Court Opinion

ID: 9381349
Source: CourtListenerOpinion
Date Created: 2023-03-22 19:01:39.963613+00
Date Added: 2024-06-11T17:17:31.910774
License: Public Domain

United States Tax Court

                               T.C. Memo. 2023-38

                           DARCY-MAE ENGLERT,
                                Petitioner

                                          v.

              COMMISSIONER OF INTERNAL REVENUE,
                          Respondent

                                    —————

Docket No. 3464-22.                                         Filed March 22, 2023.

                                    —————

Darcy-Mae Englert, pro se.

Sheida Lahabi and Luke D. Ortner, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       PUGH, Judge: In a notice of deficiency dated November 3, 2021,
the Internal Revenue Service (IRS or respondent) determined a
deficiency in petitioner’s 2018 federal income tax of $6,164 and an
accuracy-related penalty under section 6662(a) of $1,233. 1 At trial
respondent conceded the section 6662(a) penalty. The remaining issues
for decision are whether petitioner (1) has unreported income of $58,470
for 2018 and (2) is liable for a section 6673 penalty.

                              FINDINGS OF FACT

       Some of the facts have been stipulated, and the stipulated facts
are incorporated into our findings by this reference. At the time the
Petition was filed, petitioner resided in Wyoming. In 2018 petitioner

        1 Unless otherwise indicated, all statutory references are to the Internal

Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references
are to the Tax Court Rules of Practice and Procedure. We round monetary amounts to
the nearest dollar.

                                 Served 03/22/23
                                     2

[*2] worked full time as a service director at Mountain Vista Retirement
Residence, Inc. (Mountain Vista), in Lander, Wyoming. Mountain Vista
paid petitioner $58,470 for 2018 in connection with her employment and
reported that amount on Form W–2, Wage and Tax Statement.

       Petitioner timely filed Form 1040, U.S. Individual Income Tax
Return, and Form 4852, Substitute for Form W2, Wage and Tax
Statement, or Form 1099–R, Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.,
reporting zero income and zero tax liability and claiming a credit for the
Social Security and Medicare taxes withheld by Mountain Vista.

       In addition to the deficiency and section 6662(a) penalty
determined in the notice of deficiency, respondent also determined a
frivolous return penalty for 2018 under section 6702. The parties
stipulated related notices and correspondence between the IRS and
petitioner. Petitioner highlighted those among her grievances in her
pretrial memorandum, her closing argument at trial, and a posttrial
written submission that regurgitates her closing argument at trial.
Those penalties, however, are not subject to the deficiency procedures,
see § 6703(b), and we do not have jurisdiction to review them. We take
the associated documents into account only insofar as the IRS
correspondence advised petitioner that she was taking frivolous
positions.

                                OPINION

I.    Burden of Proof

       Ordinarily, the burden of proof in cases before the Court is on the
taxpayer. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The
record establishes, and petitioner concedes, that she received payments
from Mountain Vista in connection with her employment. Petitioner
does not dispute the total amount she received for 2018. She disputes
only the characterization of the payments as taxable wages. Because
petitioner raises only legal issues, we decide whether she is liable for the
deficiency at issue without regard to the burden of proof.

II.   Taxable Income

      Section 61(a) provides that gross income means all income from
whatever source derived, including compensation for services. As noted
above, petitioner does not dispute that she received payments as an
employee of Mountain Vista in 2018. Rather, she argues that the
                                     3

[*3] payments are not taxable wages. She also argues that she has not
engaged in any of the sorts of activities that are subject to tax and is not
the type of taxpayer that is subject to tax.

       In general, we do not address frivolous 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., Cabirac v. Commissioner, 120
T.C. 163 (2003), aff’d per curiam without published opinion, No. 03-
3157, 2004 WL 7318960 (3d Cir. Feb. 10, 2004); Rowlee v. Commissioner,
80 T.C. 1111, 1120 (1983) (rejecting the taxpayer’s claim that he is not
a person liable for tax); Waltner v. Commissioner, T.C. Memo. 2014-35
(laying out and rejecting a litany of frivolous positions), aff’d, 659 F.
App’x 440 (9th Cir. 2016). Petitioner’s assertion that her wages are not
income has been identified by the Secretary as a “frivolous position[].”
I.R.S. Notice 2010-33, 2010-17 I.R.B. 609, 609. And courts have
repeatedly done the same. See, e.g., Walker v. Commissioner, T.C. Memo.
2022-63; Briggs v. Commissioner, T.C. Memo. 2016-86; Lovely v.
Commissioner, T.C. Memo. 2015-135, aff’d, 642 F. App’x 268 (4th Cir.
2016).

       Petitioner is subject to tax under the Internal Revenue Code.
Petitioner repeatedly asked for legal and statutory proof that her wages
are taxable. These are but a few of the cases that have rejected
arguments that she has raised. Applying the law to the facts of this case,
we find that petitioner received taxable wages from Mountain Vista, and
we sustain respondent’s deficiency determination.

III.   Section 6673 Penalty

       Section 6673(a)(1) authorizes the Court to require a taxpayer to
pay a penalty to the United States in an amount not to exceed $25,000
whenever it appears to the Court that the taxpayer instituted or
maintained her proceeding primarily for delay or that the taxpayer’s
position in the proceeding is frivolous or groundless. Counsel for
respondent, in her pretrial memorandum, raised the potential
applicability of the penalty under section 6673(a)(1) but did not move
formally for its imposition at trial, leaving it to our discretion.

      We warned petitioner at trial that her arguments were frivolous
and have been rejected by this and other courts, and we directed her to
reread Notice 2010-33, which identifies common frivolous arguments,
including some she has espoused in this case, before submitting
                                    4

[*4] anything in writing post trial. In her posttrial submission she
claims to have read the notice and asks the Court again to point out
where her arguments have been identified and rejected as frivolous. We
again direct her to section III(7), which states that a position “the same
as or similar to” the position that “[o]nly certain types of taxpayers are
subject to income and employment taxes, such as employees of the
Federal government, corporations, nonresident aliens, or residents of
the District of Columbia or the Federal territories, or similar arguments
described as frivolous in Rev. Rul. 2006-18, 2006-1 C.B. 743,” is a
frivolous position. Notice 2010-33, 2010-17 I.R.B. at 609–10; see also
Rev. Rul. 2006-18, 2006-1 C.B. 743 (rejecting arguments similar to
petitioner’s regarding the definition of “employee”).

       Notice 2010-33 thus identified as frivolous petitioner’s
arguments, repeated in her posttrial submission, that she did not have
wages or income because she and her wages were outside the covered
class. Even after reading Notice 2010-33 as we advised, petitioner did
not heed its warning: she submitted the same frivolous arguments post
trial. We also warned petitioner at trial that we would take into account
everything she said at trial and submitted in writing posttrial when we
considered whether to impose the section 6673 penalty. Therefore, we
will impose a penalty of $1,000 under section 6673(a)(1) on petitioner for
continuing to take frivolous positions.

      We again warn petitioner that if she does not abandon her
misguided positions—e.g., that wages received for services are not
taxable income, even though reported to her as such, and she is not
subject to tax—a greater penalty may be imposed in future cases before
this Court.

      We have considered petitioner’s remaining arguments, and we
conclude that they also are frivolous and devoid of any basis in law. See
Crain v. Commissioner, 737 F.2d at 1417; Wnuck v. Commissioner, 136
T.C. 498 (2011).

      To reflect the foregoing,

      An appropriate order and decision will be entered.