Stafford v. Commissioner
| Decision Date | 28 January 1997 |
| Docket Number | Docket No. 4778-95. |
| Citation | 73 T.C.M. 1848 |
| Parties | James E. Stafford v. Commissioner. |
| Court | U.S. Tax Court |
James E. Stafford, pro se. Susan V. Sample, for the respondent.
This matter is before the Court on respondent's motion for summary judgment pursuant to Rule 121.1 Respondent determined deficiencies in and additions to petitioner's Federal income taxes as follows:
Additions to Tax
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Sec. 6653 Sec. 6653 Sec. 6653 Sec. 6653 Sec
Year Deficiency (b)(1)1 (b)(2) (b)(1)(A)1 (b)(1)(B) 6654
1982 ................... $3,323 $1,662 2 -- -- $ 85
1983 ................... 4,336 2,168 2 -- -- 266
1984 ................... 1,291 646 2 -- -- 52
1985 ................... 3,944 1,972 2 -- -- 222
1986 ................... 4,089 -- -- $3,067 2 198
1987 ................... 3,685 -- -- 2,764 2 200
1988 ................... 2,427 1,820 -- -- -- 153
1 In the alternative to the additions to tax for fraud, respondent determined additions to tax under secs
6651(a)(1) and 6653(a)(1) and (2) for all years at issue
2 50 percent of the interest payable under sec. 6601 for the portion of the underpayment due to fraud
Respondent moves for summary judgment as to: (1) The deficiencies and the additions to tax under section 6654 for failure to pay estimated tax; and (2) the additions to tax for fraud under the applicable provisions of section 6653(b) for all years at issue.2
Petitioner filed a timely petition stating, inter alia, that "Without a grant of immunity, Petitioner is prevented from submitting financial information sufficient to refute the taxable income determined by Respondent lest it be used against him in a civil or criminal matter". The petition then discusses the Fifth Amendment to the Constitution and certain cases interpreting that Amendment.
Respondent filed a timely answer, affirmatively alleging fraud for all of the years at issue. Petitioner did not file a reply to respondent's answer, but since respondent did not file a motion pursuant to Rule 37(c), the affirmative allegations of fraud in the answer are deemed denied.
Respondent sought to have petitioner enter into stipulations of fact and also served on petitioner requests for admission with respect to various matters raised in this case. Petitioner in response refused to stipulate any matter or to specifically address any of the requested admissions.
In support of his refusal either to stipulate or to admit, petitioner took the position that his Tax Court petition is "null and void" because respondent lacks assessment and collection authority, in that such authority has been transferred from the Internal Revenue Service to the Bureau of Alcohol, Tobacco, and Firearms (BATF).
The Court subsequently ordered petitioner to show cause why respondent's proposed stipulations should not be accepted as established, directing petitioner to specifically address the factual matters raised in the proposed stipulations (show cause order). Petitioner declined to comply with the show cause order, repeating the argument that respondent's assessment and collection authority had been transferred to the BATF.
Respondent also filed a motion to review the sufficiency of petitioner's answers to requested admissions (motion to review). Petitioner's response to the motion to review again referenced the BATF argument and further stated that "Respondent's Notice of Deficiency did not list the statute and implementing regulations for its authority" to assess and collect taxes if a Tax Court petition was not filed.
By subsequent order, this Court advised petitioner that his grounds for refusing to stipulate or admit lacked merit and further directed him to file supplemental responses to the show cause order and the motion to review that specifically addressed each factual matter raised by respondent. Petitioner was further advised that any failure to respond as directed could result in matters being deemed stipulated or admitted. The Court also set a hearing to review petitioner's responses at the commencement of the trial calendar in Houston, Texas, on June 10, 1996.
Petitioner's supplemental responses failed to specifically address any matter in the proposed stipulations or the requests for admission. Instead, in terms substantially identical to those previously rejected by the Court, petitioner repeated the BATF argument, and expanded on the argument regarding the lack of implementing regulations, claiming that title 27 of the Code of Federal Regulations, but not title 26 thereof, contains implementing regulations for Internal Revenue Code sections concerned with the assessment and collection of taxes. Thus, petitioner concluded, the absence of regulations in title 26 of the Code of Federal Regulations precludes respondent from enforcing such Internal Revenue Code sections.
At the June 10, 1996, hearing to review petitioner's responses, petitioner renewed his argument regarding the lack of implementing regulations and orally moved for dismissal. In response to the Court's request that he provide specific evidence regarding the matters raised by respondent, petitioner refused, stating:
I stand on the documentation that I have provided this Court that there are no implementing Federal regulations in title 26 for enforcement actions against me. I stand on that. That is all I have to say to this Court.
Respondent then filed the instant motion for summary judgment pursuant to Rule 121.
This case was recalled 2 days later. Petitioner's oral motion to dismiss was denied. Petitioner's original and supplemental responses to the show cause order were determined to be unresponsive and, thus, not in compliance with that order and Rule 91. Consequently, respondent's proposed stipulations of fact were accepted as established for purposes of this case. Rule 91(f); Marcus v. Commissioner [Dec. 35,302], 70 T.C. 562, 573 (1978), affd. without published opinion 621 F.2d 439 (5th Cir. 1980). Additionally, petitioner's original and supplemental responses to respondent's requests for admission were determined to offer neither sufficient answers nor justified objections to any matters contained in the requested admissions. Consequently, the requested admissions were deemed admitted for purposes of this case. Rule 90(c); Marshall v. Commissioner [Dec. 42,301], 85 T.C. 267, 272 (1985). The Court then inquired of petitioner whether he had any other evidence to submit or factual matters to dispute. Petitioner responded in the negative. Consequently, the Court vacated the scheduled trial and granted petitioner 30 days to file a response to respondent's summary judgment motion. Petitioner's subsequently filed response is in all material respects a repetition of his prior arguments.
The facts deemed admitted and established may be summarized as follows. Petitioner resided in Kingwood, Texas, at the time the petition was filed in this case. Petitioner was married and living with his wife in Texas during the years at issue, and Texas is a community property State.3 Petitioner was employed as an accountant from 1982 to 1988 by the same company, currently known as British Petroleum Exploration Co.4 Petitioner also worked for Lester Goodson Pontiac during 1984 and 1985. Petitioner purchased food products from Yurika Foods Corp. during 1983,5 1984, 1985, 1986, 1987, and 1988. This company pays commissions to direct purchasers based on the number of orders. During 1983, 1985, and 1986 petitioner had an account at Sooner Federal Savings on which he received interest. During 1987, petitioner had an account at Sohio Federal Credit Union on which he received interest. Petitioner received the following income:
Lester Sooner Sohio
Sohio/Standard Goodson Yurika Federal Federal
Year Oil Pontiac Foods Savings Credit Union
1982 ................... $37,119.00 -- -- -- --
1983 ................... 38,705.00 -- -- $54,00 --
1984 ................... 16,438.32 $1,618.93 $2,966.00 -- --
1985 ................... 31,722.21 1,953.46 380.69 7,51 --
1986 ................... 51,898.12 -- 52,30 9,72 --
1987 ................... 52,599.72 -- 45.15 -- $3
1988 ................... 43,925.08 -- 38.40 -- --
Petitioner's community share of the foregoing amounts is one-half. Petitioner received $6,201 in distributions from Sohio Employees Investment Plan, of which his community share is $3,100.6 In 1985, petitioner sold 282.781 shares of Standard Oil stock; his community share of the sale proceeds is $6,302. In 1987, petitioner sold 8.089 shares of Standard Oil stock for $621.12. His community share of the sale proceeds is $311. Petitioner submitted Forms W-4 to his employer for 1984, 1985, 1986, 1987, and 1988 stating that he was exempt from Federal withholding. Petitioner did not file a Federal income tax return for the tax years 1982, 1983, 1984, 1985, 1986, 1987, and 1988. In August 1991, an indictment was filed against petitioner for violating section 7201 for the years 1985, 1986, and 1987.7 In November 1991, in the U.S. District Court for the Southern District of Texas, a jury verdict was returned finding petitioner guilty of violating section 7201 for...
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