T.C. Memo. 2005-184
UNITED STATES TAX COURT
ROBERT E. RHODES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6291-04. Filed July 26, 2005.
Robert E. Rhodes, pro se.
Tanya S. Wang, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: Respondent determined the following
deficiencies in and additions to petitioner’s Federal income tax:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)
1999 $9,606.50 $2,690.72 $333.90
2000 8,509.00 3,148.33 457.64
2001 8,794.00 2,726.14 348.00
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All section references are to the applicable Internal Revenue
Code, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
After concessions,1 the issues for decision are: (1)
Whether petitioner is liable for the deficiencies determined by
respondent for 1999, 2000, and 2001 in excess of the amounts he
conceded; (2) whether petitioner is liable for the addition to
tax pursuant to section 6651(a)(1) for 1999, 2000, and 2001; (3)
whether petitioner is liable for the addition to tax pursuant to
section 6654(a) for 2000 and 2001; and (4) whether to impose a
penalty pursuant to section 6673.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time he filed his
petition, petitioner resided in Arlington, Texas.
I. Notices of Deficiency and Forms 1040
On January 14, 2004, respondent issued petitioner separate
notices of deficiency for 1999, 2000, and 2001. After receiving
the notices of deficiency for 1999, 2000, and 2001, on January
1
Respondent concedes that (1) Texas community property
laws are applicable to petitioner, (2) petitioner’s income listed
in the notice of deficiency must be reduced in accordance with
Texas community property laws, (3) petitioner’s filing status is
married filing separately, (4) no addition to tax pursuant to
sec. 6654(a) is due from petitioner for 1999, and (5) petitioner
incurred net losses on his stock transactions for 2000 and 2001.
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28, 2004, January 30, 2004, and January 30, 2004, respectively,
petitioner signed Forms 1040, U.S. Individual Income Tax Return,
for 1999, 2000, and 2001. On February 8, 2004, the Internal
Revenue Service received petitioner’s Forms 1040 for 1999, 2000,
and 2001. The Forms 1040 for 1999, 2000, and 2001 listed zeros
for, among other things, the amount of petitioner’s income,
adjusted gross income, taxable income, tax, total tax, and
payments and the amount petitioner overpaid, wanted refunded, and
owed.
II. 1999
During 1999, petitioner worked for Allstate Insurance Co.
(AIC). AIC issued petitioner a Form W-2, Wage and Tax Statement,
for 1999 reflecting wages of $45,414.84 and Federal income tax
withholding of $2,512.77. During 1999, petitioner also worked
for Practice Practice, Inc. (PPI). PPI issued petitioner a Form
W-2 for 1999 reflecting wages of $2,648 and Federal income tax
withholding of $60.
In 1999, petitioner received a taxable distribution from the
AIC Savings and Profit Sharing Plan. Petitioner received a Form
1099-R, Distributions from Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc., from AIC
for 1999 listing a gross distribution in the amount of $4,700, a
taxable distribution in the amount of $3,885, and Federal income
tax withholding in the amount of $777.
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III. 2000
During 2000, petitioner worked for AIC. AIC issued
petitioner a Form W-2 for 2000 reflecting wages of $46,754.84 and
zero Federal income tax withheld. Petitioner received $13 of
interest in 2000. Arlington Federal Credit Union (AFCU) issued
petitioner a Form 1099-INT, Interest Income, for 2000 reflecting
this interest.
IV. 2001
During 2001, petitioner worked for AIC. AIC issued
petitioner a Form W-2 for 2001 reflecting wages of $46,465 and
zero Federal income tax was withheld. Petitioner received a $4
ordinary dividend in 2001. Datek Online Holdings Corp. issued
petitioner a Form 1099-DIV, Dividends and Distribution, for 2001
reflecting this dividend. Petitioner received $11 of interest in
2001. AFCU issued petitioner a Form 1099-INT for 2001 reflecting
this interest.
OPINION
I. The Deficiency
As a general rule, the taxpayer bears the burden of proving
the Commissioner’s deficiency determinations incorrect. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Section
7491(a), however, provides that if a taxpayer introduces credible
evidence and meets certain other prerequisites, the Commissioner
shall bear the burden of proof with respect to factual issues
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relating to the liability of the taxpayer for a tax imposed under
subtitle A or B of the Code. Additionally, section 6201(d)
provides that if a taxpayer asserts a reasonable dispute with
respect to any item of income reported on an information return
filed with the Secretary by a third party and the taxpayer has
fully cooperated with the Secretary, the Secretary shall have the
burden of producing reasonable and probative information
concerning such deficiency in addition to such information
return.
At trial, petitioner testified and stipulated he received
the wages, pension distribution, interest, and dividend set forth
in the notices of deficiency. Petitioner, however, disputed that
the aforementioned amounts are income. Accordingly, as
petitioner does not dispute the facts, failed to introduce
credible evidence, and has not asserted a reasonable dispute
regarding the items listed on the information returns, sections
6201(d) and 7491(a) are inapplicable. Parker v. Commissioner,
117 F.3d 785, 786 (5th Cir. 1997); Tanner v. Commissioner, 117
T.C. 237, 241 (2001), affd. 65 Fed. Appx. 508 (5th Cir. 2003).
At trial and on brief, petitioner advanced shopworn
arguments regarding why the wages, pension distribution,
interest, and dividend are not income. His arguments are
characteristic of tax-protester rhetoric that has been
universally rejected by this and other courts. See Wilcox v.
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Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C. Memo.
1987-225; Carter v. Commissioner, 748 F.2d 1006, 1009 (9th Cir.
1986). We shall not painstakingly address petitioner’s
assertions “with somber reasoning and copious citation of
precedent; to do so might suggest that these arguments have some
colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417
(5th Cir. 1984).
Accordingly, with the exception of the amounts conceded by
respondent, we sustain respondent’s deficiency determinations for
1999, 2000, and 2001.
II. Additions to Tax
Section 7491(c) provides that the Commissioner will bear the
burden of production with respect to the liability of any
individual for additions to tax. “The Commissioner’s burden of
production under section 7491(c) is to produce evidence that it
is appropriate to impose the relevant penalty, addition to tax,
or additional amount”. Swain v. Commissioner, 118 T.C. 358, 363
(2002); see also Higbee v. Commissioner, 116 T.C. 438, 446
(2001). If a taxpayer files a petition alleging some error in
the determination of an addition to tax or penalty, the
taxpayer’s challenge will succeed unless the Commissioner
produces evidence that the addition to tax or penalty is
appropriate. Swain v. Commissioner, supra at 363-365. The
Commissioner, however, does not have the obligation to introduce
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evidence regarding reasonable cause or substantial authority.
Higbee v. Commissioner, supra at 446-447.
A. Section 6651(a)(1)
Section 6651(a)(1) imposes an addition to tax for failure to
file a return on the date prescribed (determined with regard to
any extension of time for filing), unless the taxpayer can
establish that such failure is due to reasonable cause and not
due to willful neglect.
Petitioner stipulated that he filed his Forms 1040 for 1999,
2000, and 2001 on February 8, 2004. Individuals are required to
file a Federal income tax return on or before April 15, following
the close of the calendar year. Sec. 6072(a). Even assuming
arguendo that the Forms 1040 are valid returns for purposes of
section 6651(a)(1), see infra, petitioner’s Forms 1040 for 1999,
2000, and 2001 are late by more than 3 years and 9 months, 2
years and 9 months, and 1 year and 9 months, respectively.
Accordingly, respondent has met his burden of production on this
issue.
Petitioner offered no credible evidence to show that the
failure to file on the date prescribed was due to reasonable
cause and not due to willful neglect. Accordingly, we sustain
respondent’s determinations that petitioner is liable for the
additions to tax pursuant to section 6651(a)(1) for 1999, 2000,
and 2001.
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B. Section 6654(a)
Section 6654(a) imposes an addition to tax “in the case of
any underpayment of estimated tax by an individual”.
Petitioner had zero withholding for 2000 and 2001.
Petitioner’s Forms 1040 for 1999, 2000, and 2001 were not signed
or filed prior to his receipt of the notices of deficiency for
1999, 2000, and 2001. Additionally, the Forms 1040 for 1999,
2000, and 2001 listed zeros for, among other things, the amount
of income, of adjusted gross income, of taxable income, of tax,
of total tax, of payments, overpaid, petitioner wanted refunded,
and amount he owed. Accordingly, the Forms 1040 for 1999, 2000,
and 2001 are not considered valid returns for purposes of section
6654. Mendes v. Commissioner, 121 T.C. 308, 322-329 (2003);
Cabirac v. Commissioner, 120 T.C. 163, 168-170 (2003); Beard v.
Commissioner, 82 T.C. 766, 777 (1984), affd. per curiam 793 F.2d
139 (6th Cir. 1986). Accordingly, respondent met his burden of
production.
Petitioner offered no credible evidence related to this
issue and failed to address it on brief. See Petzoldt v.
Commissioner, 92 T.C. 661, 683 (1989) (failure to address an
adjustment in the notice of deficiency on brief constitutes
abandonment of that issue); Money v. Commissioner, 89 T.C. 46, 48
(1987) (uncontested items deemed conceded). Accordingly, we
sustain respondent’s determinations that petitioner is liable for
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the additions to tax pursuant to section 6654(a) for 2000 and
2001.
III. Section 6673(a)(1)
Section 6673(a)(1) authorizes this Court to require a
taxpayer to pay to the United States a penalty not to exceed
$25,000 if the taxpayer took frivolous positions in the
proceeding or instituted the proceedings primarily for delay. A
position maintained by the taxpayer is “frivolous” where it is
“contrary to established law and unsupported by a reasoned
colorable argument for change in the law.” Coleman v.
Commissioner, 791 F.2d 68, 71 (7th Cir. 1986). In Parker v.
Commissioner, 724 F.2d 469, 472 (5th Cir. 1984), affg. T.C. Memo.
1983-75, the U.S. Court of Appeals for the Fifth Circuit, the
court which is the likely venue for appeal, gave a “cautionary
note to those who would persistently raise arguments against the
income tax which have been put to rest for years. The full range
of sanctions in Rule 38 hereafter shall be summoned in response
to a totally frivolous appeal.”
Prior to trial, petitioner filed several documents
containing frivolous and groundless arguments with the Court.
The Court specifically warned petitioner that we may penalize
petitioner up to $25,000 pursuant to section 6673 for pursuing
arguments that the Court advised him had been rejected as
frivolous by the Court, the U.S. Court of Appeals for the Fifth
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Circuit, and the Supreme Court of the United States. Despite
warning petitioner at least six times at trial that his arguments
were frivolous and groundless, petitioner persisted in making
those arguments at trial and on brief.
We conclude that petitioner’s position was frivolous and
groundless and that petitioner instituted and maintained these
proceedings primarily for delay. Accordingly, pursuant to
section 6673(a) we hold petitioner is liable for a $5,000
penalty.
To reflect the foregoing,
Decision will be entered
under Rule 155.