Chapel v. DOR

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IN THE OREGON TAX COURT MAGISTRATE DIVISION Income Tax RICHARD CHAPEL, Plaintiff, v. DEPARTMENT OF REVENUE, STATE OF OREGON, Defendant. ) ) ) ) ) ) ) ) ) ) No. 021019D DECISION ON CROSS MOTIONS FOR SUMMARY JUDGMENT Plaintiff appeals Defendant's Notice of Determination and Assessment, dated June 14, 2002, for tax year 2000. There is no dispute of fact, and the matter has been submitted to the court on the parties Cross Motions for Summary Judgment. The court has carefully considered the stipulated facts and motions of the parties. STATEMENT OF FACTS Plaintiff did not file an Oregon personal income tax return for tax year 2000. Defendant submitted information stating that Plaintiff had wage and taxable income in tax year 2000. Based on the best available information, Defendant determined that Plaintiff s income tax liability for tax year 2000 was $356, before interest or penalty. Plaintiff alleges that he DOES NOT work for the federal, State or local governments, their agents or instrumentalities, or the District of Columbia" and does not fall into the defined group as intended by Congress subject to the income tax. (Ptf's Repy to Def s Cross Mot for Summ J at 7, 8.) Further, Plaintiff concludes that [w]ithout the Public Salary Tax Act, the State of Oregon could not lawfully tax even the salary of people who work in the federal, State or local governments. (Ptf s Stipulated Facts and Ptf s Mot for Summ J at 12.) In his pleadings, Plaintiff expressed his views on statutory construction DECISION CASE NO. 021019D 1 and construed the meaning of various words, including employer, employee and taxpayer. Defendant alleges that for purposes of assessing Oregon state income tax the statutory definition of income found in ORS 316.022 is the same definition set forth in the Internal Revenue Code, Section 63. Defendant concludes that Plaintiff has income and his income is taxable by the state of Oregon. COURT'S ANALYSIS Plaintiff appeals Defendant s determination that he has wages and other income subject to personal income taxation. In analyzing the law governing state taxable income, the court is guided by the legislature s expressed intent to make the Oregon personal income tax law identical in effect to the provisions of the federal Internal Revenue Code relating to the measurement of taxable income of individuals. ORS 316.007.1 Plaintiff is a resident of Oregon. A tax is imposed for each taxable year on the entire taxable income of every resident of this state. ORS 316.037(1)(a). Taxable income is defined in ORS 316.022 as follows: Taxable income means the taxable income as defined in subsection (a) or (b), section 63 of the Internal Revenue Code, with such additions, subtractions and adjustments as are prescribed by this chapter. The Internal Revenue Code (IRC) states that the term taxable income means gross income minus allowable deductions. Gross income is defined in IRC § 61(a): General definition. Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and 1 All references to the Oregon Revised Statutes (ORS) are to 1999. . DECISION CASE NO. 021019D 2 similar items. (Emphasis added.) Using those statutory definitions, this court has previously held that wages are clearly taxable. See Combs v. Dept of Rev., 15 OTR 60, 61 (1999). With respect to wages, Plaintiff s position is unrealistic and uniformed. Id. Defendant s Motion also requests damages under ORS 305.437(1), which provides: Whenever it appears to the Oregon Tax Court that proceedings before it have been instituted or maintained by a taxpayer primarily for delay or that the taxpayer s position in such proceeding is frivolous or groundless, damages in an amount not to exceed $5,000 shall be awarded to the Department of Revenue by the Oregon Tax Court in its judgment. Damages so awarded shall be paid within 10 days after the judgment becomes final. If the damages remain unpaid, the department may collect the amount awarded in the same manner as income taxes are collected under ORS 314.430. In Combs, the court concluded that taxpayer s appeal was groundless and totally devoid of merit. Id. Further, the court held that there was no objective reasonable basis for such as assertion. Id at 61-62. After weighing various factors, the court assessed a frivolous penalty because of the time required of the court and the administrative agency, Oregon Department of Revenue, to respond to taxpayer s groundless appeal. Id. at 62. In evaluating the amount of the damages award, the court is guided by the definition of frivolous as a claim where there was no objectively reasonable basis for asserting the position. ORS 305.437(2). In the case before the court, Plaintiff made the same assertion as the taxpayer in Combs: wages or other earned compensation are not subject to personal income tax. Prior to filing his Motion, the court advised Plaintiff of its prior ruling. Plaintiff s Motion did not present any legal argument in support of his appeal DECISION CASE NO. 021019D 3 different from that previously denied by this court. Plaintiff made the same assertion that in a prior case (Combs) was deemed frivolous. The court awards Defendant $500 in damages under ORS 305.437. Plaintiff requested that the court impose stiff penalties against Defendant s (sic) for slandering Plaintiff in open court (in their Cross Motion) when they full well knew they were NOT going to produce any law passed by Congress that supported their position or allegation. (Ptf s Reply to Def s Cross Mot for Summ J at 8.) Because the court concludes that Defendant s Cross Motion for Summary Judgment is granted, the court denies Plaintiff s request. CONCLUSION Now, therefore, IT IS THE DECISION OF THIS COURT that Plaintiff's Motion for Summary Judgment is denied. IT IS FURTHER DECIDED that Defendant's Cross Motion for Summary Judgment is granted. IT IS FURTHER DECIDED that pursuant to the provisions of ORS 305.437, Defendant shall be awarded a money judgment against Plaintiff for damage in the amount of $500. /// /// /// /// /// IT IS FURTHER DECIDED that Plaintiff s request to assess penalties against DECISION CASE NO. 021019D 4 Defendant is denied. Dated this _____ day of December, 2002. _________________________________ JILL A. TANNER PRESIDING MAGISTRATE IF YOU WANT TO APPEAL THIS DECISION, FILE A COMPLAINT IN THE REGULAR DIVISION OF THE OREGON TAX COURT, FOURTH FLOOR, 1241 STATE ST., SALEM, OR 97301-2563. YOUR COMPLAINT MUST BE SUBMITTED WITHIN 60 DAYS AFTER THE DATE OF THE DECISION OR THIS DECISION BECOMES FINAL AND CANNOT BE CHANGED. THIS DOCUMENT WAS SIGNED BY MAGISTRATE JILL A. TANNER ON DECEMBER 31, 2002. THE COURT FILED THIS DOCUMENT ON DECEMBER 31, 2002. DECISION CASE NO. 021019D 5

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