DocketNumber: Docket No. 18177-11
Citation Numbers: 2012 U.S. Tax Ct. LEXIS 33, 139 T.C. No. 9, 139 T.C. 270
Judges: HALPERN
Filed Date: 9/25/2012
Status: Precedential
Modified Date: 1/13/2023
An appropriate order and decision will be entered in each case.
P filed no tax return for either 2005 or 2006. R prepared substitutes for returns and issued notices of deficiency for those years. P principally argues that he is not liable for the deficiencies because the individuals who prepared the substitutes for returns and issued the notices of deficiency were not delegated authority to do so. R also determined additions to tax for failure to timely file a return and failure to timely pay tax due and asks that we sanction P for making frivolous arguments.
1.
2.
3.
*270 HALPERN,
2005 | $2,706 | $479 | $532 |
2006 | 2,491 | 441 | 461 |
Petitioner assigned error to those determinations, averring only: "The true amount of the tax and interest and penalties owing is $0.00." Petitioner did not, as required by our standing pretrial order, file a pretrial memorandum, which, among other things, would have described his view of the issues in the case. From his testimony at trial, we understand petitioner's principal objections to respondent's determinations to be that the determinations are not based on properly made substitutes for returns and that the notices are invalid because improperly issued. At trial, respondent moved for the imposition of a sanction against petitioner under
Petitioner bears the burden of proof.
At the time the petition was filed, petitioner resided in Illinois.
During 2005 and 2006 (the years in issue), petitioner was employed by Dell Medical Corp. and, in return for his services, received compensation from it of $28,630 and $27,529 for those years, respectively. During the years in issue, he also received dividend payments of $24 and $28 for those years, respectively. Because for the years in issue he received no income tax returns from petitioner, respondent, using *272 information returns he received from third parties, made returns (substitutes for returns) for petitioner. In part, the substitutes for returns consist of an Internal Revenue Service (IRS) Form 13496,
Although petitioner's objections to respondent's determinations concern principally procedural aspects of those determinations, he did at trial argue that the compensation and dividends he received were not taxable. The short answer is that compensation for services and dividends are items of gross income and, as such, are taxable.
Petitioner argues that the substitutes for returns were not properly made because the individual certifying them, Ms. Green, had not been delegated the authority to do so. Likewise, he argues that the notices were invalid because the individual executing them, Mr. Slaughter, had not been delegated the authority to do so.
The Secretary is responsible for collecting the taxes imposed by the internal revenue laws of the United States.
Delegation Order 5-2, set forth in Internal Revenue Manual (IRM) pt. 1.2.44.3 (May 5, 1997), delegates to specific agents and managers, including SB/SE tax compliance officers, the authority to "prepare or execute returns required by any internal revenue law or regulation when the person required to file such return *39 fails to do so." Delegation Order 4-8, set forth in IRM pt. 1.2.43.9 (Feb. 10, 2004), delegates to specific managers, case leaders, reviewers and directors, including SB/SE field directors, the authority to "sign and send to the taxpayer by registered or certified mail any notice of deficiency."
*274 Ms. Green was authorized to prepare and execute the substitutes for returns. While her position is not among those specified in Delegation Order 5-2 as being delegated authority to prepare substitutes for returns, she supervises SB/SE tax compliance officers, who are specifically delegated that authority by Delegation Order 5-2. With respect to the delegation of authority to those in intervening positions (i.e., in positions between the delegating official and the delegated official), IRM pt. 1.11.4.4.1 (1)(A) (Oct. 10, 2008) states the following general rule: "Every intervening line supervisory position up to and including the Commissioner has the same authority." Because we are satisfied that Ms. Green is in an intervening line supervisory position with respect to SB/SE tax compliance officers, who are delegated authority to prepare and execute substitutes for returns, we are satisfied (and *40 find) that she had authority to prepare and execute the substitutes for returns. While provisions of the IRM are generally considered not to have the force of law,
Mr. Slaughter was authorized to issue the notices. Mr. Slaughter's position is "Director, Collection Area-Western"; he "serves as one of several field directors of SB/SE's collection activities". Delegation Order 4-8 specifically delegates the authority to issue notices of deficiency to SB/SE field directors. Mr. Slaughter was delegated that authority.
The substitutes for returns were properly made and executed, and the notices were properly issued.
Respondent's account transcripts for petitioner for the years in issue indicate that he filed no Federal income tax returns for those years, and that is sufficient for us to find, and we do, that petitioner filed no return for either year.
Petitioner filed no return for either of the years in issue, and respondent properly made substitutes for returns for him. Petitioner has not paid the tax shown on those substitutes for returns. Respondent has, therefore, met his burden under
In pertinent part,
For the foregoing reasons, petitioner is liable for the deficiencies,
1. Section references are to the Internal Revenue Code of 1986, as amended and in effect for the years in issue.↩
2. Petitioner has not raised the issue of
3. We note in passing that, while a properly made substitute for return is necessary before a
Glenn Crain v. Commissioner of Internal Revenue , 737 F.2d 1417 ( 1984 )
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Wnuck v. Comm'r , 136 T.C. 498 ( 2011 )
charles-a-roat-v-commissioner-internal-revenue-service-alaska-usa , 847 F.2d 1379 ( 1988 )