TAX COURT OPINION

Case: Richard Aaron Bessey
Docket Number: 7304-13L
Judge: Kroupa
Opinion Type: bench
Filed: 04/28/2014
Pages: 13

O - VfD 'O Ono s UNITED STATES TAX COURT WASHINGTON, D.C. 20217 RICHARD AARON BESSEY, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) Docket No. 7304-13L ORD E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of this case before Judge Diane L. Kroupa in San Francisco, California on March 20, 2014, containing her 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, an appropriate order will be issued granting respondent's Motion for Summary Judgment. (Signed) Diane L. Kroupa Judge Date: Washington, DC April 28, 2014 SERVED APR 2 9 2014 Capit 1 Reporting Company 3 1 Bench Opinion by Judge Diane L. Kroupa 2 March 20, 2014 3 Richard Aaron Bessey 4 5 6 7 8 9 10 11 12 Docket No. 7304-13L 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. These oral findings of fact and opinion shall not be relied upon as precedent in any other case. This bench opinion is made pursuant to the authority granted by Section 7459(b) and Rule 152. 13 All section references are to the Internal Revenue 14 15 16 17 Code, as amended, and all rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving the filing of a fedèral tax lien to collect from 18 Petitioner his unpaid tax liabilities for 2002, 2006, 19 20 21 22 23 2007, 2008, and 2010, years at issue. This collection review m.tter is before the Court on Respondent's motionifor summary judgment. The Court ordered Petitioner to file a response or an objection to Respondent's motion and scheduled Respondent's 24 motion for a hearing on the Court's March 17th, 2014, 25 San Francisco, Cali ornia, trial session. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 Petitioner did not file a timely response or an objection to Respondent's motion, despite having been ordered to do so by the Court. Petitioner appeared pro se at the motion hearing, and Christian Speck appeared on behalf of Respondent. Findings of fact The record establishes the following facts: 9 Petitioner resided in Petaluma, California, at the 10 time he filed the collection review petition. 11 Petitioner filed a form containing all zeros for 12 13 income amounts. Respondent prepared substitute-for- returns and determined that there. was a deficiency in 14 Petitioner's tax for each of the multiple years at 15 16 17 18 19 20 21 22 23 24 25 issue. Respondent issued statutory deficiency notices. Petitioner failed to file a petition to contest the determinations in the deficiency notices. Respondent also determined frivolous return penalties against Petitioner for 2006, 2007, and 2008. Respondent thereafter assessed the amounts based on the defaulted deficiency notices. Petitioner failed to pay the assessed amount, so Respondent placed a lien on Petitioner's property to collect the assessed amounts. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 Petitioney timely filed a hearing request. 2 Petitioner stated in his request that he was not 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 engaged in taxable activities and denied owing any tax. Petitioner contended that he did not receive income subject to federal tax because he was not a public officer and did not receive income in connection with the performance of a public office. He also used wer-torn protester-type DU arguments. Respondènt conducted a hearing by telephone. Petitioner asserted that the earnings he received were not subject to tax. Petitioner did not raise any collectiod alternatives. Respondent verified that all administrative law and procedures were met. Respondent also determined that the collection action was no more intrusive than necessary. Responden warned Petitioner that his arguments have been deemed frivolous by this Court and every other court where the arguments have been 20 made. 21 22 23 As mentioded previously, Respondent filed a summary judgment motion and the Court scheduled a hearing on Respondent's motion at the San Francisco, 24 California, trial session beginning March 17th, 2014. 25 Petitioner did not file a response or objection to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 Respondent's motion as the Court ordered, but did 2 3 4 appear for the hearing. Petitioner again raised only tax protester arguments at the hearing. Petitioner also told the 5 Court that he could not remember when he received any 6 7 8 taxable earnings. The Court indicated to Petitioner that his arguments were without merit and warned him that the 9 Court would impose the penalty under Section 6673 10 11 12 13 14 15 16 17 18 19 20 21 22 23 against him if he continued to advance his frivolous arguments. Petitioner continued to assert his frivolous arguments. Respondent made an oral motion for the Court to impose a penalty against Petitioner under Section 6673. Opinion We are asked to decide whether to grant summary judgment. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See, e.g.,j FPL Group, Inc. v. Commissioner, 116 TC 73, 74 (2001). A motion for summary judgment will be granted if the pleadings and other acceptable 24 materials, together: with the affidavits, if any, show 25 that there is no genuine issue as to any material 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 fact and that a decision may be rendered as a matter of law. See Rule 121(b). Where, as is the case here, the validity of the underlying tax liability is not properly placed at issue, the Court will review Respondent's determination for abuse of discretion. Sego v. Commissioner, 114 TC 604, 610 (2000); Goza v. Commissioner, 114 TC 176, 181-182 (2000); Pohl v. Commissioner, TC Memo 2013-291. (We review frivolous return penalty determinations de novo only if taxpayer meaningfully challenged the penalty itself at the CDP hearing.) Petitioner did not meaningfully challenge the frivolous return penalties. We therefore must decide whether Respondent exercised his discretion 16 arbitrarily, capriciously, or without sound basis in 17 18 19 20 21 22 fact or law. See Woodral v. Commissioner, 112 TC 19, 23 (1999). Based upon our examination of the entire record before us, we find that Respondent did not abuse his discretion in determining that the collection action should proceed with respect to 23 Petitioner's unpaid liabilities for the years at 24 25 issue. Respondent is therefore entitled to summary judgment in his favor. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 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 We issue this bench opinion to explain how we reached our decision, rather than merely stamping Respondent's motion Igranted. We now briefly explain how we reached our decision. First, the record reflects that Petitioner never presented any collection alternatives, nor did he provide any financial information. Instead, he has followed in the footsteps of other protesters and failed to provide reliable and credible financial information. In addition, he has failed to comply with his filing and paymdnt obligations. We have frequently and consistently held that an officer does not abuse any discretion by refusing to consider collection alternatives if the taxpayer fails to i submit the required and requested financial information. Sapp v. Commissioner, TC Memo 2006-104. Moreover, it is well established that a settlement officer ay refuse to consider any collection alternatives if the taxpayer has a history of noncompliance and is not in compliance with current tax obligations. Giamelli v. Commissioner, 129 TC 107, 111-112 (2007) ; Balsamo v. Commissioner TC Memo 2012-109. Petitioner did not assert any relevant 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 issues or spousal defenses, nor offer any collection alternatives. See Sec. 6330(c)(2). Accordingly, these issues are now deemed conceded. Rule 331(b)(4). Petitioner asserts that he is not "liable" for any tax, despite receiving income during the years at issue. It is a fundamental tax principle that gross income includes all income from whatever source derived, including wages, nonemployee compensation, interest, and dividends. Sec. 61(a)(1). Petitioner does not dispute that he received payments. ; Petitioner argues, however, that he is not a person required to file a return and pay federal income tax. Simply put, he is. See Secs. 1(a)(1); 61(a)(1); 7701(a)(1), (14); United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981); Craig v. Commissioner, 119 TC 252, 263 (2002); Vinz v. 19 Commissioner, TC Memo 1984-84. 20 Petitioner's arguments are familiar to this 21 Court and other federal courts and have been soundly 22 23 24 25 rejected on numerouh occasions. Petitioner cites, out of context, selected text from statutes and cases. Petitioner follows in the footsteps of numerous others who have unsuccessfully attempted to 866.488.DEPO www.CapitalReportingCompany.com Capit 1 Reporting Company 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 avoid paying federall income taxes. He apparently believes that he is smarter than the average person and that his interpretation of the code is correct, even though no court has agreed with his position. In fact, every court that has been faced with the type of arguments Petitioner advances has consistently and uniformly found such arguments to be frivolous. See, e.g., Abdo v. United States, 234 F.Supp.2d 553, 563 (MDNC 2002), aff'd 63 Fed. Appx. 163 (4th Cir. 2003)(court noted claim that wages are not income "has been rejected as many times as it has been asserted"); Wnuck v. Commissioner, 136 TC at 503-504 ("[C]ourts have addressed and rejected many of the recurring frivolous anti-tax arguments, including the general argument that wages are not subject to the income tax.") We need not discuss Petitioner's erroneous and frivolous positions at length as to do so might suggest that these arguments have some colorable 20 merit. See Wnuck v. Commissioner, 136 TC at 499; 21 Crain v. Commissioner, 737 F.2d 1417, 1418 (5th Cir. 22 23 24 1984). Accordingly, we conclude Respondent did not abuse his discretion when he rejected Petitioner's 25 misguided arguments.; Petitioner has not presented 866.488.DEPO www.CapithlReportingCompany.com Capital Reporting Company 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 any evidence or persuasive arguments to convince us that Respondent abused his discretion. We therefore conclude that Respondent did not abuse his discretion in upholding Respondent's collection action. Finally, we address whether it is appropriate to impose a penalty against Petitioner under Section 6673, which authorizes the Tax Court to require a taxpayer o pay to the United States a penalty up to $25,000 whenever it appears that proceedings have be n instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceedings is frivolous or groundless. See Sec. 6673; Scruggs v. Commissioner, TC Memo 1995-355, aff'd without published opinion, 117 F.3d 1433 (11th:Cir. 1997). In this proceeding now before the Court, 17 Petitioner asserts dothing but frivolous and 18 19 20 21 22 23 24 25 groundless arguments. It is apparent from the entire record that Petitioder instituted or maintained this proceeding primarily, if not exclusively, as a protest against the federal income tax system. We are convinced that no purpose would be served in repeating all that as been said about his frivolous and misguided arguments. See Wnuck v. Commissioner, 136 TC at 499. I 866.488.DEPO www.CapialReportingCompany.com Capital Reporting Company 12 1 We note that the type of argument 2 Petitioner raises have been deemed by this Court to 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 be frivolous and/or sanctionable under Section 6673. The purpose of Section 6673 is to compel taxpayers to think and to conformitheir conduct to settled tax principles. Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986) ; see also Grasselli v. Commissioner, TC Memo 1994-581. I Petitioner's tactics have consumed valuable government resources. These tactics should not be condoned. They damage the integrity of the federal tax litigation system because the time and attention the Court and Respondent must devote to these frivolous arguments deprives other taxpayers with genuine tax controversies. See Abrams v. Commissioner, 82 TC 403, 412 (1984) . When the Court has been faced with groundless arguments that waste the Court's and 19 Respondent's limited time and resources, we have 20 21 22 23 24 25 consistently found that the taxpayer deserves a penalty under Section 6673(a) (1) and that penalty should be substantial if it is to have the desired deterrent effect. See Wnuck v. Commissioner, 136 TC at 513, 514. Petitioner is pro se and may not be 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 familiar with all the rules and procedures. Pro se status, however, is not a license to litter the dockets of the federal courts with ridiculous allegations. Parkeri v. Commissioner, 117 F.3d 785 (5th Cir. 1997). Petitioner has failed to satisfy his tax obligations for nine years or more. In addition, Respondent and this Court have warned Petitioner that he was at risk of having the penalty imposed against him. Despite these warnings, Petitioner defied these admonitions and persisted in making meritless and frivolous assertions. We therefore shall require Petitioner·to pay $10,000 pursuant to Section 6673(a)(1). To reflect the foregoing, decision will be entered for Respondent, and an appropriate order will be issued sustaining the determinations set forth in the notice of determination concerning collection actions under Sections 6320 and/or 6330 upon which this case is based regarding Petitioner's unpaid income tax liabilities for the years at issue. The order will also grant Respondent' s motion for summary judgment. This concludes the Court's oral findings of fact and opinion in this case. 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 1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Capital Reporting Company 14 (Whereupon, at 2:24 p.m., the above- entitled matter was concluded.) . 866.488.DEPO www.CapitalReportingCompany.com