TP Offers Frivs In Defense Of His Corporation

[The Observer]

EPITOME SYSTEMS, INC.,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

Release Date: JUNE 11, 2015


UNITED STATES TAX COURT

Filed June 11, 2015

Donald E. Baldauf (an officer), for petitioner.

Laura A. Price and Lauren B. Epstein, for respondent.

MEMORANDUM OPINION

NEGA, Judge: These cases were consolidated for purposes of trial, briefing, and opinion. Petitioner commenced the case at docket No. 4177-13L in response to a Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330 (notice of determination) upholding collection actions [*2] regarding an employment tax deficiency of $ 1,073 for tax year 2006. 1 Petitioner commenced the case at docket No. 24939-13 in response to a notice of deficiency respondent sent to petitioner on September 10, 2013, in which respondent determined deficiencies in and additions to tax on petitioner's Federal income tax in the following amounts:

Additions to tax/1/
________________________________

TYE June 30 Deficiency Sec. 6651(a)(1) Sec. 6655(a)
_____________________________________________________________________

2009 $ 7,978 $ 1,795 $ 214
2010 36,144 8,132 227
2011 58,214 13,098 828
2012 31,079 6,993 565
_____________________________________________________________________

/1/ a later date.

The issues for consideration in the case at docket No. 4177-13L are (1) whether petitioner underreported wages paid to its only employee, Donald Baldauf, and (2) whether the settlement officer abused her discretion in upholding the collection action for petitioner's employment tax liability for tax year 2006.

[*3] The issues for consideration in the case at docket No. 24939-13 are whether petitioner (1) failed to report net taxable income of $ 51,910 and $ 135,626 for tax years ending (TYE) June 30, 2009 and 2010, respectively, (2) failed to report gross receipts of $ 192,215 and $ 122,637 for TYE June 30, 2011 and 2012, respectively, and (3) is liable for the additions to tax pursuant to sections 6651(a)(1) and (2) and 6655(a) for TYE June 30, 2009 through 2012.

BACKGROUND

The facts have been deemed established for purposes of these cases under Rule 91(f). At the time the petitions were filed, petitioner was a C corporation 2 with its principal place of business in Bradenton, Florida.

I. Docket No. 4177-13L

The notice of determination underlying petitioner's case at docket No. 4177-13L was mailed on January 25, 2013. Mr. Baldauf was petitioner's only employee during tax year 2006. Petitioner filed Forms 941, Employer's Quarterly [*4] Federal Tax Return, for each quarter of 2006, reporting total taxable wages paid to Mr. Baldauf of $ 49,000. Petitioner made employment tax deposits of $ 12,985 for tax year 2006.

Petitioner filed a Form W-2, Wage and Tax Statement, for wages paid to Mr. Baldauf during tax year 2006. The 2006 Form W-2 reported that petitioner paid Mr. Baldauf $ 51,000 during tax year 2006. The 2006 Form W-2 thus reported an amount paid to Mr. Baldauf that was $ 2,000 more than the total of the amounts reported on the 2006 Forms 941. On March 1, 2010, respondent assessed petitioner an additional $ 530 in employment tax for the period ending December 31, 2006.

Petitioner timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing, following receipt of a Letter LT-11, Notice of Intent to Levy and Notice of Your Right to a Hearing. Settlement Officer Denise Williams (SO Williams) scheduled a collection due process (CDP) hearing for November 20, 2012, and requested various documentation from petitioner in advance of the hearing, including (1) Form 433-B, Collection Information Statement for Businesses, (2) Forms 941 for December 31, 2007, through September 30, 2012, (3) Forms 940, Employer's Annual Federal Unemployment [*5] (FUTA) Tax Return, for 2007 through 2011, and (4) proof of deposits for 2007 through September 30, 2012.

A telephone CDP hearing was held on November 27, 2012, between SO Williams and Mr. Baldauf. Petitioner did not provide the requested documentation in advance of the hearing. During the hearing Mr. Baldauf raised frivolous arguments, claiming that the Constitution does not require him to pay taxes. Mr. Baldauf stated that he disagreed with the additional tax and desired to take his case to the Tax Court. Petitioner did not offer any collection alternatives, and SO Williams upheld the proposed levy.

II. Docket No. 24939-13

The notice of deficiency underlying petitioner's case at docket No. 24939-13 was mailed to petitioner on September 10, 2013. During the years at issue Mr. Baldauf was petitioner's only employee and sole shareholder. In the process of auditing Mr. Baldauf's 2009 personal income tax return to which he had attached a Schedule C, Profit or Loss From Business, relating to petitioner's business, respondent learned that petitioner was a subchapter C corporation that had not filed Forms 1120, U.S. Corporation Income Tax Return, for TYE June 30, 2008 through 2012, nor had it paid taxes for those tax years. Respondent conducted a bank deposits analysis of petitioner's bank records in order to [*6] reconstruct its income. During the years at issue petitioner maintained accounts at First America Bank.

Revenue Agent Joseph Castellano (RA Castellano) audited petitioner's bank records for the tax years at issue in order to reconstruct petitioner's income. Petitioner provided respondent with some books and records relating to 2009 but did not provide books and records for any other years. RA Castellano cross-referenced the 2009 books and records with the expenses that were reported on the Schedule C attached to Mr. Baldauf's 2009 Federal income tax return and determined that the Schedule C expenses were substantiated through the provided books and records. Except for the calendar year 2009 expenses, RA Castellano did not allow as deductible expenses the expenditures appearing on petitioner's bank account records because petitioner did not provide any documentation for the business nature of those expenses.

Respondent prepared substitutes for returns (SFRs) for petitioner for TYE June 30, 2009 through 2012. For petitioner's TYE June 30, 2009 and 2010, respondent transferred allowable expenses from the Schedule C attached to Mr. Baldauf's 2009 tax return to the Forms 1120 for those periods. Because Mr. Baldauf's 2009 Schedule C reported expenses on a calendar year basis, respondent allocated half of the expenses to petitioner's Form 1120 for TYE June 30, 2009, [*7] and half to TYE June 30, 2010. Mr. Baldauf has not filed a Federal income tax return since 2009, and accordingly, there were no Schedules C from Mr. Baldauf relating to petitioner's TYE June 30, 2011 or 2012, that would have allowed respondent to determine expenses allocable to those tax years. Petitioner has not provided respondent with documentation concerning expenses for those tax years.

DISCUSSION

I. Docket No. 4177-13L

A. Overview of CDP Hearing Requirements

Under section 6331(a), the Commissioner is authorized to levy upon the property or property rights of a taxpayer who fails to make payment for taxes due within 10 days after notice and demand for payment. At least 30 days before a levy is made, the Commissioner must notify the taxpayer in writing of the opportunity to appeal the proposed levy at a CDP hearing held by the Office of Appeals (Appeals). See sec. 6330(a)(1), (b)(1). At the hearing the taxpayer may raise any relevant issue as to the propriety of the proposed levy, such as spousal defenses, challenges to the collection action, and offers of collection alternatives. Sec. 6330(c)(2)(A); see also Sego v. Commissioner, 114 T.C. 604, 609 (2000). The taxpayer may also challenge the existence or amount of the underlying tax [*8] liability if he or she did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the liability. Sec. 6330(c)(2)(B). The Appeals officer must make a determination about whether to uphold the proposed levy, taking into consideration (1) verification that the requirements of any applicable law or administrative procedure have been met, (2) relevant issues raised at the hearing, and (3) whether any proposed collection action balances the need for the efficient collection of taxes with the taxpayer's legitimate concern that any collection action be no more intrusive than necessary. Sec. 6330(c)(1), (2), and (3)(A), (B), and (C).

A taxpayer may petition the Court under section 6330(d) to review Appeals' determination. Where the validity of the tax liability is properly at issue, we review the tax liability de novo. Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). The Court reviews other administrative determinations of Appeals for abuse of discretion. Craig v. Commissioner, 119 T.C. 252, 260 (2002) (citing Sego v. Commissioner, 114 T.C. at 610). An abuse of discretion occurs when Appeals' determination is arbitrary, capricious, or without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006); Freije v. Commissioner, 125 T.C. 14, 23 (2005).

[*9] Respondent concedes that the underlying liability is at issue in the case at docket No. 4177-13L. Accordingly, we review de novo whether petitioner is liable for the deficiency in its employment taxes. See Sego v. Commissioner, 114 T.C. at 610. After reviewing de novo the underlying liability, we review the other determinations of Appeals for abuse of discretion. See Craig v. Commissioner, 119 T.C. at 260.

B. Burden of Proof

In general, the Commissioner's determination as to a taxpayer's tax liability is presumed correct, and the taxpayer bears the burden of proving otherwise. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

C. Employer Withholding Requirements

The Internal Revenue Code requires employers to pay employment taxes imposed on employers and to withhold from employees' wages certain taxes imposed on employees. See secs. 3111, 3301, 3101, 3102. Section 3402 requires employers to withhold from employees' wages the amounts of Federal income tax owed by those employees. Section 3501 requires employers to deposit the amounts withheld under section 3402 with the Treasury of the United States. Section 3403 imposes liability on employers who fail to withhold required amounts of tax owed by employees.

[*10] D. Application and Analysis

The employment tax liability at issue in the case at docket No. 4177-13L arises from a $ 2,000 discrepancy between amounts reported on petitioner's Forms 941 for tax year 2006 and Mr. Baldauf's Form 1040, U.S. Individual Income Tax Return, for tax year 2006. Petitioner argued in its petition that the discrepancy resulted from a "computer glitch" that resulted in the application of a December 2006 payment to January 2007. Respondent disputes this allegation, claiming that respondent's records for the first three quarters of 2007 show matching amounts between petitioner's quarterly deposits and its 2007 Forms 941.

At trial Mr. Baldauf testified that he erred in allocating a paycheck from petitioner to himself when there were insufficient funds for petitioner to pay him. Accordingly, Mr. Baldauf claims that he did not receive $ 2,000 from petitioner in the form of one paycheck, thus accounting for the discrepancy between amounts reported on his Federal income tax return and petitioner's 2006 Forms 941. Petitioner did not offer into evidence any documentary evidence of this mistake, such as its own bank records or those of Mr. Baldauf. Instead petitioner offered only the testimony of Mr. Baldauf, petitioner's sole employee and shareholder. Petitioner thus offered two differing explanations as to the $ 2,000 discrepancy. In sum, petitioner has not met its burden of proof to show [*11] that respondent's determination regarding its 2006 employment tax liability is incorrect.

E. Appeals' Determination

We proceed to determine whether SO Williams abused her discretion in upholding the levy action against petitioner. Petitioner did not provide the requested financial information before the CDP hearing. Nor did it offer any collection alternatives. Mr. Baldauf, as petitioner's representative in the CDP hearing, raised frivolous arguments. SO Williams' decision to uphold the proposed levy was not an abuse of discretion in the light of petitioner's failure to provide the requested financial information. See, e.g., Cavazos v. Commissioner, T.C. Memo. 2008-257; Prater v. Commissioner, T.C. Memo. 2007-241. Further, SO Williams' determination was not an abuse of discretion considering that petitioner did not raise any relevant issues or appropriate defenses to the collection action, nor did it offer any collection alternatives. See Kendricks v. Commissioner, 124 T.C. 69, 79 (2005) ("Since there was no offer in compromise before Appeals, there was no abuse of discretion in Appeals' failing to consider an offer in compromise."). SO Williams followed the requirements of section 6330(c), and her decision to uphold the levy action was not an abuse of discretion.

[*12] II. Docket No. 24939-13

A. Burden of Proof

In general, the Commissioner's determination as to a taxpayer's tax liability is presumed correct, and the taxpayer bears the burden of proving otherwise. See Rule 142(a); Welch v. Helvering, 290 U.S. at 115. In cases involving unreported income, the presumption of correctness attaches if the notice of deficiency is supported by a minimal evidentiary foundation linking the taxpayer to the income-producing activity. Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th Cir. 1993), aff'g T.C. Memo. 1991-636. As discussed infra, we find respondent provided such a foundation here so that petitioner bears the burden of proof as to its income tax liability. Petitioner has not asserted, nor do we find, that the burden of proof has shifted to respondent pursuant to section 7491(a). Petitioner also bears the burden of proving that it is not liable for any addition to tax or penalty. See NT, Inc. v. Commissioner, 126 T.C. 191, 195 (2006).

B. Deficiency

Gross income includes all income from whatever source derived, including gross income derived from a business. Sec. 61(a)(2). Taxpayers must keep such records as are sufficient to establish gross income and deductions. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. If a taxpayer fails to maintain the required [*13] records, the Commissioner may determine the taxpayer's income by any method that clearly reflects income. See sec. 446(b); Petzoldt v. Commissioner, 92 T.C. 661, 693 (1989). Pursuant to section 6020(b), the Commissioner is authorized to prepare an SFR for any taxpayer who fails to file a tax return.

Bank deposits are prima facie evidence of income, and the Commissioner does not need to prove a likely source of such income. Tokarski v. Commissioner, 87 T.C. 74, 77 (1986); Estate of Mason v. Commissioner, 64 T.C. 651, 656-657 (1975), aff'd, 566 F.2d 2 (6th Cir. 1977). The use of the bank deposits method has long been sanctioned by the courts. Estate of Mason v. Commissioner, 64 T.C. at 656. The bank deposits method assumes that all money deposited into a taxpayer's account during a given period constitutes taxable income. Price v. United States, 335 F.2d 671, 677 (5th Cir. 1964). When the bank deposits method is used, "the Government must take into account any non-taxable source or deductible expense of which it has knowledge". Id. The taxpayer bears the burden of proving that bank deposits come from non-taxable sources. Clayton v. Commissioner, 102 T.C. 632 (1994).

Petitioner failed to file tax returns for TYE June 30, 2009 through 2012. Additionally, petitioner did not provide respondent with records of deductible expenses incurred outside of calendar year 2009. Respondent's use of the bank [*14] deposits method to reconstruct petitioner's income was reasonable. RA Castellano examined the bank accounts that petitioner used for the tax years at issue and transferred expenses from Mr. Baldauf's 2009 Schedule C to the SFRs for petitioner's TYE June 30, 2009 and June 30, 2010. Petitioner has not provided the Court with any books and records that would show that the deposits into its bank accounts were not taxable income, nor has it provided the Court with evidence of deductible expenses exceeding that respondent already allowed. Accordingly, petitioner has not shown that respondent's determinations with regard to its tax liabilities were in error.

C. Additions to Tax

We proceed to consider whether petitioner is liable for additions to tax under sections 6651(a)(1) and (2) and 6655(a) for failure to (1) timely file returns for the years at issue, (2) timely pay the tax due for those tax years, and (3) pay estimated income tax during the years at issue. Section 6651(a)(1) provides for an addition to tax for failure to timely file, unless it is shown that the failure is due to reasonable cause and not due to willful neglect. Similarly, section 6651(a)(2) provides for an addition to tax for failure to timely pay the amount shown as tax on any return, unless it is shown that the failure is due to reasonable cause and not [*15] due to willful neglect. Section 6655(a) imposes an addition to tax for corporations that fail to make estimated tax payments.

Petitioner did not file income tax returns for the tax years at issue, nor did it offer any reasonable cause for failing to do so. Accordingly, petitioner is liable for the addition to tax under section 6651(a)(1) for its TYE June 30, 2009 through 2012.

Respondent prepared SFRs for the tax years at issue in accordance with his authority under section 6020(b), and petitioner did not pay the amounts shown as due. See sec. 6651(g)(2); Cabirac v. Commissioner, 120 T.C. 163, 170-173 (2003). The returns respondent prepared met the requirements for SFRs under section 6020(b). See Wheeler v. Commissioner, 127 T.C. 200, 210 (2006), aff'd, 521 F.3d 1289 (10th Cir. 2008). Petitioner has not offered any arguments alleging reasonable cause for failure to pay the amounts shown as due on the returns and so is liable for the additions to tax under section 6651(a)(2).

Next, we consider whether petitioner is liable for the addition to tax under section 6655(a) for failure to make estimated tax payments. Since petitioner failed to file a tax return for TYE June 30, 2008, the required annual payment of estimated tax, as it relates to this case, equals 100% of petitioner's tax for TYE June 30, 2009 through 2012. See sec. 6655(d)(1)(B)(i). Petitioner made no [*16] payments of estimated tax for any of the tax years at issue. Accordingly, we hold that petitioner is liable for the section 6655(a) addition to tax for failure to make estimated tax payments.

In reaching our holding, we have considered all arguments made, and, to the extent not mentioned above, we conclude they are moot, irrelevant, or without merit.

To reflect the foregoing,

Decisions will be entered for respondent.

FOOTNOTES:


/1/ Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. All monetary amounts are rounded to the nearest dollar.

/2/ Petitioner in its petition at docket No. 24939-13 contends that it is an S corporation. An eligible small business corporation may elect to be treated as an S corporation under sec. 1362(a) by, inter alia, filing a completed Form 2553, Election by a Small Business Corporation, with the Internal Revenue Service. Sec. 1362(a); sec. 1.1362-6(a)(2)(i), Income Tax Regs. Respondent does not have any records indicating that petitioner has ever made the requisite election to be treated as an S corporation, nor did petitioner offer any evidence corroborating its assertion that it is an S corporation.

[LPC]

Donald E. Baldauf (an officer), for petitioner.

I find it somewhat strange that no one objected to an officer of a corporation representing the corporation in Tax Court.

/2/ Petitioner in its petition at docket No. 24939-13 contends that it is an S corporation. An eligible small business corporation may elect to be treated as an S corporation under sec. 1362(a) by, inter alia, filing a completed Form 2553, Election by a Small Business Corporation, with the Internal Revenue Service. Sec. 1362(a); sec. 1.1362-6(a)(2)(i), Income Tax Regs. Respondent does not have any records indicating that petitioner has ever made the requisite election to be treated as an S corporation, nor did petitioner offer any evidence corroborating its assertion that it is an S corporation.

The petitioner might have been able to create some kind of a factual dispute by that showing past returns were S corporation returns, Form 1120S, but I suspect he either (a) didn't have any copies of past returns or (b) the returns he had copies of were Form 1120 and not 1120S.

Claiming something like that without any evidence whatsoever is just another waste of everyone's time.

[noblepa]

Donald E. Baldauf (an officer), for petitioner.

I find it somewhat strange that no one objected to an officer of a corporation representing the corporation in Tax Court.

/2/ Petitioner in its petition at docket No. 24939-13 contends that it is an S corporation. An eligible small business corporation may elect to be treated as an S corporation under sec. 1362(a) by, inter alia, filing a completed Form 2553, Election by a Small Business Corporation, with the Internal Revenue Service. Sec. 1362(a); sec. 1.1362-6(a)(2)(i), Income Tax Regs. Respondent does not have any records indicating that petitioner has ever made the requisite election to be treated as an S corporation, nor did petitioner offer any evidence corroborating its assertion that it is an S corporation.

The petitioner might have been able to create some kind of a factual dispute by that showing past returns were S corporation returns, Form 1120S, but I suspect he either (a) didn't have any copies of past returns or (b) the returns he had copies of were Form 1120 and not 1120S.

Claiming something like that without any evidence whatsoever is just another waste of everyone's time.

I thought that an officer could represent the company, but only if he/she were a licensed attorney. Corporations can not appear pro se, can they? I seem to remember other cases discussed here, in which the sole owner of a corporation was not allowed to represent his corporation in court, because he was not an attorney.

[operabuff]

Why no one objected:

Tax Court Rule 24(b):

(b) Personal Representation Without Counsel: In
the absence of appearance by counsel, a party will be deemed
to appear on the party’s own behalf. An individual party may
represent himself or herself. A corporation or an unincorporated
association may be represented by an authorized officer
of the corporation or by an authorized member of the association. (emphasis added)

[noblepa]

Why no one objected:

Tax Court Rule 24(b):

(b) Personal Representation Without Counsel: In
the absence of appearance by counsel, a party will be deemed
to appear on the party’s own behalf. An individual party may
represent himself or herself. A corporation or an unincorporated
association may be represented by an authorized officer
of the corporation or by an authorized member of the association. (emphasis added)

Is the Tax Court different than other courts, in this respect? IANAL, but I thought that only a licensed attorney could represent anyone other than him/herself in court.

[Famspear]

Is the Tax Court different than other courts, in this respect?...

In most courts in the United States, a corporation must be represented by an attorney. So, yes, the U.S. Tax Court is a bit different.

[Arthur Rubin]

Is the Tax Court different than other courts, in this respect? IANAL, but I thought that only a licensed attorney could represent anyone other than him/herself in court.

I'm almost certain that a defendant corporation can be represented by an officer in small claims court, as well. In most courts, though, only an individual plaintiff or defendant can represent him/her/(what's the pronoun for hermaphrodites?)/self.

[operabuff]

Heck, you don't even have to be an attorney to represent someone else in the Tax Court. You do have to be admitted to practice before the court and pass an exam, but you don't need a law degree.

In many ways this reflects the court's history - starting as the Board of Tax Appeals, which was not a court, but an administrative hearing process. The court has always bent over backwards to assist pro se litigants - indeed the vast majority of cases in the court are brought by pro se petitioners.

[noblepa]

Is the Tax Court different than other courts, in this respect? IANAL, but I thought that only a licensed attorney could represent anyone other than him/herself in court.

I'm almost certain that a defendant corporation can be represented by an officer in small claims court, as well. In most courts, though, only an individual plaintiff or defendant can represent him/her/(what's the pronoun for hermaphrodites?)/self.

I forgot about small claims court. I believe that, in most jurisdictions, attorneys are not even ALLOWED in small claims court, unless they are the plaintiff or defendant.

[operabuff]

I believe that, in most jurisdictions, attorneys are not even ALLOWED in small claims court, unless they are the plaintiff or defendant.

I'm pretty sure you're wrong about that. Attorneys may not be required, but they are permitted to represent parties in small claims court. I quickly checked MD, PA , TX and NY, and all four states permit attorneys in small claims court.

I know I'd want the right to be represented by an attorney if someone sued me. Small claim or not.

[Pottapaug1938]

I believe that, in most jurisdictions, attorneys are not even ALLOWED in small claims court, unless they are the plaintiff or defendant.

I'm pretty sure you're wrong about that. Attorneys may not be required, but they are permitted to represent parties in small claims court. I quickly checked MD, PA , TX and NY, and all four states permit attorneys in small claims court.

I know I'd want the right to be represented by an attorney if someone sued me. Small claim or not.

I am retired -- at least as a lawyer; but I seem to recall seeing attorneys representing people in small claims court, and remember being asked to do that for some of my clients.

[Gregg]

You have a right to be represented by an attorney in any court of law in the USA, small claims courts included.

[noblepa]

You have a right to be represented by an attorney in any court of law in the USA, small claims courts included.

I stand corrected, then. I do remember, in a Business Law class at Cleveland State University, back in the 80's, that the instructor claimed that attorneys weren't allowed in small claims court. I guess he was wrong. It didn't make much sense then, but, hey, he was the instructor.

He claimed that you could consult a lawyer before going to court, but that the attorney could not represent you. Perhaps he was just confused by the fact that, since the amounts are limited ($3000 I believe, in Ohio), attorneys are not commonly used. I don't remember if the instructor was himself an attorney or not.

Sorry for my mistatement.

[Famspear]

I stand corrected, then. I do remember, in a Business Law class at Cleveland State University, back in the 80's, that the instructor claimed that attorneys weren't allowed in small claims court. I guess he was wrong. It didn't make much sense then, but, hey, he was the instructor.

He claimed that you could consult a lawyer before going to court, but that the attorney could not represent you. Perhaps he was just confused by the fact that, since the amounts are limited ($3000 I believe, in Ohio), attorneys are not commonly used. I don't remember if the instructor was himself an attorney or not.

Sorry for my mistatement.

Just for fun, here is an excerpt from the current law in Ohio:

Chapter 1925: SMALL CLAIMS DIVISIONS

1925.01 Small claims division established.

(A) Each municipal and county court shall establish a small claims division.

(B) Proceedings in the small claims division of a municipal court or a county court may be conducted by a magistrate appointed by the court. The magistrate shall be a person admitted to the practice of law in this state and shall receive the annual compensation that the court prescribes.

[ . . . ]

(D) The appearance of an attorney at law on behalf of any party is permitted but not required.....

(effective Oct. 17, 1996).

--from Ohio Revised Code, sec. 1925.01.

The reason I posted this excerpt is that I notice that the magistrate in Ohio small claims court is required to be an attorney. In Texas, the justice of the peace in small claims court is not required to be an attorney.

[operabuff]

You have a right to be represented by an attorney in any court of law in the USA, small claims courts included.

That's a pretty broad statement. In any event, the right to an attorney is waivable, even in criminal cases. So I'm pretty sure it would be constitutionally ok for a state to set up a civil court where both parties agree to waive the right to counsel. I just doubt that it has often been done. First, there might not be very much demand for such a forum. Second, attorneys usually make up a large proportion of most legislatures and would be very unlikely to support any measure that would cut back on potential business.

[Gregg]

Its a fundamental right. Would you have a mentally handicapped person required to appear as a defendant in a small claims case pro se? Easy money, just sue the crazy people and then garnish their benefits, they might not even notice! How about corporations, who for the most part cannot appear without an attorney. Sure, as someone pointed out, an officer of a corporation can appear ( I didn't know that) in some situations, but what if the company being sued is a Fortune 500 Company, is Jeffrey Immelt free to defend that $500 refund case in Washington County Small Claims Court? You can waive your right to representation, but you can't waive my right to anything. Setting up a court as such would be pointless, if both parties have to agree, and one doesn't, well, it goes to another court, but if both parties agree to not have attorneys, they can do that now, in any court, if they are not corporations or fictitious entities that cannot appear pro se.

As to your instructor telling you that, I'm astonished that someone who doesn't know better is allowed to teach at that level. A casual observer might be fooled so, but think a minute, just the examples I give here, does that make any sense?

It may not be cost effective to hire an attorney, but you always have the right to one, civil or criminal. In civil cases you don't get a public defender.

[obadiah]

In Washington:

Neither plaintiff nor defendant may bring an attorney into court with them unless the Judge allows it; all parties in Small Claims Court represent themselves. However, you may consult an attorney to get legal advice to help prepare you for court.

The code talks about allowing attorneys at the judges discretion in cases where the case was transferred from district court.

As far as suing the incompetent, it is the Judge/Magistrate that is responsible for preventing that.

[Famspear]

In Washington:

Neither plaintiff nor defendant may bring an attorney into court with them unless the Judge allows it; all parties in Small Claims Court represent themselves. However, you may consult an attorney to get legal advice to help prepare you for court.

The code talks about allowing attorneys at the judges discretion in cases where the case was transferred from district court.

As far as suing the incompetent, it is the Judge/Magistrate that is responsible for preventing that.

I found the provision to which you refer. It is from the Revised Code of Washington, section 12.40.080:

Hearing.

(1) No attorney-at-law, legal paraprofessional, nor any person other than the plaintiff and defendant, shall appear or participate with the prosecution or defense of litigation in the small claims department without the consent of the judicial officer hearing the case. A corporation may not be represented by an attorney-at-law or legal paraprofessional except as set forth in RCW 12.40.025.

(2) In the small claims department it shall not be necessary to summon witnesses, but the plaintiff and defendant in any claim shall have the privilege of offering evidence in their behalf by witnesses appearing at trial.

(3) The judge may informally consult witnesses or otherwise investigate the controversy between the parties and give judgment or make such orders as the judge may deem to be right, just, and equitable for the disposition of the controversy.

[Famspear]

Note: That provision applies to proceedings in the "small claims department of the district court" in the State of Washington:

In every district court there shall be created and organized by the court a department to be known as the "small claims department of the district court." The small claims department shall have jurisdiction, but not exclusive, in cases for the recovery of money only if the amount claimed does not exceed five thousand dollars.

----Revised Code of Washington, section 12.40.010.

[Famspear]

And, this:

Transfer of action to small claims department.

A defendant in a district court proceeding in which the claim is within the jurisdictional amount for the small claims department may in accordance with court rules transfer the action to the small claims department. In the event of such a transfer the provisions of RCW 12.40.070 shall not be applicable if the plaintiff was an assignee of the claim at the time the action was commenced nor shall the provisions of RCW 12.40.080 prohibit an attorney from representing the plaintiff if he or she was the attorney of record for the plaintiff at the time the action was commenced.

--Revised Code of Washington, section 12.40.025.