Tax Court In Brief | Mining v. Comm'r | Deficiency Determination And Penalties For Underreporting And Frivolous Arguments

• Jurisdiction: United States,Federal
• Law Firm: Freeman Law
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Tax, Employee Benefits & Compensation, Trials & Appeals & Compensation, Income Tax, Tax Authorities
• Author: Freeman Law
• Published date: 09 January 2023

The Tax Court in Brief - January 2nd - January 6th, 2023

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of January 2nd, 2022, through January 6th, 2023

Mining v. Comm'r, T.C. Memo. 2023-1| January 4, 2023 | Marshall, J. | Dkt. No. 4989-20

Summary: During 2016, Ryan Mining (Mining) was employed by Tasco, Inc. (Tasco), and it issued him Form W-2, Wage and Tax Statement, reporting wages of $116,000, no federal income tax withheld, Social Security tax withheld of $7,192, and Medicare tax withheld of $1,682 for the 2016 tax year. Mining sent to the IRS a signed Form 1040, U.S. Individual Income Tax Return, for the 2016 tax year. Mining reported zero income and federal income tax withheld of $8,797, and claimed a refund of that amount. Mining included a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. In a notice of deficiency, the IRS determined a deficiency of $23,075 and a section 6662(a) accuracy-related penalty. Mining petitioned the Tax Court to review the matter.

In the Tax Court, Mining asserted arguments, such as (1) the notice of deficiency is invalid because the signer of the notice lacked proper delegated authority to sign and issue it; (2) the IRS has no proof that Mining received wages and reliance on a Form W-2 is hearsay; and (3) the wages listed on the Form W-2 issued by Tasco did not meet the definition of wages under the Code. Mining asserted similar arguments in a separate Tax Court proceeding in 2014. In the present matter, Mining was warned not to make further frivolous arguments. At trial, the IRS made an oral motion requesting that the Court impose a section 6673 penalty against Mining for making frivolous arguments.

Key Issues: Whether Mining (1) underreported income for the 2016 tax year, (2) is liable for a section 6662(a) accuracy-related penalty, and (3) is liable for a section 6673 penalty for frivolous arguments?

Primary Holdings: (1) Yes, Mining did not raise a reasonable dispute concerning the accuracy of the Tasco Form W-2, and thus it constitutes a reasonable foundation and that the presumption of correctness attaches to the IRS's income...