TAX COURT OPINION

Case: Lorry M. Barnes
Docket Number: 4071-08S
Judge: Colvin
Opinion Type: bench
Filed: 11/25/2008
Pages: 11

UNITED STATES TAX COUR T WASHINGTON , DC 2021 7 LORRY M . BARNES, Petitione r v . ) Docket No . 4071-08 S COMMISSIONER OF INTERNAL REVENUE, Respondent S '2 CAL STAT S .T . 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 hearing of the above case before Special Trial Judge Robert N . Armen, Jr . at Peoria, Illinois on October 8, 2008, containing his oral findings of fact and opinion rendered at the conclusion of the hearing . In accordance with the oral findings of fact and opinion, an Order and Decision will be entered for respondent . (Signed) Robert N . Armen, Jr. Special Trial Judg e Dated : Washington, D .C . November 25, 2008 SERVED Nov 26 2008 3 1 Bench Opinion by Special Trial Judge Robert Armen, Jr . 2 October 8, 200 8 3 Lorry M . Barnes Docket No . 4071-08 S 4 I . 5 THE COURT : THE COURT HAS DECIDED TO RENDER ORAL 6 FINDINGS OF FACT AND OPINION IN THIS CASE, AND THE FOLLOWING 7 REPRESENTS THE COURT'S ORAL FINDINGS OF FACT AND OPINION . 8 THE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED 9 UPON AS PRECEDENT IN ANY OTHER CASE . 10 II . 11 This proceeding was heard as a Small Tax Cas e 12 pursuant to the provisions of Section 7463 of the Internal 13 Revenue Code of 1986, as amended, and Rules 170 through 175 14 of the Tax Court Rules of Practice and Procedure . 15 III . 16 This bench opinion is made pursuant to the 17 authority granted by Section 7459(b) of the Internal Revenue 18 Code of 1986, as amended, and Rule 152 of the Tax Cour t 19 Rules of Practice and Procedure . 20 Hereinafter in this bench opinion, and unless 21 otherwise indicated, all section numbers refer to the 22 Internal Revenue Code, as amended, and all Rule numbers 23 refer to the Tax Court Rules of Practice and Procedure . 2 4 25 IV . Petitioner appeared on his own behalf . Angella B . Heritage Reporting Corporation (202) 628-4888 4 1 Friedman appeared on behalf of Respondent . 2 V . 3 By Notice dated and served on Petitioner by 4 certified mail on May 6, 2008, this case was calendared for 5 trial on October 6, 2008 in Peoria , Illinois . However, on 6 August 21, 2008, Respondent filed a Motion for Summar y 7 Judgment and To Impose A Penalty under I .R .C . Section 6673 . 8 Respondent served his motion on Petitioner on August 20 , 9 2008 . 10 By Order dated August 25, 2008, and served on 11 Petitioner by certified mail on August 26, 2008, the Court 12 directed Petitioner to file an objection or other response 13 to Respondent's motion on or before September 16, 2008 . In 14 that same Order, the Court also calendared Respondent' s 15 motion for hearing on October 6, 2008, in Peoria, Illinois . 16 Petitioner did not file any objection or other 17 response to Respondent's Motion for Summary Judgment . 18 Pursuant to the aforementioned Notice and order, 19 this case was called and recalled from the calendar o n 20 October 6, 2008, in Peoria, Illinois for hearing o n 21 Respondent's Motion for Summary Judgment . Petitioner and 22 counsel for Respondent appeared and were heard . 23 VI . 24 The facts necessary to a resolution of 25 Respondent's motion are as follows : Heritage Reporting Corporation (202) 628-4888 5 1 Petitioner did not file a Federal income ta x 2 return for either 2004 or 2005 . Rather, Respondent prepared 3 substitutes for return for Petitioner for those years under 4 Section 6020(b) reflecting a variety of items of income fo r 5 both 2004 and 2005 . 6 By separate notices dated November 13, 2007 , 7 Respondent determined deficiencies in, and additions to, 8 Petitioner' s Federal income taxes for 2004 and 2005 . 9 In the Notice for 2004, Respondent determined a 10 deficiency of $7,269 and additions to tax under Sectio n 11 6651(a)(1) for failure to file of $1,635 .53, under Section 12 6651(a)(2) for failure to pay of $1,054 .01, and unde r 13 Section 6654(a) for failure to pay estimated tax of $210 .97 . 14 In the Notice for 2005, Respondent determined a 15 deficiency of $18,701 and additions to tax under Sectio n 16 6651(a)(1) for failure to file of $4,207 .73, under Section 17 6651(a)(2) for failure to pay of $1,589 .59, and unde r 18 Section 6654(a) for failure to pay estimated tax of $750 .13 . 19 (Parenthetically, we note that the addition to tax 20 under Section 6651(a)(2) for failure to pay for 2004 an d 21 2005 was computed only through the date of the notices of 22 deficiency ; the amount of the addition to tax accrue s 23 pursuant to the provisions of Section 6651(a)(2) .) 24 Petitioner timely filed a petition fo r 25 redetermination in respect of the November 13, 2007 notices Heritage Reporting Corporatio n (202) 628-4888 6 1 of deficiency ; see Sections 6213(a), 7502 . As assignments 2 of error and statements of fact, see Rule 34(b)(4) and (5), 3 Petitioner incorporated his letter dated December 27, 2007, 4 to Respondent's District Director in Chicago, Illinois . I n that 17-page letter , Petitioner asserted that his "lawfu l 6 status" is that of "a Sovereign natural born free stat e 7 citizen under the U .S . Constitution, that is, a 8 'nontaxpayer' under the law" . As a "nontaxpayer" , 9 Petitioner further alleged that he is "neither subject to, 10 nor liable for, any particular type of tax under the IRC" 11 and that "there is absolutely no requirement to comply with 12 your request for information, for the filing of a Form 1040, 13 or even for payment of any income tax" . Petitioner als o 14 alleged that "my tax professionals all advise me tha t 15 Section 6012^ does not apply to me ; it only applies to those 16 who are made liable or subject to, either by statute or by 17 having volunteered to be liable for, the filing of your tax 18 form" . 19 All of the statements in Petitioner's December 27, 20 2007 letter served to expand upon the central allegation in 21 paragraph four of his petition that "I am not informed of 22 any taxing statutes" . 23 Respondent timely filed an answer to the petition ; 24 see Rule 36 . Thereafter, and as relevant herein, Respondent 25 filed his Motion for Summary Judgment . Heritage Reporting Corporation (202) 628-4888 7 1 Petitioner was previously before the Court in an 2 action filed in September 2007 at Docket No . 19839-07 . As 3 relevant herein, that case involved 2003, yet another year 4 for which Petitioner failed to file a Federal income ta x 5 return and for which Respondent prepared a substitute fo r 6 return under Section 6020(b) reflecting Petitioner's income 7 from a variety of sources but primarily wages . Afte r 8 Respondent issued a notice determining a deficiency i n 9 Petitioner's income tax and additions to tax under Section 10 6651(a)(1) for failure to file and under Section 6651(a)(2) 11 for failure to pay, Petitioner filed a petition fo r 12 redetermination . After the case was at issue, Respondent 13 filed a Motion for Summary Judgment . The Court ordered 14 Petitioner to file a response to that motion, which order 15 Petitioner ignored . 16 In granting Respondent's Motion for Summar y 17 Judgment at Docket No . 19839-07, the Court issued a lengthy 18 order . In the order, the Court described the petition as 19 containing a series of frivolous arguments that have been 20 universally rejected by this Court as well as other courts . 21 Nevertheless, the Court painstakingly addressed Petitioner's 22 principal arguments and explained why they were frivolous . 23 In so doing, the Court cited copious precedent from courts 24 within the Federal system . 25 It is noteworthy that Respondent did not ask for Heritage Reporting Corporatio n (202) 628-4888 8 1 the imposition of a penalty under Section 6673 in Docket No . 2 19839-07 . Nevertheless, after concluding that Responden t 3 was entitled to judgment as a matter of law, thereb y 4 sustaining Respondent's determinations, the Court sua sponte 5 undertook to warn Petitioner about the penalty provisions of 6 Section 6673 . The Court concluded its warning by stating : 7 Although we do not impose a Section 6673 penalty o n 8 Petitioner today, we strongly caution Petitioner that should 9 he continue to press frivolous and groundless arguments on 10 this Court in the future, the Court might impose, even sua 11 sponte, a Section 6673 penalty up to the $25,000 maximu m 12 allowable amount . 13 VII . 14 We turn now to the law . 15 Summary judgment is intended to expedit e 16 litigation and avoid unnecessary and expensive trials . 17 Florida Peach Corp . v . Commissioner , 90 T .C . 678, 68 1 18 (1988) . Summary judgment may be granted where there is no 19 genuine issue of any material fact and a decision may be 20 rendered as a matter of law . Rule 121(a ) and (b) ; see 21 Sunstrand Corp . v . Commissioner , 98 T .C . 518, 520 (1992), 22 affd . 17 F .3d 965 (7th Cir . 1994) ; Zaentz v . Commissioner , 23 90 T .C . 753, 754 (1988) . 24 Petitioner did not respond to Respondent's Motion 25 for Summary Judgment, as ordered by the Court in its Heritage Reporting Corporatio n (202) 628-4888 9 1 August 25, 2008 Order . 2 Further, in the petition, Petitioner advanced 3 frivolous and groundless arguments . See Crain v . 4 Commissioner , 737 F .2d 1417, 1417 (5th Cir . 1984) ("W e 5 perceive no need to refute these arguments with somber 6 reasoning and copious citation of precedent . To do so might 7 suggest that these arguments have some colorable merit .") . 8 In any event, the Court has already refuted Petitioner' s 9 arguments in the Court's Order entered at Docket No . 19839- 10 07 . 11 Suffice it to say now that Petitioner is a 12 taxpayer subject to the Federal income tax who is obliged to 13 file a Federal income tax return and pay Federal income tax 14 on his wages and other items of income ; see Sections 1 , 15 61 (a) , 6012(a)(1), 7701(a)(1) and (14) . Regarding the 16 taxability of compensation, see United States v . Romero , 640 17 F .2d 1014, 1016 (9th Cir .,1981) ("Compensation for labor or 18 services, paid in the form of wages or salary, has bee n 19 universally held by the courts of this republic to be 20 income, subject to the income tax laws currentl y 21 applicable .") . See also Parker v . Commissioner , 117 F .3d 22 785 (5th Cir . 1997) and White v . Commissioner , T .C . Memo 23 1997-459 regarding Petitioner's failure to challenge, on 24 justiciable grounds, any of Respondent's determinations in 25 the November 13, 2007 notices of deficiency . Heritage Reporting Corporation (202) 628-4888 1 0 1 At the hearing on Respondent's motion o n 2 October 6, 2008, in Peoria, Illinois, Petitioner continue d 3 to make the same frivolous arguments that he advanced in the 4 petition . 5 On the basis of the record, we conclude that there 6 is no genuine dispute as to any material fact and tha t 7 Respondent is entitled to judgment as a matter of law . 8 Accordingly, we shall grant that part of Respondent ' s motion 9 asking for summary judgment in respect of the deficiencies 10 and additions to tax for 2004 and 2005 . 11 VIII . 12 We turn finally to that part of Respondent' s 13 motion asking for the imposition of a penalty on Petitioner 14 under Section 6673 . 15 As Petitioner well knows, Section 6673(a)(1 ) 16 authorizes the Tax Court to require a taxpayer to pay to the 17 United States a penalty not greater than $25,000 whenever it 18 appears that proceedings have been instituted or maintained 19 by the taxpayer primarily for delay or that the taxpayer's 20 position in such proceedings is frivolous or groundless . 21 The purpose of this penalty is to deter frivolous claims and 22 positions . Bagby v . Commissioner , 102 T .C . 596, 613-61 4 23 (1994) . 24 In the petition, Petitioner advanced nothing but 25 frivolous and groundless arguments . At the hearing on Heritage Reporting Corporatio n (202) 628-4888 1 1 1 Respondent's motion, Petitioner continued to advance those 2 same frivolous arguments . 3 In Petitioner's prior case in this Court at Docket 4 No . 19839-07, the Court granted Respondent's Motion fo r 5 Summary Judgment for 2003 and advised Petitioner that his 6 arguments were frivolous . Indeed, the Court cautione d 7 Petitioner that if he should continue to press frivolous 8 arguments on this Court in the future, the Court might 9 impose a Section 6673 penalty up to the $25,000 maximum 10 allowable amount . 11 Petitioner did not appeal the Court's final order 12 at Docket No . 19839-07, and it became final before the 13 hearing on Respondent's motion in the instant case . 14 Nevertheless, Petitioner ignored the Court's warning in the 15 Order at Docket No . 19839-07 and persisted in advancing 16 frivolous arguments in the instant case . 17 Many years ago, Supreme Court Justice Olive r 18 Wendell Holmes said : "Taxes are what we pay for civilized 19 society ." Petitioner undoubtedly feels himself to b e 20 entitled to every benefit that civilized society has t o 21 offer ; unfortunately, he feels no obligation to pay his fair 22 share . 23 To date, Petitioner has been undeterred i n 24 advancing his protest agenda . Accordingly, we shall grant 25 that part of Respondent's motion asking for the imposition Heritage Reporting Corporatio n (202) 628-4888 1 of a penalty, and we shall impose a substantial penalty o n 1 2 2 Petitioner . 3 IX . 4 In conclusion, we shall enter an Order an d 5 Decision granting Respondent ' s Motion for Summary Judgment, 6 filed August 21, 2008, and deciding that Petitioner i s 7 liable for (1) the deficiencies and additions to tax a s 8 determined in the November 13, 2007 notices of deficiency 9 and (2) a penalty under Section 6673 in the amount o f 10 $5,000 . 11 X . 12 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT 13 AND OPINION IN THIS CASE . 14 (Whereupon, at 10 :53 a .m ., the bench opinion in 15 the above-entitled matter was concluded . ) 16 // 17 // 18 // 1 9 20 21 // 22 // 2 3 24 // 25 Heritage Reporting Corporation (202) 628-4888