Parker v. CIR

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 96-60580
Summary Calendar
_____________________
CAREY K. PARKER; MARY E. PARKER,
Petitioners-Appellants,
versus
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
_________________________________________________________________
Petition for Review of an Order of the
United States Tax Court
(3456-96)
_________________________________________________________________
May 13, 1997
Before KING, JOLLY, and DENNIS, Circuit Judges.
PER CURIAM:*
Appellants Carey K. Parker and Mary E. Parker appeal the tax
court’s dismissal of their petition challenging tax deficiencies
found by the Internal Revenue Service. Finding the Parkers’
arguments to be entirely meritless, we affirm.
The Parkers did not file income tax returns for the years 1991
through 1994. The IRS concluded from the 1099 and W-2 forms
submitted by third-party payors that the Parkers owed in excess of
*
Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
$80,000 in back taxes and penalties, and sent the Parkers notices
of these deficiencies. The Parkers filed a petition for
redetermination in which they argued (1) that the IRS lacked
authority to assess income taxes, determine deficiencies, or assess
tax penalties because there were no proper implementing
regulations; (2) that the IRS’ determinations were arbitrary and
without factual foundation; (3) that they are “Texas State
Citizens” residing in “on of the American Republics named the
‘State of Texas’” and therefore were not subject to federal income
tax because they are “foreign” to the United States; and (4) that
their income was part of their “estate,” which is “foreign to the
corporate United States Government” and not includable in gross
income. The Commissioner moved to dismiss the petition for failure
to state a claim. The tax court found that the Parkers’ petition
was based upon “frivolous constitutional arguments” that were
“totally without merit” and granted the motion to dismiss.
On appeal, the Parkers have abandoned most of these arguments,
but they have clarified their claim that the IRS’ determinations
were “arbitrary.” The Parkers now insist that the determinations
are “arbitrary” because they are based upon 1099 and W-2 forms
submitted by third-party payors, claiming that “the Commissioner
has some duty to investigate the payers [sic] bald assertion of
-2-
payment and determine if the payers [sic] position was supported by
their books, receipts, or other records.”
The Parkers cite our decision in Portillo v. Commissioner, 932
F.2d 1128 (5th Cir. 1991), as support for this position. In
Portillo, the IRS issued a notice of deficiency when it discovered
that the taxpayer had reported substantially less income from a
particular payor than that payor had reported in its Form 1099. We
found that the Commissioner “arbitrarily decided to attribute
veracity to [the third-party payor] and assume that [the
taxpayer’s] Form 1040 was false.” Id. at 1134. In Portillo, the
Commissioner’s determination was arbitrary because the Commissioner
offered no factual basis for accepting one sworn statement, the
Form 1099, while rejecting another sworn statement, the taxpayer’s
Form 1040.
Portillo did not hold that the IRS must conduct an independent
investigation in all tax deficiency cases. In this case, the
Commissioner has not arbitrarily found the third-party forms
credible: the Parkers never filed a Form 1040 or any other
document in which they swore that they did not receive the payments
in question. The Commissioner has no duty to investigate a third-
party payment report that is not disputed by the taxpayer.
The Parkers additionally suggest, in their statement of facts,
that the requirement that individuals file income tax returns
-3-
violates the constitutional right against self-incrimination.
Although this argument was not raised before the tax court and
therefore is not properly raised here, we observe that the Parkers’
position is plainly frivolous.
The decision of the tax court dismissing the Parkers’ petition
for redetermination for failure to state a claim is therefore
affirmed.
Also before this court is the Commissioner’s motion that
sanctions be assessed against the Parkers for bringing a frivolous
appeal. The Internal Revenue Code specifically authorizes the
Court of Appeals to impose a penalty in cases “where the decision
of the Tax Court is affirmed and it appears that the appeal was
instituted or maintained primarily for delay or that the taxpayer’s
position in the appeal is frivolous or groundless.” 26 U.S.C.
§ 7482(c)(4). In past cases, this penalty has been single costs,
double costs or a lump sum sanction.
As we have previously observed, imposing a lump sum sanction
saves the government the additional cost of calculating its
expenses, and also saves the court the time and expense of
reviewing the submission of costs. Stelly v. Commissioner, 804
F.2d 868, 871 (5th Cir. 1986), cert. denied, 480 U.S. 907, 107
S.Ct. 1352 (1987) (setting lump sum sanction “saves both government
time in preparing and filing of affidavits and judicial time in
-4-
considering such affidavits”). See also Stoecklin v. Commissioner,
865 F.2d 1221, 1226 (11th Cir. 1989); Crain v. Commissioner, 737
F.2d 1417, 1418 (5th Cir. 1984).
In this case, after the government filed its motion to dismiss
on the ground that the Parkers’ petition cited only frivolous and
unsupported arguments, the tax court specifically ordered the
Parkers to file an amended petition alleging each error with
specificity, and with “separate statements of every fact upon which
the petitioner bases the assignment of each error.” Despite this
opportunity, the Parkers’ amended petition simply repeats the
meritless constitutional arguments of their original petition. In
its order dismissing the petition, the tax court specifically
stated that the Parkers had raised “frivolous allegations” that
were “nothing but tax protestor rhetoric and legalistic gibberish.”
Despite this warning that their claims were meritless, the Parkers
filed the present appeal in which they continued to maintain that
the entire Tax Code is an elaborate “fraud” designed to “catch the
naïve.” The Parkers insist that the “IRS lie” is based upon a
“deception” that is “thorough, deep and wide.”
Although some latitude may be afforded to pro se taxpayers who
misunderstand the nature of the tax laws, pro se status is not a
license to litter the dockets of the federal courts with ridiculous
allegations that the Internal Revenue Code is the product of an
-5-
illegal conspiracy. The Commissioner has requested a sanction of
$2000, citing cases imposing sanctions of that amount and higher.
We agree with the Commissioner that this is a reasonable penalty,
and find that imposing a lump sum sanction in lieu of costs
conserves both government and judicial resources. We therefore
impose a sanction of $2000, which we hope will deter the Parkers
from any further frivolous filings.
AFFIRMED; SANCTIONS IMPOSED.
-6-