TAX COURT OPINION

Case: Alexander Hyatt
Docket Number: 26157-08
Judge: Colvin
Opinion Type: bench
Filed: 04/16/2009
Pages: 14

UNITED STATES TAX COUR T WASHINGTON , DC 2021 7 ALEXANDER HYATT, Petitione r v . ) Docket No . 26157-08 . COMMISSIONER OF INTERNAL REVENUE, ) Respondent R 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 petitioner and to respondent a copy of the pages of the transcript of the hearing of the above case before Special Trial Judge Robert N . Armen, Jr . at New York, New York, on February 26, 2009, containing Judge Armen's oral findings of fact and opinion rendered at the conclusion of the hearing . In accordance with the oral findings of fact and opinion, an Order of Dismissal and Decision will be entered for respondent . CAL . STAT . S . T . JTJSOR EFIf, lt q (Signed) Robert N . Armen, Jr. Special Trial Judg e Dated : Washington, D .C . April 16, 2009 SERVED Apr 17 2009 1 Bench Opinion by Special Trial Judge Robert N . Armen, Jr . 2 Hyatt v . Commissioner Docket No . 26157-0 8 3 3 February 26, 200 9 4 1. 5 THE COURT : The Court has decided to render 6 oral findings of fact and opinion in this .case, and the 7 following represents the Court's oral findings of fact 8 and opinion . The oral findings of fact and opinion 9 shall not be relied upon as precedent in any other case . 10 II . 11 This proceeding was heard as a regular case 12 pursuant to the provisions of section 7443A(b) (3) of the 13 Internal Revenue Code of 1986, as amended, and Rules 14 180, 181, and 182 of the Tax Court Rules of Practice and 15 Procedure . 16 III . 17 This bench opinion is made pursuant to the 18 authority granted by section 7459(b) of the Internal 19 Revenue Code of 1986, as amended, and Rule 152 of the 20 Tax Court Rules of Practice and Procedure . 21 Hereinafter in this bench opinion, al l 22 section numbers refer to the Internal Revenue Code, as 23 amended and in effect for 2003, the taxable year in 24 issue, and all Rule numbers refer to the Tax Court Rules 25 of Practice Procedure . Heritage Reporting Corporation (202) 628-4888 4 1 IV . 2 Michelle L . Maniscalco appeared on behalf of 3 respondent . There was no appearance by or on behalf of 4 4 petitioner . 5 V . 6 This case is before the Court on respondent's 7 Motion To Dismiss For Failure to State A Claim Upon 8 Which Relief Can Be Granted And To Impose a Penalty 9 Under I .R .C . § 6673, filed December 19, 2008, pursuan t 10 to Rule 40 and section 6673, and supplemented February 11 23, 2009 . 12 Petitioner resided in the State of New York 13 at the time that the petition was filed with the Court . 14 15 VI . The Notice of Deficienc y 16 By notice dated July 23, 2008, respondent 17 determined a deficiency in petitioner's Federal income 18 tax for 2003 of $10,354 . In the notice, respondent also 19 determined an addition to tax under section 6651(a)(1) 20 for failure to file, an addition to tax under section 21 6651(a)(2) for failure to pay, and an addition to tax 22 under section 6654(a) for failure to pay estimate d 23 tax . 24 The deficiency in income tax is based on 25 respondent's determination that for 2003, petitioner Heritage Reporting Corporatio n (202) 628-4888 5 1 failed to report, on a Federal income tax return , 2 wages received from New York City/MTA of $60,082, a 3 capital gain of $1,842 in respect of an investment in 4 Met Life, Inc ., and taxable interest of $32 received 5 from Fleet Bank . 6 The additions to tax under sections 6651 (a) (1) 7 and 6651(a)(2) are based on respondent's determinations 8 that petitioner failed to file a return and failed .to 9 pay tax for 2003 . Finally, the addition to tax unde r 10 section 6654(a) is based on respondent's determination 11 that petitioner failed to pay estimated tax for 2003 . 12 Petitioner's Petitio n 13 Petitioner timely filed a petition for 14 redetermination with this Court, appealing from th e 15 July 23, 2008 notice of deficiency . See secs . 6213(a), 16 7502(a) . 17 In the petition, petitioner alleges in a 18 conclusory fashion that the notice of deficiency was 19 "not a proper Notice of Deficiency under the 20 requirements of the law" and that "I was denied Du e 21 Process ." Remarkably, petitioner admits that "I never 22 filed for 2003 ." Finally, petitioner alleges tha t 23 "The IRS is in default with respect to my requests for 24 information and Due Process . " 25 Significantly, in the petition, petitioner Heritage Reporting Corporatio n (202) 628-4888 6 1 does not assign error nor allege facts specifically in 2 respect of the income determinations made by respondent 3 in the notice of deficiency . In particular, petitioner 4 does not deny receiving wages, capital gain, or interest 5 income, nor does petitioner allege --receiving wages, 6 capital gain, or interest income in any amount less than 7 that determined by respondent in the notice of 8 deficiency . See Parker v . Commissioner , 117 F .3d 785 9 (5th Cir . 1997) ; White v . Commissioner , T .C . Memo . 10 1997-459 . 11 Similarly, petitioner does not deny in the 12 petition that he failed to file an income tax return 13 for 2003 ; indeed, as previously stated, petitioner 14 admits that he failed to file a return for 2003 . 15 However, petitioner does not allege that such failure 16 was due to what would constitute reasonable cause and 17 not willful neglect . 18 Further, petitioner does not deny in th e 19 petition that he failed to pay estimated tax for 2003, 20 nor does he allege that such failure was excused by 21 any legitimate statutory exception . 22 Respondent's Rule 40 Motio n 23 On December 19, 2008, respondent filed his 24 Motion To Dismiss For Failure To State A Claim Upon 25 Which Relief Can Be Granted and To Impose A Penalty Heritage Reporting Corporation (202) 628-4888 7 1 Under I .R .C . § 6673 . The heart of respondent's motion 2 lies in paragraphs 6, 7, and 8, the most relevant 3 portions of which are as follows : 4 "6 . Petitioner makes no factual claims of 5 error in the petition but argues only-law and legal 6 conclusions therein . 7 7 . No justiciable error has been alleged in 8 the petition with respect to the Commissioner' s 9 determination set forth in the notice of deficiency 10 and no facts in support of any such error are apparent 11 therein . 12 8 . The document filed as the petition is 13 not a proper petition, but rather a statement making 14 frivolous arguments with no factual basis . * * * " 15 Court's January 7, 2009 Orde r 16 By Order dated January 7, 2009, the Court 17 directed petitioner to file a proper amended petition, . 18 consistent with Rule 34(b)(4) and (5), containing clear 19 and concise assignments of each and every error that 20 petitioner alleges was committed by respondent in the 21 determination of the deficiency and the additions to 22 tax in dispute and clear and concise statements of the 23 facts on which petitioner bases the assignments o f 24 error . The Court also directed petitioner to file an 25 objection, if any, to respondent's motion . Heritage Reporting Corporation (202) 628-4888 8 1 Petitioner's Response to Court's Orde r 2 On February 3, 2009, petitioner filed an 3 Amended Petition . The tenor of this pleading appears in 4 the last numbered paragraph of the attachment thereto : 5 "Commissioner has failed to=provide an y 6 rebuttal to the issues of law used and/or relied upon 7 by Petitioner in my explanation as to why I am no t 8 required to file a tax return for the year in question . " 9 Significantly, in the amended petition, as 10 in the petition, petitioner does not assign error nor 11 allege facts specifically in respect of the incom e 12 determinations made by respondent in the notice of 13 deficiency . As before, petitioner does not deny . 14 receiving wages, capital gain, or interest income, nor 15 does petitioner allege receiving wages, capital gain, 16 or interest income in any amount less than tha t 17 determined by respondent in the notice of deficiency . 18 See ' Parker V . Commissioner , supra ; White v . 19 Commissioner , supra . 20 Also on February 3, 2009, petitioner file d 21 an Opposition to respondent's motion . Petitioner 22 attached to his Opposition a Memorandum of Law i n 23 support thereof . In a nutshell, petitioner alleges that 24 "the law does not require me to file a tax return" 25 because (1) income, for Federal income tax purposes, is Heritage Reporting Corporatio n (202) 628-4888 d 9 1 only "the product of corporate activities" and (2) the 2 employer, and not the employee, is "the party made 3 liable for payment of the tax on wages . " 4 Hearing on Respondent ' s Motion 5 Pursuant to notice, respondent's motion was 6 called for hearing in New York, New York, o n 7 February 23, 2009 . At the hearing, there was no 8 appearance by or on behalf of petitioner . In contrast, 9 counsel for respondent appeared and presented argument ; 10 counsel also conceded, on technical grounds, the 11 addition to tax under section 6651( a) (2) . See sec . 12 6651(g)(2) ; Cabirac v . Commissioner , 120 T .C . 163 13 (2003) . 1 4 1 5 16 VII . Dismissal for Failure to State a Claim Rule 40 provides that a party may file a 17 motion to dismiss for failure to state a claim upon 18 which relief can be granted . We may grant such a 19 motion when it appears beyond doubt that the party's 20 adversary can prove no set of facts in support of a 21 claim that would entitle him or her to relief . Conley 22 v . Gibson , 355 U .S . 41, 45-56 (1957) ; Price v . Moody , 23 677 F .2d 675, 677 (8th Cir . 1982) . 24 Rule 34(b)(4) requires that a petition filed 25 in this Court contain clear and concise assignments of Heritage Reporting Corporation (202) 628-4888 4 10 1 each and every error that the taxpayer alleges to hav e 2 been committed by the Commissioner in the determination 3 of the deficiency and the additions to tax in dispute . 4 See Gordon v . Commissioner , 73 T .C . 736, 739 (1980) . 5 Rule 34 (b) (5) further requires that the-petition contain 6 clear and concise lettered statements of the facts on 7 which the taxpayer bases the assignments of error . See 8 Jarvis v . Commissioner , 78 T .C . 646, 658 (1982) . . 9 Any issue not raised in the assignments of 10 error is deemed to be conceded . Rule 34(b)(4) ; Jarvis 11 12 v . Commissioner , supra at 658 n .19 ; Gordon v . Commissioner , supra . (Parenthetically, we note that 13 the rule of concession found in Rule 34(b)(4) extends 14 to additions to tax, notwithstanding that, pursuant to 15 sec . 7491(c), the Commissioner ordinarily bears th e 16 burden of production in any court proceeding wit h 17 respect to such additions . Swain v . Commissioner , 118 18 T .C .'358, 363 (2002) .) Further, the failure of a party 19 to plead or otherwise proceed as provided in the Court's 20 Rules may be grounds for the Court to hold such party in 21 default, either on the motion of another party or on the 22 initiative of the Court . Rule 123(a) . Similarly, the 23 failure of a petition to conform to the requirements set 24 forth in Rule 34 may be grounds for dismissal . Rules 25 34 (a) (1) , 123 (b) . Heritage Reporting Corporation (202) 628-4888 1 1 1 The petition filed in this case does not 2 satisfy the requirements of Rule 34(b)(4) and (5) . 3 The same may be said of the amended petition . In 4 short, there is neither assignment of error no r 5 allegation of fact in support of any justiciable claim 6 in issue . 7 The Court's order dated January 7, 2009 , 8 provided petitioner with an opportunity to assign error 9 and allege specific facts concerning his tax liability 10 for the year in issue . Petitioner failed to file a 11 proper amended petition . 12 We see no need to painstakingly address the 13 matters pleaded by petitioner in his pleadings . As the 14 Court of Appeals for the Fifth Circuit has remarked : 15 "We perceive no need to refute these arguments wit h 16 somber reasoning and copious citation of precedent ; 17 do so might suggest that these arguments have some 18 colorable merit ." Crain v . Commissioner , 737 F . 2d 1417, 19 1417 (5th Cir . 1984) Suffice it to say that petitioner 20 is a taxpayer subject to the Federal income tax who is 21 obliged to file a Federal income tax return and pay 22 Federal income tax on his income, specifically including 23 wages, capital gain, and interest . See secs . 1, 24 61(a)(1), (3) and (4), 6012(a)(1), 7701(a)(1) and (14) . 25 See also United States v . Romero , 640 F .2d 1014, 1016 Heritage Reporting Corporatio n (202) 628-4888 12 1 (9th Cir . 1981) ("Compensation for labor or services , 2 paid in the form of wages or salary, has been 3 universally held by the courts of this republic to be 4 income, subject to the income tax laws currentl y 5 applicable .") ; Monaco v . Commissioner , T .C . Memo . 6 1998-284, categorically rejecting the argument that the 7 Commissioner may not determine a deficiency withou t 8 first making an assessment, and affirming the principle 9 that a taxpayer's failure to report tax on a return does 10 not prevent the Commissioner from determining a 11 deficiency in that taxpayer's income tax . 12 Because petitioner's pleadings fail to state 13 a claim upon which relief can be granted, we will grant 14 that part of respondent's motion, as supplemented, 15 seeking the dismissal of this case, subject only to 16 respondent's concession regarding the addition to tax 17 under section 6651(a)(2) . See Scherping v . 18 Commissioner , 747 F .2d 478 (8th Cir . 1984) ; Rules 19 34(a) (1), 123(b) . 20 21 VIII . Imposition of Penalty Under Section 6673(a) 22 We turn now to that part of respondent's 23 motion, as supplemented, seeking the imposition of a 24 penalty against petitioner under section 6673(a) . 25 As relevant herein, section 6673(a)(1) Heritage Reporting Corporation . (202) 628-4888 1 3 1 authorizes the Tax Court to require a taxpayer to pay 2 to the United States a penalty not in excess o f 3 $25,000 whenever it appears that proceedings have been 4 instituted or maintained by the taxpayer primarily for 5 delay or that the taxpayer's position in such proceedin g 6 is frivolous or groundless . 7 The record in this case convinces us tha t 8 petitioner was not interested in disputing the merits 9 of the deficiency in income tax determined b y 10 respondent in the notice of deficiency . See Coleman 11 v . Commissioner , 791 F .2d 68, 71 (7th Cir . 1986) . 12 Rather, the record demonstrates that petitioner regards 13 this case as a vehicle to protest the tax laws of this 14 country and espouse his own misguided views . 15 A petition to the Tax Court is frivolous "if 16 it is contrary to established law and unsupported by a 17 reasoned, colorable argument for change in the law ." 18 Coleman v . Commissioner , supra . Petitioner's position, 19 as set forth in his pleadings and in his Opposition to 20 respondent's motion, consists of tax protestor rhetoric . 21 Based on well-established law, petitioner's position is 22 frivolous and groundless . E .g ., Johnston v . 23 Commissioner , T .C . Memo . 2004-107 (holding frivolous the 24 contentions that the Commissioner cannot determine a 25 deficiency for a year for which a return was not file d Heritage Reporting Corporation (202) 628-4888 .0 / 14 1 and that a taxpayer's failure to file a return shield s 2 the taxpayer from tax liability) . 3 We are also convinced that petitione r 4 instituted and maintained this proceeding primarily, 5 if not exclusively, for purposes of delay . Having to 6 deal with this matter wasted the Court's time, as well 7 as respondent's . Moreover, taxpayers with genuin e 8 controversies may have been delayed . 9 Many years ago, Supreme Court Justice Oliver 10 Wendell Holmes said : "Taxes are what we pay fo r 11 civilized society ." Petitioner undoubtedly feel s 12 himself to be entitled to every benefit that civilized 13 society has to offer ; unfortunately, he feels no 14 obligation to pay his fair share . 15 Finally, we note that petitioner has been 16 before this Court previously in a case in which the 17 Court imposed a $5,000 . penalty on him pursuant to 18 section 6673(a)(1) . Petitioner remains undeterred . 19 In view of the foregoing, we will require 20 petitioner to pay a penalty to the United States in 21 the amount of $7,500 pursuant to the provisions of 22 section 6673(a)(1) . See Coleman v . Commissioner , 23 supra at 71-72 ; Crain v . Commissioner , supra at 1417- 24 1418 . 25 IX . Heritage Reporting Corporation (202) 628-4888 4 15 1 In order to reflect the foregoing, an order o f 2 dismissal and decision will be entered (1) granting that 3 part of respondent's motion, as supplemented, seeking 4 the dismissal of this case, but incorporating 5 respondent's concession regarding the-addition to tax 6 under section 6651(a)(2), and (2) granting that part of 7 respondent's motion, as supplemented, seeking the 8 imposition of a penalty and imposing a penalty on 9 petitioner under section 6673(a) in the amount of 10 $7,500 . 11 X . 12 This concludes the Court's oral findings of 13 fact and opinion in this case . 14 (Whereupon, at 8 :40 a .m ., the bench opinion 15 in the above-entitled matter was concluded . ) 16 1 7 1 8 19 20 21 22 23 24 / / 25 Heritage Reporting Corporation (202) 628-4888