                        T.C. Memo. 2008-29



                      UNITED STATES TAX COURT



                  NICHOLAS MACK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

                   NICOLAS MACK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 446-06, 26301-06.     Filed February 13, 2008.



     Nicholas Mack, pro se.

     Mark J. Miller, for respondent.



                        MEMORANDUM OPINION


     GERBER, Judge:   By order dated May 21, 2007, these

deficiency cases were scheduled for trial on September 24, 2007,

at Milwaukee, Wisconsin.   In each case, respondent moved at trial

for a dismissal for failure to properly prosecute and for the
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imposition of penalties under section 6673.1   We must decide

whether the cases should be dismissed for lack of prosecution and

whether penalties should be imposed.

                              Background

Docket No. 446-06

     Respondent determined a $554 income tax deficiency for

petitioner’s 2003 tax year solely attributable to the 10-percent

additional tax under section 72(t) on early distributions from

qualified retirement plans.    The petition was filed on January 6,

2006, and respondent’s answer was filed on March 10, 2006.      After

filing his petition, petitioner immediately began requesting

documents from respondent, and on April 3, 2006, respondent moved

for a protective order, which the Court granted April 24, 2006.

     Approximately 1 year later respondent moved to have this

case calendared, petitioner objected, and the Court calendared

this case for trial, along with docket No. 26301-06, on the

Court’s September 24, 2007, Milwaukee, Wisconsin, session.      On

May 29, 2007, petitioner moved for summary judgment on the basis

that respondent’s counsel and certain unnamed clerks of the Tax

Court “have engaged in serious misconduct” and the “presiding

judge has failed and failed again to show any semblance of

impartiality”.   Petitioner did not seek summary judgment with


     1
       All section references are to the Internal Revenue Code as
amended and in effect for the periods under consideration. Rule
references are to the Tax Court Rules of Practice and Procedure.
                                 - 3 -

respect to the underlying merits of respondent’s determination.

In effect, petitioner was seeking a dismissal of this case as a

sanction against respondent.   After considering the parties’

written positions, the Court denied petitioner’s motion for

summary judgment by a June 25, 2007, order.

     Petitioner also served respondent with a request for

admissions, and respondent responded.    At about the same time,

respondent’s motion to show cause why proposed facts in evidence

should not be accepted as established under Rule 91(f) was filed

on June 1, 2007, and on June 5, 2007, the Court issued an order

to show cause why said facts should not be deemed stipulated

under Rule 91(f).   Petitioner failed to respond, and the order to

show cause was made absolute by order dated July 25, 2007.     The

facts deemed stipulated support respondent’s position that his

determination is not in error.

      Respondent’s attorney and Appeals officer made numerous

attempts to contact petitioner for purposes of normal pretrial

preparation and/or settlement of the case.    Petitioner was

recalcitrant and refused to speak with respondent’s employees.

Petitioner sent respondent a final offer to resolve the case and

thereafter, on July 10, 2007, the Court received and filed

“PETITIONER’S NOTICE OF REFUSAL TO ACCEPT SERVICE OF COURT’S

DOCUMENTS”.   Attached to petitioner’s notice was a letter to the

Clerk of the Tax Court dated July 5, 2007, returning “unopened
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and unread” certified mail the Court had sent to petitioner.

Petitioner’s letter also stated that his “Settlement Offer * * *

[was his] final involvement * * * [with the] Court.”

Docket No. 26301-06

     Respondent determined that petitioner was liable for a

deficiency in self-employment tax for his 2004 tax year.

Petitioner reported gross receipts of $43,933 from “General

Rentals” and an $8,078.68 net profit from his “General Rentals,

Quality Homes” business on Schedule C, Profit or Loss from

Business, attached to his 2004 return.   On the basis of

petitioner’s reported items, respondent determined that

petitioner was liable for a deficiency of $1,142 in self-

employment tax for his 2004 tax year.

     Petitioner had received a Form 1099-MISC, Miscellaneous

Income, for $35,983 from SSI Independent Living Center, Inc.

(SSI), and petitioner contends he included this amount in the

gross receipts he reported on his Schedule C.   Petitioner

contends that SSI is a nonprofit corporation of which

petitioner’s father is a director and an officer.   Respondent

reports that according to SSI’s Web site, petitioner is

permanently paralyzed and during 2004, under a contract with SSI,

was paid $35,983 to provide himself with a home and with

transportation.
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     The petition in docket No. 26301-06 was filed December 20,

2006, and respondent’s answer was filed February 6, 2007.

Initially, petitioner had designated Milwaukee, Wisconsin, as the

place of trial, but in March he sought to strike Milwaukee as the

place of trial because he considered respondent’s determination

to be “fraudulent” and he believed the case would “never properly

proceed to trial.”   Around the same time, petitioner moved to

have the case dismissed with prejudice on the ground that

respondent’s determination was “frivolous” and without merit.

Petitioner’s motions were denied, and over the next few months

petitioner sought reconsideration of the denial of his motions.

     Subsequently, petitioner served requests for admission which

respondent answered.   Petitioner filed a motion for summary

judgment that was denied.   Petitioner also sent a final offer to

resolve docket No. 26301-06 and subsequently filed a “NOTICE OF

REFUSAL TO ACCEPT SERVICE OF COURT’S DOCUMENTS” as he had in

docket No. 446-06.

     Other than an ultimatum of settlement on his terms,

petitioner has not provided respondent with any reason or

argument that would show that respondent’s determinations for

2003 and 2004 were in error.   Instead, petitioner has attempted

to collaterally attack respondent’s determinations by means of

broadly stated assertions that respondent’s determinations are

“fraudulent” or “frivolous” and that respondent’s employees are
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involved in some type of conspiracy with Court employees.

Petitioner has not shown or specifically identified any

particular act that would be considered fraudulent.

                             Discussion

     Our consideration of respondent’s motions to dismiss for

lack of prosecution is a relatively simple matter.    Petitioner

filed petitions in these cases generally alleging error in

respondent’s determinations for his 2003 and 2004 tax years.    No

penalties or matters upon which respondent would bear a burden of

proof or production were determined against or identified by

petitioner.   There was some pretrial activity, including

petitioner’s failed motion for summary judgment.   Petitioner then

made ultimatums of settlement on his terms followed by his

refusal to further discuss these cases with respondent or to

receive any correspondence from the Court.   He failed to appear

for trial or respond to respondent’s motions or Court orders, and

it is clear that his cases should be dismissed for his failure to

prosecute.    Petitioner delayed these cases, his conduct has been

contumacious, and he was given ample opportunity to pursue the

merits of his tax dispute but failed to do so.   Accordingly, we

will grant respondent’s motions to dismiss for failure to

properly prosecute.

     Respondent’s motions to impose sanctions under I.R.C.

section 6673 are also presented for our consideration.    In
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support of his motions, respondent contends that initial attempts

to communicate with petitioner were met with “abject hostility,

including accusations of fraud and misconduct.”    Respondent also

points out that petitioner refused to meet with respondent’s

employees or to discuss his cases by telephone.    In addition,

petitioner’s correspondence to respondent and the Court contained

“insulting and false accusations of ‘unethical misconduct’ and

‘bad faith’”.

     Respondent contends that petitioner filed numerous frivolous

motions or documents, such as:    “Petitioner’s Motion to Strike

Designation of Place of Trial, Petitioner’s Motion to Dismiss and

For Costs, Petitioner’s Motion for Reconsideration, Petitioner’s

Request for Admissions, Petitioner’s Motion for Summary Judgment,

Petitioner’s Request for Stipulations, Petitioner’s Notice of

Refusal to Accept Service of Court’s Documents.”    Petitioner’s

motions were denied and did not address the underlying merits of

respondent’s determinations.   In most instances they were

collateral attacks on respondent’s or the Court’s employees.

     Respondent contends, that petitioner has filed, in another

court, a “false and frivolous law suit against respondent’s

counsel * * * [and Judges] of this Court.”    Respondent contends

that “Petitioner is using * * * [that] law suit as a basis for

this Court to ‘stay’ this proceeding.”    It is for those reasons
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that respondent moves the Court to impose a penalty upon

petitioner under section 6673.

     Section 6673(a)(1) provides that

     Whenever it appears to the Tax Court that–-

           (A) proceedings before it have been instituted or
          maintained by the taxpayer primarily for delay,

           (B) the taxpayer's position in such proceeding is
          frivolous or groundless, or

           (C) the taxpayer unreasonably failed to pursue
          available administrative remedies,

     the Tax Court, in its decision, may require the taxpayer to
     pay to the United States a penalty not in excess of $25,000.

     Respondent argues that penalties should be imposed because

petitioner instituted and/or is maintaining these proceedings

primarily for delay and because petitioner’s positions in these

proceedings are frivolous.   In particular, respondent contends

that petitioner did not advance meaningful positions regarding

his 2003 or 2004 tax years and that the documents he filed were

frivolous and contained insulting and false accusations against

respondent’s employees, Court employees, and Judges of the Court.

     The Court of Appeals for the Third Circuit has observed that

“the legislative history of §6673 supports the view that it is a

penalty statute designed to deter taxpayers from bringing

frivolous or dilatory suits, and not a damage provision enacted

to compensate the IRS.”   Sauers v. Commissioner, 771 F.2d 64, 68
                                - 9 -

(3d Cir. 1985), affg. T.C. Memo. 1984-367; see also Coleman v.

Commissioner, 791 F.2d 68 (7th Cir. 1986).

       The Court of Appeals for the Fifth Circuit has recently

approved and imposed a sanction where a taxpayer insulted the

Court of Appeals, the Tax Court, and the opposing party.

Stearman v. Commissioner, 436 F.3d 533, 540 (5th Cir. 2006),

affg. T.C. Memo. 2005-39.    In approving the imposition of

penalties against the taxpayer, the Court of Appeals observed

that

       it is difficult to imagine a lesser sanction that would
       vindicate the integrity of the court proceedings and
       deter * * * [taxpayers] from similar misconduct.
       Wasteful and dilatory appeals unjustifiably consume the
       limited resources of the judicial system: “While
       judges, staff and support personnel have expended
       energy to dispose of this meritless appeal, justice has
       been delayed for truly deserving litigants.” Foret v.
       S. Farm Bureau Life Ins. Co., 918 F.2d 534, 539 (5th
       Cir. 1990). [Id.; fn. ref. omitted.]

       In deciding whether to sanction petitioner’s conduct by

imposing penalties under section 6673, we note that we will

dismiss petitioner’s cases with prejudice for failure to

prosecute because there was a record of delay and contumacious

conduct, and petitioner had been given ample opportunity to

pursue the merits of his tax dispute.    A lesser sanction than

dismissal would, under the circumstances, be futile.    See Tello

v. Commissioner, 410 F.3d 743, 744 (5th Cir. 2005).

       Understanding that a dismissal with prejudice, in itself, is

a form of sanction, we consider whether the same actions should
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also be sanctioned by means of a penalty imposed under section

6673.   Initially we note that petitioner’s conduct meets the

letter and intent of section 6673 in that his personal attacks on

respondent’s and the Court’s employees are frivolous.   Petitioner

has not advanced any particular reasons for his broad-based

claims of fraud and misconduct.   In addition, he has failed to

present any meaningful basis to support his generalized claim

that respondent’s determinations are in error.   Finally, after

instituting these proceedings, petitioner has sought to engineer

a delay of them.   He has made unreasonable ultimatums, refused to

cooperate or follow the Court’s Rules, and most significantly,

intentionally refused to accept, read, or follow the Court’s

correspondence, some of which contains Court orders requiring a

specific action.

     Petitioner’s income tax deficiencies are modest ($554 for

2003 and $1,142 for 2004), but his belligerence and actions

require that, in addition to the dismissal of his cases, he be

sanctioned by the imposition of penalties under section 6673 of

$1,000 for 2003 and $1,000 for 2004.   Petitioner’s attempts to

delay and his belligerence must be sanctioned to vindicate the

integrity of this Court’s proceedings and to deter petitioner

from similar misconduct in the future.   Accordingly, we will

grant respondent’s motions to impose sanctions under I.R.C.

section 6673.
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To reflect the foregoing,


                                 Orders of dismissal and

                            decision will be entered for

                            respondent.
