TAX COURT OPINION

Case: William Paul Lipe
Docket Number: 4103-15
Judge: Goeke
Opinion Type: bench
Filed: 06/02/2016
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 WILLIAM PAUL LIPE, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 4103-15. ) ) ) ) ORDER 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 trial in the above case before Judge Joseph Robert Goeke at Mobile, Alabama on May 19, 2016, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. June 2, 2016 SERVEB JUN - 3 2016 Capital Reporting Company 3 1 2 Bench Opinion by Judge Joseph Robert Goeke May 19, 2016 3 William Paul Lipe v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Docket No. 4103-15 THE COURT: 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: The oral findings of fact and opinion shall not be relied upon as precedent in any other case. The present matter before the Court based upon our jurisdiction to review deficiency determinations made by the Internal Revenue Service a indnotice4 of deficiency after the timely filing of a petition, Section 6213(a). The petition in the present case was timely mailed after the Respondent issued a notice of deficiency to the Petitioner dated November 10, 2014. The notice of deficiency was issued to the 20 Petitioner and his spouse as the Petitioner and his 21 22 23 24 25 spouse have filed timely a joint federal income tax return for the year in question in this case, which is 2012. The burden of proof in the present matter generally lies with the Petitioner pursuant to Rule 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 142(a) of the Tax Court Rules of Practice and Procedure. Code Section 7491(a) would serve to shift the burden of proof under certain specific circumstances, none of which are applicable in the present matter. Hereinafter code section references are to the Internal Revenue Code and rule references are to the Tax Court Rules of Practice and Procedure. This opinion is rendered pursuant to Section 7459(b) and Rule 152. The parties have stipulated the basic facts of the case and the Petitioner did give some brief testimony. Based upon the parties' stipulation of facts, the Petitioner resided in Alabama at the time the petition was filed. The notice of deficiency was timely issued to the petitioner and his spouse and as previously stated the Petitioner and the spouse had filed a joint federal income tax return for 2012. The parties have also stipulated that the 21 Petitioner received but failed to report certain 22 23 24 25 items. These include a pension distribution in the amount of $30,489, rents and royalties in the amount of $73 and interest in the amount of $11. Petitioner does not dispute that these amounts were actually 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 paid to he and his wife in 2012. He does, however, dispute that these amounts are taxable to him. His primary argument is that the income tax provided in the Internal Revenue Code is an excise tax and must be apportioned and that, therefore, Respondent has failed in its burden to establish that he is liable for the tax. Respondent in the notice of deficiency determined these items were taxable income to the petitioner and his spouse in 2012 and also determined that the distribution from the pension was subject to an additional tax liability pursuant to Section 72. The Petitioner does not dispute Respondent's computations of the tax liability, nor does the Petitioner offer any defenses based upon the Internal Revenue Code that would offset the items of income asserted by Respondent as stipulated to have been paid in the parties' stipulation of facts. Nonetheless Petitioner maintains that these items of income should not be taxed based upon his assertion that the income tax is an excise tax. We will first address the Petitioner's primary argument. His assertion that the income tax is an excise tax is simply incorrect. The income tax is a tax on income, not on property. Smith v. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 Commissioner, T.C. Memo 1991-612. The income tax has been held to be constitutional. Brushaber v. Union Pacific Railroad Company, 240 U.S. 1 (1916) and Crain v. Commissioner, 737 F. 2d., 1417 (Fifth Circuit 1984). The 16th Amendment to the Constitution adopted in 1913 is also inconsistent with the 8 Petitioner's position. The 16th Amendment reads as 9 follows: "The Congress shall have power to lay and 10 collect taxes on incomes from whatever source derived 11 without apportionment among the several states and 12 without regard to any census for enumeration." 13 14 15 16 17 18 In Eisner v. Macomber, 252 U.S. 189 (1920) Supreme Court was concerned with the taxability of stock dividends. The Court in that case referred to income as "gain derived from capital, from labor or from both combined." 252 U.S. at 207. Section 51(a) provides that gross income 19 means all income from whatever source derived. 20 21 22 23 24 25 There's no legitimate question that the items stipulated by the parties in the present case should be included in gross income. The Petitioner has offered no offsetting defenses or basis adjustments which would change the computation of the resulting income tax liability, nor has Petitioner 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 offered any defense to the assertion that Section 72(t) provides for additional 10 percent penalty because of the early withdrawal from the pension as stipulated by the parties. While the Petitioner was responsible in entering into a stipulation of facts and politely presented his arguments to the Court, the arguments are spurious. Generally Federal Courts confronting frivolous tax arguments involving the constitu- tionality of the validity, applicability and character of the income tax have not found it necessary to refute these arguments with "somber reasoning and copious citation of precedent." Crain v. Commissioner, 737 F. 2d., 1417 (Fifth Circuit 1984). In Wnuck v. Commissioner, 136 T.C. 489 (2011), this Court went to great lengths to enumerate each reason why we prefer not to respond in great detail to tax protest6dbr arguments. We will not reiterate the analysis of that case in this bench opinion; however, we note that it is especially applicable to the Petitioner's current arguments. We noted in that case that tax protestor arguments are unlimited and they have actual insignificance generally as a matter of legal precedent. And as in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 the present case, the arguments have been answered repeatedly over time. Respondent has also asserted an addition to tax under Section 6652(a). Petitioner offered no defense to this addition to tax and we find specifically that Petitioner's arguments do not create a reasonable cause for the Petitioner's failure to report and pay tax on the amounts stipulated by the parties, which were omitted from the joint federal income tax return of Petitioner and his spouse. Therefore, we uphold the addition to tax as determined in the notice of deficiency. Given our analysis, a decision will be entered for Respondent. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 9:31 a.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com