Janis J. Weybrew v. Commissioner, No. 14868-10L (U.S.T.C. 2/16/2011) (levy to collect frivolous return penalty may proceed; $2,500 in sanctions imposed), aff'd No. 11-1545 (4th Cir. 10/20/2011).
Tax Court wrote:UNITED STATES TAX COURT
WASHINGTON, DC 20217
JANIS J. WEYBREW,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
Docket No. 14868-10 L.
ORDER AND DECISION
On November 26, 2010, respondent filed a motion for summary judgment and a motion for penalty under I.R.C. section 6673. On December 29, 2010, petitioner filed responses to respondent's motions.
The Internal Revenue Service (IRS) determined that petitioner filed a frivolous Federal income tax return for 2008 and assessed a $5,000 frivolous return penalty pursuant to I.R.C. section 6702(a). Petitioner failed to pay the penalty, and the IRS sent petitioner a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. Petitioner timely requested a collection due process hearing and challenged the assessment of the frivolous return penalty. The settlement officer assigned to petitioner's case concluded in a notice of determination that the IRS validly assessed the frivolous return penalty pursuant to I.R.C. section 6702(a) and that collection activity should proceed. Petitioner then filed a petition with this Court challenging the underlying tax liability. This case is before the Court on respondent's Motion for Summary Judgment and respondent's Motion for Penalty under I.R.C. Section 6673. We have jurisdiction under I.R.C. section 6330(d) (1) to review a notice of determination where the underlying tax liability consists of a frivolous return penalty. See Callahan v. Commissioner, 130 T.C. 44, 48-49 (2008).
Petitioner filed with the IRS Form 1040, U.S. Income Tax Return, for 2008. Petitioner received from her employer a W-2, Wage and Tax Statement, that showed she earned wages of $52,537, but petitioner reported wages of $0 on her Form 1040. Petitioner attached to her 2008 tax return Form 4852, Substitute for Form W-2, Wage and Tax Statement, on which she stated that "A 4852 substitutes for a W-2 when a 'payer has issued an incorrect Form W-2.' My payer incorrectly identified my private sector receipts as 'wages' using a W-2 when in fact I earned zero (0) 'wages' & engaged in no taxable activity."
Under I.R.C. section 6702, a $5,000 civil penalty may be assessed against a taxpayer if: (1) The taxpayer files a document that purports to be an income tax return; (2) the purported return lacks the information needed to judge the substantial correctness of the self-assessment or contains information indicating the self-assessment is substantially incorrect; and (3) the taxpayer's position is frivolous or demonstrates a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws. Petitioner filed an income tax return that contained information indicating that the self-assessment was substantially incorrect. Additionally, petitioner's claim that her private sector earnings are not taxable by the Federal government has long been considered a frivolous position. See Pabon v. Commissioner, T.C. Memo. 1994-476. Accordingly, there are no material facts in dispute, and respondent is entitled to summary judgment as a matter of law.
I.R.C. section 6673 allows for the Court to impose a penalty on a taxpayer of up to $25,000 if the taxpayer's position in the proceeding is frivolous or groundless. At no point has petitioner asserted a legitimate argument as to how the IRS erred in assessing the frivolous return penalty or determining that collection activity should proceed. In addition to petitioner's frivolous argument that the Federal government cannot tax her private sector earnings, she argued throughout the administrative proceedings, in her petition, and in her response to respondent's motion for summary judgment that she is not a "person" as defined in I.R.C. section 6671(b). Petitioner advanced frivolous arguments despite being warned by respondent that her arguments were frivolous and that he would seek a penalty under I.R.C. section 6673 if petitioner continued to advance them. Because of petitioner's persistence in asserting frivolous arguments, a penalty under I.R.C. section 6673(a) (1) of $2,500 is appropriate. Upon due consideration and for cause, it is
ORDERED that respondent's motion for summary judgment, filed November 26, 2010, is granted, and this case is stricken for trial from the Winston-Salem, North Carolina, trial session of the Court. It is further
ORDERED that respondent's motion for penalty under I.R.C. section 6673, filed November 26, 2010, is granted. It is further
ORDERED and DECIDED that respondent may proceed with the collection activities as determined in the notice of determination concerning collection activities for the taxable year 2008 upon which this case is based; and
That petitioner shall pay to the United States a penalty in the amount of $2,500 under I.R.C. section 6673.
(Signed) Juan F. Vasquez
Judge
Entered: FEB 16 2011
