TAX COURT OPINION

Case: Curtis Stewart Green
Docket Number: 5248-13
Judge: Kroupa
Opinion Type: bench
Filed: 05/29/2014
Pages: 12

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 CURTIS STEWART GREEN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Docket No. 5248-13 ORDE R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of this case before Judge Diane L. Kroupa in San Francisco, California on May 8, 2014, containing her 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, an appropriate order will be issued granting respondent's Motion to Dismiss for Lack of Prosecution and to impose a Penalty Pursuant to I.R.C. § 6673. (Signed) Diane L. Kroupa Judge Date: Washington, DC May 29, 2014 SERVED MAY 29 2014 Capital Reporting Company 3 1 2 Bench Opinion by Judge Diane L. Kroupa May 8, 2014 3 Curtis Stewart Green v. Commissioner 4 5 6 7 8 9 10 11 Docket No. 5248-13 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. THESE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. This bench opinion is made pursuant to the authority granted in section 7459(b) and Rule 152. 12 All section references are to the Internal Revenue 13 14 15 16 17 18 19 20 Code as amended for 2009, 2010 and 2011 (collectively the "years at issue"), and all Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner nor anyone representing petitioner appeared at calendar call or the scheduled hearing on petitioner's Motion to Withdraw Tax Court Petition and Render the Case To Be Settled Between the Two 21 Parties. Tim Froehle appeared on behalf of 22 23 24 25 respondent. FINDINGS OF FACT The record reflects the following facts. Petitioner resided in California at the time he 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 filed the petition. Petitioner timely filed joint income tax returns 3 with his spouse for each of the years at issue. On 4 5 6 7 those returns, petitioner claimed Schedule C income and expenses for a "Real Estate Sales" activity. He also claimed Schedule E income and expenses for a property listed as "San Diego Condo," located at Gill 8 Village Way in San Diego. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Respondent examined petitioner's joint returns and requested supporting documents for petitioner's claimed expenses. Petitioner initially did not respond to these requests, and then when he did respond, he made frivolous arguments and wanted respondent to explain why his returns were selected for examination. Respondent closed the examination and issued a deficiency notice for each of the three years at issue. Petitioner timely filed a petition to contest the determinations in the deficiency notice for all three years at issue. On the petition and in later correspondence with respondent, petitioner continued to challenge the legitimacy of the Federal income tax system and respondent's ability to impose an income tax on his Schedule C earnings. Petitioner prepared amended returns seeking a refund of the taxes paid and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 demanded respondent to process the amended returns. He also asserts that the amended returns make the original returns no longer relevant and that, therefore, the deficiency notice, upon which this case is based, is no longer valid. Petitioner asked respondent in a June 5, 2013 letter, what laws created a specific liability for him to pay taxes, what laws demonstrate how petitioner came within the taxing authority of respondent, what laws give respondent the authority to revoke or override petitioner's Fourth Amendment rights and how petitioner became classified as a "taxpayer." Throughout the proceedings, respondent and the 15 Court have warned petitioner that he was at risk of 16 17 18 the Court imposing sanctions against him including dismissal of his case. The Court cautioned the parties, in the Court's Notice Setting Case for 19 Trial, that their failure to appear [at the call of 20 21 22 23 24 25 the calendar on May 5, 2014] may result in dismissal of the case and entry of decision against you. Respondent in Discovery Motions requested sanctions if petitioner did not comply with the Court's Order. The Court's Order informed petitioner that, if he failed to comply fully with the Court's Order, he may 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 be subject to sanctions including dismissal of the case and entering a decision against him. Petitioner submitted a response to the Court's 4 Order dated April 4, 2014. He generally takes issue 5 with each statement in the Order. First, he questions 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 who wrote the Order and accuses the author of having already decided the case against him. Specifically, he accuses the judge of not being impartial and having pre-conceived notions before the trial begins. In addition, petitioner asserts that the author failed to review the entire record when the author says that "without exception petitioner is challenging the Federal Tax System." He asserts that, if the author had reviewed the entire record, she would have found that petitioner has filed returns for over 40 years and has no history of challenging the Government or the Federal tax system. It has only been recently that petitioner became aware of a large body of evidence from very credible people that the Federal income tax system may be misapplied to some citizens. The Court takes this opportunity to advise petitioner that the record in this proceeding relates only to the three years at issue. It lacks the information he says is in the record. Petitioner failed to comply with the Court's 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 Rules and Orders. Petitioner failed to stipulate to facts as required under Rule 91. Petitioner failed to submit a pre-trial memorandum as required. Petitioner failed to attend calendar call and failed to attend the scheduled hearing on his Motion to Withdraw Tax 6 Court Petition and Render the Case To Be Settled 7 8 9 Between the Two Parties. Likewise, petitioner has refused to produce documents to respondent arguing that he has a Fourth and Fifth Amendments right to 10 withhold them. Petitioner's answers to respondent's 11 12 13 14 15 16 17 18 19 20 21 22 23 24 discovery requests were incomplete, inadequate and contained frivolous arguments. Petitioner was not forthcoming with relevant information that would have been helpful to his case. Respondent filed a Motion to Dismiss For Lack of Prosecution and to Impose a Penalty Pursuant to I.R.C. § 6673. OPINION Petitioner follows in the footsteps of numerous others who have unsuccessfully attempted to avoid paying Federal income taxes. Petitioner uses war-torn arguments that this Court and other courts have found frivolous and sanctionable. Petitioner makes his arguments by taking portions of the Code, the 25 Constitution and United States Supreme Court opinions 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 out of context. Petitioner challenges the legitimacy of the Federal income tax system and respondent's 3 ability to impose income tax. Simply put, it does. 4 5 6 7 8 9 See secs. 61(a), 6001, 6012 and 6072. We need not discuss petitioner's erroneous positions at length. See Wnuck v. Commissioner, 136 T.C. 498 (2011). To refute petitioner's arguments with somber reasoning and conspicuous citation of precedent might suggest that these arguments have some colorable merit. 10 Crain v. Commissioner, 737 F.2d 1417, 1418 (5th Cir. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1984). We next are asked to decide whether to grant respondent's motion to dismiss for failure to properly prosecute. We stated all the actions that petitioner failed to perform which equate with his failure to prosecute this case. We will not repeat them here. Respondent and the Court repeatedly warned petitioner that dismissal was an appropriate sanction for the actions that petitioner was taking. We may dismiss a case at any time and enter a decision against the taxpayer for failure to properly prosecute or for other cause we deem sufficient. Rule 123(b). Dismissal of a case is a sanction resting in the trial court's discretion. Levy v. Commissioner, 87 T.C. 794, 803 (1986). Dismissals for 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 failure to properly prosecute normally arise where a party fails to appear at trial. Even dismissals of cases have been affirmed where the taxpayer appeared at trial attempting to stall the proceedings and delay the collection of taxes. See, e.g., Noli v. Commissioner, 860 F.2d 1521 (9th Cir. 1988); 7 Montgomery v. Commissioner, 367 F.2d 917 (9th Cir. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1966). Courts have the inherent power to issue orders as they deem necessary and prudent to achieve the orderly and expeditious disposition of their cases. See Roadway Exp., Inc. v. Piper, 447 U.S. 752, 764- 765 (1980); Link v. Wabash R.R. Co., 370 U.S. 626, 633 (1962); Williams v. Commissioner, 92 T.C. 920, 932-933 (1989). In light of the foregoing, we shall grant respondent's Motion to Dismiss for Lack of Prosecution and sustain respondent's deficiency determinations in the statutory deficiency notice. See, e.g., Marryat v. Commissioner, T.C. Memo. 1990- 438. It is a fundamental principle of tax litigation that gross income includes all income from whatever source derived, including self-employment income and rental income. Sec. 61(a)(1). Petitioner argues, however, that he is not a person required to file a return and pay tax. Simply put, he is. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 10 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 We now focus on whether respondent has met his burden of production as to additions to tax and penalties. Higbee v. Commissioner, 116 T.C. 438 (2001); Sec.7491(c). This Court has held that the Commissioner meets the burden of production if he shows that the taxpayer substantially understated income tax. Prince v. Commissioner, T. C. Memo. 2003- 247. A substantial understatement of tax exists when the understatement of tax.exceeds the greater of 10 percent of the amount of tax required to be shown, or $5,000. Sec. 6664(d)(1) (A). Petitioner's tax required to be shown on the return for 2009 was $28,511, 10 percent of which is $2,851.10. Petitioner's tax liability shown on that return was $4,005. Thus, there was a substantial understatement for 2009 because the understatement is $24,506, which amount exceeds the greater of 10 percent of the tax required to be shown on the return ($2,851.10) or $5,000. Respondent has therefore met his burden of production for 2009. Petitioner's tax required to be shown on the return for 2010 was $32,393.,10 percent of which is $3,239.30. Petitioner's tax liability shown on that return was $3,118. Thus, there was a substantial understatement for 2010 because the understatement is 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 $29,275, which amount exceeds the greater of 10 percent of the t.ax required to be shown on the return ($3,239.30) or $5,000. Respondent has therefore met his burden of production for 2010. Petitioner's tax required to be shown on the return for 2011 was $43,207, 10 percent of which is $4,320.70. Petitioner's tax liability shown on that return was $3,282. Thus there was an understatement for 2011 of $39,925, which amount exceeds the greater of 10 percent of the tax required to be shown on the return ($2,851.10) or $5,000. Respondent has therefore met his burden of production for 2011. Accordingly, respondent has met the burden of production for the accuracy-related penalty for all three years at issue. We next determine whether to impose a penalty against petitioner under section 6673. Section 6673 authorizes the Tax Court to require a taxpayer to pay to the United States a penalty up to $25,000 whenever it appears that proceedings have been instituted or 21 maintained primarily for delay or that the taxpayer's 22 23 24 25 position in such proceedings is frivolous or groundless. See sec. 6673; Scruggs v. Commissioner, T.C. Memo. 1995-355, aff'd without published opinion, 117 F.3d 1433 (11th Cir. 1997). The purpose of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 5 6 section 6673, like that of section 6702, is to compel taxpayers to think and to conform their conduct to settled tax principles. See Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986). Despite numerous warnings from the Court and respondent, petitioner persisted and wasted this 7 Court's limited time and resources. Petitioner's 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tactics have consumed valuable Government resources. These tactics should not be condoned. They damage the integrity of the Federal tax litigation system because the time and attention the Court and respondent must devote to these frivolous arguments deprives other taxpayers with genuine tax controversies. See Abrams v. Commissioner, 82 T.C. 403, 412 (1984). We are mindful that petitioner is representing himself and may not be familiar with all the Court's rules and procedures. Pro se status, however, is not a license to litter the dockets of the Federal courts with ridiculous allegations concerning the Code. Parker v. Commissioner, 117 F.3d 785 (5th Cir. 1997). Respondent contends the Court should impose against petitioner a $1,000 penalty under section 6673 for each year at issue as this is the first time petitioner is making such arguments . We would have 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 1 2 3 4 5 6 7 8 9 imposed a greater amount given the large amount of taxes and additions to tax due from petitioner ($100,000) and that three years were at issue. We warn petitioner, however, that the Court may consider imposing a greater penalty if he returns to the Court and advances similar arguments and wastes the Court's and respondent's limited resources. To reflect the foregoing, an appropriate order and dismissal will be issued granting respondent's 10 Motion to Dismiss for Lack of Prosecution and to 11 12 13 14 15 16 17 Impose a Penalty Pursuant to I.R.C. § 6673, as to the years 2009, 2010 and 2011. The order will also reflect that a $3,000 penalty under section 6673 shall be imposed against petitioner. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 12:10 p.m., the above-entitled 18 matter was concluded.) 19 20 21 22 23 24 25 866.488.DEPO www.Capita1ReportingCompany.com