Unpublished Disposition, 865 F.2d 1271 (9th Cir. 1989)

MEMORANDUM

Stumpf appeals pro se a tax court decision, which upheld both the Commissioner's deficiency determinations and imposition of additions of tax, and which imposed $3,000 in damages pursuant to 26 U.S.C. § 6673. We affirm the judgment, and impose sanctions on Stumpf for filing this frivolous appeal.

Stumpf failed to file federal income tax returns for the tax years 1980 and 1981. The Commissioner of Internal Revenue (Commissioner) sent Stumpf notices of deficiency for unpaid income taxes for 1980 and 1981. The Commissioner also imposed additions to tax for failure to file a return, pursuant to 26 U.S.C. § 6651(a); negligent or intentional disregard of Internal Revenue Service rules and regulations, pursuant to 26 U.S.C. § 6653(a) (1); and underpayment of estimated taxes, pursuant to 26 U.S.C. § 6654. Stumpf filed two petitions with the tax court for redetermination of the asserted deficiencies and penalties. The petitions were consolidated and calendared for trial.

Prior to trial, Stumpf stipulated that he did not file a tax return for the tax years 1980 and 1981. He further stipulated that he had received "wages in exchange for labor" totaling $12,844.00 in 1980 and $13,882.89 in 1981, and interest income totaling $64.00 in 1980. At trial, Stumpf contended that he was a "non-taxpayer" and that his income was not taxable. The tax court judge rejected Stumpf's contentions, upheld the Commissioner's deficiency determinations and imposition of penalties, and awarded the Commissioner $3,000 damages pursuant to 26 U.S.C. § 6673. Stumpf timely appealed.

Stumpf contends that the judgment should be reversed because (1) his wages are not taxable, (2) the tax court lacked jurisdiction because Stumpf is not a taxpayer within the meaning of the tax code, and (3) the imposition of an income tax on his wages is unconstitutional because it constitutes an unapportioned direct tax. We review de novo decisions of the tax court on questions of law. Beisler v. Commissioner, 814 F.2d 1304, 1307 (9th Cir. 1987) (en banc).

First, Stumpf's wages are taxable. Taxable income is defined in the tax code as gross income minus allowable deductions. 26 U.S.C. § 63(a). Gross income includes "all income from whatever source derived," including compensation for services. 26 U.S.C. § 61(a) (1). We have repeatedly rejected as frivolous the argument that wages are not income. See, e.g., Wilcox v. Commissioner, 848 F.2d 1007, 1008-09 (9th Cir. 1988) (Wilcox) ; Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir. 1986).

Second, the tax court had jurisdiction over Stumpf. The tax court has jurisdiction when a taxpayer commences a case upon issuance of a notice of deficiency. Tax Court Rule 13(a) (1). The Internal Revenue Code defines a taxpayer as "any person subject to any internal revenue tax." 26 U.S.C. § 7701(a) (14). Stumpf earned wages which were taxable. Because Stumpf voluntarily subjected himself to the jurisdiction of the tax court by filing two petitions for redetermination, the tax court had jurisdiction over him.

Third, the imposition of income tax on Stumpf's income is not unconstitutional. The sixteenth amendment gives Congress the power to impose an unapportioned direct tax. U.S. Const.Amend. XVI; Wilcox, 848 F.2d at 1008 n. 3.

Stumpf next argues that the tax court improperly assessed section 6673 damages against him. We review a tax court's imposition of damages under 26 U.S.C. § 6673 for an abuse of discretion. Grimes v. Commissioner, 806 F.2d 1451, 1454 (9th Cir. 1986) (per curiam) (Grimes) . The tax court may impose damages under section 6673 on a taxpayer who maintains a proceeding primarily for delay or who brings a frivolous and groundless action. 26 U.S.C. § 6673. Because Stumpf's contentions have no basis in the law, the tax court did not abuse its discretion by imposing damages. See Grimes, 806 F.2d at 1454.

The Commissioner requests sanctions of $1,500 against Stumpf in lieu of costs and attorneys' fees for bringing a frivolous appeal. We have discretion to impose sanctions on an appellant for filing a frivolous appeal. Fed. R. App. P. 38; Grimes, 806 F.2d at 1454. Sanctions are appropriate when "the result [of an appeal] is obvious or the arguments of error are wholly without merit." Swimmer v. IRS, 811 F.2d 1343, 1345 (9th Cir. 1987) (Swimmer) . The fact that a petitioner is proceeding pro se does not preclude the imposition of sanctions. Grimes, 806 F.2d at 1454.

We have previously imposed sanctions against an appellant who raised identical issues to those raised by Stumpf. See Wilcox, 848 F.2d at 1008-09 (sanctions imposed where petitioner claimed that his wages were not income and the income tax was an unconstitutional unapportioned direct tax). Furthermore, Stumpf was on notice that his contentions were frivolous based on the tax court judge's oral findings of fact and opinion. The trial judge stated that "the arguments presented by the taxpayer ... are nothing but frivolous and groundless contentions." Therefore, we grant the Commissioner's request for sanctions. See Swimmer, 811 F.2d at 1345.

The judgment is affirmed. We also impose sanctions of $1,500.00 against Stumpf in lieu of costs and attorneys' fees for filing this frivolous appeal.

AFFIRMED.