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CITE: Joseph T. McQuatters v. Commissioner; T.C. Memo. 2000-34;
No. 16871-98 (February 3, 2000)
UNITED STATES TAX COURT
JOSEPH T. MCQUATTERS,
COMMISSIONER OF INTERNAL REVENUE,
UNITED STATES TAX COURT
Filed February 3, 2000
Joseph T. McQuatters, pro se.
Edwina L. Charlemagne, for respondent.
VASQUEZ, JUDGE: Respondent determined the following deficiencies in and
additions to petitioner's Federal income taxes:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654
____ __________ _______________
1990 $63,547 $15,887 $4,185
1991 65,221 16,305 3,749
1992 25,949 6,487 1,133
1993 22,724 5,681 952
1994 12,113 3,028 623
1995 10,065 2,516 550
After concessions, /1/ the sole issue for our decision is whether we
should grant respondent's motion to impose a penalty pursuant to
section 6673. /2/ We combine our findings of fact with our opinion.
At the time the petition was filed, petitioner resided in Columbia, South
Petitioner failed to file tax returns for 1990 through 1995. On July 30,
1998, respondent issued a notice of deficiency (the notice) for these years.
The deficiency was principally attributable to unreported income from petitioner's
sole proprietorship known as Interstate Safety. Respondent based his determination
of gross receipts on State sales tax returns filed by petitioner and computed
petitioner's cost of goods sold based on information obtained from petitioner's
On October 19, 1998, petitioner filed a petition protesting the validity
of the notice on numerous grounds, such as that the notice was addressed to "Dear
Taxpayer", was fraudulent, and was not signed by hand or under penalties
of perjury. Petitioner also argued, among other things, that (1) section 61
does not define taxable income; (2) he is not liable for the addition to tax
under section 6651(a)(1) because he has not engaged in the collection of taxes
on alcohol, tobacco, and/or firearms; and (3) he is not liable for the addition
to tax under section 6654 because he had no knowledge that he qualified as
a "person" subject to pay estimated taxes.
On December 4, 1998, respondent filed a motion to dismiss for failure
to state a claim and to impose a penalty under section 6673 (the motion to
dismiss). On December 8, 1998, in response to the motion to dismiss, this Court
ordered petitioner to file an amended petition on or before January 8, 1999,
setting forth with specificity each error petitioner alleged respondent made
in the notice of deficiency and separate statements of every fact upon which
petitioner based his assignment of each error. The Court calendared the motion
to dismiss for a hearing on February 8, 1999.
On January 11, 1999, petitioner filed an amended petition. In the amended
petition, petitioner accused this Court of acting prematurely in issuing the
order on December 8, 1998, petitioner "reiterate[d] and reaffirm[ed] each
and every statement of Claim, Fact, Law, Case Law, and Regulation contained
in the original PETITION," and he contended that his arguments and statements
of fact/law were entitled to a presumption of correctness.
On February 10, 1999, a hearing was held on the motion to dismiss. Pursuant
to the hearing and by an order dated February 18, 1999, this Court denied the
motion to dismiss. The Court struck the amended petition in its entirety and
struck all statements and allegations set forth in the petition except for
paragraphs 1, 2, 3, and 19. The stricken portions contained tax- protester
rhetoric. Taking into account the nonstricken portions of the petition, only
one issue remained -- whether petitioner had any long-term capital gains in
At the hearing, petitioner was warned that if he continued at trial to
advance tax-protester arguments this Court would impose a penalty under section
6673 for a sum substantially higher than the $1,000 penalty we awarded against
petitioner in McQuatters v. Commissioner, T.C. Memo. 1998-88 (McQuatters I).
On May 11, 1999, and June 3, 1999, respectively, petitioner served a request
for admissions and written interrogatories on respondent. Petitioner's requests
related to his arguments that were already stricken from the petition and the
amended petition. Respondent filed motions for a protective order, and this
Court granted the motions on June 16, 1999.
On December 6, 1999, respondent filed his trial memorandum wherein respondent
conceded that petitioner had no capital gains in 1994. Respondent based his
concession on information received pursuant to a subpoena duces tecum establishing
petitioner's basis in the property sold.
Although there were no remaining issues in the case, petitioner refused
to sign a decision document. On December 6, 1999, at the calendar call of this
case, petitioner failed to make an appearance. Respondent filed a motion for
entry of decision and a motion to impose a penalty under section 6673.
After the amended petition in its entirety and the majority of the petition
were stricken, the only issue remaining was whether petitioner had a long-term
capital gain of $6,971 in 1994. In his trial memorandum and at the calendar
call, respondent conceded that issue. Accordingly, we shall grant respondent's
motion for entry of decision.
Pursuant to section 6673, this Court may impose a penalty not in excess
of $25,000 whenever it appears to the Court that the taxpayer has instituted
or maintained the proceedings primarily for delay or the taxpayer's position
in such proceedings are frivolous or groundless. A position maintained by the
taxpayer is "frivolous" where 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).
The petition and amended petition contained shopworn tax- protester rhetoric
that has been universally rejected by this and other Courts. After the majority
of the petition and the entire amended petition were stricken, petitioner served
requests for admissions and interrogatories on respondent relating to the tax-
protester arguments contained in the stricken portions. Petitioner also refused
to sign a decision document even though there were no longer any issues in
the case and did not make an appearance at the calendar call to explain his
refusal to sign the decision documents.
In McQuatters I, petitioner made frivolous tax-protester arguments akin
to those advanced in the petition and amended petition in the instant case,
and this Court penalized petitioner $1,000 pursuant to section 6673. At the
hearing on the motion to dismiss, petitioner was warned that if he continued
to advance these arguments and further delay the resolution of this case he
would be penalized again. Petitioner has failed to heed our warnings. Accordingly,
we shall grant respondent's motion and impose a penalty of $5,000 pursuant
to section 6673.
To reflect the foregoing,
An appropriate order and decision will be entered for respondent.
/1/ After the majority of the petition and the entire amended petition were
stricken, see discussion infra, the only issue raised in the petition was whether
petitioner had a capital gain of $6,971 in 1994. In his trial memorandum and
at trial, respondent conceded that petitioner did not have any capital gains
/2/ All section references are to the Internal Revenue Code in effect for
the taxable years in issue.
/3/ Petitioner was before this Court with regard to his 1988 taxable year
in McQuatters I. In McQuatters I, petitioner asserted typical tax-protester
arguments, and this Court penalized him $1,000 pursuant to sec. 6673.
END OF FOOTNOTES
to Tax Protestor Exhibit