This Assessment Was Made In New York!

[The Observer]

SAM WILLIAM PALMER,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

Release Date: FEBRUARY 06, 2012

UNITED STATES TAX COURT

Filed February 6, 2012

Sam William Palmer, pro se.

Dessa J. Baker-Inman, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

PARIS, Judge: On October 19, 2009, respondent issued to petitioner a notice of deficiency which determined a Federal income tax deficiency of $ 656 and additions to tax under section 6651(a)(1) 1 and (2) of $ 147.60 and $ 91.84, respectively, for petitioner's 2006 tax year. Petitioner filed a timely petition with this Court. The issues for decision are: (1) Whether respondent's New York office has the authority to issue a notice to petitioner, who resided in Oklahoma at the time the notice of deficiency was issued and (2) whether petitioner is liable for an income tax deficiency and additions to tax in the amounts determined by respondent for tax year 2006.

FINDINGS OF FACT

Some of the facts have been stipulated, and the stipulation of facts and the exhibits attached thereto are incorporated herein by this reference. At the time the petition was filed, petitioner resided in Oklahoma.

Petitioner did not file an income tax return for tax year 2006 and made no payments in regard to his tax liability for that year. Consequently, respondent filed a substitute for return for petitioner on August 3, 2009, pursuant to section 6020(b) stating that, for his tax year 2006, petitioner received $ 15,019 in funds, composed of rents or royalties of $ 14,615, dividends of $ 54, and interest of $ 350. Petitioner does not argue that he did not receive these funds; rather, petitioner argues that the New York office of the Internal Revenue Service (IRS) does not have the authority to issue a notice of deficiency to him because the New York office did not provide petitioner with confirmation that the Secretary of the Treasury delegated his authority to the New York office to issue a notice of deficiency to him. Petitioner argues that because the New York office is not within petitioner's geographical district, which consists of Oklahoma, Texas, and Arkansas, the New York office has no authority to issue him a notice of deficiency.

OPINION

Jurisdiction of the IRS

Petitioner does not argue that he did not receive a notice of deficiency and should not have to pay taxes. Rather, petitioner argues that the notice of deficiency sent to him from the New York office is invalid as the New York office has no authority over him because he lives in Oklahoma and is accountable only to the IRS office which encompasses the IRS district in which he lives.

Petitioner argues that the IRS' Holtsville, New York, office has no authority to issue a notice of deficiency to him as he does not live in the geographic district which encompasses New York and has offered nothing to show that this office has been delegated authority to issue such notice by the Secretary of the Treasury. Specifically, in his letter to the Holtsville, New York, office, petitioner asked the New York office to provide him with "proof that you have been properly delegated by the Secretary of [sic] Treasury." Pursuant to the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, sec. 1001(a), 112 Stat. at 686, the IRS replaced its original national/regional/district structure with organizational units that served particular industries or groups of taxpayers. See also Notice 2010-53, 2010-31 I.R.B. 182.

The arguments that petitioner has raised have been deemed frivolous by this Court and many others. See Nestor v. Commissioner, 118 T.C. 162, 165-166 (2002) (holding that the Secretary or his delegate may issue a notice of deficiency pursuant to sections 6212(a) and 7701(a)(11)(B) and (12)(A)(i)); Reynolds v. Commissioner, T.C. Memo. 2006-192 (holding that a notice of deficiency prepared and issued by a compliance center director is valid without obligating the director to produce a copy of the delegation order). It is well established that the Secretary or his delegate is authorized by statute to issue notices of deficiency, secs. 6212(a), 7701(a)(11)(B), (12)(A)(i), and it is well established that the director of an IRS compliance center is an authorized delegate, e.g., Hughes v. United States, 953 F.2d 531, 536 (9th Cir. 1992) (holding that the Commissioner's delegation of authority to district directors and the subsequent delegation to local IRS employees is a valid delegation of authority); Reynolds v. Commissioner, T.C. Memo. 2006-192; see also Pendola v. Commissioner, 50 T.C. 509, 512 (1968) (holding that the section 301.6212-1 is clear that District Directors have authority to send deficiency notices and there is no provision in the Code or the regulations which limits their authority to send deficiency notices to taxpayers within a particular district); sec. 301.6212-1, Proced. & Admin. Regs. Accordingly, this Court finds that petitioner's argument is consistent with other tax-protester arguments previously deemed frivolous and rejects it as such.

Petitioner's 2006 Income Tax Liability

In general, the Commissioner's determinations in the notice of deficiency are presumed correct, and the taxpayer bears the burden of disproving these determinations. See Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). The burden on factual issues that affect a taxpayer's liability may shift to the Commissioner if "a taxpayer introduces credible evidence with respect to * * * such issue." See sec. 7491(a)(1). However, this provision does not apply if the taxpayer has failed to comply with the substantiation requirements. See sec. 7491(a)(2)(A).

Petitioner has not offered any evidence regarding the substance of the tax issues involved with this case. Petitioner has the burden of proof to produce credible evidence to substantiate why he is excluded from filing tax returns or paying taxes on his income. See Rule 142; Welch v. Helvering, 290 U.S. at 115. Petitioner has offered only one letter into evidence, a letter he wrote to respondent in response to the notice of deficiency that was mailed to him from the IRS' New York office. Petitioner has offered no substantive evidence as to why the determined deficiency or the additions to tax are incorrect. Because petitioner has failed to meet his burden of proof and offer any substantive evidence as to why the determined deficiency is incorrect, this Court sustains respondent's determination for petitioner's 2006 tax year as set forth in the notice of deficiency.

Additions to Tax

Section 6651(a)(1) imposes an addition to tax on taxpayers who fail to file a timely tax return for any given tax period. Petitioner stipulated that he did not file an income tax return for tax year 2006. Consequently, this Court sustains the determined section 6651(a)(1) addition to tax for petitioner's tax year 2006.

Section 6651(a)(2) is an addition to tax imposed on taxpayers for their failure to pay timely the amount of tax they owe for the tax year. By his own admission, petitioner failed to file his tax return. Moreover, respondent submitted an official transcript for petitioner's 2006 tax year which shows that respondent filed a substitute for return pursuant to section 6020(b) on August 3, 2009, and that no deposits or payments have ever been made on the account. Consequently, this Court finds that petitioner has failed to make any payments toward his tax liability for his tax year 2006 and sustains the addition to tax under section 6651(a)(2).

The Court has considered all arguments the parties have made, and to the extent not discussed herein, we find they are meritless, moot, or irrelevant.

To reflect the foregoing,

Decision will be entered for respondent.

FOOTNOTES:

/1/ All section references are to the Internal Revenue Code (Code) in effect for the period at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise indicated.

[Quixote]

Made in New York? Get a rope.

(Did that commercial run anywhere outside of Texas?)

[The Observer]

Made in New York? Get a rope.

(Did that commercial run anywhere outside of Texas?)

Yes, it did. Thanks for plugging into the topic header reference. (Or were you being facetious?)

[Famspear]

"Pick up the original! Pick up the Pace!"

Good stuff!

[jcolvin2]

http://www.ca10.uscourts.gov/opinions/11/11-9018.pdf

For the 2006 year (the earlier opinion in this thread related to 2007), the TP appealed to the Tenth Circuit. For his trouble, he was sanctioned $4,000.

UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
SAM WILLIAM PALMER,
Petitioner–Appellant,
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent–Appellee.
No. 11-9018
(Tax No. 17755-10)
(U.S. Tax Court)
ORDER AND JUDGMENT*
Before LUCERO, O’BRIEN, and MATHESON, Circuit Judges.

Sam William Palmer, proceeding pro se, appeals from a decision of the United
States Tax Court finding that he owed $20,803 for an income tax deficiency and
$7,811.39 in penalties. Exercising jurisdiction under 26 U.S.C. § 7482(a)(1), we affirm.
We also grant the motion for sanctions filed by the Commissioner of Internal Revenue (“Commissioner”), but limit the requested award to $4,000.

I

Despite receiving at least $102,706 in income, Palmer failed to file a federal income tax return for the 2007 tax year. The IRS issued a notice of deficiency stating that Palmer owed $20,803 in taxes and was liable for various penalties: (1) a $4,680.67 failure-to-file penalty under I.R.C. § 6651(a)(1); (2) a $2,184.31 failure-to-pay penalty under I.R.C. § 6651(a)(2); and (3) a $946.77 failure-to-pay-estimated-tax penalty under I.R.C. § 6654(a). Palmer sought review of this determination by the United States Tax Court.

In tax court, Palmer did not deny that he had received the unreported income or that he had failed to file a tax return. Rather, he argued that the agents who issued the notice of deficiency lacked proper authority and that the notices violated the Paperwork Reduction Act of 1995. In response, the IRS introduced evidence of Palmer’s unreported income, argued that it was proper to impose penalties, and moved for summary judgment. After considering the evidence, the tax court granted summary judgment in favor of the IRS. Additionally, the court upheld the penalties, finding that Palmer had failed to contest the IRS’s evidence.

II

We review de novo the tax court’s grant of summary judgment. Scanlon White, Inc. v. Comm’r, 472 F.3d 1173, 1174 (10th Cir. 2006). On appeal, Palmer asserts that that his notice of deficiency was issued by an agent who lacked authority to implement the Internal Revenue Code. In this claim, Palmer implies that only the Secretary of the Treasury may issue such a notice from Washington, D.C. Moreover, Palmer suggests Congress undermined the IRS’s authority to issue deficiency notices when it passed the Internal Revenue Service Restructuring and Reform Act of 1998 (“RRA”), Pub. L. No. 105-206, 112 Stat. 685 (1998).

We have expressly rejected the contention that “the Commissioner of Internal Revenue and employees of the Internal Revenue Service have no power or authority to administer the Internal Revenue laws . . . because of invalid or nonexistent delegations of authority.” Lonsdale v. United States, 919 F.2d 1440, 1448 (10th Cir. 1990). Palmer raises no legal arguments and offers no facts that undermine our holding in Lonsdale. His claims are “nothing more than oft-repeated tax protestor arguments that have long been rejected by the federal courts as patently frivolous.” United States v. Ford, 514 F.3d 1047, 1053 (10th Cir. 2008) (quotation omitted); see also United States v. Springer, 444 F. App’x 256, 261 (10th Cir. 2011) (unpublished). We decline Palmer’s invitation to reconsider our precedent and do not address the extensive arguments presented for the first time in his reply brief. See United States v. Mora, 293 F.3d 1213, 1216 (10th Cir. 2002).

The tax court was also correct in upholding Palmer’s penalties. Although the Commissioner usually bears the burden of establishing that penalties are appropriate, I.R.C. § 7491(c), Palmer has never denied that he failed to report income or file a tax return. The Commisioner thus carried its burden for proving that penalties were justified under I.R.C. §§ 6651(a), 6651(b), and 6654(a).

III

The Commissioner asks that we impose $8,000 in sanctions on Palmer for maintaining frivolous arguments on appeal. According to the Commissioner, Palmer’s arguments have repeatedly been rejected by courts nationwide (including this court) and are completely devoid of merit. As such, the instant appeal is cast as a waste of judicial resources. The sum of $8,000 was selected because it is allegedly less than the cost that the Commissioner incurs in responding to an appeal.

Federal Rule of Appellate Procedure 38 and 28 U.S.C. § 1912 allow a court of appeals “to award just damages and single or double costs if the court determines that an appeal is frivolous or brought for purposes of delay.” Kyler v. Everson, 442 F.3d 1251, 1253 (10th Cir. 2006) (quotation omitted). The mere fact that Palmer is proceeding pro se does not excuse his attempts to bring meritless arguments before this court: “[P]ro se litigants are subject to the same minimum litigation requirements that bind all litigants and counsel before all federal courts.” Id.

In light of Palmer’s acknowledgment that his arguments conflict with circuit precedent and his failure to offer any reasonable basis for challenging the existing law, we hold that sanctions are warranted. Nevertheless, this appeal does not present a situation in which the court or Commissioner were “inundated” with a “myriad of claims.” See, e.g., Stearman v. Comm’r, 436 F.3d 533, 539 (5th Cir. 2006). Given the relatively simple issues the Commissioner was required to address, we invoke our discretion and reduce the requested sanction amount to $4,000. See Richards v. Comm’r, 273 F. App’x 728, 732 (10th Cir. 2008) (unpublished) (reducing the requested sanction to $4,000 because the appeal “involve[d] only a few relatively straightforward issues.”).

IV

The judgment of the United States Tax Court is AFFIRMED. The Commissioner’s motion for sanctions is GRANTED but the amount is limited to $4,000. The mandate for sanctions shall issue forthwith.

Entered for the Court
Carlos F. Lucero
Circuit Judge

[Lambkin]

Sam William Parker loses, but sanctions reduced by half.
http://www.forbes.com/sites/peterjreill ... r-victory/

It is hard being a tax protester. Coming up with crackpot theories and having them slapped down by the IRS and the courts. The case of Sam William Parker in the Tenth Circuit is about as close as they ever come to a victory.

[LPC]

The name was Palmer, not Parker, and we've already got a thread on his "victories," so I'm merging the new posting with that thread.

[jcolvin2]

Sam William Palmer loses, but sanctions reduced by half.

No sanctions were reduced. Based on sanctions that the Tenth Circuit had awarded in prior cases, the DOJ Tax Division had requested $8,000 as a sanction against the TP for bringing a frivolous appeal. The Tenth Circuit held that the case was relatively depressingly simple, and only awarded $4,000:

In light of Palmer’s acknowledgment that his arguments conflict with circuit precedent and his failure to offer any reasonable basis for challenging the existing law, we hold that sanctions are warranted. Nevertheless, this appeal does not present a situation in which the court or Commissioner were “inundated” with a “myriad of claims.” See, e.g., Stearman v. Comm’r, 436 F.3d 533, 539 (5th Cir. 2006). Given the relatively simple issues the Commissioner was required to address, we invoke our discretion and reduce the requested sanction amount to $4,000. See Richards v. Comm’r, 273 F. App’x 728, 732 (10th Cir. 2008) (unpublished) (reducing the requested sanction to $4,000 because the appeal “involve[d] only a few relatively straightforward issues.”).

[LPC]

The name was Palmer, not Parker,

The proofreading (or fact checking) by Forbes was really abysmal, considering that (a) there was a link to the text of legal opinion in the same paragraph and (b) the author of the Forbes article was also the author of the blog post to which the Forbes article linked, and the name was right in the blog post.

[jcolvin2]

On a trip to the Tenth Circuit in a subsequent case, the Tenth Circuit realized its mistake in giving the government less in the way of sanctions than had been requested, as Palmer continued to make frivolous arguments.

http://www.ca10.uscourts.gov/opinions/12/12-9002.pdf

FILED
United States Court of Appeals
Tenth Circuit
November 27, 2012
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
SAM WILLIAM PALMER,
Petitioner-Appellant,
v. No. 12-9002
COMMISSIONER OF INTERNAL
REVENUE,
Respondent-Appellee.
(Docket No. 1398-10)
(United States Tax Court)
ORDER AND JUDGMENT*

Before BRISCOE, Chief Judge, McKAY and HOLMES, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is, therefore,
submitted without oral argument.

Petitioner-appellant Sam William Palmer, proceeding pro se, appeals a decision of
the United States Tax Court finding that he owed a $656.00 deficiency on his 2006 income tax and $239.44 in penalties. We exercise jurisdiction under 26 U.S.C. §
7482(a)(1), and we dismiss the case for Palmer’s failure to pay sanctions we imposed in a
prior proceeding. We also grant the motion for sanctions filed by the Commissioner of
Internal Revenue (“Commissioner”).

I

Palmer received $15,019 in income in 2006, but he did not file a tax return
reporting his income, and he did not pay the tax due. The Commissioner issued Palmer a
notice of deficiency, stating that he had a tax deficiency of $656.00, a failure-to-file
penalty of $147.60 under I.R.C. § 6651(a)(1), and a failure-to-pay penalty of $91.84
under I.R.C. § 6651(a)(2). The notice of deficiency was signed on behalf of the
Commissioner by Ann Hagemeyer, Field Director of Compliance Services at the IRS
Brookhaven Service Center in Holtsville, New York. Palmer sought redetermination of
the tax in the United States Tax Court.

In Tax Court, Palmer did not dispute the Commissioner’s deficiency tax
determination nor did he dispute the penalties asserted against him. Instead, Palmer
argued that the notice of deficiency was unauthorized because only the district director
designated to the district where he resided had authority to issue him the notice. He
argued that a director from Holtsville, New York, had no authority to issue him a notice
because he is a resident of Oklahoma. The Tax court rejected Palmer’s argument as
frivolous and sustained the Commissioner’s deficiency determination and penalties.

II

This court has previously imposed sanctions for Palmer’s “waste of judicial
resources” in pursuing a frivolous appeal. Palmer v. Comm’r, No. 11-9018, 2012 WL
1949326, at *2 (10th Cir. May 31, 2012). In that case, Palmer raised essentially the same
objections as he does here, arguing that the agents who issued a notice of deficiency for
the 2007 tax year lacked proper authority. Id. at *1. We affirmed the decision of the Tax
Court. We also imposed $4,000 in sanctions on Palmer for maintaining frivolous
arguments on appeal. In light of the “relatively simple issues the Commissioner was
required to address” in that case, we reduced the Commissioner’s requested sanction
amount from $8,000 to $4,000. Id. at *2.

The Commissioner contends that Palmer has failed to pay the $4,000 in sanctions
that we had imposed in our prior order. According to the Commissioner, Palmer has paid
only $1,500 of the $4,000 in sanctions. Palmer does not contend otherwise.
We have dismissed suits for a party’s nonpayment of sanctions from prior actions.
See, e.g., In re Hook, 336 F. App’x 789, 791-92 (10th Cir. 2009); Mann v. Boatright, 477
F.3d 1140, 1150 (10th Cir. 2007) (ordering that the plaintiff not be permitted to pursue
additional appeals until she has complied with the sanctions imposed); Christensen v.
Ward, 916 F.2d 1485, 1485 (same). Here, Palmer has not complied with our order
requiring him to pay $4,000 to the Commissioner, and so we dismiss this appeal.

III

The Commissioner asks that we impose $8,000 in sanctions on Palmer for maintaining a frivolous appeal. According to the Commissioner, we have already
rejected Palmer’s arguments as frivolous in his prior proceeding before this court, and
further sanctions are appropriate to convey to Palmer that wasteful litigation is not
without cost.

“This court has the inherent power to impose sanctions that are necessary to
regulate its docket, promote judicial efficiency, and deter frivolous filings.” Mann, 477
F.3d at 1150 (10th Cir. 2007). See also F.R.A.P. 38 (“If a court of appeals determines
that an appeal is frivolous, it may . . . award just damages and single or double costs.”).
The court’s power to impose sanctions applies equally to pro se litigants. Kyler v.
Everson, 442 F.3d 1251, 1253 (10th Cir. 2006) (“[P]ro se litigants are subject to the same
minimum litigation requirements that bind all litigants and counsel before all federal
courts.”).

We hold that sanctions are warranted in light of our previous order denying
Palmer’s identical arguments and his failure to present any reasonable legal arguments
before this court. Sanction awards for frivolous tax appeals “are to be determined on a
case-by-case basis.” Wheeler v. C.I.R., 538 F.3d 773, 783 (10th Cir. 2008). In addition
to providing “an effective sanction for the bringing of a frivolous appeal,” sanction
awards “serve as an effective deterrent to the bringing of future frivolous appeals, and . . .
recompense the government for at least the direct costs of the appeal.” Id. (quoting
Casper v. C.I.R., 805 F.2d 902, 906-07 (10th Cir. 1986)). In Palmer’s prior proceeding
before this court, we reduced the Commissioner’s requested sanctions from $8,000 to $4,000, noting that the case did not “present a situation in which the court or
Commissioner were ‘inundated’ with a ‘myriad of claims.’” Palmer, 2012 WL 1949326,
at *2 (quoting Stearman v. Comm’r, 436 F.3d 533, 539 (5th Cir. 2006)). However, as
evidenced by this appeal, the reduced sanction award of $4,000 did not serve as an
effective deterrent to Palmer from bringing subsequent frivolous appeals to this court.
When a taxpayer repeatedly engages in frivolous litigation to avoid paying lawful income
taxes, this court has imposed the Commissioner’s requested sanction award in full,
especially if the taxpayer was undeterred by prior monetary sanctions. See, e.g., Ford v.
Pryor, 552 F.3d 1174, 1180 (10th Cir. 2008); Kyler, 442 F.3d 1251; Williamson v. Sena,
230 F. App’x 815, 817 (10th Cir. 2007). In light of Palmer’s repeatedly frivolous
appeals, we grant the Commissioner’s motion for sanctions in the full amount of $8,000.

IV

Because Palmer has not complied with our order requiring him to pay $4,000 to
the Commissioner, we DISMISS this appeal. The Commissioner’s motion for sanctions
in the amount of $8,000 is GRANTED.

Entered for the Court
Mary Beck Briscoe
Chief Judge

[Gregg]

So this genius has turned a $650 tax bill into $12,000 in sanctions?

Brilliant!

[ashlynne39]

So this genius has turned a $650 tax bill into $12,000 in sanctions?

Brilliant!

What is really brilliant is that he tried it for 2006 and it didn't work so he decided to try it again for what appears to be 2007 and it still didn't work so he thought hey, it didn't work two previous times and I've been sanctioned $4000 but what the heck let's try again resulting in a 3rd attempt in 2012 which led to a 3rd failure and $12000 in sanctions. This guy must be a real genius.

[Pottapaug1938]

This clown fully deserves to pay $12,000; but the way I read the opinion, it looks as if all they did was grant the original request for sanctions of $8,000. Not that it matters, because Palmer will whine, like a petulant kindergartener, about how UNFAIR they are being to him in making him pay that the law says he doesn't have to pay

[AndyK]

Assuming that the Tax Court docket inquiry results for a search on Palmer, Sam all elate to the topic at hand, there are THREE additional TC cases open:

25602-12 (filed 10/16/12), 25521-12 (also filed 10/16/12), and 14560-12 (a collection due process case filed 6/7/12)

If you care to look into them, please go to the Tax Court docket inquiry page and enter his name in the relevant fields on the "Individual Party Name" page.