary, which includes his delegate. Sections 6020 (a), 7701(a) (11) (B) and (12) (A) (i). The Secretary's authority may be redelegated to a host of officers or employees. Sections 301.6212-1(a), 301.7701-9(b) and (c), Proced. & Admin. Regs. The presumption of official regularity supports the official acts of public officers and, in the absence of clear evidence to the contrary, Courts presume that they have properly discharged their official duties. United States v. Chemical Found., Inc., 272 U.S. 1, 14-15 (1926); See Coleman v. Commissioner, 94 T.C. 82, 91 (1990). Petitioner has offered no evidence or reason to suggest that IRS officers and employees who signed the notice of deficiency and § 6020 certificate lacked the authority to do so. Petitioner has failed to carry his burden to show that the notice of deficiency or § 6020 certificate was invalid. See Perlmutter v. Commissioner, 44 T.C. 382, JHY$ (1965), affd. 373 F.2d 45 (10th Cir. 1967). In any event, this Court generally will not look behind a deficiency notice to examine Respondent's motives for the administrative policy or procedures involved in making his determinations. See 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 Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324, 327-329 (1974). Rather, the Court's "focus is on the correctness of the deficiency determined in the statutory notice." Estate of Brimm v. Commissioner, 70 T.C. 15, 22 (1978). Section 6651(a) (1) imposes an addition to tax for failure to file a return by the date prescribed, unless Petitioner shows that the failure to file was due to reasonable cause and not willful neglect. Section 6651(a) (2) imposes an addition to tax for failure to timely pay the amount of tax shown . on a return, unless Petitioner shows that the failure to pay was due to reasonable cause and not willful neglect. Section 6654 (a) imposes an addition to tax on an underpayment of required installment of individual estimated tax. Respondent bears the burden of production with respect to Petitioner's liabilities for these additions to tax. Section 7491(c). Once the Respondent meets the burden of production, Petitioner bears the burden of proving he is not liable for the additions to tax. See Higbee v. Commissioner, 116 T.C. 438, 447 (2001). Respondent has met his burden of production 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 by showing that Petitioner failed to file a 2007 federal tax return and failed to make any payment towards his 2007 federal. tax liability. Petitioner has presented no evidence showing his failure to file, pay the tax imposed or pay estimated tax was due to reasonable cause. We therefore sustain Respondent's determination that Petitioner is liable for additions to tax under §§ 6651(a) (1), 6651(a) (2) and 66543 Respondent has moved for damages under § 6673. Under § 6673f(a) (1), this Court may require the taxpayer to pay to the United States a penalty of up to $25,000 whenever it appears to the Court that proceedings have been instituted or maintained by the taxpayer primarily for delay, the taxpayer's position in the proceeding is frivolous or groundless, or the taxpayer has unreasonably failed to pursue available administrative remedies. In his motion, Respondent outlines numerous circumstances indicating that Petitioner has instituted and maintained these proceedings primarily for delay, raising only frivolous and groundless arguments, including arguments that he is not required to file a tax return and that his income for the year at issue is not relevant. In addition, Petitioner refused to participate in good faith in the 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 stipulation process and has filed untimely and unmeritorious requests and untimely motions to continue, further evidencing a purpose to delay these proceedings. Petitioner has not raised any meaningful defense to Respondent's motion. Petitioner has ·been warned numerous times by both Respondent and this Court about the possibility of sanctions under § 6673. Petitioner has not heeded these warnings and has wasted the time of Respondent and this Court. It appears to this Court that Petitioner has instituted these proceedings primarily for delay, has raised only frivolous and groundless arguments ånd has unreasonably failed to pursue available administrative remedies. We shall, therefore, require Petitioner to pay a penalty under § 6673 (a) (1) of $3,000. Decision will be entered for Respondent. This concludes the Court's findings of fact and opinion in this case. (Whereupon, at 10:48 a.m. the bench opinion in the above-entitled matter was concluded.) // // // // Heritage Reporting Corporation (202) 628-4888 Certificate of Transcriber and Proofreader CASE NAME: Pappert v. Commissioner DOCKET NUMBER: 18010-10 We, the undersigned, do hereby certify that the foregoing pages, numbers . through 1, inclusive, are the true, accurate and complete transcript prepared f rom the tape made by electronic recording by Michael McCann on December 6, 2011 . be f ore the United States Tax Court at its session in . Philadelphia, Pennsylvania in accordance ·with the applicable ·provisions of the current verbatim reporting contract of the Court, and have verified the accuracy of the transcript by comparing the printed transcript against the verbal recording. Karen Levandowski (Signature of Transcriber) 12/6/11 (Print-Transcriber Name)_ (D Micah J. Gillett (Signature of P'roofreader) 12/12/11 (Print-Proofreader Name) (Date) Heritage Reporting Corporation . (202) 628 4888