Also note that the result of the assessed deficiency would have been a refund, because the withholdings from wages were more than the proposed deficiency.
Daawud El Waamiq Ali v. Commissioner, No. 11866-11 (2/6/2012)
DAAWUD EL WAAMIQ ALI,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
UNITED STATES TAX COURT
ORDER AND DECISION
Now before the Court is the motion of respondent (the IRS) for the imposition of penalty, pursuant to I.R.C. section 6673(a), against petitioner Daawud El Waamiq Ali. We will grant the motion.
BACKGROUND
In our order of January 5, 2012, we granted respondent's motion for summary judgment in part and withheld ruling on his motion for penalties under section 6673(a), so that we could hear argument from the parties on that subject on January 30, 2012, at the Court's "Westbury" session in New York City. We will assume that the reader is familiar with its contents of our order of January 5, 2012, and will not repeat the discussion entirely but will summarize it here.
Our order described Mr. Ali's prior unsuccessful case in this Court, noted that we had decided in that case that Mr. Ali's positions were frivolous but that we would not impose a penalty under section 6673(a), and quoted our opinion in that case as follows:
Ali v. Commissioner, T.C. Memo. 2010-86, slip op. at 10-11.[P]etitioner's frivolous arguments were made at the suggestion of a woefully misinformed adviser. In response to questions from the Court, petitioner was unable to articulate certain positions raised in his pretrial memorandum. This is the first time petitioner has engaged in conduct sanctionable under section 6673(a). Therefore, we shall not impose a penalty under section 6673(a).
Though we decline to impose a penalty at this time, we take this opportunity to warn petitioner that we will impose a section 6673 penalty if he returns to the Court and proceeds in a similar manner in the future.
In 2008 Mr. Ali earned wages of $25,866, which his employer reported and from which his employer withheld Federal income tax of $2,471. Mr. Ali filed no 2008 income tax return. The IRS determined that he owed tax of $2,228 (and that by withholding he had overpaid his tax by $243). The IRS sent Mr. Ali a notice of deficiency to that effect.
About a month after we issued our opinion quoted above, Mr. Ali filed his petition commencing this second suit. His petition stated contentions that, for the reasons that we explained in our order of January 5, 2012, are frivolous. The IRS moved for summary judgment, and Mr. Ali filed his opposition on December 29, 2011, in which he made frivolous arguments in support of his frivolous positions.
We granted the IRS's motion in our order of January 5, 2012. After explaining briefly why his positions are frivolous, we reminded him of the explanation of the section 6673(a) penalty that we previously gave to him in Ali v. Commissioner, T.C. Memo. 2010-86. We then stated:
Mr. Ali appeared on January 30, 2012, at the hearing that we had ordered. The Court explained to Mr. Ali that the purpose of the hearing was not to revisit the Court's order granting the IRS's motion for summary judgment, nor to reconsider Mr. Ali's arguments, which -- the Court repeated -- are frivolous. Rather, the Court explained that the purpose of the hearing was for the Court to learn whether there might be facts that would mitigate Mr. Ali's culpability in making frivolous arguments. The Court also noted that the main purpose of section 6673(a) is to deter taxpayers from making frivolous arguments and that therefore if Mr. Ali would assure the Court that he would hereafter desist from making such arguments, then that assurance might reduce the amount of penalty that the Court would otherwise impose. The Court then invited Mr. Ali to speak.Despite our warning, Mr. Ali has returned to this Court with another frivolous suit. The IRS has moved for the imposition of a penalty under section 6673(a)(1). In deciding whether to impose such a penalty and in what amount, the Court would benefit from hearing argument from the parties. * * *
Regrettably, Mr. Ali's principal aim at the hearing was to repeat, elaborate, and support his frivolous positions. The Court warned him that he was putting himself in danger of aggravating his penalty, rather than reducing it, but he persisted. He also submitted a "Memorandum of Law", which the Court filed, that takes issue with the Court's decision holding his positions to be frivolous. The memorandum is frivolous-arguing, for example, that for purposes of section 1 "an 'Individual' is a 'Person' which is basically a corporation or other type of business or statutorily created entity" and that "n order for such term to apply to Petitioner, it would have to include Man or Men (male and female) or Human Beings (Homo Sapiens)." So Mr. Ali now frivolously contends he is not an individual.
Mr. Ali's most germane comment at the hearing was his observation that, because he had overpaid through payroll withholding the 2008 tax liability that the IRS determined in its notice of deficiency, it cannot be said that he was delaying the collection of tax from him but, rather, was simply delaying the IRS's refunding of his overpayment of tax.
In response to questions from the Court, Mr. Ali stated that he is 41 years old, that he has a high school education, and that he has learned about law by reading. He stated that with him in the courtroom was his "spiritual adviser" (presumably, the "woefully misinformed adviser" that we referred to in our prior opinion). And his new Memorandum of Law states, "My Attorney-in-Fact, and spiritual advisor, has been researching various aspects of the law for over 20 years." It would seem that this adviser has learned little in those 20 years, and that Mr. Ali is most unfortunate to be under his influence. But Mr. Ali insisted that he is his own man and is acting deliberately on his own behalf.
The Court stated that it would take under advisement the matter of Mr. Ali's liability for penalty under section 6673(a).
DISCUSSION
Section 6673(a)(1) provides:
(1) Procedures instituted primarily for delay, etc. -- Whenever it appears to the Tax Court that --
(A) proceedings before it have been instituted or maintained by the taxpayer primarily for delay,
(B) the taxpayer's position in such proceeding is frivolous or groundless, or
(C) the taxpayer unreasonably failed to pursue available administrative remedies,
the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000.
This Court is thus authorized under section 6673(a)(1) to impose a penalty not in excess of $25,000 when the taxpayer's position is frivolous or groundless or when it appears that proceedings before it have been instituted or maintained by the taxpayer primarily for delay.
Mr. Ali's positions are frivolous, and the remaining questions are about Mr. Ali and his motivations and culpability. He persists in making those frivolous arguments despite our very explicit warnings in our opinion in his prior case, in our order of January 5, 2012, in this case, and at his hearing. It is therefore clear either that he knows his positions are frivolous (and should therefore be sanctioned for deliberately abusive behavior) or that he in some manner sincere and will not be dissuaded by mere exhortation (and should therefore be sanctioned to deter future misbehavior). Thus, in either event the Court should impose a sanction, and we now consider the appropriate amount.
On the one hand, Mr. Ali is right that in his case his tax has already been paid (by payroll withholding), so he cannot be accused of the particular, common abuse of maintaining frivolous positions in order to forestall the collection of tax. On the other hand, however, he shows another motive, equally culpable: Since Mr. Ali persists even when it is clear that his arguments are doomed to failure, it seems that he maintains this suit as some sort of protest against the system. He can use his Tax Court petition to gum up the works -- annoying the IRS and consuming its resources, and eventually gaining a day in court when he can take a stand against laws that he dislikes. The Tax Court does not exist, however, for these therapeutic or political purposes, and Mr. Ali should not suppose that an employer's withholding of an employee's tax liability gives the employee the right to maintain frivolous litigation in the Tax Court.
Mr. Ali has no serious argument against the IRS's determination that he owes $2,228 and no good reason to object to the assessment of that liability. And yet he has put the IRS and this Court to substantial effort in order to forestall that assessment. We think it appropriate that a penalty in the same amount -- $2,228 -- be imposed against him for this abuse. Given that his annual wages in 2008 were about $26,000, and assuming that his current wages are approximately the same, we hope that a penalty of $2,228 not so large as to ruin him financially (which is certainly not our desire) but is large enough to be punitive.
Mr. Ali should realize that if in the future he continues to persist with frivolous litigation, then he will be communicating to the Court that a penalty of this size is insufficient to affect his behavior and that the Court should instead consider imposing a much larger penalty, up to the maximum of $25,000.
To give effect to the foregoing and to our order of January 5, 2012, it is
ORDERED that respondent's motion for summary judgment, which was granted in part by our order of January 5, 2012, is now granted in full, in that respondent's request for a penalty under section 6673(a) is also now granted. It is further
ORDERED AND DECIDED that there is a deficiency of Federal income tax for the year 2008 due from petitioner in the amount of $2,228, and that there is due from petitioner a penalty under section 6673(a) in the like amount of $2,228.
(Signed) David Gustafson
Judge
ENTERED: FEB 06 2012
