TAX COURT OPINION

Case: Ray George Southwell
Docket Number: 24310-08
Judge: Colvin
Opinion Type: bench
Filed: 06/24/2009
Pages: 9

sft'/~ rp - UNITED STATES TAX COURT WASHINGTON , D.C. 2021 7 RAY GEORGE SOUTHWELL , Petitioner , V . Docket No . 24310-0 8 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 proceedings of the above case before Judge Diane L . Kroupa at Anchorage , Alaska on June 10, 2009, containing her oral findings of fact and opinion . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . Date : Washington, D .C . June 24, 2009 (Signed ) Diane L. Kroupa Judg e SERVED JUN 2 5 2009 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 3 Bench Opinion by Judge Diane L . Kroupa June 10, 200 9 Southwell v . Commissioner Docket No . 24310-0 8 The Court has decided to render oral findings o f fact and opinion in this case and the following represent s the Court's oral findings of fact and opinion . These ora l findings of fact and opinion shall not be relied upon a s precedent in any other case . This bench opinion is made pursuant to th e authority granted by section 7459(b) of the Internal Revenu e Code and Rule 152 of the Tax Court Rules of Practice an d Procedure . All section references are to the Interna l Revenue Code for 2003, 2004, 2005, and 2006, the years a t issue, and all Rule references are to the Tax Court Rules o f Practice and Procedure . Ray Southwell appeared pro se, and Robert Boeshaa r appeared on behalf of respondent . FINDINGS OF FACT AND OPINION?: The record establishes that respondent issue d petitioner four statutory deficiency notices each dated Jun e 30, 2008 in which respondent determined a $10,454 deficienc y in Federal income tax against petitioner for 2003 and tha t petitioner was liable for a $1,357 .65 late filing addition under section ;6651(a)(1), a $1,478 .33 late payment additio n under section 6651(a)(2) and a $143 .01 estimated ta x addition under section 6654 . For 2004, responden t Heritage Reporting Corporation (202) 628-4888 4 1 determined an $11,331 deficiency in Federal income ta x 2 against petitioner and that petitioner was liable for a 3 $1,492 .20 late filing addition under section6651(a)(1), a 4 $1,226 .92 late payment addition under section 6651(a)(2) an d 5 a $175 .08 estimated tax addition under section 6654 . Fo r 6 2005, respondent determined an $18,10-5-deficiency in Federa l 7 income tax against petitioner and that petitioner was liable 8 for a $2,436 .98 late filing addition under sectio n 9 6651(a)(1), a $1,353 .&8 late payment addition under section 10 6651(a)(2) and a $402 .01 estimated tax addition unde r 11 section 6654 . For 2006, respondent determined a $19,30 9 12 deficiency in Federal income tax against petitioner and that 13 petitioner was liable for a $2,353 .50 late filing addition 14 under section 6651(a)(1), a $679 .90 late payment addition 15 under section 6651(a)(2) and a $448 .47 estimated tax . ]I 16 addition under section 6654 . O-K 17 petitioner failed to file income tax returns for 18 the four years at issue even though he received taxable 19 wages as a registered nurse . ;,..petitioner announced at tria l DLK 20 that he has for the last ten years firmly believed that he 21 as a citizen, not as a taxpayer, has the right to abolish or 22 alter the Government under the 9th and 10th Amendment of the 23 United States Constitution . Mr . Southwell makes hi s 24 argument by taking portions of the Code and Constitution out 25 of context . Heritage Reporting Corporation . (202) 628-4888 5 1 i,petitioner refused to cooperate with responden t 2 regarding any of the four years at issue in any meaningful 3 way . Throughout the examination, appeal and tria l 4 preparation, petitioner has remained silent and non- 5 responsive . Rather than comply with respondent's request s 6 for information or proposed stipulated of facts, petitione r 7 announced at trial that he did not respond to respondent' s requests because he is terrified of the Internal Revenue 9 10 Service (IRS) . petitioner made the same arguments during th e 11 calendar call this case as well as the trial whe n 12 respondent orally made a Motion for Sanctions under section 13 6673 . The Court warned petitioner that he was at risk of 14 having the Court impose a penalty against him under sectio n 15 6673 . 'petitioner does not dispute that he received wages . S~Ac 16 He simply wants to reform the IRS, which, in, petitioner's 17 words, is the largest terrorist organization . Simply put, 18 petitioner questions whether the IRS has authority over 19 citizen petitioner . Simply put, it does . Secs . 61(a) , 20 6001, 601 .2 and 6072 . 21 petitioner has been repeatedly warned that VA<- 2 2 22 Court is authorized to impose a penalty against him unde r 23 section 6673 if he continued to pursue frivolous an d 24 groundless arguments . -respondent warned petitioner i n R rLkl 25 respondent ' s pretrial memorandum that he would request the Heritage Reporting Corporatio n (202) 628-4888 6 1 Court to award sanctions and costs against petitioner . 2 spondent's counsel also stated at calendar call tha t 3 petitioner had failed to prosecute his case by raising the 4 type of arguments he has made, all of which ar e 5 sanctionable . The Court also warned petitioner at calendar 6 call and at the trial that he was at risk of ;a $25,00 0 7 penalty under section 6673 if petitioner persisted with the 8 type of arguments he had been making . ..petitioner defied the 9 Court and argued that he had not brought this case for dela y 10 purposes even though the IRS has been unable ,,to collect the 11 taxes due for over five years . In addition , the Court notes 12 that petitioner had an earlier case at Docket No . 19521-04 13 in which Judge David Laro issued a bench opinion as th e 14 Court is doing here because we find no merit to any of 15 petitioner ' s arguments . Despite these numerous warnings, 16 petitioner persi s ted and wasted this Court ' s limited time 17 and resources . -petitioner's conduct is patently willful V 18 and, given the number of warnings , his positions were taken 19 in bad faith . 20 Given the nonresponsive gibberish that petitioner 21 espoused , the Court informed the parties that it intended to 22 grant respondent ' s motion for sanctions . i spondent' s 91 23 counsel recommended that $25,000 would be an appropriat e 24 amount given the facts of this case, including the number of 25 years in which petitioner failed to file a return . Heritage Reporting Corporation (202) 628-4888 1 respondent was prepared to file a motion to dismis s N 7 2 for failure to properly prosecute, which the Court would 3 have granted for the amounts set forth in the fou r 4 deficiency notices for each of the years at issue . 5 Notwithstanding that respondent did not file the specified 6 motion, the Court shall grant judgment to respondent fo r 7 each of the years at issue . See Smith v . Commissioner , 91 8 T .C . 1049, 1058-1059 (1988), aff°'rd . 926 F .2d 1470 (6th Cir . 9 1991) ; Rule 123(a) . Moreover, courts have the inheren t 10 authority to issue orders as they deem necessary and prudent 11 to achieve the orderly and expeditious disposition of their 12 cases . See Roadway Exp ., Inc . v . Piper , 447 U .S . 752, 764- 13 765 (1980) ; Williams v . Commissioner , 92 T .C . 920, 932-933 .14 (1989) . 15 We now address whether it is appropriate to impose 16 a penalty against petitioner under section 66 7 3, whic h 17 authorizes the Tax Court to require a taxpayer to pay to th e 18 United States a penalty up to $25,000 whenever it appears 19 that proceedings have been instituted or maintained by the 20 taxpayer primarily for delay or that the taxpayer's position 21 in such proceedings is frivolous or groundless . See Scruggs 22 v . Commissioner , T .C . Memo . 1995-355, aff'rd . without 23 published opinion, 117 F .3d 1433 (11th Cir . 1997) ; 24 Zyglis v . Commissioner , T .C . Memo . 1993-341, aff"~- d . withou t 25 published opinion, 29 F .3d 620 (2d Cir . 1994) . We note that Heritage Reporting Corporatio n (202) 628-4888 8 1 the type of arguments petitioner raises has been deemed b y 2 this Court to be frivolous and/or sanctionable under sectio n 3 6673 . P 4 -petitioner deserves a penalty under-sectio n 5 6673(a)(1), and that penalty should be substantial, if it i s 6 to have the desired deterrent effect . Cf . Talmage v . 7 Commissioner , T .C . Memo . 1996-114, aff'Id . without publishe d 8 opinion, 101 F .3d 695 (4th Cir . 1996) . The purpose o f 9 section 6673 is to compel taxpayers to think and to conform 10 their conduct to settled tax principles . Coleman v . 11 12 Commissioner , 791 F .2d 68 , 71 (7th Cir . 1986 ), ; see also Grasselli v . Commissioner , T .C . Memo . 1994-581 . 13 In this proceeding now before the Court , petitioner 14 asserts nothing but frivolous and groundless arguments . 15 petitioner ' s tactics have consumed valuable Governmen t 16 resources . These tactics should not be condoned . They 17 damage the integrity of the Federal tax litigation system 18 because of the time and attention the Court and respondent 19 must devote to these frivolous arguments deprives other 20 taxpayers with genuine controversies . See Abrams v . 21 Commissioner , 82 T .C . 403, 412 (1984) . We are mindful that 22 petitioner is representing himself and may not be familiar 23 with all the Court's Rules and Procedures . Pro se status, 24 however, is not a license to litter the dockets of th e 25 Federal courts with ridiculous allegations concerning the Heritage Reporting Corporatio n (202) 628-4888 9 1 Code . Parker v . Commissioner , 117 F .3d 785 (5th Cir . 1997) . 2 It is apparent from the entire record tha t 3 petitioner instituted or maintained this proceedin g 4 primarily, if not exclusively, as a .protest against the 5 Federal income tax system and his proceeding in this Court 6 is merely a continuation of petitioner's refusal t o 7 acknowledge and satisfy his tax obligations . We ar e convinced that no purpose would be served in repeating al l 9 that has been said about his frivolous and misguided 10 arguments . 11 We are also convinced that petitioner is aware of 12 and choose to ignore the warnings this Court'has given to 13 him and other taxpayers who provide the type of arguments '14 petitioner provided here yet petitioner persisted and wasted 15 this Court's limited time and resources . We therefore shall 16 require petitioner to pay a penalty of $20,00'0 pursuant to 17 section 6673(a)(1) . In addition, petitioner is admonished 18 that the Court will consider imposing a larger penalty if he 19 returns to the Court and advances similar arguments in the 20 future . 21 To reflect the foregoing, decisions will be entered 22 for respondent regarding the deficiency and additions to tax 23 for each of the four years at issue, and an order will b e 24 issued imposing a $20,000 penalty against petitioner under 25 section 6673 . We are hopeful that the section 6673 penalty Heritage Reporting Corporation (202) 628-4888 10 1 will be more productive in deterring petitioner's argument s 2 and making petitioner comply with his requirement to report 3 earnings in the future . 4 This concludes the Court's oral findings of fact 5 and opinion in this case . 6 (Whereupon, at 4 :30 p .m ., the benchjopinion in the 7 above-entitled matter was concluded . ) 8 9 10 11 12 13 14 15 16 17 18 19 20 2 1 22 2 3 24 25 Heritage Reporting Corporation (202) 628-4888