*330 Held: Additions to tax for fraud found against petitioner who failed to file Federal income tax returns and filed false withholding statements for the years in issue. Held further, addition to tax found against petitioner for failure to pay estimated tax. Held further, respondent's request for damages granted.
MEMORANDUM FINDINGS OF FACT AND OPINION
WHITAKER, Judge: Respondent determined deficiencies and additions to petitioner's Federal income taxes as follows:
| Additions to Tax | |||
| Year | Deficiency | Section 6653(b) 1 | Section 6654 |
| 1980 | $4,749.84 | $2,374.92 | $100.77 |
| 1981 | 9,996.00 | 4,998.00 | 767.91 |
Alternatively in his answer respondent claims additions to tax under sections 6651(a)(1) and 6653(a) for each year.
This case was set for trial at the trial session of this Court at Tampa, Florida, beginning*332 on February 25, 1985. Prior thereto and pursuant to our Standing Pre-trial Order, we were advised by respondent that petitioner had unreasonably declined to stipulate pursuant to Rule 91. Accordingly on February 1, 1985, we issued an order to petitioner to show cause at said trial session why the facts in respondent's proposed stipulation of facts should not be deemed stipulated. Petitioner failed to reply to the Order to Show Cause and did not appear when his case was called from the calendar at Tampa on February 25, 1985. The Order to Show Cause was made absolute and the facts deemed stipulated. This case is now before the Court on respondent's motion for judgment on the pleadings and for damages made at the oral hearing of this case. For convenience our Findings of Fact and Opinion are combined.
The facts as deemed stipulated are so found. The stipulation of facts and attached exhibits are incorporated herein.
At the time of filing his petition, petitioner resided in Tampa, Florida. For years prior to 1980, petitioner filed income tax returns reporting his wages as income. During the years 1980 and 1981, petitioner received compensation for his labor as a construction*333 worker from various companies. Each company sent petitioner a Form W-2 (Wage and Tax Statement) which set forth the amount petitioner was paid during the year. Petitioer did not file Federal income tax returns for either 1980 or 1981. In addition, during each year in issue, petitioner filed false Forms W-4 (Employees Withholding Allowance Certificates) with some or all of his employers wherein he claimed that he was exempt from withholding of Federal income tax. 2
*334 In the notice of deficiency respondent advised petitioner that if he instituted a frivolous and/or groundless proceeding an award of damages pursuant to section 6673 would be sought. Respondent included the pertinent language of this section in the notice. In his answer, respondent formally requested that damages pursuant to section 6673 be awarded.
Initially, we note that determinations made by respondent in the notice of deficiency are presumed correct and petitioner has the burden of proving otherwise.
The first issue to be resolved in this case is whether petitioner is liable for income tax on wages received by him from numerous construction companies he worked for in 1980 and 1981. Petitioner claims in his petition that compensation received by him during 1980 and 1981 is not taxable because he received the compensation in exchange for his labor. This position has repeatedly been rejected by this Court and is without merit.
The next issue is whether petitioner is liable for the additions to tax for fraud under section 6653(b), or in the alternative, under sections 6651(a)(1) and 6653(a). If we find petitioner liable for the section 6653(b) addition, we do not consider respondent's alternative claims with respect to sections 6651(a) and 6653(a). Sections 6653(b)(3) and 6653(d).
Under section 6653(b) respondent has the burden of proving fraud by clear and convincing evidence. Section 7454(a); Rule 142(b).To meet this burden, respondent must show that the taxpayer intended to mislead or otherwise prevent collection of taxes.
Fraud may be proven by circumstantial evidence because direct proof of the taxpayer's intent is rarely available. The taxpayer's entire course of conduct may be examined to establish the requisite fraudulent intent.
Based on the record 3 before us, respondent has carried his burden of showing fraud by clear and convincing evidence. Petitioner filed returns prior to 1980, demonstrating his awareness of his obligation to pay taxes. Yet petitioner failed to file returns for the years 1980 and 1981. Moreover, in 1980 and 1981, petitioner repeatedly filed false Forms W-4, claiming he was exempt from Federal withholding. See, e.g.,
We turn now to respondent's claim for additions to tax under section 6654 for failure to pay estimated tax. The addition to tax under section 6654 is mandatory unless petitioner is within one of the statutory exceptions.
Finally, we turn to respondent's request for damages pursuant to section 6673. Respondent renewed this claim by oral motion when petitioner failed to appear at trial. The Court may award damages to the United States of up to $5,000 whenever it appears that the proceedings have been instituted or maintained primarily for delay or that the taxpayer's position is frivolous or groundless. Section 6673;
*340 Based on the foregoing,
Decision will be entered for the respondent.
Footnotes
1. All section references are to the Internal Revenue Code of 1954, as amended and in effect during the years in issue, and all rule references are to the Tax Court Rules of Practice and Procedure.↩
2. The following is a summary of the wages petitioner received during 1980 and 1981. On the dates indicated petitioner filed false Forms W-4 claiming that he was exempt from withholding of income.
W-4 Company 1980 1981 Filing Date Southeastern Construction and Maintenance, Inc. $1,772.71 * P.J. Pedone & Co. Inc. 5,130.21 * Universal Corporation 544.40 * Curry Instruments & 9/29/80, Electrical Services 7,416.48 11/28/80 Industrial Maintenance Contractors 3,033.61 $3,176.67 5/4/81 Mulberry Construction Company 588.01 530.79 12/23/80, 3/18/81 Leonard Construction Company 851.99 1/15/81 Catalytic, Inc. 2,475.31 2/23/81 Power Piping Company 636.24 5/11/81 Central Maintenance and Welding, Inc. 8,407.51 5/21/81 Bechtel Power Corporation 7,624.77 9/25/81 The Bared Company, Inc. 2,429.39 4/4/81 Southern Instruments, Inc. 3,694.53 11/6/81 * Neither respondent nor petitioner has provided evidence as to whether Forms W-4 were filed with these employers. However, we note that in respondent's notice of deficiency for 1980, respondent recognized that $2,537.95 had been withheld from petitioner's wages. Petitioner sought return of this sum in his Motion to Dismiss for Cause filed September 7, 1984.↩
3. It should be noted that while petitioner formally denied respondent's allegations of fraud, his denials were nonspecific. Also petitioner failed to respond to the Order to Show Cause and in fact informally advised respondent's counsel that he agreed with the facts in the proposed stipulation.↩
4. See, e.g.,
Samuelson v. Commissioner,T.C. Memo. 1985-561↩ .