Lawson v. Commissioner of Internal Revenue, T.C. Memo. 2009-147 (U.S.T.C. 6/23/2009)
| Decision Date | 23 June 2009 |
| Docket Number | No. 24205-07.,24205-07. |
| Parties | LEE MICHAEL LAWSON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Tax Court |
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v.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Lee Michael Lawson, pro se.
Randall G. Durfee and Michael W. Bentley, for respondent.
HALPERN, Judge.
By notice of deficiency dated September 13, 2007 (the notice), respondent determined deficiencies in, and additions to, petitioner's Federal income tax as follows:
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Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6654
2002 $20,212 $5,054 To be computed —
2003 26,467 5,762 To be computed $668
2004 60,088 13,520 To be computed 1,745
2005 53,671 12,076 To be computed 2,153
Unless otherwise noted, section references are to the Internal Revenue Code in effect for the years in issue, and Rule references are to the Tax Court Rules of Practice and Procedure. All dollar amounts have been rounded to the nearest dollar.
The principal issues for decision are whether petitioner had income from various sources during the years in issue and whether he is liable for the section 6651(a)(1) additions to tax for failing to file returns for the years in issue. Respondent has conceded the section 6651(a)(2) and 6654 additions to tax. Petitioner bears the burden of proof. See Rule 142(a).1 We must decide as a preliminary matter whether one of respondent's exhibits is admissible into evidence.
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Exhibit 24-R (Ex. 24-R) purports to be the transcript of a deposition of petitioner in an Alaska State court action captioned Lee Lawson v. Thomas K. Pope, et al., Case No. 1SI-04-145CI (Alaska Super. Ct. closed Oct. 27, 2005) (Lawson v. Pope). Petitioner testified that he was the plaintiff in a suit by that name and that he gave several depositions in that case. Nonetheless, in this case, when presented at trial with Ex. 24-R, petitioner testified that he could not identify that transcript. Respondent identified Ex. 24-R as a transcript of petitioner's deposition testimony in Lawson v. Pope through the testimony of his witness, Revenue Agent Alex Medley, who conducted respondent's investigation of petitioner's Federal income tax liabilities for the years in issue. Revenue Agent Medley testified that he received Ex. 24-R from Bruce Weyhrauch, the attorney who represented the defendant in Lawson v. Pope and who conducted the deposition. Respondent argues that Ex. 24-R is relevant because petitioner's testimony in the transcript contradicts his testimony here that, during 2004 and 2005, he did not own income-producing assets that are central to this case. Respondent argues that petitioner's testimony in the transcript is not hearsay because it is either a prior statement by a witness, see Fed. R. Evid. 801(d)(1), or an admission by a party-opponent, see Fed. R. Evid. 801(d)(2). Finally, respondent argues that Revenue Agent Medley's testimony is sufficient to
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meet the requirement of authentication or identification set forth in rule 901 of the Federal Rules of Evidence. In particular, respondent relies on the illustration in subdivision (b)(4) of that rule, "Distinctive characteristics and the like", which lists factors that may satisfy the requirement of sufficient authentication or identification: "Appearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances."
Petitioner's deposition testimony in Ex. 24-R is relevant, nonhearsay testimony. In form and content it is a deposition of petitioner in Lawson v. Pope. Respondent's witness, Revenue Agent Medley, received it from Mr. Weyhrauch, the attorney who deposed petitioner in Lawson v. Pope. Petitioner admits that he was deposed in that proceeding, and he did have an opportunity while on the stand in this trial to review the transcript. He did not deny that it was a transcript of his deposition testimony; he simply said he did not know.
Rule 901(a) of the Federal Rules of Evidence provides that "[t]he requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." Rule 901 of the Federal Rules of Evidence does not erect a particularly high hurdle, and that hurdle may be cleared by circumstantial evidence. The proponent
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is not required to rule out all possibilities inconsistent with authenticity, or to prove beyond any doubt that the evidence is what it purports to be. United States v. Tin Yat Chin, 371 F.3d 31, 38 (2d Cir. 2004). We are satisfied that Ex. 24-R is what it purports to be; viz, a transcript of a deposition of petitioner in Lawson v. Pope. Ex. 24-R is received into evidence.
At the time he filed the petition, petitioner resided in Alaska.
Petitioner did not file a Federal income tax return for any year in issue. He did not provide Revenue Agent Medley with any records and did not cooperate with him during his investigation of petitioner's 2002 through 2005 Federal income tax liabilities. Revenue Agent Medley prepared substitutes for returns for petitioner for each of those years, reconstituting his income from various sources and by various methods available to respondent.
During 2002 and 2003 petitioner worked for William G. Shattenberg (Mr. Shattenberg).
During 2004 and 2005, under the name "Lawson & Associates", petitioner owned and operated a grocery store and electrical generating business in and around Port Alexander, Alaska. During those years, Lawson & Associates was a sole proprietorship, and petitioner was the sole proprietor. Petitioner acquired the
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store and electrical generating facilities on February 27, 2004, from Nelson L. Jodway. Petitioner (under the name "Lawson and Associates") also acquired from Mr. Jodway real property subject to a lease to the U.S. Coast Guard for use as a communications site. The U.S. Coast Guard paid Lawson & Associates $12,670 and $13,115 in rent during 2004 and 2005, respectively. AT&T Alascom paid Lawson & Associates $36,775 and $44,130 for electricity during 2004 and 2005, respectively.
During 2002, 2003, 2004, and 2005 petitioner had signature authority over and maintained a personal checking account No. xxx-xxx7482 in his name at Wells Fargo Bank, N.A. (acct. No. 7482). Deposits of $33,653, $53,483, and $27,745 were made into that account during 2002, 2003, and 2004, respectively. Those deposits included deposits of $1,372 and $3,533, accompanied by the annotation "State Of Ak Dol Credits", during 2003 and 2004, respectively.
During 2003, 2004, and 2005, petitioner had signature authority over and maintained a checking account No. xxx-xxx4553 in the name of Lee Lawson d/b/a Lawson & Associates at Wells Fargo Bank, N.A. (acct. No. 4553). Deposits of $3,362, $86,248, and $99,436 were made into that account during 2003, 2004, and 2005, respectively.
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Petitioner was entitled to Permanent Fund Dividends from the State of Alaska but did not receive them because they were garnished to pay child support or to pay tax debts.
I. Introduction
Petitioner assigns error to the notice, averring in support of his assignment: "The taxes they say I owe have already been paid by another man." As petitioner makes clear on brief, his position (which we reject) is that another individual, Tommy Wells, was the owner of Lawson & Associates during 2004 and 2005 and properly taxable with respect to its income. Petitioner avers no other facts in the petition, but, at trial and on brief, he made clear other challenges to the notice. We shall address what we believe to be his challenges.
II. Deficiencies in Tax
A. 2002
In support of the notice, respondent shows an adjustment of $50,901 for "Gross Sales". The explanation accompanying that adjustment (and adjustments of $72,752, $118,735, and $111,994 similarly labeled for 2003, 2004, and 2005, respectively) states: "In the absence of adequate records, your taxable income * * * [has] been computed by reference to bank deposits and cash payments * * *. Thus, it is determined you had gross business income in the * * * [amount] shown above." One of respondent's
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exhibits, Ex. 45-R, shows that, during 2002, there were three bank accounts at Wells Fargo Bank, N.A., including acct. No. 7482, to which $33,653 was deposited, as found supra, and two other accounts, accounts Nos. xxx-xxx6994 and xxx-xxx4815 (acct. Nos. 6994 and 4815, respectively), to which respondent concedes on brief no deposits were made that are includable in petitioner's gross income.2 Respondent's application of the bank deposits method accounts for only $33,653 of the total of $50,901 that respondent originally determined to be unreported income and on which he based his deficiency for 2002. While respondent asks that we find that, during 2002, petitioner received $33,969 in "wages" from Mr. Shattenberg, we shall treat that claim as being limited to $33,653, given respondent's concessions with respect to acct. Nos. 6994 and 4815. On brief, petitioner concedes: "In
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2002 and 2003 the Petitioner did receive money from William Shattenberg as earnings from a job where he worked for his boss." He claims, however, that he did not receive "wages". He elaborates: "Wages are paid to an employee. Employee defined by the IRC is an officer, employee or elected official of the United States, a State or any political subdivision thereof, or the District of Columbia." He argues that, since he is not an employee as so defined, he is not "required by the IRS to report his accumulated property to the IRS." Petitioner's arguments with respect to the meaning of the terms "wages" and "employee" are meritless, tax-protester arguments. See, e.g., Custer v. Commissioner, T.C. Memo. 2008-266. We accord them no weight.
As we have stated, petitioner bears the burden of proof.3
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He has conceded that he worked for Mr....
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