DocketNumber: No. 4343-97
Citation Numbers: 1999 T.C. Memo. 65, 77 T.C.M. 1488, 1999 Tax Ct. Memo LEXIS 76
Judges: COHEN
Filed Date: 3/5/1999
Status: Non-Precedential
Modified Date: 4/17/2021
1999 Tax Ct. Memo LEXIS 76">*76 Decision will be entered under Rule 155.
MEMORANDUM FINDINGS OF FACT AND OPINION
[1999 Tax Ct. Memo LEXIS 76">*77 1] COHEN, CHIEF JUDGE: Respondent determined additions to tax and penalties with respect to petitioner's Federal income tax liabilities as follows:
Additions to Tax and Penalties | |||
Sec. | Sec. | Sec. | |
Year | 6653(b)(1)(A) | 6653(b)(1) | 6663 |
1987 | $ 7,324 | -- | -- |
1988 | -- | $ 8,127 | -- |
1989 | -- | -- | $ 13,576 |
[2] After concessions by the parties, the issues remaining for decision are whether this Court has jurisdiction over this case and whether petitioner fraudulently underpaid1999 Tax Ct. Memo LEXIS 76">*78 his Federal income tax for 1989. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue. All Rule references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
[3] This case was submitted fully stipulated, and the facts set forth in the stipulation are incorporated in our findings by this reference. Jerry V. Rice (petitioner) resided in Albuquerque, New Mexico, at the time the petition in this case was filed. During 1989, petitioner was employed as a certified public accountant (C.P.A.) with two companies, Jerry V. Rice C.P.A., P.C. (Jerry Rice, P.C.), and its successor, Rice and Associates C.P.A., P.C. (Rice and Associates). Petitioner was the sole shareholder in both companies and was responsible in each for keeping records and paying payroll taxes. Accordingly, petitioner knew that neither Jerry Rice, P.C., nor Rice and Associates withheld and paid over to the Internal Revenue Service Federal income tax for petitioner during 1989.
[4] Petitioner's Federal income tax return for 1989 reported that he had taxable income of $ 45,691 and an income tax liability of $ 10,416 before credits. Despite knowing1999 Tax Ct. Memo LEXIS 76">*79 that withholding had not been paid in 1989, petitioner claimed on his return that $ 18,102 had been withheld during the year. In addition, he attached false Forms W-2 from Jerry Rice, P.C., and from Rice and Associates to substantiate the withholding he claimed. Petitioner ultimately received a refund for 1989 of $ 10,172.
[5] On October 5, 1994, petitioner was convicted of filing a false claim for a Federal income tax refund in violation of
OPINION
[6] The jurisdiction of this Court is limited by statute and attaches only upon the issuance of a valid notice of deficiency and the timely filing of a petition.
[7]
[8] The penalty in the case of fraud is a civil sanction provided primarily as a safeguard for the protection of the revenue and to reimburse the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud.
[9] The existence of fraud is a question of fact to be resolved upon consideration of the entire record.
[10] Petitioner argues that there is no underpayment of tax in this case and that, without an underpayment, respondent cannot properly assess a penalty under
(i) The amounts shown by the taxpayer on his return as
credits for tax withheld under
withheld on wages) * * * over
1999 Tax Ct. Memo LEXIS 76">*83 (ii) The amounts actually withheld, * * * with respect to a
taxable year before the return is filed for such taxable year.
This regulation takes into consideration the situation in which a taxpayer overstates the credit for withholding. See also sec. 1.6664- 2(g) Example (3), Income Tax Regs. Accordingly, if a taxpayer overstates prepayment credits, such as the credit for wages withheld, the overstatement decreases the amount shown on the return and increases the underpayment of tax.
[11] In this case, petitioner claimed that he had withholding credits of $ 18,102 in 1989 and attached false Forms W-2 to substantiate this claim. Jerry Rice, P.C., and Rice and Associates, however, made no withholding payments during 1989. Applying
[12] Petitioner argues that, because the regulations to
[13] Petitioner admitted committing fraudulent acts with respect to his 1989 Federal income tax return. He intentionally reported false withholding information, the false withholding information was used to offset his income tax liability in 1989, and he thus obtained an erroneous refund of $ 10,172 for that year. In addition, he fabricated and attached to his return false Forms W-2 to substantiate his withholding. Petitioner was later convicted of filing a false claim for a refund and of subscribing a false Federal income tax return.
[14] Respondent has proven by clear and convincing evidence that petitioner fraudulently underpaid tax for 1989. 1999 Tax Ct. Memo LEXIS 76">*85 Accordingly, the fraud penalty is justified in this case, and petitioner has not proven that any part of the underpayment is not attributable to fraud.
[15] To reflect the foregoing,
[16] Decision will be entered under Rule 155.
herbert-eck-v-commissioner-of-internal-revenue-martin-m-karlan-v , 202 F.2d 750 ( 1953 )
Helvering v. Mitchell , 58 S. Ct. 630 ( 1938 )
Eck v. Commissioner , 16 T.C. 511 ( 1951 )
Pietanza v. Commissioner , 92 T.C. 729 ( 1989 )
King's Court Mobile Home Park, Inc. v. Commissioner , 98 T.C. 511 ( 1992 )