TAX COURT OPINION

Case: William Sandlin McLaurine, II
Docket Number: 31195-08
Judge: Wherry
Opinion Type: memo
Filed: 10/26/2010
Pages: 12

JMP T.C. Memo. 2010-236 UNITED STATES TAX COURT WILLIAM SANDLIN MCLAUPINE II, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 31195-08. , { Filed October 26, 2010. P failed to report his 006 wages, and R determined a the P contested t-he deficiency, arguing that deficiency. U.S. Government. did not have the authority to tax him because he is a citizen onl of Alabama and not of United States. the Held: P is liable for the deficiency. Held, further, P is lia le for a sec. 6673, I.R.C., penalty. William Sandlin McLaurine I] pro se. Marshall R. Jones, for respohdent.. SERVED Oct 26 2010 - 2 - MEMORANDUM FINDINGS OF FACT AND OPINION WHERRY, Judge: This case is before the Éourt on a petition for redetermination of an income tax deficienåy of $1,209 that respondent determined for petitioner's 2006 tàx year. The issues for decision are (1) whether there is a tax deficiency or overpayment and if so, the amount thereof and (2) whether this Court should impose a section 6673 penalty on petitioner for filing a frivolous or groundless petition and instituting proceedings primarily for protest or delay.1 FINDINGS OF FACT At the time he filed his petition with t is Court, petitioner resided in AIabama.2 Absent stipulation to the contrary, this case would be appealable to the Court of Appeals Il for the Eleventh Circuit. See sec. 7482(b) (1) (A). Petitioner was born in Virginia. Respon ent asserts that during 2006,.the tax year at issue, petitioner received $19,010 in wages from an employer who had apparently issued him a Form W- All section references are to the Internal Revenue Code of 1986, as amended and in effect for the year at issue. All Rule references are to the Tax Court Rules of Practice and Procedure. 2Petitioner insists that at the time of filing the petition, he was not a resident of Alabama but, "an inhabitant of the State of Alabama." This semantic distinction is unworthy of a response, and we decline to give it one. instead, - 3 - 2, Wage and Tax Statement, to that effect and had sent a copy to respondent. For 2006 petitioner filed a Form 1040NR, U.S. Nonresident .Alien Income Tax Return, showing no income and - subsequently attempted to file a Form 1040X, -Amended U.S. Individual Income Tax Return, with a Form 1040NR.3 On the basis of petitioner's failure to include in reported income the $19, 010 of wages, respcndent mailed to petitioner; on September 22, 2008, a notice of deficiency showing a deficiency of $1,209 for petitioner's 2006 t x year. Petitioner timely- petitioned this Court.4 A trial was held on May 25, 2010, in Mobile, Alabama. Petitioner does not dispute receipt of the wages from his "employment for persona-l services." Instead, petitioner argues that he is not a citizen of the United States and, therefore, the U.S. Government cannot tax him on wagës he earned in Alabáma. In 3Respondent indicates he rec ived petitioner' s Form 1040NR In his petition, petitioner stated on or about June 23, 2008. that he that he had made mistakes in filing the Form 1040NR, but had "refiled a 1040X with 1040NR on December 16, 2008 to correct the mistakes . " submission of this case. There is no allecfation by either party that the the Form 1040X has any effect on the' outcome of 4Petitioner had until Dec. 22, 2008, to timely file a petition with this Court. Petitioner's petition was not filed until Dec. 29, 2008; however, it was postmarked Dec. 16, 2008. Under sec. 7502, a timely mailed petition may be treated as timely filed and, Court. therefore, pet tioner timely petitioned this his petition, petitioner states "The petitioner is not a 'citizen. || of the United States' * * * {The]: source of tàxation in this matter come {sic] from employment -for persona services in a foreign country and is excluded from gross income and taxable income by the tax code" Petitioner alleges that "The term foreig in the United States law refers to the State of Alabama, be ause the laws of the United States are foreign to the State of Alabama." When his case was called for scheduling at ca endar call on May 24, 2010, petitioner submitted a written motion to dismiss for lack of jurisdiction, which this Court, after hearing, denied." Petitioner's motion alleged.that this Court listed him as "pro se when in fact * * * [he] is Sui uris", that- his name should not have been capitalized in the caption of the case, and that the 10th Amendment to the Constitution and ! "necessary and proper clause" had been grossly misinterpreted by both courts and the U.S. Government. Petit oner's argument that the 10th Amendment has been misinterprete appears to center around the permissible exercise of powe by the Federal Government, which, according to petitioner, excludes levying li an income tax. sThe written statement, with respondent's consent, was filed as petitioner's pretrial memorandum. Petitioner had not provided a pretrial memorandum. - 5 - Petitioner used the calendar call to expand on his political arguments, explaining th basis for his contention that he is not a U.S. citizen. »According to petitionër, natural born citizens under the 14th Amendment to the - Constitution are only- those who "are born and reside in the District of Columbia". Since petitioner was born in Virginia and asserts that he never had an-intent to be naturalized, he claims he is not a citizen of the United States. At calendar call, the Court ttempted to explain to petitioner that he was a citizen oth of Alabama and the United States and that "the U.S. Government may impose·an income tax on all * * * citizens f the United States". We further advised petitioner that t is Court is not the proper forum for expressing disagreement with the Federal Government's tax laws and policies and that he should instead consider the ballot box and letters to Congress or the President. We warned petitioner that if at trial he failed to present a case on the merits he còuld be.subject to a penalty under section 6673. 'Respondent's pretrial memorandum, which petitioner received and read before the trial, stated that sec. 6673 authorized this Court to award penalties. Further, respondent questioned (continued...) At the May 25, 2010 trial, which lasted 16 minutes, petitioner did not testify or introduce any witnesses, stating that he was "under duress, * * * [and did] not ..wish to make any argument." Petitioner did present a written statement expressing his belief that he was under duresa and therefore unable to make his case or argument . Presumably he was referring to the Court's informing him that sèction 6673 authorizes the Court to impose a penalty of up to $25, 000 if the Court concludes the case was brought primarily for delay and/or is frivolous or groundless. OPINION I. Jurisdiction and Burden of Proof . A. Jurisdiction We begin by confirming our jurisdiction ver petitioner's claims . Our jurisdiction to determine a Federal income tax deficiency depends on the issuance of a valid notice of def iciency and a timely filed petition. Secs . 6212 (a) , 6213(a), 6214(a); Monge v. Commissioner, 93 T.C. 22, 27 (1989). Petitioner filed a timely petition in response to.a valid notice of deficiency regarding his 2006 tax year, and we have jurisdiction over the case. ' ( . . . continued) petitioner at trial as to whether the potential sec. 6673 penalty had caused him to change hi position. Petitioner answered that it had not. imposition of a B. .Burden of Proof - 7 - Generally, the Commissioner's determination of a taxpayer's liability in the notice of deficiency is presumed correct, and the taxpayer bears the burden of proving that the determination.is improper. See R le 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). But in the Eleventh Circuit, for the presumption of cqrrectness to apply in some - cases involving the receipt of un eported income, the deficiency determination must be supported by "'some evidentiary foundation linking the taxpayer to the alleged income-producing activity.'" Blo m v. Commissioner, 994 F.2d ' 1542, 1548-1549 (11th Cir. 1993) (quoting.Weimerskirch v. Commissioner, 596 F.2d 358, '362 (9th Cir. 1979), revg. 67 T.C. 672 (1977)), affg. T.C. Memo. 1991-636. However, petitioner has not disputed respondent's deficiency determination on the grounds that it was incorrect, arbitrary, and did not link him with an income-pr'oducing activity, and therefore the burden of proof remains on petitioner.' See, e.g., Dunne v. 'We note that while an evidentiary foundation is needed in the required support is "minimal". unreported income cases, Blohm v. Commissioner, 994 F.2d 1542, 1548-1549 (11th Cir. 1993), affg. T.C. Memo. 1991-636; see a so Amey & Monge, Commissioner, 808 F.2d 758, 761 11th Cir. 1987) the situation where the burden of proof shifts to the Commissioner "'is rare and only occurs where the Commissioner has introduced no substantive eviden e, and the evidence shows that the claimed tax deficiency arisi g from unreported income was (quoting derived by the government (continued...) from unreliable evidence'" Inc. v. (stating that || - 8 - Commissioner, T.C. Memo. 2008-63 (concluding that allowing taxpayers to raise burden of proof for the fiEst time on appeal would prejudice the IRS because if the'taxpayer had || raised the issue earlier,. the IRS could have jresented evidence); see also White v.' Commissioner, T.C. Memo. 1997- 459.* (...continued) Gatlin v. Commissioner, 754 F.2d 921, 923 (11th Cir. 1985), affg. T.C. Memo. 1982-489)), affg. Amis v. Commissioner, T.C. Memo. 1984-642. Once the "minimal evidentiary sho ing has been made, the deficiency determination is presumed correct, and it becomes the taxpayer's b'urden to prove it arbitrary or erroneous." v. Commissioner, supra at 1549 (citing Gold Eáporium, Commissioner, 910 F.2d 1374, 1378 (7th Cir. 1990), affg. Malicki v. Commissioner, T.C. Memo. 1988-559). Inc. v. Blohm issues * such issue,." The burden will shift only if Under sec. 7491(a).(1), * inter alia, complied with aþplicable the burden of proof on factual that affect the taxpayer's tax liability may þhift to the • Commissioner where the "taxpayer introduces chedible evidence to * with respect the taxpayer has, substantiation requirements and "cooperated with reasonable requests by the Secretary for witnesses, meetings, and interviews". raise the burden of proof evidence, and failed to comply with the substantiation requirements. Accordingly, sec. 7491(a) does not shift the burden of proof inf'okmation, documents, Sec. 7491(a) (2). Petitioner did not introduce any credible issue, did not to respondent. "Even if petitioner had alleged that the deficiency was || incorrect and arbitrary, petitioner's tacit acknowledgeent he received the alleged wages is enough "miniÉal evidence" the presumption of correctness to attach to the notice of deficiency. Respondent determined that petitloner received wages of $19,010. Petitioner does not deny this, aYguing in his petition only that "the determination of employment for personal services in a foreign,country." See Havrilla v. Commissioner, No. 92-70025, -1992 Ú.S. App. LEXIS 30298, 1992 WL 332144 (9th Cir., Nov. 10, 1992) the tax owed is based on that for (affirming Tax (continued. .¯. ) II. Taxation of Salary Income Petitioner invoked the jurisdiction of this Court but has not denied and at trial did n t produce evidence or rebut respondent's determination that h received and fai-led to report taxable wages of $19,010 in 2006. Rather, petitioner argues that he does not owe the d ficiency because he is not a U.S. citizen and, therefore, the dnited States does not have the authority to tax him. Petitioner's arguments are without merit and lack factual and legal foundation, and "we are not obligated to exhaustively review and rebut petitioner's misguided - contentions." See Sanders v. Commissioner, T.C. Memo. 1997- 452. To "refute these arguments with somber reasoning and copious citation of precedent * * * might suggest that these arguments have some colorable merit." See Crain v. "(...continued) Court's dismissal after the taxpayer had argued that the Commissioner failed to meet his durden of demonstrating that the taxpayer owed taxes on unreporteÒ income yet the taxpayer did not dispute the receipt of wages, arguing instead.only that- the income was not taxable), affg. T Ca Memo. 1991-497;. Basile v. Commissioner, T.C. Memo. 2005-51 (holding that admissions as well as the Commisàioner's answer provided sufficient evidence linking the income); Malfatti v. Commissioner, T.C. Memo. 2005-19 (holding that evidence including the taxpayer's admissions sufficiently linked the taxpayer to income-producing activities), affd. 168 Fed. Appx. 786 (9th Cir. 2006). axpayer to the unreported taxpayer's deemed - 10 - Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1 84); see also United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993); || Nieman v. Commissioner, T.C. Memo. 1993-533 (dtating taxpayer's absurd arguments that as a citizen"of Illinois he did not owe Federal income taxes were "no mor than stale tax protester contentions long dismissed summarily by this Court"); Solomon v. Commissioner, T.C. Memo. 11993-509, affd. -Il without published opinion 42 F.3d 1391 (7th Cir. 1994); Martin v. Commissioner, T.C. Memo, 1990-560. Since etitioner acknowledges being born in.Virginia, he is a qitizen of the United States and subject to Federal income tax." See U.S. Const. amend. XIV, sec. 1. We therefore sustain the deficiency respondent determined for petitioner's 2006 tax year. III. Section 6673 Penalty We believe petitioner's case to be appropeiate for a section 6673 penalty. Section 6673(a) (1) authbrizes us to impose a penalty not in excess of $25,000 on a taxpayer for instituting or maintaining proceedings primarily for delay or in which the taxpayer's position is frivolous or groundless. A position "'is "frivolous" where it is "contrary to li "The Fourteenth Amendment to the ConstituÊion states: "All persons born or naturalized in the United States, citizens of reside." U.S. Const. amend. XIV, sec. 1. the United States and of * * are the State wherein they * - 11 - established.law and unsupported by a reasoned, colorable argument for change in the.law"'." Williams v. :Commissioner, 114 T.C. 136, 144 (2000) (quoting Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986)). This Court has stated numerous times that tax-protester arguments such as petitioner's are frivolous and warrant the imposition of a section 6673 penalty.1 For example, in Martin v. Commissioner, supra, the taxpayer alleged that "as a citizen resident of the State of California, it would be constitutionally impermissible to exact a tax from himson income earned within the United States". This Court rejected the taxpayer's claims and imposed an $8,000 section 6673 penalty. Id.; see also Callahan . Commissioner, T.C. Memo. 2010-201 (rejecting taxpayer's argument that as a citizen of Wisconsin he did not owe 'Federal income taxes and imposing a $3,000 section 6673 penalty); Nieman v..Commissioner, supra. (rejecting taxpayer's argument that as a citizen of Illinois he did not owe Federal income taxes and imposing a $1,000 section 6673 penalty); Solomon v. Commissioner, supra (rejecting the taxpayer's argument that as a citizen of Illinois he did not owe Federal income taxes and imposing a $5,000 section 6673 penalty). || - 12 - We conclude that this case warrants the ieposition of a section 6673 penalty and, therefore, impose a penalty of $1,000 to be paid to the United States. We consider it an abuse of our process that "Taxpayers with genuine controversies were delayed while we considered this case." Solomon v. Commissioner, supra. We have exercised restraint in penalizing petitioner , under section 6673. This appears to have been the first time petitioner has advanced. such frivolous or groundless arguments before us, and we note the deficiency .was only $1,209. However, if petitioner insists on continuing his tax-protester rhetoric in this Court, we will be inclined to impose a significantly higher section, 6673 penalty in the future. The Court has considered all of petitione 's contentions, arguments, requests, and statements. To the extent not discussed herein, we conclude that they are me itless, moot, or irrelevant. To reflect the foregoing, e - 1 Decision will be entered for respondent. il