Dykema - TP Goes Down Hard in CA8

[jcolvin2]

http://www.ca8.uscourts.gov/opndir/12/01/112805U.pdf

The appellate opinions - even those imposing sanctions on appeal - seem to be getting shorter and sweeter.

[Dr. Caligari]

Not only short and sweet, but decided within 4 days of the briefs being filed!

[LPC]

The Tax Court order and decision was also short, and sweet.

(All emphasis is in the original.)

UNITED STATES TAX COURT
WASHINGToN, DC 20217

DANIEL J. DYKEMA,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent.

Docket No. 430-11.

ORDER AND DECISION

This case is on the May 23, 2011 Des Moines, Iowa trial calendar. It started with the Commissioner' s sending Mr. Dykema a notice of deficiency for his 2006 through 2008 tax years. Mr. Dykema challenges the notice on the ground that his income from self-employment was not income because he was not "privileged to receive 'wages' or 'income' as defined by the Code" because he was not in public office, and because no one signed the notice of deficiency. The Commissioner sensibly moved to dismiss the case for failure to state a claim, and added a request for sanctions under IRC § 6673.

The Commissioner is certainly right. Mr. Dykema's arguments are cliches of frivolity: IRC § 7701(a) (26) says that "a trade or business" includes "the performance of a public office," not that it means or is limited to "performance of a public office." See, e.g., Pate v. Comm'r, T .C. Memo. 2008-2?2. And a notice of deficiency does not need to be signed. See, e.g., Wheeler v. Comm'r, T.C. Memo. 2006-109 (and numerous cases cited therein).

Mr. Dykema was very persistent at oral argument, and the Commissioner' s request for sanctions is entirely appropriate. Mr. Dykema is a first offender, but he is also articulate and skilled enough that he should know better -- so the Court will keep the sanction at $1,000 with the warning that it will only go up from there.

It is therefore

ORDERED that respondent's motion to dismiss for failure to state a claim is granted. It is also

ORDERED and DECIDED that there are deficiencies in income tax, additions to tax, and penalties due from petitioner as follows:

Addition to Tax Sec.:
Year Deficiency 6651(a)(1) 6651(a)(2) 6654(a)
2006 $232,386.00 $52,286.85 $48,801.06 $10,997.40
2007 $114,661.00 $25,798.73 $17,199.15 $5,218.55
2008 $238,116.00 $53,576.10 $21,430.44 $7,652.24

Penalty under Sec. 6673: $1000.00

(Signed) Mark V. Holmes
Judge
ENTERED: JUN - 1 2011

[LPC]

Notice that sanctions in the Tax Court were $1,000, while sanctions in the Circuit Court were $5,000.

If the Supreme Court imposed sanctions, the next level of sanctions should be $25,000.

[The Observer]

Mr. Dykema was very persistent at oral argument, and the Commissioner' s request for sanctions is entirely appropriate. Mr. Dykema is a first offender, but he is also articulate and skilled enough that he should know better

How ironic that Dykema's ability to stand above the typically inept and inarticulate TP only guaranteed that he would get sanctioned.