T.C. Memo. 2006-73
UNITED STATES TAX COURT
CHARLES E. LEWIS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16316-04. Filed April 12, 2006.
Charles E. Lewis, pro se.
Nancy E. Hooten, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HAINES, Judge: Respondent determined a deficiency in
petitioner’s Federal income tax for 2002 and additions to tax
under sections 6651(a)(1) and (2) and 6654(a).1 After
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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concessions,2 the issues for decision are: (1) Whether
petitioner has a deficiency of $12,899 in his 2002 Federal income
tax; (2) whether petitioner is liable for an addition to tax
under section 6651(a)(1); (3) whether petitioner is liable for an
addition to tax under section 6654(a); and (4) whether the Court
should impose a penalty against petitioner under section 6673(a).
FINDINGS OF FACT
Some of the facts have been deemed stipulated pursuant to
Rule 91(f) and are so found. The stipulation of facts and the
attached exhibits are incorporated herein by this reference. At
the time he filed the petition, petitioner resided in Atlanta,
Georgia.
During 2002, petitioner received wage income of $7,371 from
Hartford Life Insurance Co. Also during 2002, petitioner
received interest income from the following sources: (1) $11,341
from TIAA-CREF; (2) $126 from US Federal Credit Union; (3) $847
from Minnesota Life Insurance Co.; and (4) $1 from NWA Federal
Credit Union.
During 2002, petitioner requested and received early
retirement plan distributions of $1,091 and $34,908 from State
Street Retiree Services for Northwest Airlines Corp. Employees
(State Street Retiree Services). State Street Retiree Services
2
Respondent concedes petitioner is not liable for an
addition to tax under sec. 6651(a)(2).
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issued Forms 1099-R, Distributions from Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,
Etc., to petitioner reflecting these early distributions.
Petitioner had not reached the age of 59-1/2 and was not disabled
at the time the distributions were made. The distributions were
not part of a series of substantially equal periodic payments and
were not used to correct excess deferrals, excess contributions,
or excess aggregate contributions. The distributions were not
made to petitioner after separation from service after the age of
55 or pursuant to a qualified domestic relations order.
Petitioner did not use the distributions to pay for health
insurance premiums or medical expenses.
Petitioner did not file a Federal income tax return for
2002. On April 29, 2004, respondent prepared a substitute for
return for petitioner.
On June 8, 2004, respondent mailed a notice of deficiency to
petitioner. Respondent determined a deficiency in petitioner’s
2002 Federal income tax of $12,899. Of that amount, $3,600 is
attributable to a 10-percent additional tax on petitioner’s early
retirement plan distributions. Respondent determined that
petitioner is liable for an addition to tax under section
6651(a)(1) of either $3,513 or $2,725.3 Respondent further
3
In the notice of deficiency, the addition to tax under
sec. 6651(a)(1) appears as both $3,513 and $2,725. Because
(continued...)
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determined that petitioner is liable for an addition to tax under
section 6654(a) of $431.
On September 7, 2004, petitioner filed his petition with
this Court contesting respondent’s determinations reflected in
the notice of deficiency.
OPINION
A. Petitioner’s Federal Income Tax Deficiency
Respondent determined a deficiency of $12,899 in
petitioner’s 2002 Federal income tax. Petitioner bears the
burden of proving respondent erred in making this determination.
See Rule 142(a).
Throughout these proceedings, petitioner has presented tax-
protester arguments, including: (1) He is not a taxpayer; (2)
respondent has no jurisdiction over him; (3) respondent lacks
authority to assert income tax deficiencies; (4) respondent
failed to provide him with the “most basic ‘DUE PROCESS’
protections as provided by both Federal (4th, 5th, 6th and 7th
Amendments) and State Constitutions.” Petitioner’s assertions
have been rejected by this Court and other courts, and “We
perceive no need to refute these arguments with somber reasoning
and copious citation of precedent; to do so might suggest that
3
(...continued)
respondent has conceded that petitioner is not liable for an
addition to tax under sec. 6651(a)(2), the correct amount of the
addition to tax under sec. 6651(a)(1) should be 25 percent of the
deficiency, or $3,225. See infra p. 6.
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these arguments have some colorable merit.” Crain v.
Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984); see, e.g.,
Wetzel v. Commissioner, T.C. Memo. 2005-211 (rejecting as
frivolous the argument that the taxpayer was not a taxpayer);
Nunn v. Commissioner, T.C. Memo. 2002-250 (rejecting as without
merit the argument that the Commissioner had no jurisdiction over
the taxpayer or his documents). We reject petitioner’s tax-
protester arguments as frivolous and without merit.4
Under Rule 91(f), it was deemed stipulated that petitioner
received $7,371 of wage income, $12,315 of interest income, and
$35,999 from early retirement plan distributions. It was further
stipulated that petitioner did not meet any of the exceptions to
the 10-percent additional tax imposed by section 72(t) on the
early distributions. Petitioner has presented no evidence that
indicates respondent’s determination is incorrect. Therefore, we
hold that petitioner has a Federal income tax deficiency of
$12,899 for 2002.
4
Petitioner also argued that he was “improperly denied a
collections due process hearing”. This argument likewise has no
merit. Petitioner filed his petition in response to the notice
of deficiency, and respondent has not taken any collection
action. Thus, petitioner is not entitled to a collection hearing
at this point. See secs. 6320, 6330.
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B. Additions to Tax
1. Burdens of Production and Proof
Respondent bears the burden of production with respect to
petitioner’s liability for the additions to tax. See sec.
7491(c); Higbee v. Commissioner, 116 T.C. 438, 446-447 (2001).
To meet his burden of production, respondent must come forward
with sufficient evidence indicating that it is appropriate to
impose the additions to tax. See Higbee v. Commissioner, supra
at 446-447. Once respondent meets his burden of production,
petitioner must come forward with evidence sufficient to persuade
the Court that respondent’s determinations are incorrect.
2. Section 6651(a)(1)
Respondent determined that petitioner is liable for an
addition to tax under section 6651(a)(1) for 2002. Section
6651(a)(1) imposes an addition to tax of up to 25 percent of the
amount of tax required to be shown on a return for failure to
file the 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
willful neglect. Under Rule 91(f), it was deemed stipulated that
petitioner failed to file a Federal income tax return for 2002.
Respondent’s Certificate of Assessments and Payments also
indicates that petitioner failed to file a return. We find that
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respondent has met his burden of production with regard to the
addition to tax under section 6651(a)(1).
Petitioner has presented no evidence indicating his failure
to file was due to reasonable cause or that respondent’s
determination is otherwise incorrect. We hold that petitioner is
liable for an addition to tax under section 6651(a)(1) of $3,225.
3. Section 6654(a)
Respondent determined that petitioner is liable for an
addition to tax under section 6654(a) of $431 for 2002. Section
6654(a) imposes an addition to tax on an underpayment of
estimated tax unless one of the statutory exceptions applies.
See sec. 6654(e). Under Rule 91(f), it was deemed stipulated
that petitioner failed to file a Federal income tax return for
2002 and did not make estimated tax payments during 2002.
Respondent’s Certificate of Assessments and Payments also
indicates that petitioner failed to file a return and did not
make estimated tax payments. We find that none of the statutory
exceptions applies and that respondent has met his burden of
production.
Petitioner has presented no evidence that respondent’s
determination is incorrect. We hold that petitioner is liable
for an addition to tax under section 6654(a) of $431.
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C. Penalty Under Section 6673(a)(1)
At trial, respondent asked the Court to impose a penalty on
petitioner under section 6673(a). Section 6673(a)(1) authorizes
the Court to require a taxpayer to pay the United States a
penalty in an amount not to exceed $25,000 whenever it appears to
the Court the taxpayer’s position is frivolous or groundless.
Sec. 6673(a)(1)(B).
Petitioner has asserted tax-protester arguments throughout
these proceedings, and we have rejected these arguments as
frivolous and without merit. However, it does not appear that
petitioner has previously been a litigant in this Court, or that
he was warned before trial about the possibility of a penalty
under section 6673(a). For this reason, we decline to impose a
penalty under section 6673(a). However, we strongly admonish
petitioner that if he persists in failing to file his tax returns
and in pursuing tax-protester arguments, we may not be so
favorably inclined in the future.
In reaching our holdings, we have considered all arguments
made, and, to the extent not mentioned, we conclude that they are
moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.