Case: 14-10060    Date Filed: 09/02/2014   Page: 1 of 5


                                                           [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                               No. 14-10060
                           Non-Argument Calendar
                         ________________________

                              Agency No. 4697-11 L

JAMES STEPHEN FENNEL,


                                                                        Petitioner,

                                     versus

COMMISSIONER OF IRS,


                                                                       Respondent.

                         ________________________

                    Petition for Review of a Decision of the
                                 U.S.Tax Court
                          ________________________

                               (September 2, 2014)

Before MARCUS, PRYOR and ANDERSON, Circuit Judges.

PER CURIAM:

      James Fennel appeals the U.S. Tax Court’s denial of his pro se petition for

review of a lien or levy action imposing penalties under 26 U.S.C. § 6702(a) for
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filing frivolous tax returns. The Internal Revenue Service (“IRS”) imposed seven

penalties for filing frivolous tax returns based on returns Fennel filed for tax years

1999 and 2001 through 2006 that claimed zero income and zero tax liability and

also claimed a refund for the full amount of money withheld from his pay. At trial,

Fennel acknowledged that he worked and received pay during tax years 1999 and

2001 through 2006. On appeal, he argues that: (1) the IRS presented insufficient

evidence to impose penalties under § 6702(a); (2) he is not a “person” for purposes

of § 6702; and (3) the IRS failed to prove that the penalty assessments against him

received written supervisory approval. After thorough review, we affirm.

      We review the Tax Court’s conclusions of law de novo and findings of fact

for clear error. Creel v. Comm’r of Internal Revenue, 

, 1139 (11th

Cir. 2005). The IRS has the burden of proving the applicability of penalties for

frivolous returns. 26 U.S.C. § 6703(a).

      The Internal Revenue Code imposes a $5,000 penalty on a taxpayer who

files a tax return that meets two criteria. 26 U.S.C. § 6702(a). The first criterion is

satisfied if the return “(A) does not contain information on which the substantial

correctness of the self-assessment may be judged, or (B) contains information that

on its face indicates that the self-assessment is substantially incorrect.” 

The second criterion is satisfied if the filing of the return either “(A) is

based on a position which the Secretary has identified as frivolous under


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subsection (c), or (B) reflects a desire to delay or impede the administration of

Federal tax laws.” 

Subsection (c) provides that the Secretary

shall prescribe, and periodically revise, a list of positions that have been identified

as frivolous for purposes of this subsection. 

The Code further

provides that “[n]o penalty under this title shall be assessed unless the initial

determination of such assessment is personally approved (in writing) by the

immediate supervisor of the individual making such determination or such higher

level official as the Secretary may designate.” 26 U.S.C. § 6751(b).

      IRS Notice 2007-30, released on March 16, 2007, and published on April 2,

2007, provided a list of positions identified as frivolous for purposes of § 6702(c).

IRS Notice 2007-30, 2007-1 C.B. 883. Among the positions identified as frivolous

was the position that a taxpayer has the option to “elect to file a tax return

reporting zero taxable income and zero tax liability even if the taxpayer received

taxable income during the taxable period for which the return is filed.” 

of the Code sets forth the statutes governing the federal income

tax. See generally 26 U.S.C. §§ 1-1563. Section 1 provides for the imposition of

an income tax on all “taxable income.” 

Section 63 defines “taxable

income” as “gross income” minus the deductions that the chapter allows. 

In turn, § 61(a) defines “gross income” as “all income from whatever

source derived, including (but not limited to) . . . [c]ompensation for services.” 

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§ 61(a)(1). Under § 3402(a)(1), “every employer making payment of wages shall

deduct and withhold upon such wages a tax determined in accordance with tables

or computational procedures prescribed by the Secretary.”         

“Wages” are defined in reference to that section as “all remuneration . . . for

services performed by an employee for his employer.” 

The Code

defines employer as “the person for whom an individual performs or performed

any service, of whatever nature, as the employee of such person.” 

Finally, the Code defines a “person” as, among other things, “an individual,” and

this definition applies throughout the Code “where not otherwise distinctly

expressed or manifestly incompatible.” 

Section 6671 provides that,

for purposes of applying assessable tax penalties, the term “person . . . includes an

officer or employee of a corporation, or a member or employee of a partnership,

who as such officer, employee, or member is under a duty to perform the act in

respect of which the violation occurs.” 

      We have said that arguments that wages are not taxable income have “been

rejected by courts at all levels of the judiciary and are patently frivolous.” Stubbs

v. Comm’r of Internal Revenue Serv., 

, 938 (11th Cir. 1986); see also

Hyslep v. United States, 

, 1084 (11th Cir. 1985); Madison v. United

States, 

, 574 (11th Cir. 1985).




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      Here, Fennel fails to show that the Tax Court erred in upholding the IRS’s

penalty assessments under § 6702(a) or clearly erred in any of its underlying fact

findings. To begin with, the record shows that the Tax Court did not err in

determining that Fennel’s returns, which listed zero income and zero tax liability in

spite of the fact that he also stated that he worked a job and received pay that was

withheld, contained information that on its face indicated that Fennel’s self-

assessment was substantially incorrect. See 26 U.S.C. § 6702(a)(1)(B). Moreover,

Fennel’s position that he had zero taxable income and zero tax liability even

though he received taxable income during each of the relevant tax years was a

position identified as frivolous for the purposes of § 6702(a) at the time Fennel

filed his returns from June to November of 2007. See 

(c); IRS

Notice 2007-30, 2007-1 C.B. 883; see also, e.g., 

. Finally,

Fennel’s argument that the penalty assessments did not receive written supervisory

approval is belied by the record, and he clearly qualifies as a “person” for purposes

of § 6702. See 26 U.S.C. §§ 6671(b), 7701(a).

      AFFIRMED.




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