Waltner v. Comm'r
This text of 2014 T.C. Memo. 35 (Waltner v. Comm'r) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
BUCH,
In August 2009 Mr. Waltner and his wife, Sarah V. Waltner, submitted a joint Form 1040, U.S. Individual Income Tax Return, for 2008 to the IRS. On the Form 1040 the Waltners reported zero wages, an IRA distribution of over $22,000, a student loan interest deduction, and a home mortgage interest deduction of over $26,000, all of which resulted in zero tax liability. The Waltners each listed their *37 occupation as "private-sector worker", and they claimed a refund of over $10,000.2 Along with the Form 1040, Mr. Waltner submitted three Forms 4852, Substitute for Form W-2,3 (substitute W-2), each reporting zero wages but simultaneously reporting taxes withheld. Also, each substitute W-2 states that he determined that he received zero wages on the basis of "[p]ersonal knowledge and records provided by the company listed as 'payer' on line 5" and with respect to the efforts he made to obtain a corrected Form W-2, Wage and Tax Statement, he stated "none". Mr. Waltner also submitted a "correcting" *37 Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, which he altered by inserting the word "corrected" and replacing the amount of gross proceeds of over $5,000 with zero. At the bottom of the Form 1099-B, Mr. Waltner included the following statement: This correcting Form 1099-B is submitted to rebut a document known to have been submitted by the party identified above as 'Payer' and 'Broker' which erroneously alleged a payment to the party identified above as 'Steve T. Waltner' of 'gross proceeds' in connection with a 'trade or business.' Under penalty of perjury, I declare that I have *38 examined this statement and to the best of my knowledge and belief, it is true, correct and complete.
Three companies filed Forms W-2 for Mr. Waltner, reporting *38 total wages of over $75,000, and those Forms W-2 also reported taxes withheld consistent with what Mr. Waltner reported on his substitute W-2s. The only substantive difference between the Forms W-2 submitted by the third parties and the substitute W-2s is that Mr. Waltner reported zero wages. In March 2010 the IRS sent the Waltners a letter informing them that the return that they had filed and on which they had reported zero wages represented a frivolous position and offering them 30 days within which to submit a corrected return; otherwise the IRS would impose a $5,000 frivolous submission penalty under
Respondent issued a notice of intent to levy to Mr. Waltner to collect the
Free access — add to your briefcase to read the full text and ask questions with AI
BUCH,
In August 2009 Mr. Waltner and his wife, Sarah V. Waltner, submitted a joint Form 1040, U.S. Individual Income Tax Return, for 2008 to the IRS. On the Form 1040 the Waltners reported zero wages, an IRA distribution of over $22,000, a student loan interest deduction, and a home mortgage interest deduction of over $26,000, all of which resulted in zero tax liability. The Waltners each listed their *37 occupation as "private-sector worker", and they claimed a refund of over $10,000.2 Along with the Form 1040, Mr. Waltner submitted three Forms 4852, Substitute for Form W-2,3 (substitute W-2), each reporting zero wages but simultaneously reporting taxes withheld. Also, each substitute W-2 states that he determined that he received zero wages on the basis of "[p]ersonal knowledge and records provided by the company listed as 'payer' on line 5" and with respect to the efforts he made to obtain a corrected Form W-2, Wage and Tax Statement, he stated "none". Mr. Waltner also submitted a "correcting" *37 Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, which he altered by inserting the word "corrected" and replacing the amount of gross proceeds of over $5,000 with zero. At the bottom of the Form 1099-B, Mr. Waltner included the following statement: This correcting Form 1099-B is submitted to rebut a document known to have been submitted by the party identified above as 'Payer' and 'Broker' which erroneously alleged a payment to the party identified above as 'Steve T. Waltner' of 'gross proceeds' in connection with a 'trade or business.' Under penalty of perjury, I declare that I have *38 examined this statement and to the best of my knowledge and belief, it is true, correct and complete.
Three companies filed Forms W-2 for Mr. Waltner, reporting *38 total wages of over $75,000, and those Forms W-2 also reported taxes withheld consistent with what Mr. Waltner reported on his substitute W-2s. The only substantive difference between the Forms W-2 submitted by the third parties and the substitute W-2s is that Mr. Waltner reported zero wages. In March 2010 the IRS sent the Waltners a letter informing them that the return that they had filed and on which they had reported zero wages represented a frivolous position and offering them 30 days within which to submit a corrected return; otherwise the IRS would impose a $5,000 frivolous submission penalty under
Respondent issued a notice of intent to levy to Mr. Waltner to collect the
With respect to being liable for the income tax, he declared he was not "an officer, employee, or elected official of the United States, a State or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing", he "was never an officer of a corporation", "did not receive any Wages from any source", "did not work for or receive any pay from an Employer or American Employer", "was not engaged in Employment", "was not an Employee", "was not engaged in Self-Employment", "was not engaged in a Trade or Business, i.e. I have never performed the functions of any public office", "was not a citizen or resident of the District of Columbia or any territory or possession of the United States", was "never incorporated in Washington, D.C. or worked for any company who incorporated *40 in Washington, D.C.", and "was not a governmental unit or agency or instrumentality thereof, or a United States Person".
*40 With respect to the information returns filed by third parties, he stated: "[N]one of the payers for whom I worked in 2008 were engaged in activities effectively connected to a Trade or Business, none was a federal agency, federal instrumentality or federal (or federally-controlled) corporation, and none paid me Wages subject to reporting" however "[s]ome of these payers retained money from my non-Wage pay and paid it over to the IRS as 'withholding' for federal income and employment (payroll) taxes."
During the CDP hearing the Appeals officer informed Mr. Waltner that many of the arguments in his faxed submission were frivolous and that he would not consider them. Mr. Waltner did not provide a Form 433-A, Collection Information Statement,4*41 and the Appeals officer was unable to determine whether he was eligible for a collection alternative. Respondent issued a Notice of Determination Concerning Collection Action(s) Under
Among the errors assigned to respondent in the petition, Mr. Waltner alleged respondent had erroneously determined that Mr. Waltner was subject to a *41
During the five months between the issuance of the notice of trial and the trial date the parties filed 24 motions, some of which were supplemented and many of which required responses, competing requests for admissions and supplemental requests for admissions and various other documents, all of which resulted in the Court's issuing no less than 22 orders. The number of documents filed illustrates the lack of cooperation by the parties and, to some extent, also indicates acrimony between them. Respondent made repeated attempts to *42 elicit overly broad admissions regarding facts and documents related to other years and to nonparties that have no bearing on the year in issue or the penalty at issue in this case. For his part, Mr. Waltner refused to stipulate many relevant facts and objected to being compelled to answer interrogatories and produce documents while he simultaneously requested that the Court compel respondent to answer irrelevant *42 interrogatories and produce irrelevant documents. We address the various filings by category below.
Mr. Waltner filed a request for admissions, a supplemental request for admissions, and a motion to review respondent's responses to each. On November 4, 2013, the Court issued a 39-page order reviewing the 44 requests for admissions and the 83 supplemental requests for admissions and respondent's responses. The Court found many of Mr. Waltner's requests improper because they called for legal conclusions, posed hypothetical questions, or asked for information not relevant to the frivolous tax submissions penalty for 2008. The Court also found many of respondent's responses inadequate because respondent attempted to provide documents in lieu of admitting or denying some *43 of the requests, respondent denied for lack of information whether certain exhibits appended to the requests were copies of those in Mr. Waltner's administrative file when respondent presumably had the administrative file to verify those exhibits, and respondent denied for lack of knowledge or information what certain codes in Mr. Waltner's transcript meant when respondent was the one who created those very codes. The November 4 order directed respondent to file revised responses for *43 those the Court found inadequate. On November 22, 2013, respondent filed revised responses conforming to the Court's order.
Respondent filed a 993-page request for admissions, including 242 separate paragraphs and appended exhibits. Mr. Waltner filed a motion for a protective order staying discovery, and respondent filed a notice of objection to Mr. Waltner's motion. By order dated September 5, 2013, the Court granted Mr. Waltner's motion for protective order in part, relieving Mr. Waltner of responding to some requests, and denied the motion in part, requiring him to respond to others. The Court reviewed respondent's requests for admissions and found that some requests were irrelevant to the Court's inquiry *44 (regarding properties sold after the year in issue and information regarding Sarah V. Waltner not related to 2008) and that others related to matters of public record (various District Court, Court of Appeals, State superior court, and the U.S. Court of Federal Claims cases involving the Waltners and criminal court proceedings against Peter and Doreen Hendrickson). Although the Court ordered Mr. Waltner to respond to some of the requests for admissions, when he responded he renewed his objections and failed to admit or deny several requests. And as discussed below, for those requests to which Mr. Waltner responded and denied, some of those denials were not in good faith.
Less than one month after Mr. Waltner's requests for admissions were served, he filed a motion to compel stipulation and for an order to show cause why proposed facts and evidence should not be accepted as established under
Respondent filed a motion to compel responses to interrogatories; however, respondent supplemented his motion when he received Mr. Waltner's responses. Mr. Waltner filed an objection, and because he had in fact responded, we treated respondent's motion to compel as a motion to review the sufficiency of Mr. Waltner's responses. By order dated October 29, 2013, the Court granted respondent's motion and directed Mr. Waltner to supplement his responses *45 because Mr. Waltner's previous responses consisted of nothing but objections—not a single interrogatory was answered. For example, Mr. Waltner repeatedly objected to interrogatories regarding his earnings from three jobs during 2008 because he stated that they were not reasonably calculated to lead to discovery of admissible evidence regarding the section 6702 penalty. Rather than answer, *46 Mr. Waltner filed a motion for reconsideration of the Court's October 29 order, alleging the Court had exceeded its authority in requiring responses to the interrogatories and not accepting the objections without answers. That motion for reconsideration was denied. Mr. Waltner sought an extension of time within which to answer the interrogatories, and the Court granted his motion. However, he never responded and instead paid the section 6702 penalty as discussed more fully below.
Mr. Waltner filed his own motion to compel responses to interrogatories, which he amended and to which respondent filed an objection. The Court found some of respondent's responses sufficient; however, the Court found four responses to interrogatories regarding the summary record of assessment insufficient. Thus, the Court granted Mr. Waltner's motion in part and ordered respondent to supplement his responses to those four interrogatories. On *46 November 22, 2013, respondent supplemented his responses to include sufficient answers to the four interrogatories.
Respondent filed a motion to compel production of documents; however, respondent supplemented his motion when he received Mr. Waltner's response. Mr. Waltner *47 filed an objection; and because he had in fact responded, we treated respondent's motion to compel as a motion to review the sufficiency of Mr. Waltner's response to the request for production of documents. Mr. Waltner's response consisted of nothing but objections—not a single document was produced. The Court reviewed respondent's requests for production and found most of respondent's requests relevant and not objectionable. However, some of respondent's requests were overly broad. For example, respondent requested documents regarding mortgage applications "regardless of year", and so we restricted the request to the two years before and after the year at issue because those might lead to the discovery of admissible evidence. By order dated October 31, 2013, the Court granted respondent's motion in part and ordered Mr. Waltner to supplement his responses. Rather than answer, Mr. Waltner filed a motion for reconsideration of the Court's October 31 order, alleging the Court had exceeded its authority in requiring responses to the requests for production of documents and not accepting the objections without answers. The Court denied that motion *47 for reconsideration. Mr. Waltner sought *48 an extension of time to respond to the request for production, and the Court granted that motion. However, Mr. Waltner never responded and, as previously mentioned, paid the section 6702 penalty.
Respondent filed the first motion for continuance, requesting that this case be continued so that it may be consolidated with a 2008 deficiency case involving Mr. and Mrs. Waltner's joint return at docket No. 1729-13. Mr. Waltner filed an objection, stating that he did not wish to delay this case and that respondent's motion should be denied because this case concerned only the 2008 penalty. By order dated October 23, 2013, the Court denied respondent's motion to continue because the Court was disinclined to consolidate the two cases, which was the underlying reason for the motion to continue. The Court was disinclined to consolidate the cases because the parties to the two cases are not the same and the issues in the two cases were not the same; more specifically, Mrs. Waltner is not a party to this case but she is a party to the deficiency case, and at that time the underlying issue in this case was whether Mr. Waltner had made a frivolous tax submission whereas *49 the deficiency case will require the Court to determine the Waltners' underlying tax liability. Although it would have been within the sound *48 discretion of the Court to consolidate the cases, the Court gave heavy weight to the fact that it was Mr. Waltner who opposed consolidation, in part because he represented that he did not want to delay this case.
Notwithstanding Mr. Waltner's statement that he did not wish to delay this case, in early November 2013 he filed his own motion for consolidation of this case with two other cases at docket Nos. 8726-11L and 12722-13. In stark contrast to the consolidation that respondent had suggested, the cases Mr. Waltner proposed to consolidate did not even involve the same years. The Court denied Mr. Waltner's motion to consolidate.
Less than a month before trial Mr. Waltner hired an attorney, who entered an appearance in this case and who filed a motion to change the place of trial to Jacksonville, Florida. At the time of that motion there was no connection in this case to Florida apart from Mr. Waltner's new attorney, whose office was in Florida. The Court denied the motion to change the place of trial because it effectively requested a continuance, *50 and hiring a new counsel is not ordinarily grounds for a continuance under
Mr. Waltner filed two motions for summary judgment. Each motion stated that there were no genuine issues of material fact because respondent had not proven that Mr. Waltner was liable for the section 6702 penalty. By order dated September 3, 2013, the Court denied Mr. Waltner's first motion for summary judgment. The Court noted that at the time of the September 3 order there was "no evidence *51 in this case; there are only allegations of fact made by the parties * * * thus it appears both parties acknowledge that additional facts remain to be discovered." With respect to Mr. Waltner's assertion in his first motion for summary judgment that he was not a "person" as defined in
Mr. Waltner filed a motion for reconsideration of the order denying his first motion for summary judgment, arguing, among other things, that the Court had misapprehended the meaning of
Mr. Waltner's second motion for summary judgment incorporated all of his first motion and stated that respondent would be unable to prove that the assessment of the penalty against Mr. Waltner was valid. Mr. Waltner then asked *51 the Court to take judicial notice of a press release regarding "the discovery of evidence of forgery of the proof offered by the sitting President of the United States of his eligibility for office." Mr. Waltner argued that the President cannot be a "competent Executive" and thus there can be no valid delegation of authority from the President to assess the frivolous return penalty at issue. By order dated October 29, 2013, the Court denied Mr. Waltner's second motion.
Because we are a Court with nationwide jurisdiction and parties are often far from the Tax Court courthouse in the District of Columbia, the Court will often *53 hold telephone conferences with parties to assist them in resolving issues such as discovery disputes or to discuss motions filed by one or more of the parties. The Court often reviews the case file in whole or in part in preparation for a conference call.
In preparation for such a call, a staff person called the number Mr. Waltner had provided on his petition and requested a convenient time for a conference call and a number where Mr. Waltner preferred to be contacted. During Mr. Waltner's return phone call, he provided a number that he characterized as his work number. The Court observed on Mr. Waltner's fee waiver application that his last "job" was in 2009; the Court then noticed that Mr. Waltner had altered the Court's fee *52 waiver form, substituting the word "job" where the original form stated "employment", substituting "pay" for "salary or wages", and substituting "company payer" for "employer". The Court made no findings based on Mr. Waltner's off-the-record statement, but instead by order dated September 6, the Court sought clarification by ordering Mr. Waltner to complete another application for waiver without altering the form; the Court did not direct that Mr. Waltner give *54 updated financial information, only that he complete the form without altering it or provide the same information requested by the form in some other format. In lieu of providing an unaltered form or the requested information, Mr. Waltner paid the filing fee, thus rendering moot the question of whether he was entitled to a fee waiver. As a result, the Court vacated the September 6 order, thus ending the inquiry.
After the Court denied Mr. Waltner's first motion for summary judgment and Mr. Waltner paid the filing fee, Mr. Waltner filed a motion for recusal of the Judge assigned to this case. As grounds, Mr. Waltner asserted that the Judge was biased against him because the Court had denied Mr. Waltner's first motion for summary judgment without ordering a response and because the Court had ordered Mr. Waltner to resubmit his application for fee waiver without altering the *53 questions or the wording of the form. Mr. Waltner also claimed that the Court had denied him the ability to appeal the fee waiver issue because the Court had vacated the order calling for a new fee waiver application. In an order dated October 29, 2013, the Court explained that once Mr. Waltner paid the filing *55 fee, the Court was left with three options: (1) sanction Mr. Waltner for failing to comply with the Court's September 6 order, which had directed him to submit a new unaltered form or the information requested in the unaltered form, (2) order Mr. Waltner to comply with the September 6 order, or (3) vacate the Court's September 6 order and accept the filing fee. The option most favorable to Mr. Waltner was to vacate the September 6 order, which is what the Court did. Because there was no basis upon which bias could be found, the Court denied Mr. Waltner's motion for recusal.
Respondent filed a motion for sanctions pursuant to
Mr. Waltner filed his own motion for sanctions pursuant to
Approximately two weeks before trial Mr. Waltner filed a motion to dismiss his petition without prejudice. Mr. Waltner asserted that his motion should be granted on the ground of mootness because he had fully paid the
By order dated December *58 4, 2013, the Court had set both section 6673 motions for hearing and invited each party to appear or file a
This case has occupied an inordinate amount of the Court's time. The Court could have disposed of the entire matter summarily by reference to
Judicial opinions are the "'heart of the common law system'" and serve as "a critical component of what we understand to be the 'law.'"8 Statutes and regulations provide simply an outline; judicial opinions fill in the details by providing the rule of law the court applied, the court's rationale in applying that law, and the underlying facts.
*58 Judicial opinions serve many purposes: they assist attorneys in advising clients and preparing cases; they provide the lower court's rationale when the appellate court must evaluate its decision; they inform the public of the court's analysis; and they establish clear and articulate rules for the future. It is with these purposes in mind that we address whether Mr. Waltner's conduct merits sanctions while addressing the underlying frivolous positions upon which *61 he relies and which he perpetuates by allowing his return information to be used.
Pursuant to
*59 One need not review the entire record to determine whether Mr. Waltner should be sanctioned; the answer can be gleaned from the discovery process. In general, a party may seek information in discovery, and the party resisting the discovery may object.11 Either party may seek the Court's intervention by asking the Court to compel responses or by asking for a *62 protective order.12 Once the Court rules on the appropriateness of the request or the sufficiency of the answer, however, the parties must comply with the Court's order or risk sanctions.13
The discovery disputes are now moot because Mr. Waltner has paid the
This case presents clear examples of the proper manner for addressing discovery disputes and of a manner that evidences frivolous positions or attempts at delay. Respondent's counsel sought discovery that went beyond the scope of *60 this case, and the Court issued orders excusing Mr. Waltner from responding to those requests. Likewise, respondent's counsel was evasive in answering some of Mr. Waltner's discovery requests, and the Court ordered respondent to supplement those responses. In each instance, once the Court ruled, respondent's counsel *63 cured the defect, through either supplementing his responses or accepting the Court's determinations that his requests were improper.
Mr. Waltner sought to avoid answering every discovery request.
With respect to respondent's interrogatories, the Court found Mr. Waltner's responses (which consisted of nothing but objections) insufficient and ordered him to supplement those responses. As previously discussed, Mr. Waltner repeatedly objected to interrogatories regarding his earnings from three jobs during 2008 because he stated that those interrogatories were not reasonably calculated to lead to the discovery of admissible evidence regarding the section 6702 penalty, an objection that is not in good faith. Rather than supplement, Mr. Waltner filed a motion for reconsideration of the order directing him to supplement, which the Court denied. Mr. Waltner then filed a motion for extension of time to supplement, which the Court granted. However, Mr. Waltner never supplemented his responses.
*61 With respect to respondent's requests for production of documents, the Court found Mr. Waltner's responses (which again consisted of nothing but objections and did not include a single document) insufficient *64 and ordered him to supplement his responses. Rather than supplement his responses, Mr. Waltner filed a separate motion for reconsideration of the order directing him to supplement his responses, which the Court denied. Mr. Waltner objected to the requests for production regarding his earnings from three jobs during 2008, because he considered that information to be irrelevant—an argument the Court had already rejected. Mr. Waltner then filed a motion for extension of time to supplement, which the Court granted. Just as he never answered the interrogatories, Mr. Waltner never supplemented his responses to the request for production of documents.
Discovery is not the only area in which Mr. Waltner failed to heed the Court's orders. On September 3, 2013, the Court issued an order denying summary judgment and informing Mr. Waltner that he was a person under
Mr. Waltner's pattern of filing motions for reconsideration of orders directing him to supplement *66 his responses and then never supplementing those responses shows that those motions were interposed for delay. Mr. Waltner's objections in the responses he filed were rarely made in good faith. Mr. Waltner's late attempts to obtain counsel, consolidate this case with other cases, and change the place of trial all show an attempt to delay this case.
*63 One particularly troubling aspect of Mr. Waltner's failure to deal with the Court in good faith relates to requests for admissions. As with the discovery requests, he objected to all requests for admissions that respondent posed. Mr. Waltner sought a protective order, which the Court granted in part and denied in part, ordering Mr. Waltner to respond to the portions of respondent's requests for admissions that the Court found proper. Although the Court determined the remaining requests were proper, Mr. Waltner objected to almost every remaining request as "irrelevant" and "vexatious" and failed to admit or deny several requests notwithstanding the Court's order.
Some of those requests related to the book Cracking the Code. The Court excused Mr. Waltner from admitting or denying that Peter Hendrickson wrote the book Cracking the Code and maintains *67 the Web site
*64
Those responses simply are not credible. Although redacted, even superficially the documents on the Web site appear to be those of the Waltners. The documents still appear on the Web site as of the drafting of this opinion, although after respondent's requests for admissions were submitted they appeared in a slightly more redacted form. But after a more thorough inquiry, it is clear that they are the Waltners' documents; they submitted those same documents in other *65 cases pending in this Court. In short, Mr. Waltner's statements that he was unable to admit or deny the requested admissions do not appear to have been in good faith; they appear to have been an attempt by Mr. Waltner to distance himself from the Web site and its related book.
In short, Mr. Waltner's conduct merits sanctions. His motion to consolidate this case (after having previously objected to consolidation) and his motion to change the place of trial appear to have been interposed primarily for the *69 purpose of delay, and thus his conduct is sanctionable under
Mr. Waltner repeatedly advanced frivolous arguments. When he first advanced the argument that he was not a "person" as that term is used in the Internal Revenue Code, the Court explained in an order dated September 3, 2013, that his view has long been rejected. Yet he continued to press that point. His insistence on pressing a point that has been rejected is consistent with an admonition from Cracking the Code: It advises readers to follow its positions *66 notwithstanding the consequences.16 Indeed, those consequences are often sanctions on the parties advocating those positions, because courts have repeatedly rejected the positions espoused in that book.
We address the positions set forth in Cracking the Code not only because some of Mr. Waltner's positions in this case mirror positions set forth in that *70 book, but also because one of the purposes of the Court's opinions is to guide future litigants (and in this instance, the same litigant in other proceedings before this Court).
Simply looking at the materials the Waltners submitted with their 2008 return show that they are familiar with Cracking the Code. Mr. Waltner has adopted the book's nomenclature, declaring himself a "private-sector worker" on his 2008 return, and he followed the author's directions in submitting substitute W-2s and 1099s including declarations, and reporting his Federal tax withholdings as including Social Security and Medicare taxes.
In his filings with this Court, Mr. Waltner has adopted the book's frivolous approach to statutory construction, specifically as it relates to the use of the word *67 "includes" when asserting that he cannot be among the class of people subject to a section 6702 penalty. Mr. Waltner altered his request for waiver of the filing fee to be consistent with Cracking the Code, replacing the word "employment" with "job", replacing the words "salary or wages" with "pay", and replacing "employer" with "company payer". Mr. Waltner submitted a 49-page fax that he also submitted to the Appeals *71 officer wherein his declaration closely tracks the narrow types of payments and payers that Cracking the Code declares are taxable and subject to reporting, and wherein Mr. Waltner declares under penalty of perjury that he received no such payments from any such payer. Further, Mr. Waltner states repeatedly in his filings that, although he received pay for working in 2008, the amount he received was not income because it was from a private-sector company, which Cracking the Code declares to be not taxable.
When taxpayers consider relying on a book that purports to explain the tax laws, it is reasonable to inquire into the qualifications of the author. After all, the quality of tax research depends on the sources on which the researcher relies. Taxpayers can perform their own research or they can rely on the advice of others *68 as a way to avoid the imposition of accuracy-related penalties.17 But whether relying on their own research or relying on others, that reliance must be reasonable.18 For example, if a case is off-topic or is no longer relevant because the law has changed, relying on that case is not reasonable.19 When a taxpayer is relying on the advice of a tax *72 professional, the Court will consider the qualifications of the adviser.20 So it only follows that, when taking positions based on a book, it is reasonable to inquire into the expertise of the author. Some authors are well-recognized tax experts who are cited by courts; others are not.
Cracking the Code is written by Peter Eric Hendrickson. Nowhere in his book does Mr. Hendrickson set forth his credentials, other than on the back cover where he vaguely identifies himself as "researcher, analyst and scholar". Add to that felon and serial tax evader.
*69 Mr. Hendrickson's first felony indictment of which the Court is aware occurred in 1991.21 In October of that year, *73 Mr. Hendrickson was charged with: • Conspiracy to Place Incendiary Device in United States Mail • Placing Injurious Article in U.S. Mail, Aiding and Abetting • Malicious Destruction of Property Affecting Interstate Commerce by Means of Explosive • Use of Explosive to Commit Felony Against the United States • Failure to File Federal Income Tax Return (relating to 1988) • Failure to File Federal Income Tax Return (relating to 1989) It was a part of the conspiracy that defendants PETER HENDRICKSON and DOREEN WRIGHT planned the placement of an incendiary device in the mail receptacle on the last day for the filing of federal income tax returns, April 16, 1990, in order to destroy such returns and to foster opposition to the payment of such income taxes. On April 16, 1990, the last day which tax returns could be postmarked that year, a firebomb was placed in a bin at the United States Post Office in Royal Oak, Michigan. At about eight p.m., a postal worker standing near the bin and collecting mail from individuals driving in front *74 of the post office noticed smoke coming from one of the bins. He rummaged through the bin and retrieved a smoking brown padded envelope, addressed "to the tax thieves" from "freedom loving Americans." When the postal worker tried to extinguish whatever was causing the smoke by placing it in a puddle *70 of water and stomping on it, the bomb detonated, injuring the postal worker and a bystander. * * * * * * * Hendrickson and Wright were charged with conspiracy to place the device at the post office. * * * 22
Mr. Hendrickson's second indictment occurred in 2008, when he was indicted on 10 counts of filing a false document, 4 relating to Forms 1040 and 6 relating to substitute *75 W-2s. This indictment is notable because it post-dates the first printing of Cracking the Code, which according to the copyright page of the book occurred in July 2003. Further, it is notable because part of Mr. Hendrickson's defense appears to have been predicated on "his interpretation of *71 the Internal Revenue Code as expounded in his book, Cracking the Code: The Fascinating Truth About Taxation in America."24
In his 2008 criminal case, Mr. Hendrickson advocated the same unduly narrow—indeed, wholly unreasonable—definition of "person" that he advocates in Cracking the Code and that Mr. Waltner asserted repeatedly in this proceeding. It was soundly rejected. Defendant begins by asserting that Congress intended through the enactment of This attempt at statutory construction fails at its initial premise. While Defendant states as This harmonizing construction of Not surprisingly, then, the courts have uniformly rejected the reading of "person" advocated by Defendant here. * * * 25
In addition to this criminal conviction that is explicitly linked to the positions outlined in Cracking the Code, Mr. Hendrickson has been enjoined from *73 "filing any tax return, amended return, form * * * or other writing or paper with the IRS that is based on the false and frivolous claims set forth in
The reporting positions that gave rise to the permanent injunction, as well as Mr. Hendrickson's second indictment and conviction, bear a *79 striking resemblance to Mr. Waltner's reporting positions that gave rise to his frivolous tax submissions penalty and that he espoused in his pleadings in this case. Both failed to report their wages but rather submitted with their tax returns substitute W-2s that reported that they received no wages. On brief Mr. Hendrickson explained that someone "working for remuneration in the private sector, as opposed to an individual who earned remuneration as a result of the voluntary exercise of a federal privilege, was not an 'employee' and the remuneration he earned was not 'wages'".27 Likewise, in his responses to respondent's requests for admissions, Mr. Waltner states that while he "does not deny having worked for private *74 companies, or having been paid money for that work in 2008, [he] denies that this work included the performance of taxable activities or resulted in receipts or gains therefrom that are subject to tax without apportionment."
Fittingly, Cracking the Code begins with a passage from Lewis Carroll's Through the Looking Glass (1872). In chapter 6 of Carroll's classic, Alice encounters Humpty Dumpty where one would *80 expect him to be—sitting on a wall. Humpty is an odd egg, filled with self-importance. He is pedantic. (Humpty asks "And if you take one from three hundred and sixty-five, what remains?" To which Alice responds "Three hundred and sixty-four, of course." "Humpty Dumpty looked doubtful. 'I'd rather see that done on paper,' he said.") And when Humpty speaks, he makes little sense. When Alice is confused by what he says, she tells Humpty that she does not know what he means. "'When
It is this passage that is quoted at the beginning of Cracking the Code. It is fitting because the book is largely an exercise in twisting the meaning of words into what the author wants them to mean, even if statutes, regulations, and case law define those words otherwise.
If there is a single truth in Cracking the Code, it can be found in ALL CAPS in the forward: If you have taxable income, you are subject to the income tax.28*81 This is known as a tautology; it is a statement that merely repeats itself. It says that taxable income is taxable.
As if to draw a contrast, the book then cites
*76 But one need not research the few citations that appear in the book to see what Cracking the Code really is: an antitax screed, short on substance and long on invective. The foreword is clear in this *82 regard, stating: "Plainly stated, the 'income' tax scheme is an utterly corrupt and corrosive fraud feeding an ever-more insatiable appetite of a swollen cadre of politically astute private interests and their camp-followers by way of a deliberate campaign of disinformation, intimidation and cunning."29 The foreword refers to the tax laws variously as "widely misunderstood" and "dauntingly and profoundly confusing", administered by "a professional class of fixers and go-betweens" through a "tangle of deceit and confusion".30 This is not analysis.
The introduction to Cracking the Code chronicles the author's antitax journey. Without an explicit reference to his 1991 indictment, the author refers to "a rogue and ignorant judge" who, in 1992, apparently *83 ordered him to "comply *77 with all internal revenue laws".31 He questions "the lawfulness[] of the U.S. Supreme Court" and names as his apparent inspiration people like Irwin Schiff, a well-recognized tax protester who resides in a Federal prison as a result of his conviction for conspiracy, aiding in the filing of false income tax returns, and failing to pay income tax (plus added time for contempt).32 The author tells of how he would alter the jurat on his tax return, but he notes that the IRS eventually refused to accept his returns with the altered jurat.33*84 Although he seems to attach meaning to the fact that the IRS often accepted his returns with the altered jurat, as the Supreme Court recently noted, "An agency's failure to assert a power, even if prolonged, cannot alter the plain meaning of a statute."34 It should come as no surprise that the IRS eventually rejected the returns with the altered jurat; returns *78 must be executed under penalties of perjury.35 And an altered jurat may be enough to invalidate a return.36
Cracking the Code is divided into three major parts with each part containing several sections. Part I is titled "The Nature Of The Law" and states—or more accurately, misstates—a variety of principles. The following are the section headings from Part I.
Starting with the premise that taxes are either direct or indirect, Cracking the Code lays the foundation for the remainder of the book on two fallacies. The first is that "federal direct taxes which affect citizens of the several states must be apportioned."37 The Constitution at one time required this apportionment; however, with the adoption of the
The second fallacy is that the Federal Government has legislative authority over only the District of Columbia and U.S. territories and thus lacks the authority to impose taxes within any State. The error here starts with the author's misreading of the Constitution. The Constitution gives Congress the power To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of *86 Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings * * * 39
*80 From this the author leaps to the erroneous conclusion that "All other areas within the union are under the exclusive jurisdiction of one of the several States, and are thus insulated from federal authority except in regard to certain enumerated powers, and federal governmental property and contract rights."40 The fact that Congress has exclusive legislative power in one area does not mean that it has no legislative power in others; it merely means that its power in those other areas is not exclusive. States and the Federal Government exercise sovereignty concurrent with one another. Or, as the Supreme Court has stated: "As every schoolchild learns, our Constitution establishes a system of dual sovereignty between the States and the Federal Government."41*87
The author attempts to use early enactments of the income tax to shed light on the meaning of the income tax as it exists, but he fails miserably.
A similar problem adheres to the author's discussion of
The author's tortured analysis erroneously *89 concludes that remuneration for work is not profit and thus is not taxable. This proposition has already been rejected by the courts.44 Although we need not review the issue further, the author's illogic is worth noting. The analysis begins with a simple analogy of a shepherd exchanging a sheep for shoes from a cobbler. The author asks whether in such a transaction either party received income, concluding "[c]learly not".45 This may not be income in the author's mind, but from a tax standpoint, it is income from a barter transaction and it is subject to tax.46 The rest of the author's conclusions that flow from this analogy all fail because of his faulty premise.
The author opines that laws that need the assistance of interpretation are "improper and void" and goes on to suggest that the judiciary lacks the authority to interpret the law.47 Nonsense. It was Chief Justice John *90 Marshall who wrote more than two centuries ago: "It is emphatically the province and duty of the judicial department to say what the law is. Those who apply the rule to particular cases, must of necessity expound and interpret that rule."48
Amongst the errors in this section is the author's misapprehension of the meaning of the word "including", or perhaps more accurately his ignoring it. For example, because certain out-of-date tax provisions expressly stated that they taxed income, including that of Federal employees, the author erroneously concludes that persons who are not Federal employees are not taxed. The Supreme Court rejected this view half a century ago. Though the definition of "person" in
When the law uses a general term followed by the word "including", what follows is a nonexhaustive list.50 The Internal Revenue Code is explicit in this regard, providing that "includes" and "including" "shall not be deemed to exclude other things".51 In contrast, when the law uses a specific list of terms, that list is presumed to be exhaustive.52*92 This principle is often referred to by the Latin phrase "expressio unius est exclusio alterius".53
*85 This can be illustrated by a simple example. If one were to say "I had ham and eggs for breakfast", it would mean that the person had just that. If, however, one were to say "I had breakfast, including ham and eggs", then that breakfast may well have included toast or other breakfast foods. In short, "including" is not a word of limitation.
Mr. Waltner followed the same erroneous reading of the word "including" when he argued that he is not a person. We addressed this error in an order dated September 3, 2013, stating: Mr. Waltner asserts that he is not a "person" as defined in
Having spent the immediately preceding chapter misinterpreting the word "including", the author turns to the same Latin phrase discussed above and then proceeds to misinterpret it. Indeed, courts have repeatedly explained that phrase, and the author's views simply do not withstand scrutiny.54 The faulty conclusions that the author reaches are laughable and have been rejected elsewhere: • Because one Code section defines the term "employee" to include government employees,55 someone who does not work for the government is not included in the definition of an employee. This proposition was rejected in • Because one Code section defines the United States to include the U.S. territories,56 the fifty States *94 are not included in the definition of United States. This proposition was rejected in
This chapter provides an example of how one illogical conclusion can be used to bolster another. The author makes the unsupported statement that "[n]eedless to say, the federal government has no authority to subject officers and *87 employees of the several union States to taxation by decree."57 He cites no support, and this view has already been rejected by the Supreme Court.58*95 But he bolsters this erroneous view on the basis of his continued misunderstanding of the word "including." Because
Turning to the subject of withholding, the author sets forth one of his fundamental, and fundamentally incorrect, positions regarding tax reporting. *88 Having erroneously concluded that the term "employee" includes only government employees (and a few selected others), the author concludes that "this kind of *96 withholding only applies to the pay of federal government workers".60 This argument, too, has already been rejected by the courts, with at least one court characterizing it as "a preposterous reading of the statute."61
The author's misinterpretation of the word "includes" continues to lead him to erroneous conclusions. For people involved in a trade or business, he concludes "that unless one's works involves the performance of the functions of a public office one has no '
In a pernicious attempt at persuasion, Hendrickson interrupts his own book to make certain that the reader is convinced. He presents, in essence, a false dichotomy: Either you agree with him or "you personally are simply incapable of understanding the law".65 And anyone who disagrees is part of "a conspiracy of sloth, and ignorance, and plunder, and fear. And a good share of corruption and lies, of course."66 Or he is simply wrong, but the reader is not offered this option.
Part II of Cracking the Code is titled "The Nature Of The Scheme", which is apt because it is in Part II where the author lays out his scheme for how people can avoid taxes. His erroneous advice regarding tax reporting mirrors how Mr. Waltner has reported, or attempted to report, his items.
The author's chief weapon, as described beginning in this chapter and continuing in subsequent chapters, is not to comply with the tax laws. He begins with a fundamental misunderstanding of what it means to have a "voluntary compliance" tax system. As we have noted *98 previously, "The concept of voluntary compliance does not refer to whether one volunteers to be liable for tax but only that one voluntarily reports and remits his tax due. In the absence of such voluntary compliance, the government may force compliance."67 For example, failing to file a return can result in civil and criminal penalties.68
We have previously addressed the argument that phrase "voluntary compliance" means that the tax system is voluntary, stating: This is nothing but arrogant sophistry. Implicit in the statements relied upon by him to the effect that the system is based upon voluntary compliance is the known fact that, in spite of its extensive bureaucracy and technical equipment, the manpower and facilities of the IRS for policing compliance by every taxpayer are limited and that the effectiveness of the system depends upon the taxpayer's voluntary obedience to the law. These statements certainly were never intended to suggest that the internal revenue laws were *99 self-destructive. Yet, this is precisely what petitioner's argument *91 comes down to, for if he were correct, Congress has supplied every taxpayer with a facile device for totally avoiding all liability by simply declaring that he does not choose to comply. We cannot find that Congress ever intended any such absurd result.69
On the basis of his misguided views about voluntary compliance and who is subject to tax, the author takes issue with the Form W-9, Request for Taxpayer Identification Number and Certification, that is typically submitted by people who are required to file certain information returns. On the basis of his misinterpretation of various words, as discussed above, the author suggests "replacing the relevant line [declaring that you are a U.S. citizen or U.S person] with an accurate declaration, like: 'I am a Pennsylvania citizen' (or *100 whatever is true); and adding language" stating you are not subject to withholding.70 Indeed, we see this same type of nonsensical rhetoric from Mr. Waltner. But the author has it backwards; one cannot be a citizen of a State without also being a citizen of *92 the United States.71 Indeed, citizenship in the United States is "paramount and dominant" over State citizenship.72
Much like the Humpty Dumpty passage at the start of Cracking the Code, the author at this point has redefined terms to mean what he wants them to mean: The term "United States" does not include the States, *101 the term "employee" does not include most employees, and the term "person" does not include most people. It is only by venturing into this Through the Looking Glass world that the author can conclude that tax reporting through Forms W-2 and 1099 does not apply to private sector persons, a position echoed repeatedly by Mr. Waltner.
In another pernicious attempt at persuasion, the author issues an ominous warning to the reader. It is the author's view that only Federal workers are subject to tax. By accepting a Form W-2 that reports wages, the author suggests that one would be admitting to being a Federal worker. Thus, he concludes, failing to *93 correct a Form W-2 to state that one earned zero wages will land the recipient of the Form W-2 in jail: "Furthermore, impersonating a federal official or employee, as in pretending to be engaged in the performance of the functions of a public office and withholding from one's 'employees' accordingly, is a felony under
Much of the remainder *102 of Cracking the Code simply rehashes the myths that we have dispelled above. In this section the author analogizes the Form W-4, Employee's Withholding Allowance Certificate, to the Form W-2, likewise maintaining that most employees are not employees under his interpretation and thus need not have taxes withheld. But this argument has already been rejected.74
Cracking the Code turns its attention to employers, suggesting that businesses are duped from their inception into participating in the tax system. Here is another instance where we see parallels between Mr. Waltner's conduct and the course of action suggested in Cracking the Code. The author suggests *94 "carefully avoiding the use of any possibly misleading legal terms such as 'employee', 'wages', etc.", instead suggesting that forms be left blank or that terms be altered.75 This mirrors Mr. Waltner's conduct in this case. An example can be seen in his application for fee waiver, where he substituted "pay" for "salary or wages" and "job" for "employment". As already outlined above, both the author's and Mr. Waltner's positions regarding these terms are without *103 merit.
As previously discussed, Cracking the Code erroneously redefines terms in such a way as to nullify the tax system. And one incorrect definition is predicated on another, as in this section where the author concludes that "the vast majority of adult American citizens are not 'taxpayers', because they are not 'employers', 'withholding agents', recipients of 'income' in more than the exemption amount, or other such specialized entities by virtue of which liability for an internal revenue tax might arise."76
This misguided view leads to the author's strategy for filing tax returns, which was mirrored by Mr. Waltner's returns. The author recommends "correcting" Forms 1099 by including a declaration that nothing that was received *95 was taxable. Mr. Waltner did this. The author recommends creating substitute W-2s by changing only the amount of the reported wages. Mr. Waltner did this. The author recommends filing a Form 1040 based on these inappropriately revised forms. Mr. Waltner did this. The author recommends including FICA taxes amongst the taxes withheld. Mr. *104 Waltner did this.
Part III, labeled "The Nature of the Crisis", lays bare the author's disdain for our tax system; it is, however, devoid of analysis.
According to the author, the entire tax system is "[a] racket by which 250 million people are conned".77 At this point it should be clear that the only people being conned are those who follow the positions advocated in Cracking the Code. And even if deceptive, the positions outlined above are so lacking in merit that they are sanctionable even if sincerely believed.78
In misleading its readers into believing that they can avoid taxes because the law simply does not apply, Cracking the Code provides a warning: All that each of us need do is invoke the written law and claim the return of money improperly withheld; de-authorize improper withholdings for the future; rebut any erroneous assertions by others who have paid us; correct any improper assertions that we have made ourselves * * * while being *105 ready to abide the storm of protest, denial, resistance, threats, intimidation and perhaps injustice which might follow.79
The positions advocated in Cracking the Code have routinely been rejected, with its author being criminally convicted and its adherents being sanctioned.80
Mr. Waltner took a series of frivolous positions that have repeatedly been rejected by the courts. Even after this Court cautioned him that he was making frivolous arguments, he continued to advance them, and his conduct merits *97 sanctions. The Court is authorized to impose sanctions of up to $25,000. In the hope that Mr. Waltner heeds this warning, the Court imposes a penalty under
To reflect the foregoing,
Footnotes
1. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
2. The requested refund included Federal income tax, Social Security tax, and Medicare tax withheld from Mr. Waltner's three jobs and withheld Federal income tax from a retirement plan.↩
3. The complete title of this form is "Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.".↩
4. The complete title of this form is "Collection Information Statement for Wage Earners and Self-Employed Individuals".
5.
See United States v. Graham , 309 F.2d 210, 212 (9th Cir. 1962)Crites v. Commissioner , T.C. Memo. 2012-267↩, at PP*7-*86.
Crain v. Commissioner , 737 F.2d 1417, 1417↩ (5th Cir. 1984)7.
Rapp v. Commissioner , 774 F.2d 932, 936 (9th Cir. 1985)May v. Commissioner , 752 F.2d 1301, 1305-1306 (8th Cir. 1985)Schiff v. Commissioner , 751 F.2d 116, 117 (2d Cir. 1984)aff'g T.C. Memo. 1984-223 ;Wnuck v. Commissioner , 136 T.C. 498, 499 (2011)McCoy v. Commissioner , 76 T.C. 1027, 1029-1030 (1981)aff'd ,696 F.2d 1234 (9th Cir. 1983) ;Myrick v. United States , 217 F. Supp. 2d 979, 984-985 (D. Ariz. 2002)aff'd ,70 Fed. Appx. 956↩ (9th Cir. 2003) .8. Martha J. Dragich, "Will the Federal Courts of Appeals Perish If They Publish? Or Does the Declining Use of Opinions to Explain and Justify Judicial Decisions Pose a Greater Threat?",
44 Am. U. L. Rev. 757, 758↩ (1995) (citations omitted).9.
See Pierson v. Commissioner , 115 T.C. 576, 581↩ (2000)10.
See Coleman v. Commissioner , 791 F.2d 68, 71 (7th Cir. 1986)see also Wnuck v. Commissioner , 136 T.C. at 513-514Grunsted v. Commissioner , 136 T.C. 455, 462↩ (2011)11.
Rule 90↩ .12.
Rules 103 ,104(b)↩ .13.
See generally Rule 104↩ .14.
See, e.g., Coleman v. Commissioner , 791 F.2d at 69Sixteenth Amendment↩ is unconstitutional, and so on. These beliefs all lead—so tax protesters think—to the elimination of their obligation to pay taxes. The government may not prohibit the holding of these beliefs, but it may penalize people who act on them.").15. Specifically, Steven T. Waltner and Sarah V. Waltner's "return information notice" for 2007 from the State of California Franchise Tax Board and a letter from the IRS applying a 2007 overpayment to their outstanding 2006 tax liability.
16. Peter Eric Hendrickson, Cracking the Code: The Fascinating Truth About Taxation in America 204 (2007).↩
17.
See, e.g. ,sec. 6664(c) ;sec. 1.6664-4(b)(1), Income Tax Regs.↩ 18.
Freytag v. Commissioner , 89 T.C. 849, 888 (1987)aff'd ,904 F.2d 1011 (5th Cir. 1990) ,aff'd ,501 U.S. 868, 111 S. Ct. 2631, 115 L. Ed. 2d 764↩ (1991) .19.
Sec. 1.6662-4(d)(3)(iii), Income Tax Regs. ;see also Brown v. Commissioner , T.C. Memo. 2013-275↩, at *1820.
See sec. 1.6664-4(c), Income Tax Regs. ;see also Charlotte's Office Boutique, Inc. v. Commissioner , 425 F.3d 1203, 1212 n.8 (9th Cir. 2005)Neonatology Assocs, P.A. v. Commissioner , 115 T.C. 43, 99 (2000)aff'd ,299 F.3d 221↩ (3d Cir. 2002) .21.
See United States v. Hendrickson↩ , No. 91-80930 (E.D. Mich. Oct. 24, 1991)22.
United States v. Scarborough , 43 F.3d 1021, 1023↩ (6th Cir. 1994)23.
See Hendrickson↩ , No. 91-80930 (Judgment entered May 13, 1992). The superseding information and the docket sheet worded the first count as "Conspiracy to Possess a Destructive Device".24.
United States v. Hendrickson , 664 F. Supp. 2d 793, 796↩ (E.D. Mich. 2009)25.
Hendrickson , 664 F. Supp. 2d at 814-815↩26.
United States v. Hendrickson , No. 06-11753, 2007 U.S. Dist. LEXIS 99006↩ (E.D. Mich. May 2, 2007)27.
Hendrickson , 664 F. Supp. 2d at 796↩28. Cracking the Code,
supra note 16, at i.29. Throughout the book, Mr. Hendrickson uses scare quotes, especially around the words "income" and "wages". Scare quotes are defined as "[e]ither of a pair of quotation marks used to emphasize a word or phrase or to indicate its special status, especially to express doubt about its validity or to criticize its use." The American Heritage Dictionary of the English Language 1555 (4th ed. 2000).↩
30. Cracking the Code,
supra↩ note 16, at iii.31. Cracking the Code,
supra↩ note 16, at viii.32.
United States v. Schiff , 544 Fed. Appx. 729, 2013 U.S. App. LEXIS 22636↩ (9th Cir. Nov. 7, 2013)33. Cracking the Code,
supra note 16, at ix.34.
United States v. Woods , 571 U.S.35.
Sec. 6065↩ .36.
See, e.g., Sloan v. Commissioner , 53 F.3d 799 (7th Cir. 1995)aff'g 102 T.C. 137 (1994) ;see also Williams v. Commissioner , 114 T.C. 136↩ (2000)37. Cracking the Code,
supra↩ note 16, at 2.38.
Eisner v. Macomber , 252 U.S. 189, 218-219, 40 S. Ct. 189, 64 L. Ed. 521, 1920-3 C.B. 25, T.D. 3010 (1920)see also Brushaber v. Union Pac. R.R. Co. , 240 U.S. 1, 18, 36 S. Ct. 236, 60 L. Ed. 493, T.D. 2290 (1916)Brushaber merits special mention, because Cracking the Code misleadingly cites that case. A stockholder brought suit to against a corporation to prevent the corporation from paying taxes imposed by the Tariff Act of 1913. The Supreme Court summarized the stockholder's arguments, stating: "The various propositions are so intermingled as to cause it to be difficult to classify them."Brushaber , 240 U.S. at 10supra↩ note 16, at 19-20.39.
U.S. Const., art. I, sec. 8↩ .40. Cracking the Code,
supra↩ note 16, at 6.41.
Gregory v. Ashcroft , 501 U.S. 452, 457, 111 S. Ct. 2395, 115 L. Ed. 2d 410 (1991)see also Loughborough v. Blake , 18 U.S. 317, 319, 5 L. Ed. 98 (1820)42. Cracking the Code,
supra↩ note 16, at 14.43.
Brushaber , 240 U.S. at 18Pollock↩ case was decided[.]").44.
See, e.g., Reading v. Commissioner , 70 T.C. 730 (1978)aff'd ,614 F.2d 159↩ (8th Cir. 1980) .45. Cracking the Code,
supra↩ note 16, at 26.46.
Sec. 61(a) ;Baker v. Commissioner , 88 T.C. 1282, 1288 (1987)Rooney v. Commissioner , 88 T.C 523 (1987)sec. 1.61-2(d)(1), Income Tax Regs.↩ 47. Cracking the Code,
supra↩ note 16, at 38.48.
Marbury v. Madison , 5 U.S. 137, 177, 2 L. Ed. 60↩ (1803)49.
Sims v. United States , 359 U.S. 108, 112, 79 S. Ct. 641, 3 L. Ed. 2d 667, 1959-1 C.B. 636↩ (1959)50.
Wnuck , 136 T.C. at 506↩51.
Sec. 7701(c)↩ .52.
Helvering v. Morgan's, Inc. , 293 U.S. 121, 125 n.1, 55 S. Ct. 60, 79 L. Ed. 232, 1934-2 C.B. 267 (1934)53. Black's Law Dictionary 661-662 (9th ed. 2009).↩
54.
See Rand v. Commissioner, 141 T.C. 12, ___, 2013 U.S. Tax Ct. LEXIS 32, *65↩ (Nov. 18, 2013) .55.
Sec. 3401(c)↩ .56.
Sec. 3121(e)(2)↩ .57. Cracking the Code,
supra↩ note 16, at 70.58.
Sims , 359 U.S. at 112-11359.
Helvering v. Gerhardt , 304 U.S. 405, 416-417, 58 S. Ct. 969, 82 L. Ed. 1427, 1938-1 C.B. 246↩ (1938)60. Cracking the Code,
supra↩ note 16, at 76.61.
United States v. Latham , 754 F.2d 747, 750↩ (7th Cir. 1985)62. Cracking the Code,
supra↩ note 16, at 87.63.
Latham , 754 F.2d at 750↩64.
See, e.g., Pabon v. Commissioner , T.C. Memo. 1994-476↩65. Cracking the Code,
supra↩ note 16, at 92.66. Cracking the Code,
supra↩ note 16, at 95.67.
McKeown v. Commissioner , T.C. Memo. 1985-74↩68.
See, e.g. ,sec. 6651(a)(1) (imposing a civil addition to tax for failure to file);sec. 7203↩ (imposing a criminal fine or imprisonment for willful failure to file).69.
Donelin v. Commissioner , T.C. Memo. 1984-131see also Wilcox v. Commissioner , 848 F.2d 1007, 1008 (9th Cir. 1988)aff'g T.C. Memo. 1987-225↩ .70. Cracking the Code,
supra↩ note 16, at 130-131.71.
Kantor v. Wellesley Galleries, Ltd. , 704 F.2d 1088, 1090-1091 (9th Cir. 1983)Factor v. Pennington Press, Inc. , 230 F. Supp. 906, 909↩ (N.D. Ill. 1963))72.
Colgate v. Harvey , 296 U.S. 404, 427, 56 S. Ct. 252, 80 L. Ed. 299 (1935)overruled in part on other grounds by Madden v. Commissioner , 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590↩ (1940)73. Cracking the Code,
supra↩ note 16, at 142-143.74.
See, e.g., Latham , 754 F.2d at 750↩75. Cracking the Code,
supra↩ note 16, at 160.76. Cracking the Code,
supra↩ note 16, at 164.77. Cracking the Code,
supra↩ note 16, at 187.78.
Hansen v. Commissioner , 820 F.2d 1464, 1470↩ (9th Cir. 1987)79. Cracking the Code,
supra↩ note 16, at 204.80.
See, e.g., Lindberg v. Commissioner , T.C. Memo. 2010-67sec. 6673↩ for taking positions consistent with those set forth in Cracking the Code).
Related
Cite This Page — Counsel Stack
2014 T.C. Memo. 35, 107 T.C.M. 1189, 2014 Tax Ct. Memo LEXIS 35, Counsel Stack Legal Research, https://law.counselstack.com/opinion/waltner-v-commr-tax-2014.