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Frivolous tax argument repeat offender slapped with $25,000 penalty

August 27, 2010

Charles Raymond Wheeler has been adamant for years more than a decade that he doesn't owe taxes on military retirement payments he's received.

The IRS disagrees.

And this week, a federal Tax Court judge decided that Wheeler has taken quite enough of the legal system's time with his frivolous arguments for not paying the taxes and his continual stalling techniques in court.

Judge Holding Gavel

U.S. Tax Court Judge Mary Ann Cohen imposed the maximum $25,000 penalty against Wheeler.

In her ruling, Cohen noted that in refusing to send in his 1040s, Wheeler relied on "a variety of repetitious and frivolous arguments. … Similarly, at no time has petitioner denied that he failed to file income tax returns for the years in issue, nor has he alleged that such failure was due to what would constitute reasonable cause and not willful neglect."

Compounding the Court's ire, noted Cohen, was Wheeler's "frivolous and groundless" legal pleadings that "suggest that he instituted, and is maintaining, the present action primarily for purposes of delay."

Cohen's whacking of Wheeler and his tax-avoidance techniques didn't stop there:

"Although the Court previously indulged petitioner's pleas for more time and his claims that he was entitled to deductions and credits, at this stage it is apparent that his consistent strategy has been to delay determination of his liabilities without any intent to abandon the arguments that have been characterized throughout as frivolous, irrelevant, and otherwise totally lacking in merit."

Petitioner's only authority for his arguments is his own convoluted reading of various provisions of the Internal Revenue Code, the Internal Revenue Manual, official IRS transcripts, the Federal Rules of Evidence, and cases cited out of context. Because the Court advised him that his interpretations were erroneous, he asserts that the Court is biased against pro se taxpayers. … Petitioner’s repetitious rhetoric claiming victimization has no credibility. Petitioner's contentions are merely stale and recycled versions of unsuccessful arguments that he has made since 1994.

"Under these circumstances, we are not compelled to address at length his latest concoctions. To do so would be to encourage the dilatory conduct that he has employed throughout the history of this case and would neither dissuade petitioner nor provide useful guidance to taxpayers with legitimate cases."

The judge then pointed out that in three prior cases, Wheeler was penalized $1,500 each for failure to pay. An appeals court subsequently assessed another $4,000 fine against him.

But apparently, $8,500 wasn't enough to get him to stop fighting his tax obligations with unsupportable arguments.

So Cohen assessed the maximum allowed under the law. In finding for the IRS, she noted:

"[Wheeler's] noncompliance with the tax laws has continued for well over a decade and after repeated rejections of his frivolous arguments in judgments of this Court and the Court of Appeals rendered years before this case was submitted.

"A penalty in the maximum amount of $25,000 is appropriate when lesser amounts have not deterred a taxpayer's defiance of the tax laws and of the rulings of the courts. … Such a penalty is justified here, and the decision in this case will include a determination that petitioner owes to the United States a penalty of $25,000."

The $25,000 penalty is in addition to the $16,399 in taxes Wheeler owes for the 2002, 2004 and 2005 tax years, along with penalties and interest of $5,052 that have accrued (and are still adding up) on those unpaid tax amounts.

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Comments
  • If tax protesters poured all that energy into actually reforming the system, rather than play games with reasons nobody accepts, we’d all be alot better off.
    As it is, he’ll have to pay way more in and have spent much more time dealing with the IRS than the average person. What a waste.

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