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ADOPTED OCTOBER 3, 2000
CALIFORNIA STATE BOARD OF EQUALIZATION
PERSONAL INCOME TAX APPEAL
Proposed Assessment Appellant Year Tax Penalty
Les R. Reid 1997 $1,753 $438.25 Case No. 30974 (delinquent)
Representing the Parties:
For Appellant: Les R. Reid For Franchise Tax Board: Andrew
O'Boyle, Staff Service Manager
Counsel For Board of Equalization: Donald L. Fillman, Tax
QUESTIONS: (1) Whether appellant's California wages are
subject to California's tax laws.
(2) Whether respondent properly determined appellant's tax
(3) Whether appellant has maintained a frivolous or groundless
position before this Board.
FINDINGS AND DETERMINATION  Facts and Contentions. Appellant
did not file a timely or valid California personal income
tax return for 1997. On December 9, 1998, respondent mailed
a written notice and demand to appellant requesting that
he file (within 30 days) a 1997 return or provide proof that
he was not required to file a return. No return was filed
and no proof was provided that appellant was not required
to file. Appellant sent a letter dated January 8, 1999, contending
that only income from sources on the list contained in Internal
Revenue Code section 861 is subject to income tax. Respondent
issued a Notice of Proposed Assessment (NPA) on February
3, 1999, based upon information on appellant's California
income available at that time. 1 Appellant timely
protested but did not demonstrate error in the NPA. Respondent
issued a Notice of Action (NOA) on July 6, 1999, which affirmed
the NPA. Appellant appealed.
 Appellant filed his opening brief on December 8, 1999.
Attached were several documents including a copy of a 1997
income tax return form that was filled-in with zeros; a California
Form 3525 (substitute Form W-2), dated "12-6-99," that
attempted to change appellant's reported wages for 1997 to
zero; a Form W-2 for 1997 from Vista International that showed
California wages for appellant of $60,830.05; and, copies
of prior correspondence with respondent and the Internal
Revenue Service. Appellant made a number of contentions that
do not attempt to dispute the correctness of the amounts
contained in the NOA. Rather, appellant's contentions are
the same type as those heard and uniformly rejected by the
Board on numerous occasions, and which both California and
United States courts have rejected for many years.
 For example, appellant contends that the tax laws do
not authorize respondent to tax "Citizens of the California
Republic." (App. Br., p. 9.) Appellant attempts to exclude
his type of income from that to which the tax laws apply.
Appellant cites the Internal Revenue Code (IRC), the California
Revenue and Taxation Code (R&TC), as well as various
regulations and judicial decisions, most of which are either
irrelevant or grossly misapplied. He correctly cites R&TC
section 17071 as defining gross income with reference to
IRC section 61. Section 61 defines gross income as "all
income from whatever source. . . ." Yet appellant proceeds
to miscite and misapply the history of this section of the
law (App. Br., p. 11) to conclude that only certain narrow
types of income are subject to the tax laws. This limited
list is contended to include only sources of income listed
in IRC section 861 (App. Br., p. 12). The United States Tax
Court, in Solomon v. Commissioner, 1993 RIA TC Memo 93,509
dismissed this contention as frivolous, and imposed a $5,000
penalty for pursuing a frivolous position before the tax
court. Thus, appellant's gross and obvious misapplication
of plain language is clearly a groundless and frivolous position.
 The United States Court of Appeal for the Ninth District
(which includes California) considered a similarly argued
case in United States v. Romero (9th Cir. 1981) 640 F.2d
1014. In upholding the taxpayer's criminal conviction on
all five counts, the court stated at page 1016, as follows:
"Courts are established at public expense to try issues,
"Romero's proclaimed belief that he was not a "person" and
that the wages he earned as a carpenter were not "income" is
fatuous as well as obviously incorrect. Compensation for
labor or services, paid in the form of wages or salary, has
been universally held by the courts of this republic to be
income, subject to the income tax laws
[Romero] is attempting willfully and intentionally to shift
his burden to his fellow workers by the use of semantics.
He seems to have been inspired by various . groups across
the land who postulate weird and illogical theories of tax
avoidance, all to the detriment of the common weal and of
themselves."  Appellant has not established any error
in respondent's assessment of tax. None of appellant's arguments
answer or even address why appellant believes that the NOA
amount is incorrect. Appellant's arguments are of a type
this Board has uniformly rejected (see: Appeal of Alfons
Castillo, 92-SBE-070, July 20, 1992; Appeal of Walter R.
Bailey, 92-SBE-001, Feb. 20, 1992; Appeals of Fred R. Dauberger,
et al., Cal. St. Bd. of Equal., Mar. 31, 1982), a fact pointed
out to appellant in our letter of September 7, 1999, accepting
this appeal. Respondent's determination is presumed correct
and appellant bears the burden of proving that it is erroneous.
(Todd v. McColgan (1949) 89 Cal.App.2d 509.) When a taxpayer
fails to present credible, competent, relevant, and uncontradicted
evidence as to the issues in dispute, respondent's determination
cannot be successfully rebutted. (Appeal of James C. and
Monablanche A. Walshe, Cal. St. Bd. of Equal., Oct. 20, 1975.)
Appellant has failed to meet this burden.
 Revenue and Taxation Code section 19714 provides for
a penalty of up to $5,000 for maintaining a frivolous or
groundless position before this Board. Appellant was notified
of this fact in both the NOA issued on July 6, 1999, and
our letter of September 7, 1999, accepting this appeal. Despite
this information, appellant filed the present appeal and
has failed to identify any legitimate grounds upon which
respondent's action may be challenged. We conclude that a
frivolous appeal penalty should be imposed against appellant
in the amount of $750.
 The action of respondent is affirmed in all respects.
In addition, a frivolous appeal penalty in the amount of
$750, pursuant to section 19714, is imposed.
1 We note that respondent based its NPA on reported
income of $41,300. However, appellant's Form W-2 shows California
wages of $60,830.05. It appears that, to date, respondent
has only assessed appellant on a portion of his California
income for 1997.
END OF FOOTNOTE
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