Aldrich v. Commissioner

Citation66 T.C.M. 13
Decision Date06 July 1993
Docket NumberDocket No. 7477-90.
PartiesRobert C. Aldrich v. Commissioner.
CourtUnited States Tax Court

Robert C. Aldrich, pro se. Joan Steele Dennett, for the respondent.

Memorandum Findings of Fact and Opinion

PARKER, Judge:

Respondent determined the following deficiencies in and additions to petitioner's Federal income taxes:

                Additions to Tax
                                       Sec.        Sec.           Sec.            Sec.            Sec.         Sec
                Year   Deficiency    6651(a)    6653(a)(1)   6653(a)(1)(A)   6653(a)(1)(A)   6653(a)(1)(B)   6654(a)
                1984   $7,954.00    $  707.75    $397.70           *              --              __         $ 97.47
                1985    9,499.00     2,242.50     474.95           *              --              __          506.44
                1986    7,838.00       567.25       --             --           $391.90            *           42.42
                * 50 percent of the interest due on the portion of the underpayment attributable to negligence

Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the taxable years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

After concessions, the issues to be decided are:

1. Whether the Paperwork Reduction Act of 1980 precludes the application of additions to tax for:

(a) Failure to file a timely return under section 6651(a)(1);

(b) Failure to pay estimated tax under section 6654(a); and

(c) Negligence or intentional disregard of rules or regulations under section 6653(a)(1) and (2) for taxable years 1984 and 1985, and under section 6653(a)(1)(A) and (B) for taxable year 1986;

2. Whether the Paperwork Reduction Act of 1980 precludes the imposition of interest under section 6601; 3. Whether the Paperwork Reduction Act of 1980 precludes denial of a credit or refund to petitioner for overpayment of his 1984 and 1986 Federal income taxes which is otherwise barred by the statute of limitations; and

4. Whether the Court should impose a penalty under section 6673(a)(1) on the grounds that petitioner instituted or maintained this proceeding primarily for delay, or that petitioner's position is frivolous or groundless.

Findings of Fact

Some of the facts have been stipulated and are so found. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference.

Petitioner resided in Missoula, Montana, when he filed his petition. Petitioner did not file Federal income tax returns for the taxable years 1984, 1985, and 1986. Respondent issued notices of deficiency, each dated January 19, 1990, for the taxable years 1984, 1985, and 1986. On April 19, 1990, petitioner mailed his petition to this Court in an envelope bearing a United States postmark of that date.

After this case was calendared for trial, petitioner for the first time provided copies of his Forms W-2 and his books and records to substantiate any deductions he might be entitled to claim on income tax returns. After review of these documents by an Internal Revenue Service (IRS) auditor, the parties agreed that petitioner is liable for deficiencies in Federal income tax for the taxable years 1984, 1985, and 1986, in the amounts of $6,099, $7,731, and $4,933, respectively. The parties further agreed that petitioner is entitled to Federal tax withholding credits in the amounts of $7,518, $711, and $5,569 for the taxable years 1984, 1985, and 1986, respectively. As a result of these tax withholding credits, petitioner overpaid his Federal income taxes for taxable years 1984 and 1986 by $1,419 and $636, respectively. Petitioner underpaid his Federal income tax for taxable year 1985 by $7,020.

Respondent concedes that, as a result of the Federal tax withholding credits, petitioner is not liable for the additions to tax pursuant to sections 6651(a) and 6654(a) for the taxable years 1984 and 1986. The parties agree that should this Court find for respondent, the correct amounts of the remaining additions to tax are as follows:

                Additions to Tax
                                                 Sec.       Sec.          Sec.          Sec.           Sec.        Sec
                Year                            6651(a)   6653(a)(1)   6653(a)(2)   6653(a)(1)(A)   6653(a)(1)(B)   6654(a)
                1984 ........................   none         $305          *             --              --          none
                1985 ........................   $1,755        387          *             --              --          $392
                1986 ........................   none          --           --           $247              *          none
                * 50 percent of the interest under sec. 6601 due on the underpayment attributable to negligence

Petitioner now agrees that he is liable for the tax in the reduced amounts stipulated by the parties. However, he still challenges some of the additions and interest under section 6601. Petitioner's sole defense to the additions and interest is that sections 3507(a) and 3512 of the Paperwork Reduction Act of 1980, 44 U.S.C. sec. 3501, et seq. (1988) (the PRA), preclude the application of those additions to the tax and the imposition of interest.

Petitioner has the burden of proving that respondent's determination of deficiencies and additions to tax is erroneous. Rule 142(a); Welch v. Helvering [3 USTC ¶ 1164], 290 U.S. 111 (1933); Neely v. Commissioner [Dec. 42,540], 85 T.C. 934, 947 (1985). Petitioner argues that the PRA requires that the instruction booklet to Form 1040 and certain regulations display Office of Management and Budget (OMB) control numbers. Petitioner further argues that the PRA requires Form 1040, the instruction booklet and the regulations to exhibit expiration dates. Petitioner concludes that the lack of OMB control numbers and expiration dates precludes the application of additions to tax (for failure to file a return under section 6651, for negligence under section 6653(a), and for failure to pay estimated tax under section 6654), the imposition of interest under section 6601, and the denial of a credit or refund for overpayment of his 1984 and 1986 Federal income taxes.

Prior to the calendar call in this case, respondent's counsel sent petitioner a copy of this Court's opinion in Currier v. Commissioner [Dec. 47,322(M)], T.C. Memo. 1991-194, filed May 1, 1991, in which the Court imposed a penalty under section 6673(a) upon the taxpayer for making arguments similar to those urged by petitioner. At the calendar call, petitioner did not appear, but respondent's counsel informed the Court that, although she had warned petitioner that if he continued to pursue his PRA arguments respondent would seek damages under section 6673(a), petitioner apparently wanted the opportunity to brief his arguments.1 Subsequently, respondent filed a motion for damages under section 6673 on the grounds that petitioner has instituted or maintained this proceeding primarily for delay or that petitioner's position with respect to the PRA is frivolous or groundless.

The Paperwork Reduction Act

The PRA requires that Federal agencies requesting information from the public obtain OMB approval for all "information collection requests" and that an OMB control number be displayed on the information collection request. 44 U.S.C. sec. 3507(a)(3), (f) (1988). The term "information collection request" is defined as "a written report form, application form, schedule, questionnaire, reporting or recordkeeping requirement, collection of information requirement, or other similar method calling for the collection of information." 44 U.S.C. sec. 3502(11) (1988).

Generally, the director of OMB must approve or reject a proposed information collection request within 60 days of receiving it. 44 U.S.C. sec. 3507(b) (1988). When OMB approves an information collection request, it issues a control number which is to be displayed upon the request. If a request does not receive OMB approval, it is not issued a control number and the agency is prohibited from collecting the information. 44 U.S.C. secs. 3504(c)(3)(A), 3507(f) (1988). In addition, if the agency nevertheless promulgates the information collection request, members of the public may, under the public protection provision of the PRA, ignore the request without risk of penalty. 44 U.S.C. sec. 3512 (1988).2 The public is protected under the PRA from information collection requests not issued in compliance with the PRA only when those requests dictate that a person maintain information for an agency or provide information to an agency. Dole v. United Steelworkers of America, 494 U.S. 26, 40 (1990).

Federal income tax forms were among the many paperwork burdens imposed on the public that the PRA was created to alleviate. Dole v. United Steelworkers of America, supra at 32-33. Accordingly, beginning with the tax forms for the taxable year 1981, OMB control numbers have been listed in the upper right-hand corner of such forms and related schedules. Petitioner does not contend that the tax return forms for the taxable years at issue (Forms 1040 and related schedules) do not display appropriate OMB numbers. The pertinent Forms 1040 and schedules do display appropriate OMB numbers, but petitioner did not file any returns for the years before the Court.

Failure to File a Return

Respondent determined an addition to tax for failure to file a return under section 6651(a)(1) for each of the years in issue. The addition to tax is not imposed if the failure to file "is due to reasonable cause and not due to willful neglect". Sec. 6651(a)(1).

Petitioner was well aware of his obligation to file income tax returns. Instead of presenting evidence as to any reason for his failure to file, petitioner argues that the Internal Revenue Service (IRS) failed to comply with the PRA by not displaying control numbers in the text of the regulations and on instruction booklets associated with tax return Form 1040. He argues further that the PRA requires that expiration dates be displayed on such forms. Pe...

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