TAX COURT OPINION

Case: Edward E. Slingsby
Docket Number: 27943-07
Judge: Colvin
Opinion Type: bench
Filed: 02/09/2009
Pages: 10

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 EDWARD E . SLINGSBY, Petitione r SERVICE v . ) Docket No . 27943-07 . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s . 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 September 23, 2008, trial in the above case before Judge . Robert A . Wherry, Jr ., at Chicago, Illinois on September 25, 2008, containing the oral findings of fact and opinion rendered at the conclusion of the trial . In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155 . (Signed) Robert A . Wherry, Jr. Judge Dated : Washington, D .C . February 9, 2009 SERVED Feb 10 2009 3 1 Bench Opinion of Judge Robert A . Wherry, Jr . 2 September 25, 200 8 3 Slingsby v . Commissioner Docket No . 27943-07 4 THE COURT : As the Court announced at the trial on 5 Tuesday afternoon, the Court is issuing a bench opinion i n 6 Slingsby v . Commissioner , Docket No . 27943-07 . 7 The Court has decided to render oral findings of 8 fact and an oral opinion in this case, and the followin g 9 represents the Court's oral findings of fact and opinion . 10 The oral findings of fact and opinion shall not be relied 11 upon as precedent in any other case . 12 This bench opinion is made pursuant to th e 13 authority granted by Section 7459(b) and Rule 152 . Unless 14 otherwise indicated, all section references are to th e 15 Internal Revenue Code of 1986, as amended, and all Rule 16 references are to the Tax Court Rules .of Practice an d 17 Procedure . This case is before the Court on a petition for 18 redetermination of _an $8,129 deficiency in Federal income 19 tax and additions to tax under Section 6651(a)(1) and (2) 20 and Section 6654(a) that Respondent determined fo r 21 petitioner's 2003 tax year . The actual amount of the 22 deficiency remaining unpaid, $1,272 plus applicable 23 additions to tax and interest, is significantly lowe r 24 because a portion of the tax due had been withheld . The 25 issues for decision are : Heritage Reporting Corporation (202) 628-4888 4 1 (1) Whether $53,099 paid to petitioner in 2003 a s 2 wages was includable in petitioner's 2003 income ; and , 3 6 (2) whether petitioner is liable for the aforementioned additions to tax for 2003 . .FINDINGS OF FACT Some of the facts have been stipulated, and the 7 stipulated facts and accompanying exhibits are hereby 8 incorporated by reference into our findings . At the time he 9 filed his petition, petitioner resided in Illinois . 10 Petitioner received a Form W-2, Wage and Ta x 11 Statement, for his 2003 tax year from two payors, who were 12 apparently his employers . A Form W-2 from .Administaf f 13 Companies II, L .P ., indicated that he received $20,475 .46 in 14 wages in 2003 and that $2,112 .12 in Federal income tax had 15 been withheld . A second Form W-2, from Carsdirect .com , 16 indicated that he received $32,624 .25 in wages in 2003 and 17 that $4,745 .28 in .Federal income tax had been withheld . 18 Respondent received petitioner's 2003 Form 1040, 19 U .S . Individual Tax Return, on November 22, 2005 . On his 20 return, petitioner reported $0 in wages . In attached Forms 21 4852, Substitute for Form W-2, Wage and Tax Statement, or 22 Form 1099-R, Distributions From Pensions, Annuities , 23 Retirement or Profit-Sharing Plans, IRAs, Insuranc e 24 Contracts, Etc ., Petitioner stated that he received "No 25 response from company to issue forms correctly listing Heritage Reporting Corporatio n (202) 628-4888 5 1 payments of 'wages' as defined in [sections] 3401(a) [and ] 2 3121(a) . " 3 On August 29, 2007, Respondent issued t o 4 petitioner a notice of deficiency for his 2003 tax year . 5 The notice of deficiency reflected a deficiency and addition S 6 to tax pursuant to Section 6651(a)(1) and (2) and sectio n ~Uj 7 6654 . Petitioner filed a timely petition in which he requested the following relief : "Recalculation of Deficiency, removal of any deficiency, refund of monie s 10 withheld as taxes and sent to IRS in error ." A trial was 11 held on September 23,2008, in Chicago, Illinois . 12 OPINION 13 I . Whether Petitioner Had Unreported Incom e 14 Section 1(c) provides that "There is hereby 15 imposed on the taxable income of every individua l 16 a tax determined in accordance with" tables provided in the 17 Internal Revenue Code . (Emphasis added) . Taxable income is 18 , generally defined by section 63 as gross income minu s 19 deductions . Section 61(a) specifies that "Except a s 20 otherwise provided", gross income includes "all income from 21 whatever source derived," including "Compensation fo r 22 services, including fees, commissions, fringe benefits . and 23 similar items" . 24 - The Commissioner's determination of a deficiency 25 is generally presumed correct and the taxpayer bears the Heritage Reporting Corporatio n (202) 628-4888 6 1 burden of proving that the determination is improper . See 2 Rule 142(a) ; Welch v . Helvering , 290 U .S . 111, 115 (1933) . 3 Although section 7491(a) may shift the burden of proof t o 4 the Commissioner in specified circumstances, petitioner ha s 5 not satisfied the prerequisites under section 7491(a)(1) and 6 (2) for such a shift . 7 . Here, the parties stipulated that petitione r 8 received Forms W-2 from Administaff Companies II, L .P . and 9 Carsdirect .com . Those Forms W-2 are attached to th e 10 stipulation and reflect that petitioner was paid a total of 11 $53,099 in wages during 2003 . At trial, petitione r 12 presented no evidence or testimony . He merely argued that : 13 (1) Respondent had incorrectly stated his taxpaye r 14 identification number on one notice and may have made other 15 similar errors ; 16 (2) He does not find any provision of law tha t 17 requires him to pay Federal income tax on the monies he 18 received from Administaff Companies II, L .P . and 19 Carsdirect .com ; 20 (3) The amounts he received from those two payors are 21 not wages as defined by section 3401 ; an d 22 (4) He is entitled to additional credits and 23 deductions . 24 Those arguments are unpersuasive and are no t 25 supported by any evidence or legal authority . Petitioner's Heritage Reporting Corporatio n .(202) 628-4888 7 1 payors characterized their payments to him as wages . 2 Although petitioner may disagree with thos e 3 characterizations, he has made no effort to show that those 4 payments were not made to compensate him for his services or 5 that they are not includable in his 2003 taxable income for 6 any other reason . When entreated, by the Court, t o 7 introduce evidence of any deductions, exemptions, credits, 8 or other modifications to his adjusted gross income, not 9 already allowed by Respondent, he chose to introduce n o 10 evidence at all . We therefore sustain the deficiency 11 determined by Respondent for petitioner's 2003 tax year . 12 II . Additions to Tax 13 Under Section 7491(c), the Commissioner bears the 14 burden of production with respect to a taxpayer's liability 15 for penalties or additions to tax . This means that the 16 Commissioner "must come forward with sufficient evidence 17 indicating that it is appropriate to impose the relevant 18 penalty ." Higbee v . Commissioner , 116 T .C . 438, 446 (2001) . 19 In instances where an exception to the penalty or addition 20 to tax is afforded upon, for'example, a showing o f 21 reasonable cause or substantial authority, "the taxpayer 22 must come forward with evidence sufficient to persuade a 23 Court that the Commissioner's determination is incorrect ." 24 Id . at 447 . 25 Section 6651(a)(1) imposes an addition to tax of Heritage Reporting Corporatio n (202) 628-4888 8 1 five percent per month or a fraction thereof up to a maximum 2 of 25 percent for failure to file a timely return unless it 3 is shown that such failure is due to reasonable cause an d 4 not to willful neglect . Section 6651(a)(2) imposes a n 5 addition to tax of 0 .5 percent per month up to a maximum of 6 25 percent for failure to pay the amount of tax shown on a 7 return . The two penalties combined, however, may'not exceed 8 five percent per month . See sec . 6651(c) . Where, as here, 9 both additions to tax are determined, this is accomplishe d 10 by reducing the section 6651(a)(1) addition to tax from five 11 percent per month to 4 .5 percent per month . 12 Section 6654(a) imposes an addition to tax for 13 underpayment of estimated tax by an individual taxpayer . 14 That addition to tax is computed by reference to fou r 15 required installment payments of the taxpayer's estimate d 16 tax liability, each constituting 25 percent of the "required 17 annual payment ." Sec . 6654(c)(1), (d)(1)(A) . For taxpayers 18 whose adjusted gross income for the preceding year wa s 19 $150,000 or less, the "required annual payment" is equal to 20 the lesser of : 21 (1) 90 percent of the tax shown on the individual's 22 return for the current'year or, if no return is filed, 90 23 percent of his or her tax for such year, o r 24 (2) if the individual filed a return for th e 25 immediately preceding taxable year, 100 percent of the tax Heritage Reporting Corporatio n (202) 628-4888 9 1 shown on that return . Sec . 6654(d)(1)(B) . Generally, the 2 amount of taxes withheld during the year will be treated as 3 a payment of estimated tax . Sec . 6654(g)(1) . 4 Respondent has satisfied the burden of productio n 5 with respect to the additions to tax pursuant to sectio n 6651(a)(1) and (2) . With respect to the section 6651(a)(1) addition to tax, Petitioner admits that he mailed what h e 8 claims to be his Federal income tax return for 2003 on or 9 about November 18, 2005 . Respondent, however, insists tha t 10 this document is not a "return" because there was no "honest 11 and reasonable intent to supply the information required by 12 the tax code" . See United States v . Moore , 627 F .2d 830 , 13 835 (7th Cir . 1980) . With respect to the section 6651(a)(2) 14 addition to tax, Respondent asserts that petitioner has not 15 paid his 2003 tax liability, and petitioner has no t 16 demonstrated or argued otherwise . See Wheeler v . 17 Commissioner , 127 T .C . 200, 206-207 (2006), affd . 521 F .3d 18 1289 (10th Cir . 2008) . 19 Respondent has not, however, satisfied the burden 20 of production with respect to the section 6654(a) addition 21 to tax . The parties have stipulated to three documents that 22 have a bearing on this issue . The first is Respondent' s 23 explanation of the addition to tax attached to the notice of 24 deficiency, which reflects that petitioner had no ta x 25 liability for 2002 . The second and third are an account Heritage Reporting Corporatio n (202) 628-4888 10 1 summary that Respondent mailed to petitioner ¢n October 2006 2 and a "Notice of Federal Tax Lien Filing and Your Right to a 3 Hearing Under IRC 6320" that Respondent wiled to petition e l 4 in March 2008 . Those documents appear to reflect tha t 5 petitioner owed $6,808 . 16 in Federal income taxes for 2002 ; 6, however, it is unclear whether that amount represents 7 petitioner's total tax liability for 2002 . 8 Ultimately, Respondent has not provided any 9 reliable evidence as to petitioner's Federal income ta x 10 liability for 2002 . As a result, it is impossible t o 11 determine whether Petitioner had a required annual payment 12 under section 6654(d)(1)(B) . See Id . at 211-212 . I f 13 $6,808 .16 is the total amount of petitioner's Federal income 14 tax liability for 2002, petitioner would still not be liable 15 for the section 6654(a) addition to tax because the $6,857 16 withheld from his wages in 2003 would be treated as a n .17 estimated tax payment and there would be no estimated tax 18 underpayment, for 2003 . 19 Accordingly, we conclude that petitioner is liable 20 for the section 6651(a)(1) and (2) additions to tax but not 21 for the section 6654(a) addition to tax . 22 The Court has considered all of petitioner' s 23 contentions, arguments, requests,'and statements . To the 24 extent not discussed herein, we conclude that they are 25 meritless, moot, or irrelevant . Heritage Reporting Corporation (202) 628-4888 1 To reflect the foregoing , 1 1 2 5 8 9 Decision will be entere d under Rule 155 . 10 This concludes the Court ' s oral findings . of fact 11 and opinion in this case . 12 (Whereupon , at 12 :25 p .m ., the bench opinion in 13 the above - entitled matter was concluded . ) 14 15 16 17 18 19 20 / / 21 2 2 23 24 25 Heritage Reporting Corporation (202) 628-4888