TAX COURT OPINION

Case: Santos Guardado
Docket Number: 17984-09S
Judge: Colvin
Opinion Type: bench
Filed: 11/12/2010
Pages: 6

UNITED STATES TAX COURT 20217 WASHINGTON, D.C. SANTOS GUARDADO, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent . ) ) ) ) ) ) ) ) ) Docket No. 17984-09S 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 transcript of Trial Judge Lewis R. Carluzzo at Los Angeles, California, on October 20, 2010, containing his oral opinion rendered at the above case before Special the conclusion of trial. the pages of the the trial of findings of fact and In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. November 12, 2010 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 3 Bench Opinion by Special rial Judge Lewis R. Carluzzo October 20, 2010 Santos Guardado v. Commissioner Docket No. 17984-09S THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the ourt's oral findings of fact and opinion. This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax Court Rules of Practice and Procedure. This bench opinio is made pursuant to the authority granted by sect on 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Subsequent section references contained in this bench opinion are to sections of the Internal Revenue Code of 1986, as amended, in effect for 2008. Santos Guardado aypeared pro se. Nathan C. Johnston appeared on behalf of respondent. Nancy Moyna provided services as an interpreter for petitioner. In a notice of deficiency dated May 28, 2009, respondent determined a $2,015 deficiency in petitioner's 2008 Federal income tax. The deficiency results entirely Heritage Reporting Corporation (202) 628-4888 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 from the disallowance of and is in the same amount as) the earned income credit claimed on petitioner's timely filed 2008 Federal income tax return. The issue for decision is whether petitioner is entitled to that credit . The resolution dèpends upon whether for 2008 4 | petitioner is ineligible t o claim an earned income credit because of a final determination made with respect to 2006, the circumstances of which are more fully discussed below. Some of the facts have been stipulated and are so found. At the time the petition was filed, petitioner resided in California. I Petitioner is the mother of G.S., who was born in 1995. As best as can be determined from what has been submitted, petitioner treated G.S. as a qualifying child for an earned income credit claimed on her 2006 Federal income tax return. That redit was disallowed. The reason for the disallowan e cannot be determined with certainty from the record, but it appears that petitioner's filing status for 2006 was as a married individual filing a separate return. That being so, if only for that reason, she was not entitled to claim an earned income credit for that year. See sec. 32(d). In a Form 4549, Income Tax Changes, signed by , petitioner on September 25, 2007, she agreed to the Heritage Re orting Corporation (202) 628-4888 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 I 5 disallowance of the earned income credit claimed on her 2006 return. In an area bove her signature designated "Other Information" respondent noted that because it had been determined that the earned income credit claimed on her 2006 return was due to "reckless or intentional disregard of the law" petitioner would "not be allowed to claim [an earned income c edit] for [2007 or 2008]". As in 2006, during 2008 petitioner was employed, as she puts it, "cleaning houses". As she apparently did on her 2006 return, petitioner treated G.S. as a qualifying child with res ect to the $2,015 earned income credit claimed on her 2008 return. That credit was disallowed in the above-referenced notice of deficiency. An explanation for the disallowance contained in the notice of deficiency provides that the disallowance "resulted from a prior ex mination in which your [earned income credit] was disall wed due to reckless or intentional disregard of he [earned income credit] rules and regulations." The reference to the "prior examination" relates to 2006. The explanation further expressly refers to section 32(k) (1) (B) (ii), which section, in effect, provides that no earned income credit is allowed to a taxpayer for the two year period following the year in which a disallowed earned income credit claim "was due to reckless or intentional Heritage Reporting Corporation (202) 628-4888 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 6 disregard of rules and regulations". The earned income credit claimed on petitioner's 2006 return was determined to be "due to reckless or intentional disregard of rules and regulations", and petitioner's signature on the above-referenced Form 4549 acknowledges that determination. Because the Form 4549 shows a refund due, rather than a deficiency, petitioner could not challenge the disallowance of the 2006 earned income credit in this Court. Presumably petitioner could have pursued her claim to that credit (1) administratively with respondent's Appeals Office, or (2) judicially through refund procedures. See sec. 7422. There is nothing in the r cord that suggests that she did either, so for purposes h re, we consider the Form 4549 to be a "final determination" as that phrase is used in section 32(k). Petitioner's 2006 and 2008 Federal income tax returns were prepared by a paid income tax return preparer. As we have observed in other cases involving disallowed refundable credits, more often than not, the return preparer, rather than the taxpayer, is the culprit, and as between the two, more often than not, the return preparer profits from the refund at the ultimate expense of the taxpayer. This is especially true in cases such as this one where the taxpayer is not Heritage Reporting Corporation (202) 628-4888 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 7 proficient in the English language. Our suspicions aside, Petitioner makes no attempt to avoid the consequences of her signature on the Form 4549 by suggesting that i was signed under duress, or that she was induced to sign the form on account of fraud or some misrepresentation Instead, petitioner explained that she signed the Form 549 because it shows her entitlement to a small reEund. Taking into account the modest income she earned by "cleaning houses", no doubt every little bit helped. That being so, we cannot help but to wonder whether the Form 4549 would have been signed if it showed a tax due rather than an overpayment, or whether she fully understood the consequences of the document. Nevertheless, she signed the Form 4549, and that form clearly shows tne restrictions that would be placed upon her for doing so. The Form 4549, in effect, precludes petitioner from claiming an earned income credit for 2008. See sec. 32(k) (1) (A) and (B) (ii). It follows that respondent's disallowance of the earned income credit claimed on her 2008 return must be sustained. To reflect the foregoing, decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. Heritage Reporting Corporation (202) 628-4888