If You Fail Four Times, the Fifth Time Won’t be the Charm

As I’ve said, there is an income tax and you do need to pay it. Today’s petitioner in Tax Court didn’t like that idea and filed case after case in Tax Court citing frivolous arguments.

In 2006, the petitioner received just over $45,000 in military retirement. He didn’t file a tax return, so the IRS prepared a Substitute for Return. A notice of deficiency was sent and the petitioner timely filed a Tax Court petition. That was about the only thing that was done correctly — the timely filing.

Unfortunately for the petitioner,

At no time before or during trial did petitioner attempt to substantiate any deduction or dispute the receipt of income that was included in the statutory notice. At all times petitioner has relied solely on frivolous arguments about tax return filing requirements, preparation of substitutes for returns, and procedures for determination of tax deficiencies and additions to tax.

It’s not good when the Court can cite a case you brought up as a precedent against you:

Petitioner continues to take up this Court’s valuable time and resources with frivolous and irrelevant arguments. To expand upon his contentions is simply not necessary. As this Court stated recently in Wheeler v. Commissioner, T.C. Memo. 2010-188: “To do so would be to encourage the dilatory conduct that * * * [petitioner] has employed throughout the history of this case and would neither dissuade petitioner nor provide useful guidance to taxpayers with legitimate cases.”

Not only did the petitioner lose the case, but the maximum possible frivolous penalty was awarded — $25,000. The Court also noted that his appeals (to the 10th Circuit Court of Appeals) have also started to receive sanctions (penalties). He escaped without penalty on his first appeal, was sanctioned $4,000 on the second appeal, and $6,000 on the third.

The only good news out of this case is that the petitioner is helping to reduce the budget deficit.

Case: Wheeler v. Commissioner, T.C. Memo 2011-278

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