Fox v. Commissioner

¶3*519COLVIN, JUDGE: This matter is before the Court on respondent's motion for summary judgment under Rule 121. ¹ As discussed below, we will grant respondent's motion. We will also impose a penalty against petitioner under section 6673 in the amount of $7,500.

¶4Respondent determined deficiencies in petitioner's income taxes and additions to tax as follows:

¶5Additions to tax

¶6____________________________

¶7Year    Deficiency    Sec. 6651(a)(1)    Sec. 6654

¶8____    __________    _______________    _________

¶91989     $34,925          $8,731           $2,362

¶101990      31,218*520            7,805            2,057

¶111991      40,067          10,017            2,307

¶121992      42,552          10,638            1,858

¶13BACKGROUND

A. PETITIONER

¶14Petitioner lived in Irvine, California, when he filed the petition in this case.

¶15Petitioner previously petitioned this Court in cases decided at Fox v. Commissioner, T.C. Memo. 1989-232, affd. without published opinion 943 F.2d 55 (9th Cir. 1991) (Fox I); Fox v. Commissioner, T.C. Memo. 1993-37 (Fox II); and Fox v. Commissioner, T.C. Memo. 1993-277, affd. without published opinion 69 F.3d 543 (9th Cir. 1995) (Fox III) . Petitioner's positions in the previous cases were frivolous and groundless. In Fox I and Fox III, we awarded penalties to the United States under section 6673 on our own motion.

B. PETITION

¶16In the petition, petitioner contended respondent erred in determining: (1) He was liable for deficiencies and additions to tax; (2) his wages, interest, dividends, capital gains, and income from stock sales were includable in gross income; (3) he had itemized deductions in the amounts*521 of $31,060, $40,354, and $37,704 for 1989 to 1991, and a standard deduction in the amount of $3,600 for 1992; and (4) he was liable for additions to tax for failure to file returns and failure to pay estimated tax for 1989 to 1992. In the petition, petitioner also contended: (1) Respondent's answers to his inquiries were not courteous or considerate, and (2) respondent violated his rights under the Taxpayer Bill of Rights, subtitle J of the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), Pub. L. 100-647, 102 Stat. 334, and other rights.

¶17The facts upon which petitioner relies in his petition to support these contentions are:

¶18he was never notified by the District Director that he was required to maintain books and records and file a return in accordance with IRC 6001 and 26 CFR 1. 6001(d);

¶19… the Form 1040 is not associated with nor is it the form required to be used to collect the income tax under IRC Subtitle A, section 1;

¶20… there has been a trespass of jurisdiction on the part of the Commissioner and petitioner squarely challenges the Commissioner's jurisdiction in issuing these notices of deficiency.

¶21Nothing listed by petitioner as facts could*522 possibly justify a holding that respondent's determinations are incorrect.

C. RESPONDENT'S REQUEST FOR ADMISSIONS AND PETITIONER'S RESPONSES

¶22On June 5, 1997, respondent served a request for admissions on petitioner under Rule 90. Respondent's request for admissions and petitioner's responses are as follows:

¶231. Petitioner admits that he did not file a U.S. Individual Income Tax Return, Form 1040, for 1989, 1990, 1991 and 1992.

¶242. Petitioner admits that from 1989 to 1992 he received: (a) Compensation for services as an airline pilot for American Airlines in the amounts of $149,663, $150,708, $176,719, and $155,171; (b) interest income from the American Airlines Credit Union in the amounts of $521, $147, $409, and $587; and (c) dividend income from various Merrill Lynch accounts in the amounts of $853, $905, $1,075, and $457. Petitioner denies that this income is taxable. Petitioner's response also includes the word "jurisdiction" without explanation. We assume this (and other unexplained references to "jurisdiction" in petitioner's response to respondent's request for admissions) relates to petitioner's contention in his petition*523 that the Commissioner lacked jurisdiction to issue the notices of deficiency.

¶253. Petitioner admits that he received: (a) Capital gain income from various Merrill Lynch accounts totaling $4,754 in 1989; and (b) income of $88 from the sale of stock from Merrill Lynch in 1990, and $2,786 in 1991. Petitioner denies that this income is taxable. Petitioner's responses relating to these items also include without explanation the word "jurisdiction".

¶264. Petitioner denies that he resided in California from 1989 to 1992. Petitioner responded as follows: "Did not 'reside' as that term is stipulatively used in Amendment 14 to the U.S. Constitution. Jurisdiction."

¶27Respondent attached several exhibits to the request for admissions and the motion for summary judgment. The exhibits, and petitioner's responses to respondent's request for admissions, are as follows:

¶281. A copy of the notices of deficiency issued to petitioner on: (a) March 9, 1994, for 1989 to 1991; and (b) September 8, 1994, for 1992. Petitioner admitted receipt, but denied that he is liable for income taxes. Petitioner stated "jurisdiction" without explanation.

¶292. Copies of several statements or letters from petitioner*524 to respondent. Petitioner admits.

¶303. A copy of a letter from American Airlines to Frederick M. Fox, dated September 2, 1992. Petitioner admits.

¶314. A copy of a notice of bill from Frederick J. Fox dated December 9, 1992. Petitioner responded "Denies. Wrong Frederick Fox." ²

¶325. A copy of an affidavit of applicable law and denial of specific liability for Federal income taxes during calendar years 1989-92 from petitioner dated June 9, 1993. Petitioner admits.

¶336. A copy of letters from petitioner dated April 12, 1994. Petitioner admits.

¶347. A copy of a document from petitioner entitled "DEMAND for you to PROVE the existence of JURISDICTION at the administrative level" dated June 6, 1994. Petitioner admits.

¶358. A copy of a document from petitioner entitled "BY AFFIDAVIT" dated April 14, 1995. Petitioner admits.

¶369. A copy of a document from petitioner entitled "MEMORANDUM AT LAW BY AFFIDAVIT" dated June 20, 1996. Petitioner admits.

¶37The statements by and letters and documents from petitioner attached to respondent's motion for summary judgment and request for admissions recite various*525 frivolous tax protester arguments.

¶38DISCUSSION

A. RESPONDENT'S MOTION FOR SUMMARY JUDGMENT

¶39Respondent moved for summary judgment on July 21, 1997, pursuant to Rule 121, on the grounds that there is no genuine issue of material fact for trial. Petitioner objected and moved to strike respondent's motion for summary judgment on August 13, 1997.

¶40A decision will be rendered on a motion for summary judgment if the pleadings, answers to interrogatories, deposition, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue of material fact and that a decision may be rendered as a matter of law. Rule 121(b); Southern v. Commissioner, 87 T.C. 49, 51-52 (1986). The burden of proving that there is no genuine issue of material fact is on the moving party. Naftel v. Commissioner, 85 T.C. 527, 529 (1985); Espinoza v. Commissioner, 78 T.C. 412, 416 (1982).

¶41Matter admitted under Rule 90 is conclusively established unless the Court on motion permits the admitting party to withdraw or modify the admission. Rule 90(f). Petitioner has not asked the Court to withdraw*526 or modify his admissions.

¶42Petitioner admits that he received income in the amount respondent determined. He admits that he did not file tax returns for the years at issue. He has alleged no facts in the petition that could warrant a holding that he is not liable for the addition to tax for failure to file returns under section 6651 or failure to pay estimated tax under section 6654, or that respondent's determination relating to his itemized deductions for 1989, 1990, and 1991 and his standard deduction for 1992, was in error. Likewise, he did not contend in his response to respondent's summary judgment motion that any material facts are in dispute relating to respondent's determination. We conclude that his objections to respondent's determinations regarding his deductions and the additions to tax are based solely on the same frivolous contentions on which his entire case is based.

¶43Petitioner asserts that the District Director never notified him that he was required to maintain books and records and file a tax return. The District Director is not required to do so. See sec. 6001. He also frivolously asserts that the Form 1040 is invalid and that respondent lacked jurisdiction to *527 issue the notice of deficiency. In petitioner's objections to respondent's motion for summary judgment, as supplemented, and petitioner's motion to strike respondent's motion, petitioner claims he is not a protester; however, his contentions are merely a rehash of familiar tax protester arguments. See Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C. Memo. 1987-225; United States v. Romero, 640 F.2d 1014 (9th Cir. 1981).

¶44Petitioner has not alleged any facts fairly related to respondent's determinations, and he has not raised any issue that could possibly be affected by a hearing. See Knighten v. Commissioner, 702 F.2d 59 (5th Cir. 1983). In Knighten, the U.S. Court of Appeals for the Fifth Circuit said:

¶45Since he has never alleged any facts at all, and his legal arguments were clearly without merit, he has failed to demonstrate that there is any issue the resolution of which could possibly be affected by a hearing; thus, there is simply no point in having one. The Constitution does not require such futile exercises. Id. at 61.

¶46See also*528Morrison v. Commissioner, 81 T.C. 644, 651 (1983) (summary judgment proper where taxpayers did not set forth specific facts as required by Rule 121(d)).

¶47We have examined all the materials in the record and construed facts most favorably for petitioner. We conclude that there is no dispute as to any material fact, that petitioner's contentions are frivolous, and that respondent is entitled to summary judgment.

¶48We will deny petitioner's motion to strike respondent's motion for summary judgment filed August 13, 1997, for the same reasons for which we grant respondent's motion for summary judgment.

B. IMPOSITION OF A PENALTY UNDER SECTION 6673

¶49We next decide whether the Court, on its own motion, should award a penalty to the United States under section 6673.

¶50Section 6673 provides that the Court may require the taxpayer to pay a penalty to the United States not in excess of $25,000 when proceedings have been instituted or maintained primarily for delay, where the taxpayer's position is frivolous or groundless, or where the taxpayer unreasonably fails to pursue administrative remedies. A taxpayer's position is frivolous or groundless if it is contrary to *529 established law and unsupported by a reasoned, colorable argument for change in the law. Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); Sicalides v. Commissioner, T.C. Memo. 1989-164.

¶51It is beyond any reasoned dispute that petitioner is subject to Federal income taxation and that his position in his previous cases was frivolous, groundless, and instituted primarily for delay. Fox I, Fox III; see Fox II. Petitioner continues to waste respondent's and the Court's time with stale tax protester arguments. Petitioner's written materials show that he has an ability to twist tax laws to support his frivolous positions. Fox III. We imposed penalties under section 6673 on our own motion in Fox I and Fox III, which were filed before petitioner filed his petition in this case.

¶52We require petitioner to pay a penalty of $7,500 to the United States under section 6673.

¶53An appropriate order will be issued, and decision will be entered for respondent.