Conovitz v. Commissioner
| Citation | 39 TCM (CCH) 929,1980 TC Memo 22 |
| Decision Date | 23 January 1980 |
| Docket Number | Docket No. 12376-77. |
| Parties | Roy S. Conovitz v. Commissioner |
| Court | United States Tax Court |
David A. Pravda, 10 E. 40th St., New York, N.Y., for the petitioner, Ellis L. Reemer and Martha Sullivan, for the respondent.
Memorandum Findings of Fact and Opinion
The Commissioner determined the following deficiencies in income tax and additions to tax for the years 1973 and 1974:
Additions to Tax, I. R. C. 1954
Sec. Sec. Sec
Year Deficiency 6651(a) 6653(a) 6654(a)
1973 .... $17,395* $2,909.45 $869.75 $326
1974 .... 15,539* 2,419.00 777.00 263
* The deficiency notice indicated that the "net
tax due" was a lesser amount computed by
subtracting "withheld credits" of $5,757.20 for
1973 and $5,862 for 1974
Petitioner timely filed a petition for redetermination of the deficiencies and additions to tax. At the time the petition was filed he resided in Pacific Palisades, California, in the greater Los Angeles area. During the tax years petitioner and his wife resided in New York, New York.
Petitioner did not undertake to file income tax returns for 1973 and 1974 until October of 1977, as hereinafter more fully set forth. Prior to this time petitioner and his wife, Diana Conovitz, had received extensions of time to file 1973 and 1974 returns. By filing Forms 4868, they first obtained the familiar automatic two-month extensions from April 15, 1974 and April 15, 1975, in respect of the returns for 1973 and 1974. Upon application they obtained further extensions, and upon expiration of the latter, they applied for and were granted final extensions until October 15, 1974, and October 15, 1975, to file 1973 and 1974 returns, respectively. The extension requests were filed by petitioner's attorney, Mr. David A. Pravda. The final extension request for 1973 indicated that a return of petitioner and Diana Conovitz for a prior year was being audited, and that issues resolved in the audit might affect the 1973 return. The final extension request for 1974 represented that the outcome of a pending Tax Court case involving petitioner and Diana Conovitz would affect returns for subsequent years. The Tax Court case referred to, Docket No. 9458-74, raised issues concerning the Commissioner's disallowance of medical and employee business expense deductions for 1971. That case was never tried; it was resolved by a decision entered on March 15, 1977, based upon a settlement stipulation of the parties.
No returns were filed for 1973 or 1974 during the periods as finally extended, and, upon the lapse of substantial periods of time thereafter, an office auditor for respondent, acting under section 6020(b), I.R.C. 1954, prepared substitutes for returns of the petitioner for 1973 and 1974.1 These returns contained the name, New York address, and social security number of petitioner. Aside from these details, the remainder of each such return was not completed. However, these returns were prepared at the same time and in conjunction with Forms 1902-E, which set forth items of petitioner's gross income (wages) and allowed the standard deduction as well as a single exemption for petitioner. These substitute returns and the corresponding Forms 1902-E were processed together by the I.R.S., and a deficiency was determined upon the basis thereof. The notice of deficiency was mailed to petitioner on September 15, 1977, at 110 Riverside Drive, New York City. This address is the same address for petitioner as is shown on his W-2 forms for 1973 and 1974. It is also the same address which is shown on the applications for automatic extension of time to file (Forms 4868), filed for the tax years 1973 and 1974; two other extension requests show petitioner's address as being in care of his attorney, David Pravda. The deficiency notice determined that petitioner's filing status was that of a married person filing separately. Petitioner was determined to have income from wages of $43,000 in 1973 and $39,800 in 1974. The standard deduction of $1,000 was allowed in each year. Petitioner was also allowed a personal exemption of $750. The deficiency notice determined petitioner's tax and additions to tax as set forth above.
Subsequent to the mailing of the deficiency determination, petitioner "filed" what purported to be 1973 and 1974 joint income tax returns with Diana Conovitz. David A. Pravda appeared on both returns as preparer, and his signature was dated October 10, 1977. The 1974 return was signed by the taxpayers on October 13, 1977, and stamped as received by the Internal Revenue Service in Holtsville, New York, on October 21, 1977; the 1973 return was "filed" at the same time. The 1973 return and the 1974 return both had attached W-2 forms. The W-2 form for petitioner for 1973 reported wages of $43,000, and state and city taxes withheld of $2,228.80. A W-2 form for Diana Conovitz indicated that she received wages of $433.75 in 1973. The W-2 form for petitioner and a New York City form attached showed his 1974 wages as $39,800 and state and local taxes paid of $2,255. The 1974 return also showed that Diana Conovitz received $250 interest income from savings accounts.
The petitioner argues that his filing status and the amount of allowable deductions should be determined from the 1973 and 1974 joint returns "filed" in October of 1977. He thus challenges the Commissioner's determination which computed his tax liability upon the basis of the rates applicable to a married person filing separately. The respondent contends that petitioner is precluded from filing a joint return for 1973 because he failed to do so within three years of the due date of the 1973 return (section 6013(b)(2)(B)), and also that he is not entitled to treat the 1973 and 1974 returns "filed" on October 21, 1977, as joint returns because he could not elect to file a joint return after the issuance of the notice of deficiency (September 15, 1977) in respect of which he filed a petition with this Court (section 6013(b)(2)(C)). Additional matters in dispute are: whether petitioner is entitled to any deductions in excess of the standard deduction; whether petitioner is entitled to any personal exemptions other than his own; and whether there was any error in the additions to tax determined by the Commissioner.
1. Petitioner's claimed right to joint return rates. We hold that petitioner is not entitled to the benefits of joint return rates for either 1973 or 1974. The matter is clear beyond question as to 1973, and the statute, as fairly construed, requires the same result as to 1974.
Petitioner's purported 1973 joint return was "filed" on October 21, 1977, more than three years after the April 15, 1974, due date of the original return. It is clear in these circumstances that section 6013(b)(2)(B) precludes the election of joint return status by petitioner. Durovic v. Commissioner Dec. 30,204, 54 T.C. 1364, 1401-1402 (1970), affd. on this issue 73-2 USTC ¶ 9728, 487 F. 2d 36, 41-42 (7th Cir. 1973) (Barnes, J.), cert. denied 417 U.S. 919 (1974). See Marshall v. Commissioner Dec. 33,652(M) 35 T.C.M. 138, 141, 45 P-H Memo. T.C. par. 76,034 at 138 (1976). Cf. Anderson v. Commissioner Dec. 32,051(M), 32 T.C.M. 762, 768, 42 P-H Memo. T.C. par. 73,155 at 745-746 (1973); Dritz v. Commissioner Dec. 29,718(M), 28 T.C.M. 874, 879-880, 38 P-H Memo. T.C. par. 69,175 at 947-948 (1969), affd. per curiam 90-2 USTC ¶ 9572, 427 F.2d 1176 (5th Cir. 1970).
While it might be contended that the limitations of section 6013(b)(2) are applicable only where a separate return has been previously filed (cf. Rev. Rul. 72-539, 1972-2 C.B. 634, the "substitute for return" for each year under the authority of section 6020(b)(1)3 qualifies as such separate return. By virtue of those section 6020(b)(1) returns, petitioner must be regarded as having filed as a married person filing separately, since section 6020(b)(2) explicitly characterizes such returns as follows:
(2) Status of Returns. — Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes.
Section 6020(b) is a procedural device which supplies the Internal Revenue Service with a means to assess tax obligations not reported by the taxpayer and to impose various "civil" penalties. United States v. Harrison, 72-2 USTC 85,352, 85,353, 30 AFTR 2d 72-5367, 72-5368 (E.D.N.Y.), affd. 73-1 USTC 80,618, 31 AFTR 2d 73-967 (2d Cir. 1972), cert. denied 411 U.S. 965 (1973). When the Commissioner is required to prepare a return because a taxpayer does not file a return, considerations of equity and administrative convenience dictate that the taxpayer must be bound by elections in the return so prepared and may not require the Commissioner to start anew the assessment machinery merely by filing a belated return. See Spanos v. Commissioner 63-1 USTC ¶ 9229, 212 F. Supp. 861, 863-864 (D. Md), affd. in part and revd. in part 63-2 USTC ¶ 9736, 323 F. 2d 108 (4th Cir. 1963). Durovic v. Commissioner, supra, 54 T.C. at 1402. Cf. United States v. Harrison, supra, 72-2 USTC at 85,354, 30 AFTR 2d 72-5369. When the taxpayer fails to file a return, he runs the risk of being bound by elections in the return filed on his behalf by the Commissioner. See Del Mar Addition v. Commissioner 40-2 USTC ¶ 9578, 113 F. 2d...
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