TAX COURT OPINION

Case: Burns Washington Davis
Docket Number: 10657-09S
Judge: Colvin
Opinion Type: bench
Filed: 07/13/2010
Pages: 9

Sva3vn, T-T t-Wt-w~_crl UNITED STATES TAX COURT WASHINGTON, DC 2021 7 BURNS WASHINGTON DAVIS, ) Petitioner , v . ) Docket No . 10657-09S COMMISSIONER OF INTERNAL REVENUE ., Respondent . O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 proceedings in the above case before Judge Laurence J . Whalen at Oklahoma City, Oklahoma, containing his oral findings of fact and opinion rendered on May 28, 2010 . In accordance with the oral findings of fact and opinion, an appropriate decision will be entered . (Signed) Laurence J . Whalen Judg e Dated : Washington, D .C . July 13, 2010 SERVED JUL 14 2010 0 1 Bench Opinion By Senior Judge Laurence J . Whale n 2 Davis v . Commissione r Docket No . 10657-09 S 3 May 28, 2010 4 1. 5 THE COURT HAS DECIDED TO RENDER ORA L 6 FINDINGS OF FACT AND OPINION IN THIS CASE, AND TH E 7 FOLLOWING REPRESENTS THE COURT'S ORAL FINDINGS OF FAC T 8 AND OPINION . II . 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 . Hereinafter, all section references are to 15 the Internal Revenue Code, as amended and in effec t 16 for the taxable years in issue, and all rul e 17 references are to the Tax Court Rules of Practice and 18 Procedure . Section 7463(b) provides that a decision 19 entered in a Small Tax Case shall not be reviewed in 20 any other court and shall not be treated as a 21 precedent for any other case . 22 III . 23 This bench opinion is made pursuant to th e 24 authority granted by section 7459(b) and Rule 152 . 25 Heritage Reporting Corporation (202) 628-4888 4 1 IV . 2 Mr . Burns Washington Davis appeared on his 3 own behalf , and Ms . Ann L . Darnold , Attorney at Law, 4 appeared on behalf of respondent . 5 V . 6 Petitioner did not file an income tax return 7 for taxable year 2006 . Therefore, based upo n 8 information reports submitted to the Internal Revenue 9 Service , respondent made a return of petitioner' s 10 income pursuant to section 6020 ( b) . In due course 11 thereafter , respondent issued a notice of deficiency 12 to petitioner for taxable year 2006 in whic h 13 respondent determined a deficiency of $22,557 i n 14 petitioner ' s tax and further determined penalties or 15 additions to tax under section 6651(a)(1) in the 16 amount of $3,205 .58 , under section 6651 ( a)(2) in the 17 amount of $1,424 .70 , and under section 6654 ( a) in the 18 amount of $630 .53 . 19 The deficiency determined by respondent was 20 based upon the following items of income : 2 1 22 23 24 25 2 6 27 28 Income Royalty income Dividend income Taxable distrib . from pensions Wages, tips , other compensation Social Security RRB Total Amount $2,33 3 3 0 17,68 2 73,34 9 14,86 8 $108,26 2 Heritage Reporting Corporation (202) 628-4888 1 In response to the notice of deficiency , 2 petitioner filed his Petition and stated the following 3 as the reason why he disagreed with the determination 5 4 in the notice : 5 "I self-assessed my income for 6 2006 and found that I had 7 insufficient income according t o 8 the statutes to warrant the filing 9 of a return . " 10 On August 5, 2009, petitioner met with a 11 representative of the Appeals office and stated that 12 he .is not required to file a Federal income tax return 13 because he is not a Government employee . 14 In a statement submitted by petitioner on 15 August 4, 2009, petitioner stated as follows : United States , 295 U .S . 249, 79 16 "I understand that th e 17 existence of the power of the 18 federal government to levy i s 19 essential to our self-assessment tax system in that it encourages 20 voluntary compliance with the tax 21 laws and furthers the collection 22 23 of taxes described in Bull v . 24 25 L .Ed . 142, 55 S . Ct . 695 (1935), 26 as the life-blood of government, 27 and their prompt and certai n 28 availability and imperious need .' 29 In relying on this authority, I am 30 claiming and asserting that the 31 Federal Income Tax System is a 32 voluntary system of self- 33 assessment and payment . 34 CLAIMING AND ASSERTING THAT 35 PAYMENT OF INCOME TAXES IS 36 VOLUNTARY . Precisely, I am 37 claiming and asserting that all 38 parties domiciled within th e I AM NOT Heritage Reporting Corporation (202) 628-4888 6 1 United States or the territories 2 of the United States and/or all 3 parties deriving income from 4 sources within or without the 5 United States and/or the 6 territories of the United State s 7 have a duty to assess themselves - 8 the duty to assess one's self i s 9 voluntary - the payment of income Testimony of Burns Davis 10 taxes is not voluntary . 11 12 "Pursuant to the applicable 13 law and code, I have conducted a 14 self-assessment for the year s 15 [sic] in question to warrant the 16 filing of a return, to wit : 17 18 1 9 20 "I, Burns Davis, of age and 21 competent to testify and having 22 actual knowledge of the matters 23 herein, do state under penalty of 24 perjury ; Pursuant to 26 U .S .C . § 1 25 and 26 C .F .R . § 1 .861-8 et seq ., I 26 have repeatedly conducted a self- 27 assessment for the years [sic] in 28 question and not found that I had 29 sufficient taxable income for the 30 years [sic] in question to warrant 31 the filing of a tax return . " 32 The above statement was signed and notarized . 33 VI . 34 At the start of trial, petitioner announced 35 his intention to "stand on his pleadings ." He then 36 made the following frivolous or groundless arguments 37 in support of his contention that he is not subject to 38 Federal income tax . First, he stated that Form 1040 39 applies to trusts and estates ; that is, people who are 40 transferring the property of estates . He said tha t Heritage Reporting Corporation (202) 628-4888 7 1 Form 1040 does not apply to him because he is not 2 dead . 3 Second, he stated that the Internal Revenue 4 Service had no authority to complete a substitute Form 5 1040 on his behalf because he did not sign it . Third, 6 he objected to the inclusion in the record of th e 7 adjustments to income set forth in the notice o f 8 deficiency . Fourth, he cited 26 C .F .R . § 1 .861-8 a s 9 authority for his contention that Form 1040 applies to 10 estates and trusts, and that it does not apply to him . 11 Finally, he stated that he had performed "hi s 12 assessment" and found that he did not have sufficient 13 income to file a return . 14 The record of this case contains sufficient 15 evidence to find that petitioner failed to file a n 16 income tax return for taxable year 2006 , 17 notwithstanding the fact that PCI Staff Leasing, Inc ., 18 paid wages, tips, and other compensation of $54,762 .75 19 to him during the year, and the fact that MGIC Pension 20 Plan made a distribution from pensions, annuities , 21 retirement or profit-sharing plans, IRAs, insurance 22 contracts, et cetera, of $12,187 .44 to him . We also 23 find that petitioner failed to pay Federal income tax 24 for 2006 and that he failed to pay estimated tax for 25 the year . Heritage Reporting Corporation (202) 628-4888 8 1 VII . 2 When this case was first called from the 3 calendar, the Court twice warned petitioner that it 4 would impose damages under section 6673 if it found 5 that petitioner's arguments were frivolous o r 6 groundless, or if it concluded that the case been 7 instituted or maintained primarily for delay . 8 Petitioner made clear his intention to proceed despite 9 the Court's warnings . 10 At trial, petitioner announced his intention 11 to "stand on his pleadings" and he introduced no 12 testimony or evidence . He then continued to make a 13 series of frivolous or groundless legal arguments that 14 were foreshadowed in his petition and earlie r 15 statements . 16 For example, he claims to have made a "self- 17 assessment" and to have determined that he did no t 18 have sufficient income to be required to file a tax 19 return . He asserts that "the duty to assess one' s 20 self is voluntary [but] the payment of income taxes is 21 not voluntary ." [Emphasis in original] . The nature 22 of petitioner' s self-assessment that led him t o 23 conclude that he did not have sufficient income to be 24 required to file a tax return is not clear . It may 25 have been influenced by his assertion that the Federa l Heritage Reporting Corporation (202) 628-4888 9 1 income tax does not apply in his case because he is 2 not dead . None of petitioner's tax-proteste r 3 contentions require discussion . 4 Section 7491(a) does not apply in this case, 5 and petitioner bears the burden of proving that the 6 respondent's determinations in the notice o f 7 deficiency are wrong . Rules 142(a)(1) . Because he 8 failed to introduce any evidence at trial, we fin d 9 petitioner liable for the deficiency determined in the 10 notice of deficiency . 11 At trial, respondent introduced sufficient 12 evidence to meet respondent burden of production under 13 section 7491(c) with respect to petitioner's liability 14 for the penalties or additions to tax determined i n 15 the notice of deficiency . Thus, petitioner bears the 16 burden of producing sufficient evidence to show the 17 respondent's determinations regarding the penalties 18 and additions to tax are incorrect . See Higbee v . 19 Commissioner , 116 T .C . 438, 447 (2001) . Because he 20 failed to introduce any evidence at trial, we find 21 petitioner liable for the penalties and additions to 22 tax determined in the notice of deficiency . 23 Having heard petitioner's case, the Court 24 finds that petitioner instituted or maintained the 25 case primarily for delay and that his position in Heritage Reporting Corporatio n (202) 628-4888 10 1 these proceedings is frivolous or groundless . Indeed, 2 it is clear that petitioner had no case . He only used 3 these proceedings to advance his frivolous an d 4 groundless theories to justify his failure to file his 5 return and pay his tax . Accordingly, pursuant t o 6 section 6673, the Court will require petitioner to pay 7 to the United States a penalty in the amount o f 8 $15,000 . 9 VIII . 10 In order to give effect to the foregoing, we 11 shall enter an order and decision sustainin g 12 respondent's determinations regarding the deficiency 13 in income tax and the penalties or additions to tax 14 determined in the notice, and imposing damages under 15 section 6673 in the amount of $15,000 . 16 IX . 17 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF 18 FACT AND OPINION IN THIS CASE . 19 (Whereupon, at 10 :00 a .m ., the bench opinion 20 in the above-entitled matter was concluded . ) 21 22 23 // 2 4 25 Heritage Reporting Corporation (202) 628-4888