COLVIN I. BERT
COMPTROLLER OF THE TREASURY
Krauser, C.J., Davis, Arrie W. (Retired, Specially Assigned), Salmon, James P. (Retired, Specially Assigned), JJ.
This is a tax protestor case. In his appeal from the judgment of the Circuit Court for Howard County (McCrone, J.), Colvin I. Bert, appellant, seeks further judicial review of the decision of the Maryland Tax Court. The circuit court affirmed the decision of the Tax Court, which in turn had upheld tax assessments and penalties regarding the income tax years of 1999, 2000, 2001, 2002 and 2004. Appellant, aggrieved by the decision of that court, seeks our review of a host of issues. Recast to facilitate and clarify appellate review, the pertinent issues on appeal are as follows:
1. Whether the Maryland Tax Court erred by concluding that Mr. Bert was not entitled to exclude from his income for tax year 2004 compensation that he had received from his employers, and whether the Maryland Tax Court erred by affirming the assessment of frivolous return penalties for tax years 1999, 2000, 2001, 2002 and 2004.
2. Whether the Maryland Tax Court abridged appellant's privilege against self-incrimination or due process rights, or otherwise erred in the conduct of its statutory review.
For the reasons set forth below, we shall affirm.
This dispute between appellant and the Comptroller of Maryland involves appellant's filings for tax years 1999 through 2002 and 2004. We set forth pertinent facts related to each year.
Tax Years in Question
On July 31, 2000, appellant filed a Maryland Tax Form 503 for calendar year 1999. He attached a Form W-2 from the OAO Corporation in Greenbelt that reported wages in the amount of $79, 043.25, and a Form 1099-G that reported unemployment compensation in the amount of $250 from the State of Maryland. On the 1999 tax filing, appellant represented that his reportable net income was "$0.00." On October 3, 2005, appellant filed an amended Maryland Tax Form 502X for the calendar year 1999, accompanied by an IRS Form 4852, "Substitute for Form W-2, " that reported his wages from OAO Corporation to be "$0.00." Appellant represented on the Form 502X that the adjusted gross income from the federal return was also "$0.00." On the Form 4852, appellant explained the change in income:
Company provided records and statutory language behind IRC sections 3401 and 3121 and others. Request, but the company refuses to issue forms correctly listing payments of "wages as defined in 3401(a) and 3121(a)" for fear of IRS retaliation. The amounts listed withheld on the W-2 it submitted are correct, however.
To explain his amended Maryland 1999 return, appellant represented:
Submitting Form 4852. Original W-2 submitted with return was in error. Employer issued forms incorrectly listing payments of wages as defined in IRC Sections 3401(a) and 3121(a). However, withholding amounts on W-2 are correct.
On April 15, 2004, appellant filed a Maryland Tax Form 503 for calendar year 2000. The Form 503 listed appellant's federal adjusted gross income from the federal tax return for that year as $2, 000. Appellant then filed an amended Form 502X for calendar year 2000 on a Form 502X that was signed on October 4, 2005. This filing was accompanied by four W-2 forms that reported a total of $81, 680.69 in salary or wages for 2000. Appellant also received $2, 000 in unemployment compensation in calendar year 2000.
On October 4, 2005, appellant filed what purported to be an amended Maryland Tax Return on Form 502X for calendar year 2000. This filing was accompanied by four self-generated Forms 4852, each of which reported wages in the amount of "$0.00." On the Form 502X filing, appellant represented that his federal adjusted gross income for calendar year 2000 was $2, 000, the amount he received as unemployment compensation.
On October 5, 2005, appellant signed a purported Maryland Tax Return for calendar year 2001 and filed the Form 502 on that date or thereafter. He reported his adjusted gross income for that year as "$0.00, " and claimed a tax refund of $5, 504.12. For 2001, the Data Computer Corporation reported that appellant had received compensation in the amount of $87, 091.12 as reflected in the Form W-2 that was issued by that employer. Notwithstanding, appellant's self-generated Form 4852 reported his wages from Data Computer Corporation as "$0.00."
On October 7, 2005, appellant filed a Maryland Tax Form 502 for the calendar year 2002 and reported on this form an adjusted gross income from the federal return of "$0.00." He also claimed a tax refund of $5, 985.71 and attached a self-generated Form 4852 that represented that his wages from Data Computer Corporation were "$0.00." The Data Computer Corporation W-2 for this period reported that appellant's wages were $91, 031.21.
This pattern repeated itself on October 12, 2005, when appellant signed and, shortly thereafter, filed a Maryland Tax Form 503 for calendar year 2004. Although the W-2 form that had been issued by Data Computer Corporation reported appellant's wages at $93, 577.88, his self-generated Form 4852 represented that he had received no wages from this company that year.
In 2006, the Comptroller acted on appellant's tax filings. On March 27, 2006, the Comptroller sent appellant a notice of income tax assessment with respect to the 2004 tax year, followed on March 31 by a similar assessment notice that addressed the tax years of 1999, 2000, 2001 and 2004. In these assessments, the Comptroller advised appellant that the tax returns in question were each incorrect and assessed a $500 frivolous return penalty for each tax year in question. The Comptroller also recomputed appellant's 2004 income.
Appellant objected to these assessments and the Comptroller convened an informal hearing on July 10, 2006. On July 23, 2007, the Comptroller issued a "Notice of Final Determination" with respect to the tax assessments for Tax Years 1999 through 2002. In this Notice, the Comptroller also upheld the adjustments to appellant's 2004 filing. The Notice of Final Determination relevantly provided:
This is the Comptroller's final determination, on your request for revision of the income tax assessments, issued on March 31, 2006 for tax years 1999, 2000, 2001, and 2002, and on March 27, 2006 for tax year 2004, pursuant to Tax General Article, Section 13-508(c) of the Annotated Code of Maryland.
On July 10, 2006, an informal hearing was held regarding the above referenced assessments. At issue is the imposition of frivolous return penalties by the Comptroller for all years, and for tax year 2004, also the recomputation of tax due.
Rita Bormuth, of the Compliance Division, appeared on behalf of the Comptroller of Maryland. She testified that Mr. Bert filed amended returns for tax years 1999 and 2000 showing only interest and unemployment income. For tax years 2001 and 2002, Mr. Bert filed original returns reporting zero income. On March 31, 2006, Ms. Bormuth sent Mr. Bert a Notice of Income Tax Assessment which assessed a frivolous return penalty of $500.00 for each of the years 1999, 2000, 2001, and 2002. For tax year 2004, Mr. Bert filed a return reporting zero income and requesting a refund of his withholding in the amount of $7, 076.13. Ms. Bormuth testified that she recomputed the return including the wages in the amount of $93, 578.00 reported on the W2 from Data Computer Corp. of America. Based on that recomputation, she calculated a tax refund due in the amount of $39.43. She assessed a $500.00 frivolous return penalty, and applied the refund amount toward that penalty, resulting in a balance due on the 2004 assessment of $460.57.
The Comptroller outlined appellant's arguments:
Mr. Colvin Bert appeared on his own behalf at the hearing. Mr. Bert disputed the imposition of the frivolous return penalties. As to the amended returns, he stated that he was required by law to amend his Maryland returns because he had amended his federal returns for tax years 1999 and 2000. However, he also stated that the federal amendments had no effect on his Maryland liability. With regard to the amounts reported on all of the returns, Mr. Bert stated that he felt his Maryland returns were filed in accordance with applicable Maryland law. As directed by Tax-General Article § 10-204, he reported the same federal adjusted gross income on his Maryland return that he reported on his federal returns. He further argued that by reporting these amounts, as well as the amounts he calculated on his substitute W2s, the information reported on the returns was not substantially incorrect on its face. With regard to tax year 2000, Mr. Bert also disputed the imposition of the frivolous return penalty with regard to the amended return, since he had already been assessed a frivolous return penalty when he filed his original 2000 Maryland return.
Mr. Bert also questioned Ms. Bormuth's authority to issue the assessments and the legality of those assessments. He referred to Ms. Bormuth's job description and argued that nowhere in that description did he find authority to issue assessments or penalties. Mr. Bert's position is that because Ms. Bormuth's job description does not specifically list assessing tax or penalty as one of the duties of her position, Ms. Bormuth ...