Ozaki v. Comm'r

2003 T.C. Memo. 213, 86 T.C.M. 96, 2003 Tax Ct. Memo LEXIS 214

• Court: United States Tax Court
• Decided: July 16, 2003
• Docket: No. 10677-02
• Status: Unpublished

Opinion

EDWARD KAZUO OZAKI, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Ozaki v. Comm'r

No. 10677-02

United States Tax Court

T.C. Memo 2003-213; 2003 Tax Ct. Memo LEXIS 214; 86 T.C.M. (CCH) 96;

July 16, 2003, Filed

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Petitioner was liable for additions to tax for years at issue.

Edward Kazuo Ozaki, pro se.

James M. Klein, for respondent.

Chiechi, Carolyn P.

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CHIECHI

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge: Respondent determined the following deficiencies in, and additions to, petitioner's Federal income tax (tax):

                 Additions to Tax     

Sec. Sec.    Sec.

 Year   Deficiency    6651(a)(1)¹  6651(a)(2)   6654(a)  ____   __________    __________   __________   _______

 1994   $ 9,397     $ 1,135.00     ---    $ 276.79

1995    12,201      1,484.08     ---     361.11

1996    12,247      1,406.70   $ 1,563.00    349.34

1997    14,220      1,593.45    1,628.86    395.91

1998    15,372      1,722.60    1,301.52    386.40

1999    21,621      1,235.03     603.79    205.78

2000    20,063      1,471.95     327.10    270.37

The issues remaining for decision are: ²

(1) Is petitioner liable for the addition to tax under section 6651(a)(1) for each of the years at issue? We hold that he is.

(2) Is petitioner liable for the addition to tax under section 6654(a) for each of the years at issue? We hold that he is.

             FINDINGS OF FACT

Most of the facts have been deemed established pursuant to the Court's Order under Rule 91(f) dated February 26, 2003.

At the time petitioner filed the petition in this case, he resided in Chicago, Illinois.

Throughout the years at issue until the time of the trial in this case, petitioner, who received a master's degree in music from Northwestern University, has worked as a sales manager and as a singer/composer.

During World War II, when petitioner's mother was 13 years old, and when petitioner's father was 17 years old, the U.S. Government confined each of them and their respective families in certain Government facilities because of their Japanese ancestry. Petitioner's parents made petitioner aware of their respective experiences in those facilities.

The last tax return (return) filed by petitioner was for his taxable year 1991. Petitioner did not file a return for any of the taxable years at issue, although he received timely one or more Forms W-2, Wage and Tax Statement, and one or more Forms 1099-NEC, Non-Employee Compensation, for each of those years.

No physician or psychologist has made a determination that petitioner suffered from a mental illness or condition that prevented him from complying with the tax laws for the years at issue.

Respondent sent to petitioner a notice of deficiency (notice) for petitioner's taxable years 1994 and 1995, a separate notice for petitioner's taxable years 1996, 1997, and 1998, and a separate notice for petitioner's taxable years 1999 and 2000. In those notices, respondent determined that for the years indicated petitioner received the following amounts of taxable income from the following sources:

 Tax Year 1994

   Source    Amount

    Bands and Bows     $ 1,500

    Orchestral Assoc.     5,425

    United Bindery     39,940

    Walt Disney     401

         Pictures

        1st Commercial            83

             Total Income     $ 47,349

              Tax Year 1995

          Source           Amount

        Bands and Bows          $ 800

        Orchestral Assoc.        9,981

        Fleur De Lys            775

        United Bindery         45,700

         1st Commercial           20

            Total Income      $ 57,276

              Tax Year 1996

           Source          Amount

        Bands and Bows         $ 1,600

        Orchestral Assoc.        7,528

        United Bindery         48,725

        1st Commercial           15

           Total Income      $ 57,868

              Tax Year 1997

           Source           Amount

        Bands and Bows         $ 1,440

        Orchestral Assoc.        10,729

        United Bindery         51,620

        1st Commercial           17

        Oak Park Temple         1,080

            Total Income      $ 64,886

               Tax Year 1998

        Orchestral Assoc.        $ 4,739

        United Bindery          56,061

        1st Commercial            22

        Oak Park Temple          1,578

        St. Ferdinand's          5,242

           Total Income      $ 67,642

              Tax Year 1999

        Chicago Sinai           $ 300

         Congregation

        St. Ferdinand's          1,735

        United Bindery          78,469

        Orchestral Assoc.         7,369

        Oak Park Temple          1,480

        1st Commercial            28

           Total Income       $ 89,381

               Tax Year 2000

        Chicago Sinai           $ 75

        United Bindery          75,175

        Orchestral Assoc.         7,651

        Oak Park Temple          1,630

        1st Commercial            41

        Halevi Choral            690

        Chicago Sinai            150

        Half Note Music           29

           Total Income         ³ $ 85,441

OPINION

Petitioner has the burden of proving that respondent's determinations under sections 6651(a)(1) and 6654(a) are wrong. ⁴Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115, 78 L. Ed. 212, 54 S. Ct. 8 (1933).

Petitioner claims that his failure to file a return for any of the years at issue and to pay estimated tax for each such year is attributable to his "mental illness caused by failure of U.S. Government to acknowledge that violation of constitutional and civil rights of Japanese Americans during World War 2 has debilitating and demoralizing effects on the child (Edward Kazuo Ozaki) of U.S. concentration camp survivors."

With respect to the determinations at issue under section 6651(a)(1), mental illness or mental incapacity can constitute reasonable cause for the failure to file a return. Williams v. Commissioner, 16 T.C. 893, 906 (1951); see Carlson v. United States, 126 F.3d 915, 922 (7th Cir. 1997) (addressing reasonable cause exception with respect to failure to pay tax under section 6651(a)(2)). However, if the taxpayer is able to exercise ordinary care and prudence with respect to nontax matters, the claimed mental illness or mental incapacity does not constitute reasonable cause. See Carlson v. United States, supra at 923.

Except for his self-serving testimony, on which we are unwilling to rely, petitioner has introduced no evidence establishing that he had a mental illness or mental incapacity which prevented him from filing a return for each of the years at issue. In fact, the record establishes that, throughout the years at issue until the time of the trial in this case, petitioner has worked as a sales manager and as a singer/composer and has almost doubled his income throughout that period. On the record before us, we find that petitioner has failed to carry his burden of proving that he suffered from a mental illness or mental incapacity which prevented him from filing a return for each of the years at issue. On that record, we further find that petitioner has failed to prove that he is not liable for the addition to tax under section 6651(a)(1) for each of those years.

With respect to the determinations at issue under section 6654(a), on the record before us, we find that petitioner has failed to show that any of the exceptions in section 6654(e) apply in the instant case. On that record, we further find that petitioner has failed to prove that he is not liable for the addition to tax under section 6654(a) for each of the years at issue.

To reflect the foregoing, respondent's concession, and the issues deemed abandoned by petitioner,

Decision will be entered under Rule 155.

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Footnotes

• 1. All section references are to the Internal Revenue Code in effect for the years at issue. All Rule references are to the Tax Court Rules of Practice and Procedure.

• 2. The only determinations in the notices of deficiency for the years at issue that petitioner disputes relate to the additions to tax under secs. 6651(a)(1) and (2) and 6654(a). Respondent concedes the determinations under sec. 6651(a)(2). We conclude that petitioner has abandoned contesting any remaining determinations in the notices of deficiency for the years at issue other than the determinations under secs. 6651(a)(1) and 6654(a).

• 3. There was a mathematical error in computing the total income of petitioner for the tax year 2000 that appeared in the facts deemed established under Rule 91(f). The correct total income of petitioner for that year, i.e., $ 85,441, as determined in the pertinent notice, is used here.

• 4. The record does not disclose when respondent commenced an examination of each of the years at issue. We proceed on the assumption that respondent's examination of each of those years commenced after July 22, 1998, and that sec. 7491(c) is applicable in the instant case.

  The record establishes that petitioner did not file a tax return or pay estimated tax for any of the years at issue. We conclude that respondent has satisfied respondent's burden of production under sec. 7491(c).