Court Opinion

ID: 4336467
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:52:17.445554+00
Date Added: 2024-06-11T14:19:54.414913
License: Public Domain

T.C. Memo. 2007-121

                       UNITED STATES TAX COURT

                   WILLIAM M. SMITH, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 13599-05.                Filed May 10, 2007.

     William M. Smith, pro se.

     Jonathan J. Ono, for respondent.

               MEMORANDUM FINDINGS OF FACT AND OPINION

     HAINES, Judge:    Respondent determined a deficiency in

petitioner’s 2002 Federal income tax of $4,088, as well as

additions to tax under section 6651(a)(1) of $1,131 and section

6654 of $125.1

     1
         Unless otherwise indicated, all section references are to
                                                     (continued...)
                                - 2 -

     The issues for decision are:    (1) Whether petitioner failed

to report wages, interest, a State income tax refund, and other

income of $35,335, $14, $757, and $270, respectively, in 2002;

and (2) whether petitioner is liable for section 6651(a)(1) and

6654 additions to tax.2

                          FINDINGS OF FACT

     The parties’ stipulation of facts and the attached exhibits

are incorporated herein by this reference.    Petitioner resided in

Lahaina, Hawaii, at the time the petition was filed.

     In 2002, petitioner was employed by the county of Maui in

Hawaii and received wage income of $35,335 and had withheld $713

in Federal income tax.    Using third-party payor information,

respondent determined that in 2002 petitioner also received $14

of interest from the Maui County Employees Federal Credit Union,

$757 as an income tax refund from the State of Hawaii, and $270

from the Hawaii Public Employees Health Fund.    Petitioner did not

file a Federal income tax return for 2002 and, other than tax

withheld of $713, failed to make estimated tax payments.

     1
      (...continued)
the Internal Revenue Code (Code), as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
     2
       In the notice of deficiency respondent determined that
petitioner was entitled only to the standard deduction, one
personal exemption, and tax rates applicable to a single
individual. Petitioner did not present any evidence or make any
arguments with respect to deductions, exemptions, or filing
status. We conclude that he has abandoned any argument with
respect to these issues.
                                 - 3 -

     On April 26, 2005, respondent mailed a notice of deficiency

to petitioner for 2002.    The notice of deficiency correctly

identified petitioner’s name, address, and Social Security

number.    Petitioner timely filed his petition on July 22, 2005.

Trial was held on this matter on June 20, 2006.

                                OPINION

     At trial, petitioner admitted receiving $35,335 of wage

income from Maui county, $14 of interest income from the Maui

County Employees Federal Credit Union, and a $757 income tax

refund from the State of Hawaii in 2002.    Although petitioner

asserted he did not receive $270 from the Hawaii Public Employees

Health Fund as reported on the information return of the payor,

he was a public employee in the State of Hawaii in 2002 and

produced no evidence to dispute his receipt of that amount.

Thus, respondent established the requisite evidentiary foundation

connecting petitioner with the receipt of $270 in 2002.     See

Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982);

Weimerskirch v. Commissioner, 596 F.2d 358, 361-362 (9th Cir.

1979), revg. 67 T.C. 672 (1977); Petzoldt v. Commissioner, 92
T.C. 661, 689 (1989); McManus v. Commissioner, T.C. Memo.

2006-68.

     Petitioner bears the burden of proving respondent’s

determinations are incorrect.    See Rule 142(a).   Petitioner

produced no evidence to dispute respondent’s determination of
                                 - 4 -

petitioner’s receipt of the $270 in 2002.   Therefore, this Court

finds petitioner received $270 of income from the Hawaii Public

Employees Health Fund in 2002.

     Petitioner also asserted he was not liable for the

deficiencies, making tax-protester arguments including:    (1) He

is not a taxpayer; (2) respondent has no jurisdiction over him;

and (3) respondent lacks authority to assert income tax

deficiencies.   Petitioner’s assertions have been rejected by this

Court and other courts, and “We perceive no need to refute these

arguments with somber reasoning and copious citation of

precedent; to do so might suggest that these arguments have some

colorable merit.”    Crain v. Commissioner, 737 F.2d 1417, 1417

(5th Cir. 1984); see, e.g., Wetzel v. Commissioner, T.C. Memo.

2005-211 (rejecting as frivolous the argument that the taxpayer

was not a taxpayer); Nunn v. Commissioner, T.C. Memo. 2002-250

(rejecting as without merit the argument that the Commissioner

had no jurisdiction over the taxpayer or his documents).   This

Court rejects petitioner’s tax-protester arguments as frivolous

and without merit.

     Respondent determined that petitioner is liable for

additions to tax under section 6651(a)(1) for failure to file an

income tax return for 2002 and under section 6654(a) for failure

to make estimated tax payments for 2002.    Respondent bears the

burden of production with respect to petitioner’s liability for
                                - 5 -

the additions to tax.   Sec. 7491(c); Higbee v. Commissioner, 116
T.C. 438, 446-447 (2001).    To meet his burden of production with

respect to section 6651, respondent must come forward with

sufficient evidence indicating it is appropriate to impose the

addition to tax.   Higbee v. Commissioner, supra at 446-447.

     Section 6651(a)(1) imposes an addition to tax for failure to

file a return on the date prescribed (determined with regard to

any extension of time for filing) unless petitioner can establish

that his failure was due to reasonable cause and not due to

willful neglect.   Petitioner admitted he did not file a Federal

income tax return for 2002.    Respondent has met his burden of

production.   This Court finds that the failure to file a Federal

income tax return for 2002 was not due to reasonable cause but

was due to willful neglect.    Therefore, this Court holds that

petitioner is liable for the section 6651(a)(1) addition to tax

for 2002.

     Under section 6654, the addition to tax is calculated with

reference to four required installment payments of the taxpayer’s

estimated tax liability.    Sec. 6654(c)(1); Wheeler v.

Commissioner, 127 T.C. 200, 210 (2006).    Each required

installment of estimated tax is equal to 25 percent of the

“required annual payment”.    Sec. 6654(d)(1)(A).   The “required

annual payment” is generally equal to the lesser of (1) 90

percent of the tax shown on the individual’s return for that year
                               - 6 -

(or, if no return is filed, 90 percent of his or her tax for such

year), or (2) if the individual filed a return for the

immediately preceding taxable year, 100 percent of the tax shown

on that return.   Sec. 6654(d)(1)(B); Wheeler v. Commissioner,

supra at 210-211; Heers v. Commissioner, T.C. Memo. 2007-10.     A

taxpayer has an obligation to pay estimated tax for a particular

year only if he has a “required annual payment” for that year.

Wheeler v. Commissioner, supra at 211.

     Respondent introduced evidence to prove petitioner was

required to file a Federal income tax return for 2002, petitioner

did not file a 2002 return, and petitioner failed to make

estimated tax payments (with the exception of the withheld tax).

However, in order to permit this Court to make the analysis

required by section 6654(d)(1)(B)(ii) and to conclude that

respondent met his burden of producing evidence that petitioner

had a required annual payment for 2002 payable in installments

under section 6654, respondent also must introduce evidence

showing whether petitioner filed a return for the preceding

taxable year and, if so, the amount of tax shown on that return.

Respondent did not do so.   Without that evidence, this Court

cannot identify the number equal to 100 percent of the tax shown

on petitioner’s 2001 return, complete the comparison required by

section 6654(d)(1)(B), and conclude petitioner had a required

annual payment for 2002 that was payable in installments under
                                 - 7 -

section 6654.   Consequently, respondent’s determination regarding

the section 6654 addition to tax is not sustained.

     Although petitioner’s arguments were frivolous and without

merit, he was not previously warned that a penalty might be

imposed under section 6673(a).    For this reason only, this Court

declines to impose a penalty under section 6673(a) but strongly

admonishes petitioner that if he persists in failing to file his

income tax returns and in pursuing tax-protester arguments, this

Court will not be so favorably inclined in the future.

     In reaching our holdings herein, we have considered all

arguments made, and, to the extent not mentioned above, we find

them to be moot, irrelevant, or without merit.

     To reflect the foregoing,

                                              Decision will be entered

                                         under Rule 155.