Unpublished Disposition, 902 F.2d 1578 (9th Cir. 1990)

MEMORANDUM^** 

John Guedel appeals pro se the Tax Court's grant of summary judgment upholding the Commissioner of Internal Revenue's (CIR) assessment of deficiencies and additions to tax pursuant to sections 6651(a), 6653(a) (1), and 6654(a) of the Internal Revenue Code (Code) against Guedel for the tax years 1981 and 1982. See 26 U.S.C. §§ 6651(a), 6653(a), and 6654(a). Based on facts stipulated by Guedel, the Tax Court found that Guedel had received income, in the form of wages, non-employee compensation, interest, dividends, and distributive share income during the 1981 and 1982 tax years, but that he had not filed any federal income tax return or paid any federal income tax for those years. Accordingly, the Tax Court granted the CIR's motion for summary judgment. We have jurisdiction pursuant to section 7482 of the Code. See 26 U.S.C. § 7482. We affirm.

* Merits

Guedel raises a litany of claims which can be summarized as follows. First, Guedel argues that as a "natural born citizen of the State of California" and "an American worker on the domestic market, not living abroad," he is exempt from any "direct unapportioned [income] tax." Second, he argues that the CIR failed to show "by a minimal evidentiary foundation" the basis for its determination of a deficiency, and therefore the CIR should not be entitled to a presumption of correctness in its assessment. Third, Guedel contends that the Tax Court erred by ignoring his relevancy objection to the introduction of the stipulated facts. Fourth, Guedel contends that the Internal Revenue Service (IRS) failed to follow its own procedures, pursuant to the Statement of Procedural Rules, 26 C.F.R. Sec. 601.101 et seq.. Fifth, Guedel contends that he was not afforded a meaningful hearing on the record as required by the Administrative Procedure Act (APA). Finally,¹  Guedel contends that his right to due process was violated. These contentions are all meritless.

First, the IRS is statutorily authorized to levy an income tax on United States citizens who reside in the United States and whose income is derived from domestic sources. See 26 U.S.C. § 1(c) (section 1(c) of the Code imposes an income tax on unmarried individuals); 26 C.F.R. Sec. 1.1-1 (" [s]ection 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States") (emphasis added); United States v. Nelson (In re Becraft), 885 F.2d 547, 548 (9th Cir. 1989) ("the Supreme Court and the lower federal courts have both implicitly and explicitly recognized the Sixteenth Amendment's authorization of a non-apportioned direct income tax on United States citizens residing in the United States and thus the validity of the federal income tax laws as applied to such citizens." (emphasis added, citations omitted)). Thus, Guedel's contention that he is exempt from federal income tax is wholly without merit. See Wilcox v. Commissioner, 848 F.2d 1007, 1008 (9th Cir. 1988).

Second, The CIR's determinations are entitled to a presumption of correctness. See Rockwell v. Commissioner, 512 F.2d 882, 885 (9th Cir.), cert. denied, 423 U.S. 1015 (1975). Moreover, the W-2 Forms reporting on Guedel's income and Guedel's stipulation to these amounts and to his failure to file federal income tax returns for the tax years 1981 and 1982 provided the CIR with a minimal evidentiary foundation for its determination of Guedel's deficiencies.

Third, the Tax Court did not err by overruling his relevancy objection to the introduction of the stipulated facts. The facts contained in the stipulation were directly relevant to the Tax Court's decision on whether the CIR's assessment against Guedel was correct. See Fed.R.Evid. 402.

Fourth, the IRS did follow its own procedures by sending Guedel a "30-day" letter outlining Guedel's options. See 26 C.F.R. Sec. 601.105(d). Guedel responded to this letter by asking for a "formal letter, called a notice of deficiency," which was subsequently issued. Given Guedel's request, the IRS fully complied with its own procedural requirements.

Fifth, the portions of the APA cited by Guedel are not applicable to the Tax Court. The Tax Court is not a "reviewing court;" it conducts a de novo adjudication of the taxpayer's liability based on evidence presented before the court. See, e.g., Clapp v. Commissioner, 875 F.2d 1396, 1402-1403 (9th Cir. 1989) (the Tax Court "exercises de novo review"); O'Dwyer v. Commissioner, 266 F.2d 575, 580 (4th Cir.) (Tax Court is not a "reviewing court" for purposes of APA), cert. denied, 361 U.S. 862 (1959); see 5 U.S.C. §§ 702 and 706.

Finally, Guedel contends that his right to due process was violated. Here, Guedel received a hearing before the Tax Court and a de novo review of his case. We find that his right to procedural due process was not violated. See generally Stonecipher v. Bray, 653 F.2d 398, 403 (9th Cir. 1981), cert. denied, 454 U.S. 1145 (1982).

Accordingly, we affirm the Tax Court's grant of summary dismissal in favor of the CIR. See 26 U.S.C. § 7453 United States Tax Ct.R.Prac. & Proc. 121(a) (b) (summary judgment is appropriate if "there is no genuine issue as to any material fact and ... a decision may be rendered as a matter of law").

II

Sanctions

The CIR requests sanctions against Guedel for bringing this appeal. This court has discretion to impose damages against litigants, even pro se, as a sanction for bringing a frivolous appeal. Fed. R. App. P. 38; 28 U.S.C. § 1912; Wilcox, 848 F.2d at 1008-09 ($1,500 sanction imposed on pro se litigant for bringing a frivolous appeal). An appeal is frivolous if the results are obvious, or the arguments of error are wholly without merit. Wilcox, 848 F.2d at 1009 (citation omitted).

Here, the Tax Court informed Guedel that his claims were meritless and sanctionable. Guedel, however, failed to heed the Tax Court's admonition. Guedel's claims are wholly without merit. Accordingly, we impose a sanction of $1,500.

AFFIRMED.