Notice Of Deficiency Invalid For Unfiled Tax Returns
Notice Of Deficiency Is Invalid Because The Taxpayer Did Not File An Income Tax Return
The Law: Section 6211(a) defines “deficiency” as the amount by which the tax imposed by subtitle A or B – (including income, estate, and gift taxes), or chapter 41, 42, 43, 44 (excise taxes) exceeds the excess of the sum of the amount shown as the tax by the taxpayer upon his return (if return made and amount shown thereon) plus any amounts previously assessed (or collected without assessment) as a deficiency, over the amount of rebates, as defined in section 6211(b)(2), made.In accordance with this definition, a taxpayer’s failure to report tax on a return does not prevent the Service from determining a deficiency in his federal income tax and issuing a notice of deficiency, pursuant to section 6212(a).
Relevant Case Law:
Brennan v. Commissioner, T.C. Memo. 2009-77, 97 T.C.M. (CCH) 1379 (2009) – the court upheld the deficiencies determined by respondent when the taxpayer made only frivolous arguments, including that the “respondent lacked the authority to issue a notice of deficiency and that no statute required him to pay income tax.”Johnston v. Commissioner, T.C. Memo. 2004-107, 87 T.C.M. (CCH) 1256 (2004) – the court stated that “[p]etitioner’s contention that the Commissioner cannot determine a deficiency for a year for which a taxpayer did not file a return is frivolous.” The court further emphasized that the “petitioner’s contention that failure to file a return shields the non filer from income tax liability is also frivolous.” Due to the petitioner’s frivolous arguments, the court imposed a penalty under section 6673.Robinson v. Commissioner, T.C. Memo. 2002-316, 84 T.C.M. (CCH) 694 (2002), aff’d, 73 Fed. Approx. 624 (4th Cir. 2003) – the court found the petitioner liable for the section 6673(a) penalty in this case where petitioner argued, among other frivolous arguments, that the Service was not authorized to determine a deficiency for a taxpayer who has not filed a return.