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On their amended income tax returns for taxable years 1996
and 1997, petitioners essentially claimed that they were not
liable for taxes due on income received from Mr. Anderson’s
fishing activity. The Appeals officer forwarded the amended
returns to the examination division, and the revenue agent’s
report was provided to petitioners denying their claim. The
revenue agent’s report also reflected that petitioners were
liable for self-employment tax for 1996 and 1997.5
We have reviewed petitioners’ arguments as to why they are
not taxable on the income or receipts from the fishing activity.
Petitioners questioned whether they were liable for the 1996 and
1997 income tax. They base their position on a faulty premise.
That premise is that they are not liable for income tax because
the boat owners were responsible for withholding such taxes.
Petitioners conclude that the boat owners’ failure to withhold
relieves them from the liability for the income tax.6 The
obvious fallacy in petitioners’ reasoning is that the income tax
5 Subsequent to the filing of the petition in this case, a
notice of deficiency was issued to petitioners. That notice
contained respondent’s determination of a self-employment tax
deficiency for petitioners’ 1996 and 1997 tax year. A petition
was filed by petitioners, and that case is pending before another
division of this Court.
6 Petitioners mistakenly rely on sec. 3121(b)(20), under
which employment tax withholding is not required of fishing
vessel owners who meet certain requirements and have crews of
less than 10. That section, however, does not obviate their
obligation to pay income tax.
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