DocketNumber: Docket No. 30514-84.
Citation Numbers: 54 T.C.M. 894, 1987 Tax Ct. Memo LEXIS 518, 1987 T.C. Memo. 527
Filed Date: 10/8/1987
Status: Non-Precedential
Modified Date: 11/20/2020
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER;
FINDINGS OF FACT
Petitioner resided at Miami, Florida, at the time of filing the petition is this case. Petitioner filed Federal income tax returns for the taxable years 1981 and 1982 reported $ 86,118.27 and $ 70,181.76, respectively, as income from wages as an airline pilot. For 1981 and 1982 petitioner claimed $ 26,050 and $ 30,177, respectively, as losses from mining, which respondent disallowed. Respondent also disallowed claimed interest expense and miscellaneous and employee deductions as follows:
Miscellaneous | Employee | ||
Year | Interest Expense | Deductions | Deductions |
1981 | $ 12,099 | $ 3,947 | $ 3,175 |
1982 | 11,099 | 3,854 | 10,365 |
The parties stipulated that petitioner is entitled to the following amounts of interest*520 and miscellaneous and employee deductions: 2
Miscellaneous | Employee | ||
Year | Interest Expense | Deductions | Deductions |
1981 | $ 11,316 | $ 1,237 | $ 545 |
1982 | 10,563 | 1,112 | 5,218.54 |
When petitioner appeared for his audit examination for the 1981 taxable year, he refused to supply any answers or information unless the Internal Revenue agent examining his return answered questions about the Privacy Act of 1974 (Title
Petitioner did not supply any government employees with any information about his 1981 and 1982 income tax returns until he was ordered to trial following several attempts at questioning the jurisdiction of this Court on constitutional-type grounds.
OPINION
Respondent contends petitioner is a "protestor" and that he has not made any "colorable" argument with respect to respondent's determination, as set forth in the notice of deficiency. Petitioner had filed 1981 and 1982 income tax returns claiming deductions for business expenses and a loss attributable to an alleged investment in a gold mine. Apparently, after respondent contacted petitioner to audit his returns, petitioner refused to cooperate with respondent's agents because he no longer considered himself to be a "taxpayer" or "person" under*522 title 26 United States Code (Internal Revenue Code), and respondent's agents were not able to explain to petitioner's satisfaction under what authority they were entitled to obtain information from or to tax petitioner. 3 Petitioner, essentially, took these positions throughout the entire administrative process until respondent issued a notice of deficiency and petitioner instituted this proceeding. Petitioner essentially contends that he does not have to support or substantiate his report of income and deductions to the government unless the government proves to his satisfaction that he is so required.
Petitioner's case was scheduled for trial at Miami, Florida, on January 26, 1987, by means of a Notice and Pretrial Order served on petitioner August 26, 1986. By a document filed November 24, 1986, petitioner moved to withdraw his petition on the ground that this Court lacked jurisdiction because petitioner "is not a statutory 'taxpayer.'" 4 We denied petitioner's motion on December 1, 1986. *523
Petitioner appeared at the trial session on January 26, 1987, and caused to be filed another document in which he questioned the jurisdiction of this Court and it was again denied, whereupon petitioner refused to proceed with the merits of his case in accordance with the August 26, 1986, notice and order. Petitioner's case was dismissed for lack of prosecution. Petitioner, on March 16, 1987, caused to be filed a motion to vacate our order of dismissal and decision entered and, after a hearing, we granted his motion by order of March 30, 1987, in which we set this matter for trial on March 31, 1987.
Petitioner and respondent entered into a limited stipulation of facts 5 and at trial petitioner offered only incomplete testimony about the items disallowed by respondent. Petitioner was not prepared to supply evidence of his "business deductions" and was permitted until August 17, 1987, to offer further documentation which was offered in the form of a second stipulation of facts by the parties on August 17, 1987.
*524 Seriatum briefs were required of the parties and petitioner made the following "legal" arguments in his opening and responding briefs: (1) That the notice of deficiency was invalid 6 and that the burden of proof is on respondent; (2) that the Federal government cannot tax a resident of a "sovereign state;" and (3) that petitioner's "investment" of $ 10,000 cash, loans of $ 40,000 and the potential value of gold from mining show that he was seeking a profit. Respondent argues that we have jurisdiction; petitioner has failed to carry his burden of proving entitlement to deductions; and that petitioner has maintained this proceeding primarily for delay. We agree with respondent.
Initially, petitioner argued that we did not have jurisdiction because he was not a "taxpayer" or "person" over whom respondent had authority*525 to issue a notice of deficiency. It is clear that respondent has the authority to determine his Federal tax liability.
Petitioner also asserts that respondent' agents' failure to answer questions about respondent's authority to seek information upon*526 which to determine a deficiency places respondent in the position of assuming the burden of proof or in some way invalidates the notice of deficiency. Petitioner cites no meaningful authority for such a result in this case and we find that respondent's notice of deficiency is valid and that it has the statutory presumption of correctness, leaving petitioner with the burden of proof as to all matters determined in the notice of deficiency. Petitioner bears the burden of showing entitlement to the deductions claimed on his return.
Respondent seeks $ 5,000 in damages to be awarded to the United States and against petitioner for maintaining this proceeding primarily for purposes of delay. Section 6673 damages may be awarded "Whenever it appears to the Tax Court that proceedings before it have been instituted or maintained by the taxpayer primarily for delay [or] that the taxpayer's position in such proceeding is frivolous or groundless * * *." After having filed returns*527 reporting income and claiming deductions and losses, petitioner refused to cooperate with Internal Revenue Service, essentially for protestor-type reasons. Petitioner has advanced the ploy that wages are not income, which we have determined adversely in numerous cases. See, e.g.,
To reflect concessions of the parties,
1. All section references are to the Internal Revenue Code of 1954, as amended and in effect during the years in issue and all rule references are to this Court's Rules of Practice and Procedure. ↩
2. Petitioner objected that these amounts "do not reflect the full amounts that he in good faith would be allowed." Petitioner, however, does not object to these amounts being allowed per respondent's agreement with him. ↩
3. Petitioner also raised some issues or questions concerning the Privacy Act of 1974 (
4. Petitioner argues that the notice of deficiency was invalid because he is not a "taxpayer" and accordingly we would lack jurisdiction. ↩
5. The stipulation of facts contained a copy of petitioner's Federal income tax returns and many qualifications and conditions concerning petitioner's status as a "taxpayer" and whether he earned any income. Petitioner also sought to stipulate portions of the administrative proceeding to show that respondent's agents were not able to show petitioner under what authority he was required to provide information to the government. Virtually nothing was stipulated by petitioner concerning the underlying merits of his tax liability or the deficiency determined by respondent. ↩
6. This was the third occasion that petitioner questioned the validity of the notice of deficiency on similar grounds -- that he is not a "taxpayer" or "person" within the meaning of the Internal Revenue Code and, accordingly, the notice of deficiency provisions do not apply to him and respondent has no authority to make a determination of his tax liability. ↩