Robertson v. Commissioner
| Decision Date | 30 September 1966 |
| Docket Number | Docket No. 5979-64. |
| Citation | 25 TCM (CCH) 1124,1966 TC Memo 217 |
| Parties | James Robertson and Helen Robertson v. Commissioner. |
| Court | U.S. Tax Court |
William C. Hague, for the petitioners. Charles H. Powers and Charles S. Stroad, for the respondent.
Memorandum Findings of Fact and Opinion
This case involves deficiencies in petitioners' Federal income tax for the calendar years 1959, 1960, and 1961 arising out of their alleged failure to report certain income and the assertion by respondent that petitioners' underpayments were due to fraud, thereby making them liable for additions to tax under section 6653(b),1 as follows:
--------Deficiencies-------
Year Income tax Addition to tax
1959 ............ $595.73 $327.72*
1960 ............ 664.89 332.45
1961 ............ 906.80 453.40
* An additional assessment of $59.70
was paid after the due date of the 1959
return
Some of the facts are stipulated and are found accordingly.
Petitioners reside at 14803 Glenwood, Detroit, Michigan. They filed Federal income tax returns for the years in question with the district director of internal revenue, Detroit, Michigan. Helen Robertson is a party to this proceeding only by reason of having filed a joint return with her husband. Any reference herein to "petitioner" shall be deemed to refer to James Robertson.
Petitioners' returns as filed showed refund claims of $199.12, $103.98, and $113.16, respectively. The only source of income shown on these returns was from the City of Detroit. The gross income as reported by petitioners and the unreported income as claimed by respondent is as follows:
Gross income Unreported
reported by income claimed
Year petitioners by respondent
1959 ............. $6,122.96 $2,889.00
1960 ............. 6,156.54 3,375.00
1961 ............. 6,106.88 4,493.00
Petitioner for 15 years, including the taxable years in question, was an employee of the Department of Public Works of the City of Detroit as the foreman of its Northwest Incinerator. Marvin Sheats was also an employee of the City of Detroit and, in said taxable years, operated the scale at the Northwest Incinerator under the supervision of the petitioner. During that time there were approximately 27 employees working under petitioner's supervision.
The Northwest Incinerator was used by rubbish haulers to dispose of rubbish. Some of the business concerns which used the Northwest Incinerator during the taxable years were Winkler Sanitation Co., Detroit Rubbish Co., A. N. Reitzloff Co., Anco Industries, Inc., Variety Trucking Co., Fairall Trucking Co., Kramer Waste Material Co., M. and L. General Trucking Co., Vanguard Trucking Co., Michigan Business Hauling, and Davis Rubbish Removal Service. These firms paid the charges imposed by the City of Detroit for using the facilities at the incinerator.
Petitioner, in conjunction with Sheats, entered into arrangements whereby business concerns using the incinerator made extra payments in return for special access privileges and short-weighing of loads. The additional income which respondent has determined that petitioner received derives from these payments. The payments were systematic and continuous during the taxable years involved herein.
Petitioner was discharged from his employment by the City of Detroit in July 1962 because of his participation in, and his receipt of payments under such arrangements.
The arrangements involved payments of $1, $2, or $3 per load. Petitioner received as his share of the payments under the arrangements $50 to $100 weekly throughout the taxable years.
A printed Treasury Department Form 872 designated "Consent Fixing Period of Limitation Upon Assessment of Income and Profits Tax" was timely executed and filed and extended to September 30, 1964 the period for assessment of tax for the year ended December 31, 1960.
Respondent's 90-day notice of deficiency was mailed to petitioners on September 23, 1964.
Petitioner received additional unreported income for each of the taxable years 1959, 1960, and 1961 in amounts equal to or greater than the amounts determined by respondent.
Petitioner's understatement of income in each of the taxable years was due to fraud.
OpinionPetitioner was the sole witness on his behalf. His testimony was vague, general, and, to a large degree, contradictory. It consisted for the most part simply of negative answers to general questions by his counsel as to whether he had received the particular sums alleged by respondent to have been received by him from named business concerns dumping rubbish at the incinerator. Despite these general denials, on direct examination petitioner did admit that he had received "a dollar or two dollars once in a while" and "maybe a dollar, yes, maybe two, maybe three" and other items such as whisky, cigars, and beer. Petitioner finally summarized the situation by stating that he had received some $500 in 1959 and $700 in each of the years 1960 and 1961 for the purpose of facilitating the unloading operations of rubbish haulers. Moreover, on cross-examination he conceded that he had received some 100 checks made out to "Cash" by the Winkler Sanitation Co. in the following total amounts: $1,020 in 1959, $969 in 1960, and $894 in 1961.
Against petitioner's testimony, respondent produced several witnesses who testified as to payments which had been made for special privileges at the incinerator. Sheats testified as to the arrangements which he and petitioner made with various rubbish hauling firms, the amounts received thereunder, and the manner in which these amounts were divided between petitioner and himself — usually a 50-50 split. The owner of Winkler Sanitation Co. testified that he paid $50 weekly. A truck driver for A. N. Reitzloff Co. testified as to the arrangements he made and that payments of between $20 and $30 per week had been paid to Robertson and Sheats; one-half of this amount is far in excess of the amounts determined in the deficiency notice to have been received by petitioner from Reitzloff. The owner of Detroit Rubbish Co. gave similar testimony.2 Sheats' testimony substantially corroborated the testimony of the other witnesses. In view of the foregoing, we find that the testimony of the petitioner is utterly lacking in credibility.
In weighing the evidence, we have adhered to the ruling at the trial excluding certain portions of the testimony of the owner of Detroit Rubbish Co. — testimony which, upon post-trial reflection, we would, if necessary, hold to be admissible. Similarly, we have taken into account the fact that the owner of Winkler Sanitation Co. testified that all payments were made by check and that the checks submitted constitute all the checks in question. We interpret his testimony to mean that the checks submitted merely constituted all those...
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