In Uncategorized on 06/22/2020 at 15:51

That’s the job description of James A. Lloyd, 2020 T. C. Memo. 92, filed 6/22/20, at p. 4. He runs a religious-type sales operation and internet-based radio stations. For the years at issue, he employed no one and was employed by no one. He also claimed that the Federal income tax was null and void, and if it wasn’t, then he’s a church.

Judge Halpern has this one.

Jim’s income tax-is-void argument got Crained. “Petitioner’s argument that the income tax is null and void is devoid of merit, and we reject it summarily. We do so in mind of what the Court of Appeals for the Fifth Circuit said many years ago and reiterated earlier this year: ‘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.’ Williams v. Commissioner, 801 F. App’x 328, 329 (5th Cir. 2020) (quoting Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984)); see also Wnuck v. Commissioner, 136 T.C. 498, 501 (2011); Wells v. Commissioner, T.C. Memo. 2019-134, at *5.” 2020 T. C. Memo. 92, at p. 13.

Of course, Jim’s tax liability is computed via bank account reconstruction, because Jim never filed anything. His only objection to IRS’ numbers falls short. “Indeed, in response to respondent’s proposed findings of facts with respect to petitioner’s financial activity and income, petitioner has a stock response: ‘Petitioner Objects to the financial figures as they are too voluminous to evaluate within any realistic time frame.’ That is not a claim that the figures are incorrect, only that petitioner has had inadequate time to evaluate them, a claim we do not believe. Petitioner had access to the KeyBank, eBay, and PayPal records at least by December 11, 2018, the date of trial, when the records were received into evidence. Petitioner’s answering brief was not due until more than six months after. Facsimiles appear in the Court’s docket and are available to petitioner electronically.” 2020 T. C. Memo. 92, at pp. 14-15.

Jim can’t be exempt from tax, because organizations may be, but individuals aren’t. I’m sort of surprised Jim didn’t try the corporation sole dodge, but maybe that’s too obvious, and excites unwelcome attention.

IRS drops the Section 6651(f) fraudulent nonfiling chop. But Jim does get nonfiling, nonpayment, nonestimateds, and SE chops.

What makes this case interesting is Judge Halpern hitting Jim with a Section 6673 frivolity chop.

“We may, on our own initiative, require a taxpayer to pay a section 6673(a)(1) penalty. Petitioner failed to report substantial amounts of income for six years and his argument that the Code is null and void is frivolous. We need not decide whether petitioner’s other argument, that he is functioning as a church (which, in the context of this case, we reject), is also frivolous. A taxpayer who makes frivolous arguments is not immune from penalty just because some of his arguments may not be frivolous. Petitioner was warned by respondent both in the answer and in respondent’s pretrial memorandum that he was making frivolous arguments in challenging the constitutionality of the Federal income tax system. Petitioner ignored those warnings at his peril. We believe petitioner is deserving of a penalty under section 6673(a)(1) of $2,500.” 2020 T. C. Memo. 92, at pp. 23-24. (Citations omitted).

I was wondering last week what it took to get a Section 6673 chop. See my blogpost “Titanium? Tungsten? Chromium?” 6/19/20.

It seems I’ve gotten my answer. Dodge paying tax frivolously enough (after IRS warning), get chopped. Repeatedly deny your sworn testimony, resulting in delay of collection and waste of judicial resources, no chop.


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