Martinez v. CIR ( 1999 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 98-60586
Summary Calender
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GERALD J. MARTINEZ; GAYLE R. MARTINEZ,
Petitioners-Appellants,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
_________________________________________________________________
Appeal from the Decision of the United States Tax Court
(19887-95)
_________________________________________________________________
October 6, 1999
Before KING, Chief Judge, and HIGGINBOTHAM and STEWART, Circuit
Judges.
KING, Chief Judge:*
Petitioners-Appellants Gerald Martinez and Gayle Martinez,
husband and wife, appeal from a decision of the United States Tax
Court sustaining Respondent-Appellee’s assessment of deficiencies
in, and additions to, Petitioners-Appellants’ federal income tax
for the years 1982 through 1987. We AFFIRM.
I. BACKGROUND
The Martinezes are Catholics who oppose, on religious
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
grounds, the payment of taxes that fund abortions and abortion-
related education. Based on their religious beliefs, the
Martinezes have failed to file federal income tax returns since
1973. After an audit, the Commissioner issued notices of
deficiencies in federal income tax, as well as additions to tax,
to each Appellant for the years 1982-1987.
The Martinezes petitioned the U.S. Tax Court for review of
the Commissioner’s determination on numerous grounds.2 First,
the Martinezes claimed that the Free Exercise Clause exempts them
from paying taxes. Second, they claimed that the Commissioner
incorrectly determined their unreported income and allowable
deductions. Third, they contended that the Commissioner
incorrectly assessed civil penalties. Fourth, the Martinezes
claimed that the Commissioner used the wrong filing status when
computing their tax liability, i.e., “married, filing
separately,” rather than “married, filing jointly.” Finally, the
Martinezes asserted that the statute of limitations barred the
Commissioner’s assessment of back taxes.
The Tax Court rejected the Martinezes Free Exercise claim,
citing well-settled precedent that religious objections to the
manner in which federal revenue is spent provide no basis for
resisting the federal income tax. The Tax Court also rejected
the Martinezes’ contention regarding the calculation of their
income and allowable deductions. In rejecting this argument, the
2
We discuss only the arguments advanced by the Martinezes on
appeal.
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court noted that the Commissioner’s calculations were based on
the Martinezes’ own records, and that they failed to introduce
any evidence to rebut the presumption that the Commissioner’s
calculations were correct. The court also determined that the
Martinezes failed to show that the Commissioner’s imposition of
civil penalties was erroneous. The court further held that the
Martinezes were not entitled to have their taxes computed on a
“married, filing jointly” basis because they had failed to file
returns for the years at issue. Finally, the Tax Court
determined that the statute of limitations on assessment actions
had not run because the Martinezes failed to file returns for the
years at issue.
The Martinezes now appeal the Tax Court’s decision by
reasserting the arguments advanced below.
II. DISCUSSION
We review a decision of the U.S. Tax Court as we would a
decision by the district court. Street v. Commissioner, 152 F.3d
482, 484 (5th Cir. 1998). The Tax Court’s determination
regarding the Martinezes’ free exercise claim is a question of
law and is reviewed de novo. Id.; Estate of McLendon v.
Commissioner, 135 F.3d 1017, 1021 (5th Cir. 1998). The Tax
Court’s determination that the Martinezes failed to introduce
sufficient evidence to overcome the presumption that the
Commissioner correctly calculated their tax liability is reviewed
for clear error. Yoon v. Commissioner, 135 F.3d 1007, 1012 (5th
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Cir. 1998); Webb v. Commissioner, 394 F.2d 366, 372 (5th Cir.
1968).
The Martinezes’ religious-based objection to the manner in
which certain federal funds are spent does not afford them any
basis for refusing to file returns or pay their taxes. It is
well-established that the federal income tax system does not
violate the Free Exercise Clause of the Constitution. See
Hernandez v. Commissioner, 490 U.S. 680 (1989); United States v.
Lee, 455 U.S. 252 (1982); United States v. American Friends Serv.
Comm., 419 U.S. 7 (1974); Lull v. Commissioner, 602 F.2d 1166
(4th Cir. 1979), cert. denied, 444 U.S. 1014 (1980); Graves v.
Commissioner, 579 F.2d 392 (6th Cir. 1978), cert. denied, 440
U.S. 946 (1979); Autenrith v. Cullen, 418 F.2d 586 (9th Cir.
1969), cert. denied, 397 U.S. 1036 (1970). While the Free
Exercise Clause protects a person’s right to hold any religious
belief, it does not give them the right to act in a manner
contrary to the law. See United States v. Holmes, 614 F.2d 985,
989 (5th Cir. 1980). The Martinezes’ contention that their
religious convictions exempt them from paying federal income tax
is without merit.
We agree with the Tax Court that the Martinezes failed to
overcome the presumption in favor of the Commissioner’s
calculations of tax deficiencies for the years 1982-87. In
determining income the Commissioner must demonstrate a link
between the taxpayer and any unreported income. See Woodall v.
Commissioner, 964 F.2d 361, 363 (5th Cir. 1992). The use of the
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taxpayer’s own records satisfies that burden. See id. (finding
that the Commissioner’s reliance upon a “taxpayer’s statement” in
the form of a balance sheet submitted by the taxpayer was
sufficient information with which to calculate taxpayer’s
deficiencies). The Commissioner’s determination of income
(including any relevant deductions) and calculation of tax is
presumptively correct, and the taxpayer bears the burden of
proving those determinations and calculations incorrect. See
United States v. Janis, 428 U.S. 433, 440-441 (1976); Helvering
v. Taylor, 293 U.S. 507, 515 (1935); Yoon v. Commissioner, 135
F.3d 1007, 1012 (5th Cir. 1998); Portillo v. Commissioner, 932
F.2d 1128, 1133 (5th Cir. 1991).
Despite being warned repeatedly by the judge below that they
bore the burden of overcoming the Commissioner’s determination,
the Martinezes failed to introduce any evidence concerning their
income or tax liability. Accordingly, the Tax Court correctly
determined that the Martinezes failed to overcome the presumption
in favor of the Commissioner.
The Tax Court correctly determined that the Martinezes
failed to demonstrate that the Commissioner’s assessment of civil
penalties was incorrect. The Commissioner assessed civil
penalties for failure to file timely returns, negligence in the
underpayment of taxes, and negligence in the underpayment of
estimated taxes. A penalty for failure to file may be assessed
by the Commissioner under I.R.C. §6651(a)(1) (1999), unless a
taxpayer can show that his failure to file was due to a
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reasonable cause and did not result from willful neglect. See
United States v. Boyle, 469 U.S. 241, 245-246, (1985). A penalty
for underpayment of taxes or underpayment of estimated taxes may
be imposed by the Commissioner unless a taxpayer can demonstrate
that the underpayment was not negligent. See I.R.C. §§ 6653(a),
6654(a) (1999); Bilski v. Commissioner, 69 F.3d 64, 68 (5th Cir.
1995); Ledbetter v. Commissioner, 837 F.2d 708, 711 (5th Cir.
1988), cert. denied, 488 U.S. 856 (1988). Because the Martinezes
failed to introduce any evidence that their failure to file,
underpayment of taxes, or underpayment of estimated taxes, was
due to any reason other than their conscious decision not to pay
taxes, the Tax Court correctly upheld the Commissioner’s
assessment of civil penalties.
The Tax Court correctly found that the Martinezes’ were not
entitled to have their tax calculated at the “married, filing
jointly” rate. The Internal Revenue Code provides that the
“married, filing jointly” tax rates are available to married
individuals “who make a single return jointly.” I.R.C. §1(a)(1)
(1999). Therefore, only taxpayers who actually file a tax return
qualify for the “married, filing jointly” rates. See Brattin v.
Commissioner, 64 T.C.M. 1144, 1145 (1992); Thompson v.
Commissioner, 78 T.C. 558, 561 (1982); Dritz v. Commissioner, 28
T.C.M. 874, 880 (1969), aff’d 427 F.2d 1176 (5th Cir.
1970). Because the Martinezes failed to file tax returns for the
years in question, the Tax Court correctly determined that they
were not entitled to have their taxes calculated on a “married,
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filing jointly” basis.
Lastly, the Tax Court correctly determined that no statute
of limitations applied to this case. The Internal Revenue Code
provides that, if a taxpayer fails to file a return, an
assessment proceeding may be brought at any time. I.R.C.
§6501(c)(3) (1999). Therefore, in this situation, the statute of
limitations in an enforcement action remains open indefinitely.
See Woolf v. United States, 578 F.2d 1103, 1005 (5th Cir. 1978);
Lucia v. United States, 474 F.2d 565, 570 (5th Cir. 1973).
Because the Martinezes never filed a tax return during the years
in question, the Tax Court correctly determined that no statute
of limitations applied.
III. CONCLUSION
For all the foregoing reasons we AFFIRM the judgment of the
Tax Court.
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