Opinion
34180-21
05-02-2023
TAMMY LOUISE BLASZAK, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Peter J. Panuthos Special Trial Judge
Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is
ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of the proceeding of the above case before Special Trial Judge Peter J. Panuthos at Detroit, Michigan (conducted remotely) on April 12, 2023, containing the Court's oral findings of fact and opinion. In accordance with the oral findings of fact and opinion, the decision will be entered pursuant to Rule 155.
Bench Opinion by Judge Peter J. Panuthos
April 12, 2023
Tammy Louise Blaszak v. Commissioner of Internal Revenue
Docket No. 34180-21
THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case.The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Rule references in this opinion are to the Tax Court Rules of Practice and Procedure, and section references are to the Internal Revenue Code, in effect at all relevant times.
This case is before the Court on respondent's motion for summary judgment, filed January 25, 2023. Petitioner filed an objection to respondent's motion on February 27, 2023. The objection contained mostly nonresponsive and tax protestor type material. Respondent's motion was heard on April 11, 2023, during the Detroit, Michigan, trial session that began on that date.
In a notice of deficiency dated September 22, 2021, respondent determined a deficiency in petitioner's Federal income tax in the amount of $5,141 and section 6662(a) accuracy-related penalty of 1,028.20 for taxable year 2018. The notice of deficiency determined 3 items of omitted income. At the hearing respondent conceded 2 of the adjustments of omitted income set forth in the notice of deficiency. Thus the issue for consideration is whether there is any genuine dispute as to any material fact for tax year 2018 that (1) petitioner received unreported taxable wages in the amount of $50,039 and that (2) petitioner is liable for an accuracy-related penalty pursuant to section 6662. See Rule 121(b).
On the record before us, and using the burden-of-proof principles explained below, the Court finds the following facts:
Background
Petitioner resided in Michigan at the time she filed her petition in this case. During tax year 2018, Ms. Blaszak was employed by the State of Michigan. The State of Michigan reported on a W-2, Wage and Tax statement that petitioner was paid $50,039 in wages.
Petitioner timely filed her Form 1040, U.S. Individual Income Tax Return for tax year 2018. On her return, she did not report any taxable income and reported zero dollars for wages.
Discussion
Respondent's motion requests summary adjudication in her favor under Rule 121. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Either party may move for summary judgment upon all or any part of the legal issues in controversy. Rule 121(a). The Court may grant summary judgment only if there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(a) and (b); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). Respondent, as the moving party, bears the burden of proving that no genuine dispute exists as to any material fact and that the respondent is entitled to judgment as a matter of law. FPL Group, Inc. v. Commissioner, 115 T.C. 554, 559 (2000). In deciding whether to grant summary judgment, the factual materials and inferences drawn from, must be considered in the light most favorable to the nonmoving party. FPL Group, Inc. v. Commissioner, 115 T.C. at 559;
Generally, the Commissioner's determinations in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving those determinations erroneous. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). To defeat this presumption, the taxpayer must prove by a preponderance of the evidence that the Commissioner's determinations are arbitrary and erroneous. See United Dairy Farmers, Inc. v. United States, 267 F.3d 510, 515-16 (6th Cir. 2001).
Respondent has conceded the two income items attributable to Shipt, Inc. and the Michigan Department of Treasury. Respondent produced the W-2 reported by the State of Michigan as to petitioner's wages in the amount of $50,039 and has met his burden of production as to the relevant unreported income determined in the notice of deficiency. Petitioner does not dispute receipt of the wages in 2018 from the State of Michigan where she was an employee.
I. Unreported Income
Gross income generally includes all income from whatever source derived, including wages. § 61(a); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-430 (1955). The United States Supreme Court has held consistently that Congress defined gross income to exert "the full measure of its taxing power." Commissioner v. Glenshaw Glass Co., 348 U.S. at 429 (quoting Helvering v. Clifford, 309 U.S. 331, 334 (1940)).
As indicated, petitioner does not dispute that she received wages and does not make any valid arguments that her wages are excludable from gross income because of any specific provision of law. See Rodriguez v. Commissioner, T.C. Memo. 2009-92. Instead, she advances frivolous constitutional and statutory arguments that her wages are not income subject to federal income tax purposes and that because of her status as a "state national", the IRS does not have any authority over her. We do not need to discuss petitioner's frivolous and groundless arguments as they are meritless and grounds for assessing sanctions. See Martin v. Commissioner, 756 F.2d 38 (6th Cir. 1985) aff'g T.C. Memo. 1983-473. See also Wnuck v. Commissioner, 136 T.C. 498, 501-513 (2011). In a prior order, served August 18, 2022, petitioner was admonished for advancing frivolous arguments and we noted that petitioner was involved in a federal district court case in the Western District of Michigan where she was again warned for making similar frivolous arguments. Blaszak v. United States, No. 1:21-CV-1093, (W.D. Mich. June 10, 2022). We advised petitioner that she might become liable for a penalty under section 6673 and explained the circumstances for the application of that penalty. Despite the Court's admonishment, petitioner has persisted. It suffices to note that petitioner's arguments have no colorable merit and that she is a taxpayer who is subject to Federal income taxation and obligated to pay Federal income tax on the wage income she earned and received during tax year 2018.
II. Section 6662(a) Penalty
Section 6662(a) and (b)(2) imposes an accuracy-related penalty of 20% on any portion of an underpayment of tax required to be shown on a return attributable to the taxpayer's "substantial understatement of income tax." An understatement of income tax is substantial if the amount of the understatement for the taxable year exceeds the greater of 10% of the tax required to be shown on the return or $5,000. § 6662(d)(1)(A).
The Commissioner generally bears the burden of production with respect to a section 6662 penalty. See § 7491(c). To satisfy that burden the Commissioner must offer sufficient evidence to indicate that it is appropriate to impose the penalty. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the Commissioner meets his burden of production, the taxpayer must come forward with evidence sufficient to show the Court that the determination is incorrect. Id. at 446-47. If the understatement of income tax for the year in issue is substantial, the Commissioner has satisfied the burden of producing evidence that the penalty is justified.
Respondent determined a deficiency in tax, increasing petitioners' total tax liability from zero. Respondent has met his burden because the amount of petitioner's understatement for the year in issue was "substantial" in that it exceeded the greater of 10% of the tax required to be shown on the return or $5,000. See § 6662(d)(1)(A).
Section 6751(b)(1) requires that the initial determination of a penalty be approved in writing by the immediate supervisor of the individual making that initial determination. Respondent submitted a case history report reporting that supervisor approval of the accuracy related penalty on July 22, 2021. Respondent has thus shown that penalty approval was received well before the notice of deficiency was issued on September 22, 2021. See Frost v. Commissioner, 154 T.C. 23 34-35 (2020). Accordingly, we hold that respondent has established compliance with section 6751(b) as to the penalty asserted in this case. Petitioner did not present any relevant argument to the contrary.
We therefore hold that the penalty applies.
III. Conclusion
It follows that respondent's motion is well-made and viewing the record before us in a light most favorable to petitioner, there is no genuine issue for trial. See Matsushita Electric Industrial Company v. Zenith Radio Corp., 475 U.S. 574, 585 (1986). Respondent is entitled to a decision as a matter of law. See Rule 121. To reflect the foregoing, an appropriate order will be issued, and a decision will be entered pursuant to Rule 155 given the concessions made by respondent.
This concludes the Court's oral findings of fact and opinion in this case.
(Whereupon, at 11:16 a.m., the above-entitled matter was concluded.)
CERTIFICATE OF TRANSCRIBER AND PROOFREADER
CASE NAME: Tammy Louise Blaszak v. Commissioner
DOCKET NO.: 34180-21
We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 12 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Claudine Metoyer on April 12, 2023 before the United States Tax Court at its remote session in Detroit, MI, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording.