TAX COURT OPINION

Case: John H. Gurchak, Jr.
Docket Number: 28190-07S
Judge: Colvin
Opinion Type: bench
Filed: 11/21/2008
Pages: 7

UNITED STATES TAX COURT WASHINGTON, D .C. 2021 7 STA.T . JOHN H . GURCHAK, JR . , Petitioner , V . Docket No . 28190-07 S COMMISSIONER OF INTERNAL REVENUE , Respondent . O R D 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 herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above case before Judge Diane L . Kroupa at Seattle, Washington on October 28, 2008, containing her oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, a decision will be entered for respondent as to the deficiency but for petitioner as to the accuracy-related penalty under sectio n 6662 . (Signed ) Diane L. Kroupa Judg e Dated : Washington , November 21, D .C . 2008 SERVED NOV 2 4 2008 3 1 Bench Opinion by Judge Diane L . Kroup a 2 October 28, 2008 John H . Gurchak Jr . v . Commissioner 3 Docket No . 28190-07 S 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case and the 6 following represents the Court's oral findings of fact 7 and opinion . These oral findings of fact and opinion 8 shall not be relied upon as precedent in any othe r 9 case . 10 This proceeding was heard as a small ta x 11 case pursuant to the provisions of section 7463 of the 12 Internal Revenue Code of 1986 as amended, and Rule s 13 170 through 175 of the Tax Court Rules of Practice and 14 Procedure . All section references are to the Internal 15 Revenue Code as amended and in effect for 2005, th e 16 year at issue, and all Rule references are to the Tax 17 Court Rules of Practice and Procedure . 18 This bench opinion is made pursuant to the 19 authority granted in section 7459(b) and Rule 152 . 20 John ;'Gurchak, Jr . appeared pro se, and 21 Robert V . Boeshaar appeared on behalf of respondent . 22 FINDINGS OF FAC T 23 Certain facts are stipulated . Th e 24 stipulation of facts with accompanying exhibits ar e 25 incorporated by this reference . The facts are so found . Heritage Reporting Corporatio n (202) 628-4888 4 1 Petitioner resided in Washington at the time 2 he filed the petition in this case . 3 Petitioner timely filed a married filing 4 joint return for 2005 on which he reported som e 5 taxable dividends, some capital gain dividends and 6 some qualified dividends but failed to report al l 7 taxable dividends, capital gains dividends and Social 8 Security Administration income . 9 Respondent issued a deficiency notice t o 10 Petitioner for 2005 determining a $5,283 deficiency in 11 Federal income tax and determined that Petitioner was 12 liable for a $1,057 .08 accuracy-related penalty under 13 section 6662 . Petitioner paid the asserted deficiency 14 but contests the accuracy-related penalty and asks us 15 to waive the interest respondent asserts on the unpaid 16 tax and penalty . 17 Petitioner asserts that he has alway s 18 prepared and filed tax returns . With respect to 2005, 19 Petitioner did not understand the tax forms regarding 20 retirement income he received and the different forms 21 of dividends . He was overly tired and thought he did 22 not have to include all the dividends or Socia l 23 Security benefits received . Petitioner asserts that 24 the interest rate respondent charges is confiscatory 25 and not any amount he can earn on his investment Heritage Reporting Corporation (202) 628-4888 5 1 income . He urges us to waive the interest . 2 We first address whether Petitioner i s 3 liable for the accuracy-related penalty under section 4 6662 . Section 6662(a) imposes an accuracy-relate d 5 penalty equal to 20 percent of the underpayment of tax 6 resulting from, among other things, negligence or 7 disregard of rules or regulations . Sec . 6662(b)(1) . 8 The term "negligence" includes any failure to make a 9 reasonable attempt to comply with the Code, and th e 10 term "disregard" includes any careless, reckless, or 11 intentional disregard . Sec . 6662(c) . Negligence has 12 also been defined as a lack of due care or failure to 13 do what a reasonable person would do under th e 14 circumstances . Leuhsler v . Commissioner , 963 F .2d 15 907, 910 (6th Cir . 1992), affg . T .C . Memo . 1991-179 . 16 Petitioner admits that he was overly tired 17 and made a mistake in concluding that he need no t 18 report all the dividends and Social Security benefits 19 for 2005 . Petitioner failed to report more tha n 20 $20,000 of taxable dividends or nearly 60 percent of 21 the total dividends received in 2005 and failed to 22 report any Social Security benefits received . 23 Negligence often takes the form of an understatement 24 of income . See Healey v . Commissioner , T .C . Memo . 25 1996-260, and cases cited therein . Respondent has Heritage Reporting Corporatio n (202) 628-4888 6 1 therefore met his burden of production that Petitioner 2 was negligent . 3 The accuracy-related penalty under section 4 6662(a) does not apply, however, to any portion of an 5 underpayment if it is shown that there was reasonable 6 cause for, and that the taxpayer acted in good faith 7 with respect to, such portion . Sec . 6664(c)(1) . The 8 determination of whether the taxpayer acted wit h 9 reasonable cause and in good faith depends on the 10 pertinent facts and circumstances, including the 11 taxpayer's efforts to assess his or her proper tax 12 liability, the knowledge and experience of th e 13 taxpayer, and the reliance on the advice of a 14 professional, such as an accountant . Sec . 1 .6664- 15 4(b)(1), Income Tax Regs . 16 We found Petitioner to be credible . We 17 believe that he tried to assess his proper ta x 18 liability for 2005 . Petitioner was a retired employee 19 who had substantial investment income at a time that 20 Congress was changing the definition of taxabl e 21 dividends . Petitioner carefully read the directions 22 and misread the amount that was greater than t o 23 conclude that he need not report the total amount of 24 taxable dividends or Social Security benefits received 25 during 2005 . Petitioner inadvertently failed t o Heritage Reporting Corporation (202) 628-4888 7 1 report the total amount received . We find Petitioner 2 acted with reasonable cause and in good faith i n 3 failing to report all taxable dividends and Social 4 Security benefits . Accordingly, Petitioner is no t 5 liable for the accuracy-related penalty under section 6 6662 for 2005 . 7 Petitioner next urges us to waive the 8 confiscatory interest respondent charges for th e 9 unpaid deficiency and penalty . Petitioner argues that 10 he is not able to earn the amount of interest on his 11 investment income that respondent charges . We ar e 12 sympathetic to Petitioner's pleas . We lack the 13 jurisdiction, however, to waive interest . The Tax 14 Court is a court of limited jurisdiction, and we may 15 exercise that jurisdiction only to the exten t 16 authorized by Congress . Naftel v . Commissioner , 85 17 T .C . 527, 529 (1985) . The Tax Court lack s 18 jurisdiction over the waiver of interest . Med James, 19 Inc . v . Commissioner , 121 T .C . 147, 151 (2003) and the 20 cases cited therein . 21 To give effect to the foregoing, decision 22 will be entered for respondent as to the deficiency 23 but for Petitioner as to the accuracy-related penalty 24 under section 6662 . 25 This concludes the Court's oral findings of Heritage Reporting Corporatio n (202) 628-4888 1 fact and opinion in this case . 2 (Whereupon, at 1 :37 p .m ., the bench opinion 3 in the above-entitled matter was concluded . ) 8 4 5 6 7 8 9 1 0 11 12 13 1 4 15 1 6 1 7 1 8 19 20 21 22 2 3 2 4 25 / / / / / / / / / / / / / / / / Heritage Reporting Corporation (202) 628-4888