McCabe v. Commissioner
| Decision Date | 04 November 1986 |
| Docket Number | Docket No. 17929-85. |
| Citation | 1986 TC Memo 533,52 TCM (CCH) 962 |
| Parties | Steven McCabe v. Commissioner. |
| Court | U.S. Tax Court |
Steven McCabe, pro se, Las Vegas, Nev. Susan N. Wasko, for the respondent.
COUVILLION, Special Trial Judge:
This case was assigned pursuant to the provisions of section 7456(d) () of the Code1 and Rules 180, 181, and 182.
Respondent issued two notices of deficiency in which the following deficiencies in Federal income taxes and additions to tax were determined against petitioner for the years indicated:
Additions to Tax
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Section Section Section
Year Deficiency 6651(a)(1) 6653(a)(1) 6653(a)(2)
1981 .............................$1,282.00 $320.50 $64.10 *
1982 .............................$1,380.00 $345.00 $69.00 **
* 50% of the interest due on $1,282.00
** 50% of the interest due on $1,380.00
The issues are whether petitioner had unreported income from salaries or wages and whether petitioner is liable for the additions to tax for the years in question. Respondent also moved for damages under section 6673.
Some of the facts have been stipulated and are found accordingly. The stipulation of facts and attached exhibits are incorporated herein by this reference.
At the time the petition was filed, petitioner's legal residence was Las Vegas, Nevada. During the two years at issue, petitioner was employed by the Whittlesea Blue Cab Company of Las Vegas, Nevada, as a taxicab operator. During 1981, petitioner admittedly earned $10,595.52 and during 1982, he admittedly earned $11,770.92 for his services as a taxicab operator. Petitioner filed no income tax returns for 1981 and 1982. Respondent issued the notices of deficiency in which it was determined that petitioner failed to report his earnings and, accordingly, the above deficiencies in income taxes and additions to tax were determined.
Petitioner raises a number of what this Court has referred to as "protester type" arguments. For example, petitioner asserts (1) there is no definition of "income" in the Internal Revenue Code; (2) the filing of an income tax return is voluntary and imposition of additions to tax, in effect, makes the filing of a return "mandatory;" (3) respondent has violated the Privacy Act of 1974; (4) respondent has not shown or established the liability of petitioner in accordance with law; (5) the determined deficiencies have never been assessed; and (6) wages do not constitute taxable income because petitioner had a basis in his labor equal to the amount he received for his services.
OpinionSection 1(c) provides in clear, concise, and pointed language that "there is hereby imposed on the taxable income of every individual *** a tax determined in accordance with *** tables" provided in the Internal Revenue Code.
All taxpayers with taxable income are generally required by law to file Federal income tax returns. Section 6012. Under sections 6651 and 7203, taxpayers who fail to file may be subject to civil additions to the tax and prosecution for criminal offenses. The matter of filing tax returns and paying taxes is not voluntary. Respondent is authorized under section 6213 to issue notices of deficiency for determined deficiencies and/or additions to tax.
It is well settled that the determinations made by respondent in a notice of deficiency are presumed correct; the burden of proof is on petitioner, not respondent, to show that the determinations are wrong, and the imposition of the burden of proof is constitutional. Welch v. Helvering 3 USTC ¶ 1164, 290 U.S. 111 (1933); Rockwell v. Commissioner 75-1 USTC ¶ 9324, 512 F.2d 882, 887 (9th Cir. 1975), cert. denied 423 U.S. 1015 (1973); Rule 142(a). Moreover, this Court generally will not look behind a deficiency notice to examine evidence used or the propriety of the Commissioner's motives or of the administrative policy or procedures involved in making his determinations. Proesel v. Commissioner Dec. 36,514, 73 T.C. 600, 605 (1979); Greenberg's Express, Inc. v. Commissioner Dec. 32,640, 62 T.C. 324, 327 (1974).
The term "taxable income" is defined in section 63(b) generally as adjusted gross income reduced by, among other things, excess itemized deductions. The term "adjusted gross income" is defined in section 62 as gross income less trade and business expenses, long-term capital gains, and various other items of deduction. The term "gross income" is defined in section 61 as all income from whatever source derived including, but not limited to, wages. See Tomburello v. Commissioner Dec. 42,960, 86 T.C. 540, 543 (1986).
Petitioner's argument that wages are not taxable income because the basis in his labor equals the amount received for his services was rejected in Reading v. Commissioner Dec. 35,354, 70 T.C. 730 (1978), affd. 80-1 USTC ¶ 9162, 614 F.2d 159 (8th Cir. 1980). The sale of one's labor is not the same as the sale of property. A person's gain from the sale of his labor is the entire amount received for the services performed without any reduction for costs. Wage income, or compensation for services rendered, is taxable in its entirety. Any realized accession to wealth constitutes taxable income. Commissioner v. Glenshaw Glass Co. 55-1 USTC ¶ 9308, 348 U.S. 426 (1955).
The argument that respondent violated the Privacy Act, 5 U.S.C. section 552(a), is without merit. Section 7852(e) expressly provides that the Privacy Act does not apply to cases involving the determination of liability for any tax, addition to tax, or interest.
Under section 6213(a), when a notice of deficiency is issued, respondent is prohibited from making an assessment against the taxpayer until the time has expired for filing a petition with this Court. If a petition is filed, the prohibition against assessment continues until a decision by this Court becomes final. We dismiss, therefore, petitioner's argument that he was not assessed prior to issuance of the notices of deficiency.
Respondent's determinations of the deficiencies in tax are sustained.
Section 6651(a)(1) provides for the imposition of an addition to tax for failure to timely file a return unless such failure is due to reasonable cause and not due to willful neglect. Sections 6653(a)(1) and (2) provide for the imposition of additions to tax for the underpayment of tax due to negligence or intentional disregard of rules and regulations.
Petitioner bears the burden of proof on these issues. Welch v. Helvering, supra; Knoll v. Commissioner, 735, F.2d 1370 (9th Cir. 1984), affg. Catalano v. Commissioner Dec. 40,261, 81 T.C. 8 (1983); Rule 142. Petitioner clearly failed to carry his burden as to each of...
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