Susan Lee v. Commissioner, No. 11-60461 (5th Cir. 2/23/2012), aff'ng No. 016260-10L (U.S.T.C. 3/24/2011) (collection of $5,000 frivolous return penalty affirmed, $1,000 sanction imposed).
From the oral opinion of the Tax Court:
The Fifth Circuit opinion:Tax Court wrote:Attached to the Form 1040X were copies of altered Forms 1099 on which Petitioner represented, under penalty of perjury, her position that the form "erroneously alleges a payment to the party identified above as 'Recipient' of 'gains, profit or income' made in the course of a 'trade or business'."
The Internal Revenue Service determined, and we agree, that the Form 1040X with attachments was frivolous on its face and reflects a desire to delay or impede the administration of federal tax laws. To the extent, therefore, that Petitioner purports to contest the underlying liability in this proceeding, she has failed to show any error in that assessment. The document that she filed, standing alone, satisfies Respondent's burden of proof under Section 6703(a).
During the administrative proceedings, and in this Court, Petitioner has maintained frivolous and groundless positions. In a letter that is Exhibit 4-J, she asserted that the compensation that she received in 2004 for services performed by her is not taxable. She has suggested that argument in her petition and in requests for admissions and interrogatories served by her.
Although she partially abandoned that argument, along with numerous other frivolous contentions, in her pretrial memorandum filed February 3, she still maintains as Item 13, page 3 of her pretrial memorandum that, "I deny having duty and authority to perform any act as an officer, employer, or partner of any entity required to file any return or perform any act with respect to Internal Revenue law."
Such arguments have led to criminal convictions and civil fraud penalties, as well as Section 6702 and 6673 penalties, as involved in this case. The underlying convoluted statutory interpretations behind those arguments have been characterized as inane, preposterous, utterly without merit, frivolous non-sequitur, beyond frivolous, and frivolous squared in cases going back 25 years or more.
Petitioner is not entitled to simply deny that her arguments are frivolous. She has not offered any non-frivolous explanation for her Form 1040X or her maintenance of this case. Petitioner has filed nonsensical motions challenging jurisdiction and asserting the bar of the statute of limitations.
Fifth Circuit wrote:SUSAN LEE
Petitioner-Appellant
v.
COMMISSIONER OF INTERNAL REVENUE
Respondent-Appellee
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Summary Calendar
Appeal from the United States Tax Court,
Internal Revenue Service
Before HIGGINBOTHAM, DAVIS and ELROD, Circuit Judges.
PER CURIAM:*
The appellant taxpayer challenges a $5,000 penalty imposed by the IRS for filing a frivolous return and a $1,000 penalty imposed by the Tax Court for using frivolous and groundless arguments. We affirm.
The taxpayer filed a timely tax return for taxable year 2004 reporting income she received from two entities which had withheld tax on those earnings. Two years later she filed an amended tax return modifying her 1099 form reflecting that she received zero compensation from the entities listed on the 1099. She sought a return of the taxes previously paid because, she argued, the amounts shown on her original1099 were not taxable income, that she was not a person subject to tax penalty or levee and that she was not involved in a trade or business.
We agree with the Tax Court that the taxpayer's amended tax return was frivolous on its face and that the IRS was completely justified in assessing the $5,000 penalty for filing a frivolous return under I.R.C. § 6702. Thereafter the taxpayer made nothing but frivolous and groundless arguments to the appeals office and the Tax Court.
The Tax Court did not err in sustaining the penalty imposed by the Internal Revenue Service or in sua sponte imposing a $1,000 penalty for maintaining a frivolous proceeding under I.R.C. § 6673. The Tax Court correctly permitted the proposed levy to go forward to collect the penalties.
AFFIRMED.
FOOTNOTE
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
END OF FOOTNOTE