TAX COURT OPINION

Case: Carl Cook
Docket Number: 18196-15
Judge: Gustafson
Opinion Type: bench
Filed: 06/20/2016
Pages: 7

SEC UNITED STATES TAX COURT WASHINGTON, DC 20217 CARLCOOK, Petitioner, v. ) ) ) ) Docket No. 18196-15. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b), and to give effect to the opinion of the Court as set forth in the transcript of the proceeding at Detroit, Michigan, on June 8, 2016, 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 the undersigned judge at Detroit, Michigan, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) David Gustafson Judge Dated: Washington, D.C. June 20, 2016 SERVED Jun 21 2016 Capital Reporting Company 3 1 2 Bench Opinion by Judge David Gustafson June 8, 2016 3 Carl Cook v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 18196-15 The Court has decided to render the following as its oral Findings of Fact and Opinion in this case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code, and Tax Court Rule 152; and it shall not be relied on as precedent in any other case. By a notice of deficiency ("NOD") dated June 22, 2015 (Ex. 2-R), the Internal Revenue Service determined deficiencies in the 2012 Federal income tax liabilities of petitioner Carl Cook, plus additions to tax. At the time he filed his petition in this case, Mr. Cook resided in Michigan. (Stip. 1.) The issues for decision are (1) whether Mr. Cook received unreported taxable income (we hold that he did), and (2) whether he is liable for additions to tax (we hold that he is). The case was tried in Detroit, Michigan, on June 6, 2016. Mr. Cook represented himself, and the Commissioner was represented by John D. Davis. FINDINGS OF FACT Applying the burden of proof principles set out 866.488.DEPC) www.CapitalReportingCompany.com Capital Reporting Company in the opinion below, we find the following facts: 4 In 2012 Mr. Cook received pension payments totaling $79,792 from the Police and Fire Retirement System of the City of Detroit, and the payor reported the payments to the Government on Form 1099R. (Ex. 3-R.) The Form 1099R reported that the "Gross 1 2 3 4 5 6 7 8 Distribution" (line 1) and the "Taxable Amount" (line 9 2a) were both $79,792. 10 11 12 13 14 15 16 17 18 19 20 Mr. Cook did not file a Federal income tax return for 2012. Upon receiving information of the pension payments, the IRS prepared for Mr. Cook a substitute for return ("SFR") pursuant to section 6020(b) (see Ex. 4-R) and issued to him the notice of deficiency (Ex. 2-R) determining a liability for income tax and additions to tax. On July 16, 2015, Mr. Cook timely filed his petition in this Court, commencing this case. By means of a request under the Freedom of Information Act ("FOIA"), Mr. Cook received from the IRS in 21 October 2015 a copy of an "Account Transcript" for 22 23 24 25 his 2012 Federal income tax liability showing an "Account Balance" of zero. (Ex. 1-P.) I. Burden of proof OPINION 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 The IRS's determination in the NOD is presumed correct, and the taxpayer generally bears the burden to prove any adjustment to the income the IRS determined. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Mr. Cook's only rebuttal to the Commissioner's showing of his pension income was to object and to testify that he was "not sure [I] received" money in the demonstrated amount, and his only rebuttal to the Commissioner's showing that he 10 failed to file a return was to object and to testify 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that he does not recall whether he filed a return. This did not prove non-receipt or non-filing. II. Pension income Mr. Cook's position is simply that he is not liable for tax and "should not be here". He declined to elaborate further, despite the Court's invitation. If his contention is that pension income is not taxable, then that contention is wrong as a matter of law, since "gross income" subject to tax explicitly includes "Pensions". Sec. 61(a)(11). For some pensions, a portion of the payments may be non- taxable (see sec. 72(b), (m)); but here the payor reported the entire amount as taxable, and Mr. Cook suggested no reason that any portion of his pension would not be taxable. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 Mr. Cook's pension income is taxable income 2 which he was obliged to report and on which he owes 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 income tax. III. Zero balance Mr. Cook showed that as of October 2015 his 2012 "Account Balance" was still zero. (Ex. 1-P.) He seems to argue that this proves he has no income tax liability for 2012. Mr. Cook is mistaken. It is true that his IRS account for 2012 reflects a zero balance; but this means simply that no tax has been assessed--yet. Because Mr. Cook filed no return reporting any liability (which would have resulted in an assessment under section 6201(a)(1)), the IRS was required to assert his liability by the deficiency procedures provided in sections 6211-6215. The IRS proposed a liability in its notice of deficiency (see sec. 6212(a)); and since Mr. Cook filed his Tax Court 19 petition pursuant to sec. 6213(a), that provision has 20 barred the IRS from assessing the tax until after the 21 22 23 24 Tax Court decides the case. Thus, the zero balance on Mr. Cook's 2012 account is not evidence that he owes no tax but rather that the IRS has complied with section 6213(a), deferring assessment unless and 25 until the Tax Court sustains the IRS's deficiency 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 determination. We do sustain the IRS's determination. 3 Hereafter the IRS will be able, pursuant to section 4 5 6215, to assess the deficiency that we have hereby determined; and assuming it does so, that liability 6 will be ultimately reflected as a positive balance on 7 Mr. Cook's 2012 transcript. 8 9 10 11 12 13 14 15 16 17 18 19 20 IV. Additions to tax Section 6651(a)(1) imposes an addition to tax for failure to file a timely return. We have found that Mr. Cook filed no tax return for 2012. The addition is therefore warranted. Section 6651(a)(2) imposes an addition to tax for failure "to pay the.amount shown as tax on any return". Mr. Cook's 2012 liability was "shown on a return"--i.e., the SFR prepared by the IRS. See sec. 6651(g)(2). He has made no payments toward his 2012 income tax liability, and he is therefore liable for the (a)(2) addition. The Commissioner has shown, as an initial 21 matter, that the determinations of additions to tax 22 23 24 25 under section 6651(a)(1) and (a)(2) are warranted. Section 6654 imposes an addition to tax for failure to make estimated tax payments. This addition to tax applies only if the taxpayer had a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 liability in the preceding year, sec. 6654(e)(2)(B), and the Commissioner showed that Mr. Cook did have such a liability. (See Ex. 5-R.) Mr. Cook did not show any error in the IRS's determination of this addition to tax, and we hold that it is warranted. (Section 6651(a)(1) and (a)(2) both include an exception--"unless it is shown that such failure is due to reasonable cause and not due to willful neglect". (Section 6654 has no such exception.) Mr. Cook did not show "reasonable cause" nor disprove "willful neglect", so the additions to tax are not excused on that basis.) Decision will be entered in favor of the Commissioner. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 10:04 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