T.C. Memo. 2009-215
UNITED STATES TAX COURT
PEDRO JUAN RIVERA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12592-08. Filed September 16, 2009.
P failed to report wage income that he received in
2000. R determined a deficiency and additions to tax
pursuant to secs. 6651(a)(1) and (2) and 6654(a), I.R.C.
Held: P is liable for the deficiency and the additions
to tax. P is also liable for a penalty under sec.
6673(a)(1), I.R.C.
Pedro Juan Rivera, pro se.
Lauren B. Epstein, Robert W. Dillard, and Lynn M. Curry, for
respondent.
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MEMORANDUM FINDINGS OF FACT AND OPINION
WHERRY, Judge: This case is before the Court on a petition
for redetermination of an alleged $2,952 Federal income tax
deficiency and additions to tax that respondent determined for
petitioner’s 2000 tax year. The issues for decision are:
(1) Whether petitioner was required to include $26,881 in
wages in his 2000 gross income;
(2) whether petitioner is liable under section 6651(a)(1)1
for a $549.22 addition to tax;
(3) whether petitioner is liable under section 6651(a)(2)
for a $610.25 addition to tax;
(4) whether petitioner is liable under section 6654(a) for a
$128.19 addition to tax; and
(5) whether the Court should impose a penalty on petitioner
under section 6673(a)(1).
FINDINGS OF FACT
At the time petitioner filed his petition, he resided in
Florida. In 2000 petitioner worked for Terminix International
Co., LP (Terminix), and received $26,881.26 in wages. He did not
file a Federal income tax return for 1999 or 2000 and did not
make any estimated tax payments in 2000. In November 2007
1
All section references are to the Internal Revenue Code of
1986, as amended and in effect for the tax year at issue. All
Rule references are to the Tax Court Rules of Practice and
Procedure.
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respondent prepared a section 6020(b) substitute for return for
petitioner’s 2000 tax year. Respondent issued a notice of
deficiency on February 25, 2008, and petitioner filed a timely
petition with this Court on May 23, 2008. A trial was held on
January 13 and 16, 2009, in Tampa, Florida.
OPINION
I. Whether Petitioner Had Unreported Income
Generally the Commissioner’s determination of a deficiency
is presumed correct, and the taxpayer has the burden of proving
it wrong. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933). However, the Court of Appeals for the Eleventh Circuit,
to which an appeal in this case would lie absent stipulation to
the contrary, has held that the presumption of correctness does
not attach unless the Commissioner introduces some evidence
linking the taxpayer to the alleged income-producing activity.
See Blohm v. Commissioner, 994 F.2d 1542, 1549 (11th Cir. 1993),
affg. T.C. Memo. 1991-636.
Respondent has sufficiently linked petitioner to an income-
producing activity by introducing into evidence (1) a 2000 Form
W-2, Wage and Tax Statement, reflecting that Terminix paid
petitioner $26,881.26 in wages, (2) copies of paychecks that
Terminix sent to petitioner in 2000 and that petitioner endorsed,
and (3) payroll registers reflecting the wages Terminix paid
petitioner in 2000. Thus petitioner has the burden to prove that
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the deficiency was arbitrary or erroneous.2 See Blohm v.
Commissioner, supra at 1549.
Petitioner has not met his burden. He did not testify at
trial, did not present any witnesses or evidence, and did not
file a brief despite being given the opportunity to do so.
Although he argues that respondent failed to prove he is the
Pedro Juan Rivera to whom Terminix paid $26,881.26 in wages, he
admits that his Social Security number appears on the Form W-2,
the paychecks, and the payroll registers that respondent
introduced into evidence. Petitioner’s argument is without merit
as are his other arguments, which are so frivolous that they do
not warrant discussion.3 See Crain v. Commissioner, 737 F.2d
1417, 1417 (5th Cir. 1984) (“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.”). Because petitioner has not met his burden of
proof, we sustain respondent’s deficiency determination.
2
Although sec. 7491(a) may shift the burden of proof to the
Commissioner in specified circumstances, petitioner has not
satisfied the prerequisites under sec. 7491(a)(1) and (2) for
such a shift.
3
For example, petitioner argues that (1) the notice of
deficiency was invalid because it was not properly authorized,
(2) he was not a taxpayer, and (3) that respondent failed to
validate that he had a tax debt. None of these arguments has any
merit.
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II. Additions to Tax
Respondent determined that petitioner is liable for
additions to tax under sections 6651(a)(1) and (2) and 6654(a).
Pursuant to section 7491(c), respondent has the burden of
production with respect to these additions to tax and is
therefore required to “come forward with sufficient evidence
indicating that it is appropriate to impose the relevant
penalty.” See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).
However, “once the Commissioner meets his burden of production,
the taxpayer must come forward with evidence sufficient to
persuade a Court that the Commissioner’s determination is
incorrect.” Id. at 447.
A. Section 6651(a)(1) Addition to Tax
Section 6651(a)(1) imposes an addition to tax for failure to
file a timely return unless the taxpayer proves that such failure
is due to reasonable cause and not willful neglect. See United
States v. Boyle, 469 U.S. 241, 245 (1985). Respondent satisfied
the burden of production by introducing into evidence a Form
3050, Certification of Lack of Record, reflecting that respondent
has no record of petitioner having filed a Federal income tax
return for 2000. See Davis v. Commissioner, T.C. Memo. 2005-160
n.10, affd. 244 Fed. Appx. 532 (4th Cir. 2007). Petitioner has
not shown that the Form 3050 was irregular and has not presented
any evidence to suggest that his failure to file was due to
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reasonable cause. Accordingly, we sustain respondent’s
imposition of the addition to tax under section 6651(a)(1).
B. Section 6651(a)(2) Addition to Tax
Section 6651(a)(2) imposes an addition to tax for failure to
timely pay the amount of tax shown on a return.
The Commissioner’s burden of production with
respect to the section 6651(a)(2) addition to tax
requires that the Commissioner introduce evidence that
a return showing the taxpayer’s tax liability was filed
for the year in question. In a case such as this where
the taxpayer did not file a return, the Commissioner
must introduce evidence that an SFR [substitute for
return] satisfying the requirements of section 6020(b)
was made. See Cabirac v. Commissioner, * * * [120 T.C.
163 (2003)]. * * *
Wheeler v. Commissioner, 127 T.C. 200, 210 (2006), affd. 521
F.3d 1289 (10th Cir. 2008). The section 6651(a)(2) addition to
tax is not imposed if the taxpayer proves that the failure to pay
is due to reasonable cause and not willful neglect.
Under section 6651(g)(2), a return prepared by the Secretary
pursuant to section 6020(b) is treated as a return filed by the
taxpayer for the purpose of determining the amount of an addition
to tax under section 6651(a)(2). To constitute a section 6020(b)
return, “the return must be subscribed, it must contain
sufficient information from which to compute the taxpayer’s tax
liability, and the return form and any attachments must purport
to be a ‘return’.” Spurlock v. Commissioner, T.C. Memo. 2003-
124.
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Although petitioner did not file a Federal income tax return
for 2000, respondent introduced into evidence a document that
qualifies as a section 6020(b) return for that year. See Wheeler
v. Commissioner, supra at 208-210. The document contains a
November 19, 2007, “Proposed Individual Income Tax Assessment”,
which lists petitioner’s name, address, and Social Security
number and which provides sufficient information to compute his
tax liability. The document also contains an “IRC Section
6020(b) ASFR Certification”, which states that the certification
along with the information identified in it “shall be treated as
the return filed by the taxpayer for purposes of determining the
amount of the additions to tax under paragraphs (2) and (3) of
section 6651(a).”
Because petitioner did not pay the entire tax liability as
shown on the section 6020(b) return, respondent has met the
burden of production with respect to the section 6651(a)(2)
addition to tax. Further, petitioner has not demonstrated or
introduced any evidence that his failure to pay is due to
reasonable cause and not willful neglect. We therefore sustain
respondent’s imposition of the addition to tax under section
6651(a)(2).
C. Section 6654(a) Addition to Tax
Section 6654(a) imposes an addition to tax on individual
taxpayers who underpay their estimated income tax. The
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Commissioner’s burden of production under section 7491(c) with
respect to that addition to tax requires the Commissioner, at a
minimum, to produce evidence that a taxpayer was required to make
an annual payment under section 6654(d)(1)(B). See Wheeler v.
Commissioner, supra at 211. The amount of any required annual
payment is the lesser of (1) 90 percent of the tax shown on the
individual’s return for the year or, if no return is filed, 90
percent of the individual’s tax for such year, or (2) if the
individual filed a return for the immediately preceding tax year,
a fixed percentage of the tax shown on that return. Sec.
6654(d)(1)(B).
Respondent has met the burden of production with respect to
the section 6654(a) addition to tax. Because petitioner failed
to file Federal income tax returns for 1999 and 2000 as shown by
the two Forms 3050 respondent introduced into evidence, his
required annual payment of estimated tax for 2000 was 90 percent
of his tax for that year. See Wheeler v. Commissioner, supra at
211-212. Petitioner did not make his required estimated tax
payment for 2000.4 Moreover, he does not fit within any of the
4
Petitioner’s 2000 Form W-2 reflects $511.52 of Federal
income tax withheld. In the notice of deficiency respondent
rounded this figure down to $511 but should have rounded it up to
$512. In respondent’s Rule 155 computations respondent should
either correct this rounding error or explain why $511 is the
correct figure.
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exceptions listed in section 6654(e).5 We therefore sustain
respondent’s imposition of the addition to tax under section
6654(a).
III. Section 6673(a)(1) Penalty
Section 6673(a)(1) authorizes the Tax Court to impose a
penalty not in excess of $25,000 on a taxpayer for proceedings
instituted primarily for delay or in which the taxpayer’s
position is frivolous or groundless. “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.’” Williams v. Commissioner, 114 T.C. 136, 144 (2000)
(quoting Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.
1986)).
On March 3, 2009, respondent moved the Court to penalize
petitioner under section 6673(a)(1). Respondent cites
petitioner’s failure to cooperate before and during trial as well
5
Sec. 6654(e) provides two exceptions to the sec. 6654(a)
addition to tax. First, the addition is not applicable if the
tax shown on the taxpayer’s return for the year in question (or,
if no return is filed, the taxpayer’s tax for that year), reduced
for these purposes by any allowable credit for wage withholding,
is less than $1,000. Sec. 6654(e)(1). Second, the addition is
not applicable if the taxpayer’s tax for the full 12-month
preceding taxable year was zero and the taxpayer was a citizen or
resident of the United States. Sec. 6654(e)(2). In light of our
earlier conclusion regarding petitioner’s wage income, petitioner
is liable for a deficiency for 2000 that net of withholding
exceeds $1,000. And, because petitioner failed to file a 1999
Federal income tax return, he has not shown that he had no tax
liability in 1999.
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the frivolous positions petitioner has taken throughout the
proceeding. Respondent also points to petitioner’s refusal to
stipulate that he is the Pedro Juan Rivera who worked for
Terminix in 2000. Petitioner studiously avoided introducing any
evidence at all on this issue. This forced respondent to
subpoena and call a witness, Greg Harmer, vice president of
transaction services, from Terminix’s parent corporation, Service
Master, to present evidence to prove that fact.6 The out-of-
pocket cost to the Government with respect to Mr. Harmer,
including airfare from Memphis, Tennessee, was at least $1,068.7
On April 15, 2009, petitioner filed a response, which contains a
variety of frivolous arguments that we need not mention. See
Crain v. Commissioner, 737 F.2d at 1417.
Petitioner’s conduct in this case warrants a penalty under
section 6673(a)(1). His failure to acknowledge even the most
basic facts, such as where he worked and when he worked there,
6
Mr. Harmer testified that
our records show that a person who claimed to be Pedro
Rivera and furnishing documents saying they were Pedro
Rivera * * *--they had to produce the documents
required by an I-9, so a Social Security card and a
passport or a driver’s license or some other
identification--came to our Terminix offices here in
Florida in 1997, produced those documents, claimed to
be Pedro Rivera, provided the Social Security number
that is on these documents, and that we then employed
and continued to pay that person from 1997 to 2001.
7
There were considerable other costs also involved to all
of the trial participants from lost time in court and as an
expense of operating the Court.
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and his repeated assertion of frivolous arguments, particularly
his failure to acknowledge that he is the Pedro Juan Rivera who
worked at Terminix, were intended to delay and wasted hours of
the Court’s, respondent’s, and respondent’s witness’s time.
These actions also substantially and unjustifiably increased the
monetary cost borne by taxpayers who obey the law and promptly
pay their taxes. To make matters worse, the Court repeatedly
warned petitioner that he could be penalized under section
6673(a)(1) for his conduct.8 He did not heed those warnings. As
a result, we shall impose upon petitioner a $3,000 penalty
pursuant to section 6673(a)(1).
The Court has considered all of petitioner’s contentions,
arguments, requests, and statements. To the extent not discussed
herein, we conclude that they are meritless, moot, or irrelevant.
To reflect the foregoing,
An appropriate order will
be issued, and decision will
be entered under Rule 155.
8
Petitioner contends that the Court’s sec. 6673(a)(1)
warnings “constrained” him from cooperating with respondent or
diligently preparing his case. That contention, like all of his
other arguments, is frivolous and specious.