TAX COURT OPINION

Case: Ryan Lance MacCubbin
Docket Number: 15352-22
Judge: Halpern
Opinion Type: bench
Filed: 04/18/2024
Pages: 10

United States Tax Court Washington, DC 20217 RYAN LANCE MACCUBBIN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 15352-22. 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 James S. Halpern at Albuquerque, New Mexico, on March 7, 2024, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. entered for respondent. In accordance with the oral findings of fact and opinion, a decision will be (Signed) James S. Halpern Judge Served 04/18/24 1 Bench Opinion by Judge James S. Halpern 2 March 7, 2024 3 Ryan Lance MacCubbin v. Commissioner of Internal Revenue 4 Docket No. 15352-22 5 6 7 8 9 THE COURT: 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 10 relied upon as precedent in any other case. Petitioner 11 resided in New Mexico when he filed the petition. 12 All section references are to the Internal 13 Revenue Code of 1986, as amended. All dollar amounts have 14 been rounded to the nearest dollar. 15 By Notice of Deficiency dated March 30, 2022, 16 respondent determined a deficiency in petitioner's 2018 17 Federal income tax of $4,525 and an accuracy-related 18 penalty of $596. 19 Petitioner assigns error to both the deficiency 20 determination and to the penalty. He claims as 21 affirmative defenses that (1) the Notice was not issued in 22 conformance with various provisions of the Internal 23 Revenue Manual, (2) the Notice is in part untrue and is 24 arbitrary, capricious, and without credibility, and (3) it 25 fails to state a claim on which relief can be granted. �li·IH (97.3) 406-2 250 I operati6ns@escribers,net I •,,ww.escrib-ers.n et 1 2 3 petitioner's refund request had been frozen pending the outcome of his examination of petitioner's return. The section 6662(a) accuracy-related penalty of $596 was 4 approved on March 30, 2022. 5 Discussion 6 Deficiency in Tax 7 The parties have stipulated that, during 2018, 8 petitioner worked at Chenega and received from Chenega 9 earnings of $51,007. There is little more to consider. 10 Section 6l(a) provides that gross income means all income 11 from whatever source derived, including compensation for 12 services. Petitioner's 2018 earnings from Chenega were 13 for him an item of gross income. That respondent may have 14 relied on a W-2 as evidence of petitioner's omitted income 15 is of no moment. See§ 620l(d). Petitioner's earnings 16 from Chenega are confirmed by the stipulation. 17 Petitioner's arguments in his pretrial memorandum-that 18 respondent must prove (1) that petitioner participated in 19 a taxable activity and was not merely paid for work and 20 (2)that the income tax is not an excise-are frivolous 21 arguments, repeatedly rejected by courts and without need 22 of particular citation to reject. See, e.g., Englert v. 23 Commissioner, T.C. Memo. 2023-38, at *3. 24 At trial petitioner argued that he did not 25 receive taxable "wages," relying on a provision of chapter (97.3) 406-2 250 I operati6ns@escribers,net I •,,ww.escr ib-ers.n et �li·IH 1 24, subchapter A, which governs withholding of income tax 7 2 from wages. Section 340l(a) defines "wages" to mean "all 3 remuneration * * * for services performed by an employee 4 for his employer." Section 340l(a) specifies 23 narrow 5 exceptions to that rule, but petitioner does not rely on 6 any of those. Rather, he relies on section 340l(c), which 7 provides that, "[f]or purposes of this chapter, the term 8 'employee' includes an officer, employee, or elected 9 official of the United States" or agency thereof. Because 10 petitioner was not "exercising a Federal privilege" when 11 performing services for the Chenega, he asserts that he 12 was not an "employee" and thus earned no "wages" as 13 defined by section 340l(a). 14 I repeat here what we said in Muhammad v. 15 Commissioner, T.C. Memo. 2021-77, at *7. This is a time-worn tax-protestor argument 16 17 18 19 20 21 22 23 24 25 it "consists of Federal officers and employees. that no court has ever accepted. Section 340l(c) provides that the term "employee" "includes" Federal officers and employees; does not say that the term "employee" exclusively" See sec. 770l(c) ("The terms 'include' and 'including' when used in a definition in this title shall not be deemed to exclude other things otherwise within the meaning of the Sims v. United States, 359 U.S. term defined."); 108, 112 (1959); Wnuck v. Commissioner, 136 T.C. 498, 506 (2011) ("Anyone fluent in English knows that the word 'includes' mean 'includes only[.]'"). wages "means all remuneration performed by an employee," enumerated obvious that Government employees. section 340l(a) makes it In any event section "employees" are not limited to * * * for services cannot be assumed to By providing that contained exceptions, subject only to (97.3) 406-2 250 I operati6ns@escribers,net I •,,ww.escr ib-ers.n et �li·IH 1 2 3 4 5 6 7 deduction, credit or exclusion on a return which would seem to a reasonable and prudent person to be 'too good to be true' under the circumstances". Sec. 1.6662- 3 (b) ( 1) (ii) , Income Tax Regs. The authority is plain that petitioner's position in this case that an amount received for services rendered is not income is too good to be true. We sustain the accuracy-related penalty of $596. 8 Sec. 6673(a) penalty 9 Section 6673 (a) (1) authorizes this Court to 10 require a taxpayer to pay to the United States a penalty, 11 not in excess of $25,000, "[w]henever it appears to the 12 Tax Court that--(A) proceedings before it have been 13 instituted or maintained * * * primarily for delay, [or] 14 (B) the taxpayer's position in such proceeding is 15 frivolous or groundless." The purpose of section 6673 is 16 to compel taxpayers to conform their conduct to settled 17 tax principles and to deter the waste of judicial and IRS 18 resources. See, e.g., Muhammad v. Commissioner, T.C. 19 Memo. 2021-77, at *7. 20 As we have discussed, petitioner's arguments are 21 frivolous. Respondent warned him of that at the start of 22 the trial, and we told him of the risk of a penalty if he 23 persisted in making frivolous arguments. Because he 24 persisted, we think that a penalty is appropriate. We 25 find that petitioner is liable for a penalty under section �li·IH (97.3) 406-2 250 I operati6ns@escribers,net I •,,ww.escrib-ers.n et