Eric S. & Tracy A. Austin v. Commissioner of Revenue (July 18, 2012)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



ERIC S. & TRACY A. AUSTIN	v.	COMMISSIONER OF REVENUE


Docket No. C310127				Promulgated:
							July 18, 2012


This is an appeal filed under the formal procedure pursuant to G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue ("appellee" or "Commissioner") to abate personal income tax assessed to Eric and Tracy Austin ("appellants") for the tax year ending December 31, 2006 ("tax year 2006").
Chairman Hammond heard the appellee's Motion for Summary Judgment ("Motion") and Commissioners Scharaffa, Rose, and Chmielinski joined him in the decision for the appellee. 
These findings of Fact and Report are made at the request of the appellants pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32. 

	Eric S. & Tracy A. Austin, pro se, for the appellants.
	Diane M. McCarron, Esq., for the appellee.

FINDINGS OF FACT AND REPORT
Based on testimony and other evidence, including jurisdictional documents, as well as the parties' submissions in support of and opposition to the appellee's Motion, the Appellate Tax Board ("Board") made the following findings of fact.
On April 25, 2009, the Commissioner sent the appellants a Notice of Failure to File ("NFF"). The appellants, who are Massachusetts residents, had failed to file a personal income tax return for tax year 2006. The NFF delineated the elements of the proposed assessment, which included wages and other income from Negus & Taylor, Inc. in the amount of $29,510 and $21,873, respectively, as well as $10,000 of distributions reflected on Form 1099-R from A. G. Edwards & Sons and Massachusetts lottery winnings of $2,500. The Commissioner had obtained this information via an exchange of information with the Internal Revenue Service. By a Notice of Assessment ("NOA") dated June 10, 2009, and consistent with the sums reflected in the NFF, the Commissioner assessed $4,739.94 in tax, penalties, and interest to the appellants.
On January 7, 2010, the appellants filed an Application for Abatement with the Commissioner and requested a hearing with the Department of Revenue's Office of Appeals, which was conducted on June 3, 2010. On their Form-1 Massachusetts Resident Income Tax Return for tax year 2006, the appellants reported the Massachusetts lottery winnings and distributions from Forms 1099-R, but excluded the balance of the income included in the NFF and the NOA. 
On July 21, 2010, the Office of Appeals issued a determination letter stating the Commissioner's conclusions that the appellants had filed an incorrect or insufficient return for tax year 2006 and were not entitled to an abatement.  On July 27, 2010, the Commissioner issued a Notice of Abatement Determination denying the appellants' abatement application. On September 27, 2010, the appellants seasonably filed a Petition Under Formal Procedure with the Board. On the basis of the foregoing, the Board found and ruled that it had jurisdiction to hear and decide the Motion. 
The appellants do not argue that they did not receive the sums at issue during tax year 2006. Rather, in their "Response and Opposition to Appellee's Motion for Summary Judgment," the appellants summarize the central issue in this appeal as whether the appellants "engage in privileged activities that result in them incurring income tax liability," and argue that "the average American individual's laboring, occupation, subsistence, capital, principal, etc. in and of itself is not, nor ever was, a proper subject of federal and state income taxation. . . ." In essence, the appellants assert that only certain forms of income qualify as taxable income within the meaning of relevant statutory and case law.
The Board found the appellants' arguments specious and typical of arguments put forth by "tax protesters," which have, without fail, been rejected. See, e.g., Olson v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2003-492.  Consequently, on the basis of the evidence presented, the Board found and ruled that there were no disputed issues of material fact and the appellee was entitled to judgment as a matter of law. Accordingly, and for the reasons explained in the following Opinion, the Board allowed the Motion and issued a decision for the appellee. 

 OPINION
	The Rules of Civil Procedure, including Rule 56 that addresses summary judgment, are not applicable to Board proceedings. See G.L. c. 58A, § 8A. The Board may, however, grant summary judgment under 831 CMR 1.22 where there is no genuine issue of material fact and a party is entitled to judgment as a matter of law. See generally Omer v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1999-586, 591; see also 831 CMR 1.22 ("Issues sufficient in themselves to determine the decision of the Board or to narrow the scope of the hearing may be separately heard and disposed of in the discretion of the Board."). 
In their filings with the Board, the appellants did not dispute that they received the compensation at issue during tax year 2006. Misconstruing Supreme Court cases and statutory authority, they instead argued that the compensation did not constitute "gross income" as defined in § 61 of the Internal Revenue Code ("Code") and incorporated by Massachusetts pursuant to G.L. c. 62, § 2. Having considered essentially the same issue in Olson v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2001-437, the Board found and ruled that "[s]uch an argument, of course, is frivolous." Id. at 478. In Olson, the Board emphasized that "the phrase 'gross income' is intended to be comprehensive: it encompasses all income from whatever source . . . .  There is no ambiguity and no room for semantic maneuver." Id. Similarly, in the present appeal, the Board found and ruled that the appellants' arguments were entirely without merit. 
In sum, the Board found and ruled that the evidence presented established that the appellants received the income at issue during tax year 2006, no evidence suggested that the income was not taxable, and the appellants' legal arguments were unavailing. The Board therefore allowed the Motion and issued a decision for the appellee.


				  APPELLATE TAX BOARD

				    By:			 _____________ 	
				  Thomas W. Hammond, Jr., Chairman 

A true copy,
Attest:			_______	
  Clerk of the Board

ATB 2012-920