2000 Tax Ct. Memo LEXIS 313">*313 Decision will be entered under
MEMORANDUM FINDINGS OF FACT AND OPINION
[1] MARVEL, JUDGE: Respondent determined the following deficiencies and additions to tax with respect to petitioner's Federal income taxes: 1
n1Additions to tax | ||||
Sec. | Sec. | Sec. | ||
Year | Deficiency | 6651(a)(1) | 6651(a)(20 | 6654 |
1990 | $ 3,667 | $ 917 | $ 240 | |
1991 | 14,457 | 3,614 | 826 | |
1992 | 11,122 | 2,781 | 485 | |
1993 | 9,639 | 2,410 | 404 | |
1994 | 4,237 | 1,059 | 220 | |
1995 | 16,721 | 4,180 | 907 | |
1996 | 6,529 | 1,469 | $ 653 | 348 |
1997 | 22,273 | 5,011 | 891 | 1,192 |
under
2000 Tax Ct. Memo LEXIS 313">*314 After concessions, 2 the issues for decision are (1) whether petitioner is liable for self-employment tax for each year at issue except 1996; (2) whether petitioner is liable for additions to tax for failure to file returns for each year at issue pursuant to
2000 Tax Ct. Memo LEXIS 313">*315 FINDINGS OF FACT
Some of the facts have been stipulated and are so found. We incorporate the stipulation of facts by this reference.
Petitioner Robert Conrad Eanes II resided in Henderson, Nevada, at the time the petition was filed. During the years at issue, petitioner was self-employed and earned Schedule C, Profit or Loss From Business, income in amounts sufficient to require the filing of a Federal income tax return for each year at issue. Petitioner, however, did not file a Federal income tax return or an application for extension of time to file his Federal income tax returns for any of the years at issue.
Using payor information returns (Forms 1099), respondent reconstructed petitioner's self-employment income and determined that petitioner is liable for self-employment taxes as follows:
Net earnings | |||
Sch. C | from | Self-employment | |
Year | income | self-employment | tax |
1990 | $ 15,895 | $ 14,679 | $ 2,246 |
1991 | 46,477 | 42,922 | 6,567 |
1992 | 38,749 | 35,785 | 5,475 |
1993 | 35,394 | 32,686 | 5,001 |
1994 | 18,444 | 17,033 | 2,606 |
1995 | 53,671 | 49,565 | 7,583 |
1996 | 26,595 | 24,560 | 3,758 |
1997 | 68,000 | 62,798 | 9,608 |
Respondent issued a notice of deficiency2000 Tax Ct. Memo LEXIS 313">*316 for 1990 through 1993 on March 19, 1999, and a notice of deficiency for 1994 through 1997 on March 24, 1999.
Prior to trial, respondent prepared and stipulated the following revised computations of petitioner's net earnings from self-employment as well as the income tax deficiencies and additions to tax allegedly owed by petitioner for all years at issue: 3
Additions to | |||||
Revised net | Revised | tax (revised) | |||
earnings from | Revised self- | deficiencies | |||
Year | self-employment | employment tax | (incl. SE tax) | Sec.6651 | Sec.6654 |
1990 | $ 11,642 | $ 1,645 | $ 2,474 | $ 619 | $ 163 |
1991 | 32,336 | 4,569 | 8,791 | 2,198 | 506 |
1992 | 23,705 | 3,349 | 5,768 | 1,442 | 252 |
1993 | 19,723 | 2,787 | 4,628 | 1,157 | 194 |
1994 | 2,063 | 291 | 291 | 100 | 0 |
1995 | 38,530 | 5,444 | 10,648 | 2,662 | 581 |
1996 | 0 | 0 | 13 | 13 | 0 |
1997 | 43,682 | 6,172 | 12,509 | 3,127 | 674 |
2000 Tax Ct. Memo LEXIS 313">*317 OPINION
SELF-EMPLOYMENT TAX
The first Social Security Act, ch. 531, 49 Stat. 620 (1935), was enacted as part of a program to provide retirement benefits to qualifying individuals who no longer were employed. Today, such benefits are funded primarily from taxes paid by employers, employees, and self-employed individuals under the Federal Insurance Contributions Act (FICA), ch. 736, 68A Stat. 415 (1954), and the Self-Employment Contributions Act of 1954 (SECA), ch. 736, 68A Stat. 353. See secs. 3101-3128, 1401-1403.
Petitioner does not dispute that he received self- employment income as determined by respondent. Petitioner disputes only whether he is required to pay self-employment tax. Petitioner contends that since self-employment tax is merely a "contribution", he may choose whether or not to pay it. According to petitioner, a contribution is a voluntary payment. Petitioner bears the burden of proving that respondent's determinations are erroneous. See
2000 Tax Ct. Memo LEXIS 313">*319 Petitioner's argument focuses on the use of the word "contributions" in SECA's title and relies upon what petitioner claims is its plain meaning. Petitioner's argument is misplaced. Webster's Collegiate Dictionary defines "contribution", among other things, as "a payment (as a levy or tax) imposed by military, civil, or ecclesiastical authorities [usually] for a special or extraordinary purpose". Webster's Collegiate Dictionary 252 (10th ed. 1997). The use of the term "contributions" in SECA's title is consistent with the definition cited above. Self-employment tax is a tax imposed by the United States Government for a special purpose; i.e., to fund Social Security and hospital insurance benefits. The taxation regime established by SECA has been upheld as constitutional. See
ADDITIONS TO TAX UNDER
Petitioner concedes he did not file Federal income tax returns or applications for extensions of time to file for 1990 through 1997. Petitioner contends that he did not file2000 Tax Ct. Memo LEXIS 313">*321 returns because he did not have money to pay the taxes he owed at the time the returns were due, and it was his understanding that the returns and the taxes owed had to be submitted simultaneously. Petitioner states that he "never had any willful intent not to file" and that he "knew that * * * [he] was going to have to file".
A taxpayer's inability to pay Federal income taxes does not constitute reasonable cause for failure to file a timely return. See
Respondent determined that petitioner is liable for an addition to tax under
To reflect the foregoing and the concessions of the parties,
Decision will2000 Tax Ct. Memo LEXIS 313">*323 be entered under
1. All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Monetary amounts are rounded to the nearest dollar.↩
2. Prior to trial, petitioner and respondent entered into a stipulation of settled issues, wherein petitioner conceded deficiencies, without regard to self-employment tax, of $ 829 for 1990, $ 4,222 for 1991, $ 2,419 for 1992, $ 1,841 for 1993, $ 5,204 for 1995, $ 13 for 1996, and $ 6,337 for 1997. The parties agree there is no deficiency in income tax due from petitioner for 1994, without regard to self-employment tax, and that petitioner is not liable for self-employment tax for 1996. At trial, petitioner orally conceded that he received self-employment income during the years at issue but asserted that he was not liable for the self-employment tax on that income. Petitioner also conceded all remaining matters in dispute, except for the issues for decision in this opinion.↩
3. Respondent stipulated that petitioner had Schedule C, Profit or Loss From Business, income of $ 20,250, Schedule C expenses of $ 20,050, and no liability for self-employment tax for 1996.↩
4. Although respondent claimed increased additions to tax under