TAX COURT OPINION

Case: Natalia Ravelo Escandon
Docket Number: 13429-05
Judge: Vasquez
Opinion Type: memo
Filed: 05/21/2007
Pages: 5

ADM ._.,_..l. X11:.. iA~ . . . ... . . T # .i. . mm . U'r' .IJGE FILE S T .C . Memo . 2007-128 UNITED STATES TAX COUR T NATALIA RAVELO ESCANDON, Petitioner v . COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No . 13429-05 . Filed May 21, 2007 . Natalia Ravelo Escandon, pro se . Justin L . Campolieta , for respondent . MEMORANDUM FINDINGS OF FACT AND OPINIO N VASQUEZ, Judge : Respondent determined a deficiency of $1,868 in petitioner's Federal income tax, as well as additions to tax of $415 .58 under section 6651(a)(1) and $83 .12 under section 6651(a)(2) for 2003 .1 After concessions, the issues fo r 1 Unless otherwise indicated, all section references are to . (continued . . ) 'SERVED MAY 21 2007 - 3 - substitute for return (SFR) with regard to petitioner's 2003 taxes . In a notice of deficiency dated April 26, 2005, respondent determined that petitioner received self-employment income in the amount of $11,210 as well as unemployment compensation of $208 . The attached Form 4549, Income Tax Examination Changes, reveals that respondent allowed petitioner a standard deduction, one personal exemption, and a deduction for one-half of the self- employment tax assessed . Respondent determined that petitioner was liable for Federal income tax, self-employment tax, and additions to tax in the amounts delineated supra . The parties now agree that petitioner was an employee of Mimi's during 2003, and respondent concedes that petitioner is not liable for self-employment tax for 2003 . OPINIO N I . Deficienc y Petitioner contends that she is not liable for income taxes for 2003 because Mimi's failed to withhold taxes from her wages during 2003 .2 According to petitioner, Mimi's is solely liable for petitioner's taxes for 2003 . In support of her contentions, petitioner relies on sections 5041(a) and 3509 . 2 Petitioner has neither claimed nor shown that she satisfied the requirements of sec . 7491(a) to shift the burden of proof to respondent with regard to any factual issue affecting her liability for tax . Accordingly, petitioner bears the burden of proof . Rule 142(a) . - 5 - Because respondent has conceded that petitioner is not liable for self-employment tax on her 2003 income, petitioner is not entitled to the deduction provided for in section 164(f), which allows an individual taxpayer to deduct one-half of his or her self-employment tax liability from his or her taxable income . Finally, we note that gross income includes unemployment compensation . Sec . 85(a) . As we have noted in other cases, it is unfortunate that petitioner's employer classified her as an independent contractor and not as an employee . Had petitioner been classified as an employee, it is possible that Mimi's would have withheld the proper amounts of tax from petitioner's wages, and a deficiency in petitioner's taxes might not have occurred . See, e .g ., Lucas v . Commissioner , supra . But that does not alter the fact that the first principle of income taxation is that "income must be taxed to him who earns it" . Commissioner v . Culbertson , 337 U .S . 733, 739-740 (1949) (and cases cited therein) . Petitioner was paid her wages without any reduction for withheld income tax, and petitioner has not yet fully paid the tax liability on her income for 2003 . We therefore hold that petitioner is liable for the deficiency in the amount respondent has determined, appropriately adjusted to incorporate respondent's above-mentioned concession . - 7 - indicates that respondent prepared an SFR on January 14, 2005 . The record also includes a Form 13496 , IRC Section 6020(b) Certification , pertaining to petitioner ' s 2003 tax year and dated February 11, 2005 . The Court has also admitted a copy of the SFR which indicates that it was filed on January 14, 2005 , and which reports the adjustments contained in the notice of deficiency . Statements from FAWI and Mimi ' s reflecting payments to petitioner in 2003 of $ 208 and $11 , 210, respectively are attached to the SFR . Section 6020(b) provides : SEC . 6020(b) . Execution of Return by Secretary .-- (1) Authority of Secretary to execute return .--If any person fails to make any return required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise . (2) Status of returns .--Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes . The record reveals that respondent generated an SFR for petitioner's 2003 tax year based on statements provided by Mimi's and FAWI . Petitioner concedes that she received the income reported in the SFR and that she has not paid the tax shown on the SFR . The SFR complies with section 6020(b) . The SFR therefore constitutes a return for the purposes of the section 6651(a)(2) addition to tax . Sec . 6651(g)(2) . Accordingly, - 9 - taxpayer can establish that such failure is due to reasonable cause and not due to willful neglect . Petitioner did not timely pay her taxes for 2003 . Petitioner did not present any evidence indicating that her failure to timely pay her taxes was due to reasonable cause and not due to willful neglect . Accordingly, we hold that petitioner is liable for the addition to tax under section 6651(a)(2) . To reflect the foregoing, Decision will be entere d under Rule 155 .