T.C. Memo. 2007-121
UNITED STATES TAX COURT
WILLIAM M. SMITH, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13599-05. Filed May 10, 2007.
William M. Smith, pro se.
Jonathan J. Ono, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HAINES, Judge: Respondent determined a deficiency in
petitioner’s 2002 Federal income tax of $4,088, as well as
additions to tax under section 6651(a)(1) of $1,131 and section
6654 of $125.1
1
Unless otherwise indicated, all section references are to
(continued...)
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The issues for decision are: (1) Whether petitioner failed
to report wages, interest, a State income tax refund, and other
income of $35,335, $14, $757, and $270, respectively, in 2002;
and (2) whether petitioner is liable for section 6651(a)(1) and
6654 additions to tax.2
FINDINGS OF FACT
The parties’ stipulation of facts and the attached exhibits
are incorporated herein by this reference. Petitioner resided in
Lahaina, Hawaii, at the time the petition was filed.
In 2002, petitioner was employed by the county of Maui in
Hawaii and received wage income of $35,335 and had withheld $713
in Federal income tax. Using third-party payor information,
respondent determined that in 2002 petitioner also received $14
of interest from the Maui County Employees Federal Credit Union,
$757 as an income tax refund from the State of Hawaii, and $270
from the Hawaii Public Employees Health Fund. Petitioner did not
file a Federal income tax return for 2002 and, other than tax
withheld of $713, failed to make estimated tax payments.
1
(...continued)
the Internal Revenue Code (Code), as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
2
In the notice of deficiency respondent determined that
petitioner was entitled only to the standard deduction, one
personal exemption, and tax rates applicable to a single
individual. Petitioner did not present any evidence or make any
arguments with respect to deductions, exemptions, or filing
status. We conclude that he has abandoned any argument with
respect to these issues.
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On April 26, 2005, respondent mailed a notice of deficiency
to petitioner for 2002. The notice of deficiency correctly
identified petitioner’s name, address, and Social Security
number. Petitioner timely filed his petition on July 22, 2005.
Trial was held on this matter on June 20, 2006.
OPINION
At trial, petitioner admitted receiving $35,335 of wage
income from Maui county, $14 of interest income from the Maui
County Employees Federal Credit Union, and a $757 income tax
refund from the State of Hawaii in 2002. Although petitioner
asserted he did not receive $270 from the Hawaii Public Employees
Health Fund as reported on the information return of the payor,
he was a public employee in the State of Hawaii in 2002 and
produced no evidence to dispute his receipt of that amount.
Thus, respondent established the requisite evidentiary foundation
connecting petitioner with the receipt of $270 in 2002. See
Edwards v. Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982);
Weimerskirch v. Commissioner, 596 F.2d 358, 361-362 (9th Cir.
1979), revg. 67 T.C. 672 (1977); Petzoldt v. Commissioner, 92
T.C. 661, 689 (1989); McManus v. Commissioner, T.C. Memo.
2006-68.
Petitioner bears the burden of proving respondent’s
determinations are incorrect. See Rule 142(a). Petitioner
produced no evidence to dispute respondent’s determination of
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petitioner’s receipt of the $270 in 2002. Therefore, this Court
finds petitioner received $270 of income from the Hawaii Public
Employees Health Fund in 2002.
Petitioner also asserted he was not liable for the
deficiencies, making tax-protester arguments including: (1) He
is not a taxpayer; (2) respondent has no jurisdiction over him;
and (3) respondent lacks authority to assert income tax
deficiencies. 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 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). This
Court rejects petitioner’s tax-protester arguments as frivolous
and without merit.
Respondent determined that petitioner is liable for
additions to tax under section 6651(a)(1) for failure to file an
income tax return for 2002 and under section 6654(a) for failure
to make estimated tax payments for 2002. Respondent bears the
burden of production with respect to petitioner’s liability for
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the additions to tax. Sec. 7491(c); Higbee v. Commissioner, 116
T.C. 438, 446-447 (2001). To meet his burden of production with
respect to section 6651, respondent must come forward with
sufficient evidence indicating it is appropriate to impose the
addition to tax. Higbee v. Commissioner, supra at 446-447.
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 petitioner can establish
that his failure was due to reasonable cause and not due to
willful neglect. Petitioner admitted he did not file a Federal
income tax return for 2002. Respondent has met his burden of
production. This Court finds that the failure to file a Federal
income tax return for 2002 was not due to reasonable cause but
was due to willful neglect. Therefore, this Court holds that
petitioner is liable for the section 6651(a)(1) addition to tax
for 2002.
Under section 6654, the addition to tax is calculated with
reference to four required installment payments of the taxpayer’s
estimated tax liability. Sec. 6654(c)(1); Wheeler v.
Commissioner, 127 T.C. 200, 210 (2006). Each required
installment of estimated tax is equal to 25 percent of the
“required annual payment”. Sec. 6654(d)(1)(A). The “required
annual payment” is generally equal to the lesser of (1) 90
percent of the tax shown on the individual’s return for that year
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(or, if no return is filed, 90 percent of his or her tax for such
year), or (2) if the individual filed a return for the
immediately preceding taxable year, 100 percent of the tax shown
on that return. Sec. 6654(d)(1)(B); Wheeler v. Commissioner,
supra at 210-211; Heers v. Commissioner, T.C. Memo. 2007-10. A
taxpayer has an obligation to pay estimated tax for a particular
year only if he has a “required annual payment” for that year.
Wheeler v. Commissioner, supra at 211.
Respondent introduced evidence to prove petitioner was
required to file a Federal income tax return for 2002, petitioner
did not file a 2002 return, and petitioner failed to make
estimated tax payments (with the exception of the withheld tax).
However, in order to permit this Court to make the analysis
required by section 6654(d)(1)(B)(ii) and to conclude that
respondent met his burden of producing evidence that petitioner
had a required annual payment for 2002 payable in installments
under section 6654, respondent also must introduce evidence
showing whether petitioner filed a return for the preceding
taxable year and, if so, the amount of tax shown on that return.
Respondent did not do so. Without that evidence, this Court
cannot identify the number equal to 100 percent of the tax shown
on petitioner’s 2001 return, complete the comparison required by
section 6654(d)(1)(B), and conclude petitioner had a required
annual payment for 2002 that was payable in installments under
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section 6654. Consequently, respondent’s determination regarding
the section 6654 addition to tax is not sustained.
Although petitioner’s arguments were frivolous and without
merit, he was not previously warned that a penalty might be
imposed under section 6673(a). For this reason only, this Court
declines to impose a penalty under section 6673(a) but strongly
admonishes petitioner that if he persists in failing to file his
income tax returns and in pursuing tax-protester arguments, this
Court will not be so favorably inclined in the future.
In reaching our holdings herein, we have considered all
arguments made, and, to the extent not mentioned above, we find
them to be moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.