Opinion
1617-19
10-21-2022
JEFFREY ALAN RISCHE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDEER AND DECISION
Joseph Robert Goeke Judge
The parties have filed Cross-Motions for Summary Judgment. Petitioner filed his Motion on August 26, 2022, and respondent on September 14, 2022. Respondent also asks the Court to impose a sanction against petitioner under section 6673 for advancing a frivolous or groundless position.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. Amounts are rounded to the nearest dollar.
Standards for Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Under Rule 121(b) the Court may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary judgment, we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party. Id. However, the nonmoving party may not rest upon the mere allegations or denials of his pleadings but instead must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
The sole issue with respect to the deficiency is whether petitioner received wages of $113,531 from his employer in 2015. Respondent has established that petitioner did receive wages in that amount. There is no genuine dispute, and respondent is entitled to summary judgment.
Background
The following background is based on the parties' pleading and motion papers including declarations and exhibits attached thereto and are not in dispute. Petitioner resided in Washington state when he timely filed his Petition on January 28, 2019.
For 2015 petitioner received $113,531 in wages from Lightspeed Design, Inc. (Lightspeed) as payment for services that he performed, from which the following were withheld: $23,596 in Federal income tax, $7,039 in social security tax, and $1,646 in Medicare tax, for a total amount withheld of $32,281. Lightspeed prepared and provided to petitioner Form W-2, Wage and Tax Statement, for 2015 reporting wages of $113,531 and the tax amounts withheld.
Petitioner timely filed a tax return for 2015 reporting wages of zero and $32,281 of Federal income tax withheld and claiming a refund of the entire amount withheld. He listed his occupation as "Private Sector Worker". He attached Form 4852, Substitute for Form W-2, Wage and Tax Statement, to his 2015 return, that reported that he had wages of zero. He checked the box on line 4, indicating he did not obtain Form W-2 or received an incorrect Form W-2. He listed Lightspeed as his employer.
On October 24, 2018, respondent issued a Notice of Deficiency to petitioner determining a tax deficiency of $21,976 for 2015 on the basis that petitioner received and failed to report wages of $113,531.
On September 14, 2019, petitioner filed a Motion to Dismiss for Lack of Jurisdiction, arguing that the Notice of Deficiency was invalid because it was not signed by an employee of the Internal Revenue Service with authority to do so, which the Court denied. On October 15, 2018, petitioner filed a Motion for Reconsideration and a Motion to Certify for Interlocutory Appeal, both of which the Court also denied. On September 4, 2020, petitioner filed a Motion for Summary Judgment, arguing that respondent has conceded the deficiency on the basis of computer-generated notices sent to petitioner in error, which the Court denied.
Petitioner's 2015 Tax Liability
Gross income includes "all income from whatever source derived" and includes compensation for services. § 61(a). The deficiency determined by respondent is based on Form W-2 from petitioner's employer. Exhibits attached to respondent's Motion prove that Lightspeed paid wages of $113,531 to petitioner in 2015 as payment for services. The payment is taxable income under section 61(a). Accordingly, there is no genuine issue of material fact remaining in this case, and respondent is entitled to summary judgment.
Petitioner does not contest that he received payment for work that he performed for Lightspeed. Instead, he argues that the payment is not subject to tax because he was not an employee and the payments were not wages as defined in sections 3121 and 3401. The Court has consistently held that these types of arguments are frivolous. Wells v. Commissioner, T.C. Memo. 2018-188, Briggs v. Commissioner, T.C. Memo. 2016-86, at *10, Jenkins v. Commissioner, T.C. Memo. 2012-181; see also Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984) ("We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit.").
Section 6673(a)(1) Sanction for Frivolous Position
The Court may impose a sanction if a petitioner has instituted or maintained proceedings before the Court primarily for delay or if the petitioner's position is frivolous or groundless. § 6673(a)(1). A position is frivolous or groundless if it is "contrary to established law and unsupported by a reasoned, colorable argument for change in the law." Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.1986).
As stated above, petitioner's arguments in this case have consistently been frivolous. Petitioner complains of a delay in resolution of this case. However, the delay is of his own making through the numerous motions that he has filed, which the Court has consistently denied. He advanced the same zero income return position in Rische v. Commissioner, Docket No. 12518-20L, relating to the collection of a section 6702 $5,000 civil tax penalty for frivolous tax submissions for 2018, which we decided for respondent. He has taken the same or similar frivolous positions on returns filed for numerous years and has faced civil penalties for doing so. He has wasted resources of both respondent and the Court by filing frivolous motions and advancing frivolous and groundless arguments. Accordingly, we will impose a sanction under section 6673 of $5,000.
Upon due consideration, it is
ORDERED that petitioner's Motion for Summary Judgment, filed August 26, 2022, is denied. It is further
ORDERED that respondent's Motion for Summary Judgment, filed September 14, 2022, is granted. It is further
ORDERED and DECIDED that there is a deficiency in income tax due from petitioner for the taxable year 2015 in the amount of $21,976; and
That petitioner is liable for a sanction of $5,000 under section 6673.