DocketNumber: Nos. 14430-03, 7206-04
Citation Numbers: 2006 T.C. Memo. 109, 91 T.C.M. 1194, 2006 Tax Ct. Memo LEXIS 110
Judges: \"Wherry, Robert A.\"
Filed Date: 5/22/2006
Status: Non-Precedential
Modified Date: 11/21/2020
*110 P failed to timely file Federal income tax returns for the 1994,
1995, 1996, 1997, 1998, 1999, 2000, and 2001 taxable years. R
determined deficiencies and additions to tax, which P then
contested on the basis of tax protester arguments.
Held: P is liable for the deficiencies determined by R,
for additions to tax under
and for a penalty under
MEMORANDUM FINDINGS OF FACT AND OPINION
WHERRY, Judge: In these consolidated cases, respondent determined the following deficiencies and additions to tax with respect to petitioner's Federal income taxes:
Additions to Tax
________________
Year Deficiency
1994 $ 15,345.00*111 $ 3,341.25 $ 682.09
1995 22,888.00 4,501.00 946.78
1996 128,008.00 30,519.50 6,462.58
1997 37,376.00 7,010.50 1,444.79
1998 40,669.00 7,175.00 1,252.40
1999 11,093.00 2,266.75 427.92
2000 11,662.00 2,306.00 478.24
2001 9,666.90 2,755.55 382.54
The parties stipulated petitioner's filing status, number of exemptions, gross income, allowable deductions, taxable income, and in some instances allowable credits. After concessions by the parties, 2 the remaining*112 issues for decision are:
(1) Whether respondent issued valid notices of deficiency for the 1994 through 2001 taxable years; 3
(2) whether petitioner is liable for deficiencies for the 1994 through 2001 taxable years;
(3) whether petitioner is liable for additions to tax under
(4) whether petitioner is liable for additions to tax under
(5) whether the Court should impose a penalty under
FINDINGS OF FACT
Background
Petitioner did not timely file income tax returns for the taxable years 1994 through 2000, but he eventually submitted completed returns for those years on October 4, 2004, to the Appeals officer assigned to his case but only after notices of deficiency had been issued. Petitioner did not file an income tax return for 2001.
Respondent issued to petitioner notices of deficiency on June 4, 2003, determining income tax deficiencies and additions to tax for taxable years 1994 through 2000. Petitioner timely filed a petition for these years on August 28, 2003. Respondent issued to petitioner a notice of deficiency on January 28, 2004, determining an income tax deficiency and additions to tax for taxable year 2001. Petitioner timely filed a petition for this year on April 30, 2004. Both petitions disputed the deficiencies and additions to tax and included lengthy tax protester arguments. These cases were consolidated for purposes of trial, *114 briefing, and opinion. At the time these petitions were filed, petitioner resided in Colorado Springs, Colorado.
At trial, respondent orally stipulated a decreased deficiency for 2001 of $ 2,336 and revised
Some of the facts have been stipulated and are so found. The stipulations of the parties, with accompanying exhibits, areincorporated herein by this reference.
Petitioner's Correspondences
Throughout the administrative process, the record reveals that petitioner, as trustee of the Charles R. Wheeler Trust (trust) or in his individual capacity, sent at least three frivolous documents to respondent challenging his and the trust's obligation to file an income tax return and to pay income taxes. Petitioner sent a letter dated November 8, 2000, to respondent's counsel in St. George, Utah, and the Internal Revenue Service (IRS) Service Center in Ogden, Utah. That letter concluded as follows: Having studied Title 26 and various IRS manuals and documents extensively, we have determined that the IRS is in error, neither the trust nor I are taxpayers. *115 Additionally, the IRS has through various unlawful means and deceptive practices caused funds to be illegally converted to the IRS. Therefore, we request that the IRS return those converted funds with interest to the trust and/or me immediately, correct your database for past years and remove any data referencing the trust and me from any and all databases maintained by the IRS in the future.
Petitioner sent a letter dated September 6, 2002, to the IRS Service Center in Ogden, Utah, declaring that he is "not in receipt of any document that verifies that CHARLES R WHEELER is a taxpayer owing a tax to the treasury".
Petitioner sent a lengthy letter dated September 30, 2004, to the IRS Appeals Office in Denver, Colorado. In that letter, he stated he had been researching tax issues "for almost fourteen years". He contended that actions taken with respect to the notices of deficiency issued in these cases represent violations of the Constitution of the United States with Supreme Court decisions, Statutes at Large, Delegated authority, Federal Debt Collection Procedure, Administrative Procedures Act, Paperwork Reduction Act, Ethics in Government Act, and most importantly the*116 Laws of the Almighty, the Highest Authority, it is evident * * * the Notices of Deficiency * * * represent violations of them all. It is evident that the Internal Revenue Service uses Form W-2s from private sector employers and false reporting of "wages" * * * to create dummy Substitutes for Return (SFR) per the IRS' Internal Revenue Manual instructions. * * * Since it is just that, [a "dummy SFR"] the straw man so created * * * cannot and does not lawfully exist as it was created "to accomplish some purpose otherwise not allowed", i.e. forced and unlawful takings from our God given, constitutionally protected rights to the property of our labor.
The Court agrees with respondent that this correspondence, and the assertions raised therein, are frivolous.
OPINION
Petitioner argues that he does not owe any tax or addition thereto for the 1994 through 2001 taxable years because: (1) The statutory notices of deficiency issued to him by respondent were not valid; (2) the notices of deficiency for the years in issues were not signed by an authorized signer; 4*118 (3) the Form 4549, Income Tax Examination Changes, was not signed; (4) the Individual*117 Master File (IMF) for each year per the Forms 4340, Certificate of Assessment, Payments, and Other Specified Matters, shows no tax was ever assessed, no amounts due, and lacks a "code 494"; 5 (5)
*119 Respondent replies that the statutory notices of deficiency were valid when issued. Petitioner is liable for the income tax and
Petitioner stipulated the receipt of the income underlying the notices of deficiency for all the taxable years. We do not discuss the burden of proof because the outcome of this case turns on the preponderance of the evidence and is unaffected by
The Code imposes a Federal tax on the taxable income of every individual. Sec. 1. Gross income for the purposes of calculating taxable income is defined as "all income from whatever*120 source derived".
Every U.S. resident individual whose gross income for the taxable year equals or exceeds the exemption amount, subject to exceptions not applicable here, is required to make an income tax return. 7
A valid notice of deficiency need not be signed at all.
Even if the signature block does not comply with the Internal Revenue Manual, the rules of the Manual have been held to be merely directory and not mandatory. 9 See
Petitioner stipulated the receipt of the income underlying the notices of deficiency and did not introduce any evidence to establish that he was entitled to any deductions or credits not stipulated by the parties. Petitioner failed to call any witnesses on his behalf. Petitioner failed to carry his burden of proof by a preponderance of the evidence that the amounts underlying the notices of*123 deficiency were not taxable to him.
The Commissioner bears the burden of production in any court proceeding arising from an examination begun after July 22, 1998, with respect to an individual's liability for penalties or additions to tax.
A.
The Court concludes that respondent's burden of production has been met. Respondent provided Forms 4340, 10 showing that petitioner did not file a return for the 2001 taxable year and that returns for 1994, 1995, 1996, 1997, 1998, 1999, and 2000 were not filed until October 4, 2004. Petitioner has not provided any evidence that his failure to file was due to reasonable cause. Therefore, the Court sustains the imposition of an addition to tax under
*125 B.
Groundless litigation diverts the time and energies of judges from more serious claims; it imposes needless costs on other litigants. Once the legal system has resolved a claim, judges and lawyers must*127 move on to other things. They cannot endlessly rehear stale arguments. Both appellants say that the penalties stifle their right to petition for redress of grievances. But there is no constitutional right to bring frivolous suits, see
Respondent informed petitioner at trial and by pretrial memorandum of the Court's ability to impose sanctions upon petitioner for frivolous arguments pursuant to
Petitioner contended that there was no law that made him liable for an income tax*128 or required him to file an income tax return. Petitioner submitted frivolous documents to respondent and the Appeals Office, which provided specious arguments against the filing of an income tax return and the Internal Revenue Code. On the basis of the entire record, petitioner has instituted proceedings primarily for delay and has advanced arguments that are frivolous and groundless and warrant no further discussion. See
The Court found petitioner's arguments regarding the validity of the notices of deficiency to be frivolous. Petitioner is liable for
The Court has considered all of petitioner's contentions, arguments, *129 requests, and statements. To the extent not discussed herein, we conclude that they are meritless, moot, or irrelevant.
To reflect the foregoing and concessions made by respondent,
Decisions will be entered under
1. Unless otherwise indicated, all section references are to the Internal Revenue Code (Code) in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. For all the years in issue, respondent conceded the
3. Petitioner contends that the issue in this case is whether the notices of deficiency were validly signed. The Court assumes this is also an argument contesting the deficiency and additions to tax as determined by respondent even though the parties have stipulated the amounts underlying the deficiencies.↩
4. The notices of deficiency for 1994 through 2000 were signed by Timothy A. Towns, and the notice of deficiency for 2001 was signed by Thomas D. Mathews. Both Mr. Towns and Mr. Mathews signed the notices on behalf of the "Compliance Center, Ogden Service Center". Under the Internal Revenue Manual, the authority "to sign and send to the taxpayer by registered or certified mail, any notice of deficiency" is delegated to, among other individuals, "Directors, Customer Service Centers" and the later individuals may redelegate the authority "directly to selected individuals within their functional area." I.R.S. Deleg. Order No. 77 (Rev. 28) (May 17, 1996). This delegation order applied to Mr. Towns and Mr. Mathews. See also discussion infra p. 9. Petitioner did not provide any evidence that Mr. Towns or Mr. Mathews was not an individual to whom the authority to sign notices of deficiency could have been delegated. Generally, the Court does not look behind the notice of deficiency to determine or examine the evidence used, the propriety of the Commissioner's motives in making the determinations, or to question the administrative policies and procedures leading to a determination.
5. An IMF is a computer-generated transcript of a taxpayer's account with the Internal Revenue Service showing by numeric codes the dates certain transactions occurred, including the identification of the taxpayer, the type of tax, the tax period, the dates of assessment, and the amounts of assessment.
6. Petitioner's contention is unfounded as the implementing regulation for
7.
8. In petitioner's petition, he references the validity of the filing requirement. Our tax system, the Code, and the Tax Court have been firmly established as constitutional.
For the years in issue, the filing thresholds for the married filing separate filing status were:
Year Threshold Amount
____ ________________
1994 $ 2,450
1995 $ 2,500
1996 $ 2,550
1997 $ 2,650
1998 $ 2,700
1999 $ 2,750
2000 $ 2,800
2001 $ 2,900↩
9. The Internal Revenue Manual was designed to aid in the internal administration of the Internal Revenue Service, not for the protection of taxpayers; thus, it is not binding upon and confers no rights to taxpayers.
10. Petitioner contends that the Forms 4340, Certificate of Assessment, Payments, and Other Specified Matters, which were stipulated by both respondent and petitioner, show that petitioner's tax liability is zero for each of the taxable years in issue. However, petitioner's interpretation of the information on a Form 4340 is incorrect. In a deficiency case, where a tax return has not been timely filed, as in the instant case, a Form 4340 would not show the amount of any assessments, which by statute generally may not be made until the time to petition this Court has expired or this Court's decision in the case has become final or is appealed without posting of an appeal bond.
United States v. Ralph Lockyer , 448 F.2d 417 ( 1971 )
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