Holmes v Commissioner of Internal Revenue

only for the section 6654(a) addition to tax. taxation. commissioner v. glenshaw glass co., 348 u.s. 426 united states. he was a private citizen who was hired by and military compensation or is labeled by the employer as the lesser of: (1) 90 percent of the tax shown on the taxpayer's not a member of the armed forces of the united states during the tax. section 6651(a)(2) imposes an addition to tax for failure force, and * * * includes the coast guard. the members this issue and additions to an internal memorandum written to give the commissioner's next revision of the irm, which is in the process of being the tax court has held that employees of private companies failure to make timely and sufficient payments for estimated tax. 7701(a)(15), he was not entitled under section 112 to exclude armed forces cannot be excluded under section 112 even that individuals providing military service in a combat zone need u.s. naval ship which operated in a combat zone. id. the - 3 - not liable for the section 6651(a)(2) addition to tax. employment division on june 28, 2004. the memorandum states that in iraq related to military operations. petitioner received at the time petitioner filed his petition, he resided in florida. combat area are entitled to the exclusion. it also states that years 1998 and 1999, the taxpayer was assigned to work aboard a petitioner reported zero income and zero tax due on the form 6651(a)(2), and failure to pay estimated income tax under section memorandum written by an irs employee while serving in iraq. we (continued...) forces. - 11 - of the armed forces will be disregarded with respect to "certain respondent did not accept the 2005 form 1040 as a valid performing services similar to those performed by members of the [the taxpayer] was required to, and did, have security airline flying civilian aircraft under contract with the respect to exculpatory factors, such as reasonable cause. id. at 1040.2 t.c. memo. 2011-26 operations, internal revenue service (irs). this memorandum be entered. a taxpayer has an obligation to pay estimated tax for a background subject to navy physical standards and navy standards section 61 provides that gross income includes all income - 4 - commissioner, 61 t.c. 675 (1974) (a pilot employed by a private petitioner's income may not be excluded and that he is liable 2005 iraq was identified as a combat zone under executive order burden of production on the commissioner to present sufficient - 9 - from blackwater were excluded from gross income. therefore, effect for the year in issue. paid by a private company, blackwater. some of the facts have been stipulated and are so found. could give someone reasonable cause to believe that his payments hildebran are similar to the facts in this case. although civilian employee of bay ship management." the facts in those facts do not change the status of petitioner as a civilian receiving from blackwater was not taxable. this memorandum was compensation paid by other employers (whether private to reflect the foregoing, was due to reasonable cause and not willful neglect. the amount zone during the vietnam war was not a member of the armed forces $913 in taxable interest from navy federal credit union. for issued by the internal revenue service small business/self- the united states. * * * personnel below the grade of commissioned officers in involving taxpayers in iraq. the memorandum, titled "memorandum while performing those duties. however, at no time in 2005 was defined in section 7701(a)(15) and that this definition may petitioner actually a member of the armed forces of the united 2 states. section 1.112-1(a)(4), income tax regs., states: and specialty. memorandum opinion percent each month or fraction thereof during which the failure tax on the tax return but not paid, with an additional 0.5 (2001), and in 2003, h.r. 117, 108th cong. (2003). both bills qualify for the exclusion under section 112. see land v. vaccination, receive training in small arms and nathaniel j. holmes, petitioner v. secretary of defense, the secretary of the army, the addition to tax under section 6654 for failure to pay estimated tax for 2005. section 6654(a) imposes an addition to tax for 6651(a)(1). - 8 - - 10 - from gross income any of the wages that he received while working 1.6654-1(a)(1), income tax regs.; see also bray v. commissioner, clearances, wear uniforms, receive an anthrax the united states and who are working in combat zones should be department of defense in support of the u.s. military in a combat provided security to government officials, and aided in giving antiterrorism, and carry a department of defense received in 2005 from blackwater security consulting (blackwater) percent of the tax for such year); or (2) if the taxpayer filed a armed forces of the united states while in combat zones do not facts did not in any way change the status of mr. hildebran as a to file a 2004 income tax return. therefore, petitioner is and therefore not entitled to the section 112 exclusion); see point in 2008, petitioner provided respondent with a 2005 form therefore, like the taxpayer in hildebran, petitioner is not section 6654 provides no exception for reasonable cause. sec. if the payment is made to supplement the member's section 6651(a)(1), failure to timely pay tax under section entitled under section 112 to exclude from gross income the of appearance, training, and mission completion. * * * - 6 - (4), (5), (6), and (7), income tax regs., "clearly illustrate respondent also determined that petitioner is liable for an performed those services in a "combat zone", he should be allowed the taxpayer, who petitioned the court, arguing that the income written." compensation he received from a private company, blackwater, the united states for any month during any part of which such of such forces include commissioned officers and i. section 112 excluded from gross income, it has yet to amend section 112 to taxpayer was: compensation of $98,400 for those services. he also received also hildebran v. commissioner, t.c. memo. 2004-42. notice of deficiency regarding his 2005 income tax liability. on identification card which showed his ship assignment v. commissioner, 116 t.c. 438 (2001). once the commissioner section 6651(a)(1) imposes an addition to tax for failure to petitioner is not liable for the addition to tax under section combat zone military initiative and physically located in the 446. petitioner had no background in tax law and was given this military. congress has considered the issue of whether income who perform services similar to those of the united states below the grade of commissioned officer in the armed forces of respondent determined that petitioner is liable for while in iraq, petitioner was given a memorandum issued by return for petitioner under section 6020(b) for 2005. at some failing to file is that in 2005 while in iraq, he was given a cause and not due to willful neglect. section 7491(c) places the robert l. hunt, the acting deputy director, compliance field memorandum that caused him to believe that the income he was for calender year 2005. petitioner's only explanation for taxpayer can establish that the failure is due to reasonable such forces. 1 petitioner satisfies all the criteria found in the - 5 - 6654(a). tax under sections 6651(a)(1) and (2) and 6654 for 2005 are meets this burden, the taxpayer has the burden of proof with that year. sec. 6654(d). a required annual payment is equal to before us. for the reasons stated herein, we hold that return due for the year in issue (or, if no return is filed, 90 2005. on june 2, 2008, respondent prepared a substitute for from gross income under section 112. stated above, we find that petitioner had reasonable cause and is of the addition is equal to 0.5 percent of the amount shown as petitioner did not remember who gave the memorandum to him. excluded under section 112, except for compensation november 10, 2008, petitioner timely filed a petition with this section 7701(a)(15) defines "armed forces of the united laura a. price, for respondent. air support, medical aid, and emergency response assistance. continues during the member's assignment to the agency petitioner was engaged in performing dangerous security extend the exclusion to such taxpayers. h.r. 294, 109th congress came forth. an appropriate decision will petitioner admitted on brief that he did not file a return states" as including: similar bills were also introduced in 2001, h.r. 351, 107th cong. to pay the amount shown as tax on a return on or before the due member--(1) served in a combat zone". in 2005 petitioner did not serve in the armed forces of the state that "this change in procedure will be reflected in the under section 1.112-1(a)(4), income tax regs., petitioner cannot united states tax court petitioner argues that because he was performing services in hildebran, the commissioner issued a notice of deficiency to commissioner, 120 t.c. 163, 170 n.12 (2003). for the reasons states or by an international organization to a member civilian or military personnel who are in direct support of a timely file a required federal income tax return, unless the from whatever source derived, unless the taxpayer can establish services in iraq during 2005. petitioner was hired and paid by in hildebran, the taxpayer was employed as a merchant marine the armed forces of the united states while in a combat zone, additions to tax for failure to timely file a return under who was recruited and paid by blackwater, a private company. respondent also determined a section 6651(a)(2) addition to united states to members of the armed forces can be memorandum. he was serving in iraq alongside the military, earned by individuals who are not members of the armed forces of (...continued) similar to those performed by the u.s. military and because he his gross income under section 112.1 of the armed forces whose military active duty status to exclude from gross income the pay he received from blackwater involving a taxpayer deployed to a qualified combat zone. goeke, judge: respondent determined that income petitioner discussed the appropriate steps for civilian personnel to take blackwater to perform these security services in iraq. his work petitioner asserts that section 1.112-1(e)(2), examples (3), therefore such payments were less than 90 percent of the amount services which are subject to the jurisdiction of the (2006), proposed to extend the combat zone income tax exclusion commissioner of internal revenue, respondent evidence showing that the addition to tax is appropriate. higbee 12744, 56 fed. reg. 2663 (jan. 23, 1991). not be members of the armed forces." however, this is not the petitioner did not file an income tax return for 2004 or enterprises or governmental entities) to members of the by bay ship management, a private company. during part of tax forces of the united states to members of the armed forces". year 2005 but made estimated tax payments of $55,000 during 2004. liable for the section 6654(a) addition to tax. discussion petitioner made no estimated tax payments for 2005, and for acting deputy director, compliance field operations", was that although the taxpayer met certain navy standards, "those believe that receiving this memorandum while serving in iraq return for the immediately preceding taxable year, 100 percent of ii. additions to tax case. examples (3), (4), (5), (6), and (7) refer to member "b", - 7 - the court held in hildebran that because the taxpayer was petitioner did not make any estimated tax payments for tax while working in iraq. date prescribed unless the taxpayer can establish such failure 1 include compensation received for active service as a member limit the definition of "armed forces of the united states" as to the house ways and means committee and never came forth. time spent in a combat zone by an individual serving in support compensation for active service in the armed forces of or instrumentality or organization on official detail. petitioner also asserts that congress did not intend to of tax shown on the substitute for return; and petitioner failed to civilian contract employees serving in combat. jackson, cong. described in examples (1) and (2) as a member of the armed 1040, u.s. individual income tax return, dated "28 may 07". include individuals who are not members of the armed forces and when engaged in an irs examination and collection activity research serv., rl 33230, proposed federal income tax exclusion the tax shown on that return. sec. 6654(d)(1)(b). generally, to pay continues (up to a maximum of 25 percent). see cabirac v. acts required under the internal revenue code." it goes on to petitioner may have performed work similar to that of members of - 2 - particular year only if he has a "required annual payment" for employees field guidance for examination and collection activity he received while working in a combat zone should be excluded for civilians serving in combat zones (2006). h.r. 294, was sent court. gross income because it was not "compensation paid by the armed nathaniel j. holmes, pro se. t.c. memo. 2008-113. (1955). section 112(a)(1) provides: "gross income does not exclude the compensation he received from blackwater in 2005 from years at issue within the meaning of sections 112 and secretary of the navy, or the secretary of the air only compensation paid by the armed forces of the all regular and reserve components of the uniformed paid by an agency or instrumentality of the united a specific legislative authorization to exclude income from return. on august 25, 2008, respondent mailed petitioner a were also sent to the house ways and means committee and never docket no. 27240-08. filed january 31, 2011. all section references are to the internal revenue code in for dangerous security work while in iraq was not excludable from for bay ship management aboard the navy ship. the court stated