Mark Anthony Lovely - Hendrickson follower penalized for friv return and 6673

[jcolvin2]

https://www.ustaxcourt.gov/UstcDockInq/ ... ID=6800207

Lovely persisted in making frivolous arguments even after being ordered by the Tax Court judge to review the Waltner case prior to his trial. https://www.ustaxcourt.gov/UstcDockInq/ ... ID=6754009

Excerpts from bench opinion:

10 The only issues raised by Lovely are his
11 liability for allegedly erroneous credits for 2010
12 and his liability for the frivolous return penalty
13 for 2010. We discuss the erroneous credits first.
14 For 2010, Lovely's employers withheld
15 federal income tax of $5,849.97. They also withheld
16 social security and medicare tax of $3,806.49. On
17 his Form 1040EZ, federal income tax return, for 2010,
18 Lovely reported that his employers had withheld
19 federal income tax of $9,656.46. He calculated this
20 amount by erroneously including the social security
21 and medicare tax withholdings. Even though the
22 $9,656.46 amount was overstated by Lovely, the IRS
23 gave Lovely $9,656.46 of credit for federal income
24 tax withholding. Then, to rectify this error, the
25 IRS assessed the amount of the overcredit; i.e., it

1 assessed $3,807. It was not required to issue a
2 notice of deficiency before doing so. Sec.
3 6211(b) (1); sec. 6201(a) (3).
4 At trial, Lovely argued that no federal
5 income tax should have been withheld from his wages
6 because he does not owe any federal income tax. But
7 even if Lovely did not owe any federal income tax, he
8 should not be given credit for withholdings that did
9 not occur. Section 31 provides that if a taxpayer's
10 employer withholds federal income tax from the
11 taxpayer's wages, the taxpayer is given credit
12 against federal income tax for the amounts withheld.
13 The IRS gave Lovely a $9,656.46 credit under section
14 31, when it should have given him a $5,849.97 credit.
15 We therefore hold that he is liable for the $3,807
16 assessment, which is the difference between the two
17 amounts.
18 We now turn to the frivolous return
19 penalty. A taxpayer is liable for the $5,000
20 frivolous return penalty under section 6702 if three
21 requirements are met.
22 First, the taxpayer must file a document
23 that purports to be a tax return. Sec. 6702(a)(1).
24 Second, the purported return must suffer from one of
25 the following defects: it either (a) lacks the

1 information needed to judge the substantial
2 correctness of the self-assessment or (b) contains
3 information indicating the self-assessment on the
4 purported return is substantially incorrect. Id.
5 Third, the defect must be (a) based on a position
6 that the Treasury Secretary has identified as
7 frivolous or (b) reflects a desire to delay or impede
8 the administration of federal tax law. Sec.
9 6702(a)(2). The IRS has the burden of proving that
10 the taxpayer is liable for the penalty. Sec. 6703;
11 Thornberry v. Commissioner, 136 T.C. 356, 367 (2011).
12 On or about February 22, 2011, Lovely
13 submitted to the IRS a Form 1040EZ for 2010.
14 We find that the Form 1040EZ purports to be
15 a tax return.
16 We find that the return contains
17 information indicating that the tax reported
18 on the return, as substantially incorrect. First,
19 the Form 1040EZ reported that Lovely earned $0 in
20 wages. This contradicts the Forms 4852 attached to
21 the return, which report that amounts had been
22 withheld from his wages, and which therefore suggest
23 that he earned wages. Second, the Form 1040EZ
24 reported that $9,656.46 was the amount withheld from
25 wages for federal income tax. This contradicts the

1 Forms 4852, which reported that only $5,849.97 had
2 been withheld from his wages for federal income tax.
3 We also find that the two defects in Lovely's tax
4 return reflect a desire to delay or impede the
5 administration of federal tax law.
6 Lovely asserted that the reason that he
7 reported that his wage income was $0 (an assertion
8 that he made before the IRS, the Appeals Office, and
9 this Court) is that the federal income tax is
10 unconstitutional and that private-sector workers like
11 him are outside the scope of the federal income tax.
12 These preposterous theories have been rejected by the
13 courts. United States v. Sloan, 939 F.2d 499, 501
14 (7th Cir. 1991); Abrams v. Commissioner, 82 T.C. 403,
15 406-407 (1984). We believe that Lovely desired to
16 delay or impede the administration of federal tax law
17 and that the reporting of $0 of income reflected this
18 desire. As it turns out, his strategy was
19 successful. The IRS failed to issue a notice of
20 deficiency for 2010. Issuing such a notice was a
21 necessary precondition for assessing the income tax
22 corresponding to Lovely's wages for the year. Sec.
23 6213(a). This income tax went uncollected, in part
24 because of the IRS's failure to issue a notice of
25 deficiency, but also in part because of Lovely's

1 false return.
2 Lovely did not testify why he overreported
3 the amount of federal income tax withholding by
4 including social security and medicare tax
5 withholding. By overreporting the withholdings,
6 Lovely received a benefit. The IRS initially
7 credited the excessive credits against Lovely's 2010
8 account, and then transferred the excessive credits
9 to his unpaid tax liabilities for the taxable years
10 1999 and 2002. The IRS is still trying to undo this
11 benefit by levying the overcredited amount. We
12 believe that Lovely's overstatement of his federal
13 income tax withholdings was not an innocent error.
14 It too reflected his desire to impede or delay the
15 administration of federal tax law.
16 Therefore we conclude that the IRS has
17 shown that Lovely is liable for the frivolous return
18 penalty for 2010. We sustain the determination of
19 the Appeals Office.
20 The IRS made a motion for the Court to
21 require Lovely to pay a penalty under section 6673.
22 Such a penalty is justified when it appears to the
23 Tax Court that the taxpayer's position in a
24 proceeding before it is frivolous or groundless.
25 Sec. 6673(a) (1)(B). In this case, Lovely took the

1 position that the federal income tax is
2 unconstitutional and that private-sector workers like
3 him are outside the scope of the federal income tax.
4 These positions are groundless. In a prior case, the
5 Court warned Lovely that his position about private
6 sector workers was frivolous Lovely v. Commissioner,
7 T.C. Memo. 2015-135, at 7-8. We will impose a
8 penalty under section 6673 of $1,000.
9 To reflect the foregoing, an appropriate
10 order will be entered and a decision = will be entered
11 for the respondent.
12 This concludes the Court' s oral findings of
13 fact and opinion in this case.
14 (Whereupon, at 4:20 p.m., the above
15 entitled matter was concluded.)

[Famspear]

And, of course, on the lost horizons web site, Prevaricating Peter Hendrickson still claims that Mr. Lovely is an example of another "victory".

[jcolvin2]

Lovely's earlier unsuccessful foray into the Tax Court:
https://www.ustaxcourt.gov/UstcInOp/Opi ... px?ID=1050

And, of course, on the lost horizons web site, Prevaricating Peter Hendrickson still claims that Mr. Lovely is an example of another "victory".

To be fair, Hendrickson has only had four years to correct any misstatement as to Mr. Lovely's "victory."

[Cpt Banjo]

Only a $1,000 penalty after a prior warning? Slap on the wrist.

[grixit]

How often do defendents actually join the 25 thousand club?

[notorial dissent]

Yay Pete, still winning...…….