                       T.C. Memo. 2002-66



                     UNITED STATES TAX COURT



               JOSEPH E. SIMANONOK, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8081-01.               Filed March 11, 2002.


     Joseph E. Simanonok, pro se.

     Steven M. Carr, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     ARMEN, Special Trial Judge:    Respondent determined a

deficiency in, and additions to, petitioner’s Federal income tax

for the year and in the amounts as shown below:
                                          - 2 -

                                            Additions to tax
            Year       Deficiency    Sec.1 6651(a)(1)   Sec. 6654(a)
            1996         $3,326          $831.50         $133.04
                 1
                Throughout this opinion and unless otherwise
              indicated, all section references are to the
              Internal Revenue Code in effect for the taxable
              year in issue.


      After concessions by the parties,1 the issues are as

follows:

      (1) Whether petitioner’s military retirement pay is

includable in gross income.             We hold that it is.

      (2) Whether petitioner’s Social Security benefits are

includable in gross income pursuant to section 86.             We hold that

they are.

      (3) Whether petitioner is liable for an addition to tax

under section 6651(a)(1) for failure to file.             We hold that he

is.

      (4) Whether petitioner is liable for an addition to tax

under section 6654(a) for failure to pay estimated tax.                We hold

that he is.


      1
       Petitioner concedes that he received interest income in
the amount of $10 from Capital One Federal Savings Bank (Capital
One).
     Respondent concedes that the notice of deficiency
erroneously treated a deduction for a personal exemption as a
positive (i.e., upward) adjustment to petitioner’s income. After
recomputation to correct this error, the amounts of the
deficiency and the additions to tax are as follows:

                                           Additions to tax
          Year       Deficiency     Sec. 6651(a)(1)   Sec. 6654(a)
          1996         $2,561             $576            $79
                                - 3 -

     (5) Whether petitioner is liable for a penalty under section

6673(a)(1).    We hold that he is.

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and they are so

found.    Petitioner resided in Bradenton, Florida, at the time

that his petition was filed with the Court.

     Petitioner retired from the U.S. Air Force as a major in

1969.    Since that time, he has received military retirement pay.

A.   Petitioner’s Income in 1996

     In 1996, the taxable year in issue, petitioner received

military retirement pay in the amount of $22,801.56.2     The

military paymaster, the Defense Finance and Accounting Service

(DFAS), did not withhold any income tax from petitioner’s

retirement pay.3

     DFAS reported the $22,801.56 paid to petitioner to the

Internal Revenue Service utilizing Form 1099-R, Distributions

From Pensions, Annuities, Retirement or Profit-Sharing Plans,

IRAs, Insurance Contracts, etc.      DFAS reported both the gross



     2
       This amount does not include the portion ($10,657.44) of
petitioner’s retirement pay that was paid to petitioner’s former
spouse, Germaine B. Simanonok. Petitioner and Mrs. Simanonok
were divorced in 1972. One facet of their divorce litigation
appears in Simanonok v. Simanonok, 787 F.2d 1517 (11th Cir.
1986).
     3
       However, pursuant to a notice of levy, DFAS did pay over a
portion ($8,435.71) of petitioner’s retirement pay to the
Internal Revenue Service for various unpaid assessments.
                               - 4 -

distribution and the taxable amount as $22,801.56.     DFAS sent a

copy of Form 1099-R to petitioner.

      Also in 1996, petitioner received Social Security benefits

in the amount of $7,662.   The payor, the Social Security

Administration (SSA), did not withhold any income tax from

petitioner’s benefits.

      SSA reported the $7,662 paid to petitioner to the Internal

Revenue Service utilizing Form SSA-1099, Social Security Benefit

Statement.   SSA sent a copy of the form to petitioner.

B.   Petitioner’s Failure To Pay Estimated Tax and To File a

Return

      Petitioner did not pay any estimated tax for 1996, nor did

petitioner file an income tax return for that year.    Rather,

petitioner submitted a document to respondent in 1997 that

respondent was unable to process as a return.   At trial,

petitioner testified that after respondent returned the document

to him:   “I may have thrown it in the wastebasket.”   When asked

by the Court whether he had retained a copy of what he had

submitted, petitioner replied: “Maybe, maybe not * * * .”

      The document that petitioner submitted appears to have been

a “protest return” that reported no tax liability.4    The document

was signed under protest and may have been incomplete; it may


      4
       Petitioner testified that he claimed 14 exemptions in
order to eliminate any tax liability: “the 14 exemptions is
merely an empirical number to make my liability zero”.
                               - 5 -

also have served as a platform for petitioner to invoke the Fifth

Amendment.5

C.   Examination, Notice of Deficiency, and Petition

     Respondent commenced an examination of petitioner’s 1996

taxable year no later than January 1998, when respondent prepared

a substitute for return for petitioner.   See sec. 6020(b).

Ultimately, by notice dated March 28, 2001, respondent determined

a deficiency in, and additions to, petitioner’s income tax for

1996.

     The deficiency in income tax is based on respondent’s

determination that petitioner’s gross income includes: (1)

Military retirement pay of $22,801.56 received from DFAS; (2) a

portion ($821) of petitioner’s Social Security benefits

determined pursuant to the formula prescribed by section 86; and

(3) interest income of $10 received from Capital One.

     The addition to tax under section 6651(a)(1) is based on

respondent’s determination that petitioner’s failure to file an

income tax return was not due to reasonable cause.     The addition

to tax under section 6654(a) is based on respondent’s

determination that petitioner failed to pay estimated tax.

     Petitioner invoked this Court’s jurisdiction by filing a


     5
       At trial, petitioner testified that “it was signed under
protest, and it says, this form is not complete.” Petitioner
also testified that “I was preserving my rights by submitting
under protest because I didn’t want to waive my rights to the
Fifth Amendment and kiss them off.”
                                 - 6 -

timely petition with the Court disputing respondent’s

determinations.     Rule 13(a), (c);6 see Monge v. Commissioner, 93

T.C. 22, 27 (1989); Normac, Inc. v. Commissioner, 90 T.C. 142,

147 (1988); see also Simanonok v. Commissioner, 731 F.2d 743, 744

(11th Cir. 1984).

D.   Petitioner’s Position

     In his petition and at trial, petitioner contends that his

military retirement pay is not subject to Federal income tax.     In

this regard, petitioner contends:

     The Internal Revenue Service has no jurisdiction to tax
     and discipline Simanonok because he is appointed to the
     United States Armed Forces and is governed and
     disciplined under Title 10 of the Uniform Code of
     Military Justice, enacted into a [sic] positive law of
     the United States in 1956.

     Petitioner also contends that his Social Security benefits

are not subject to Federal income tax.     In this regard,

petitioner contends that the notice of deficiency “constitutes

legal process against Social Security benefits in violation of

the Social Security Act.”

     Petitioner also contends that he is not required to file a

Federal income tax return.     In this regard, petitioner testified:

     I don’t even have    to submit it [a tax return], but I
     know there can be    terrible and dire consequences if I
     didn’t. An so –-     so I proceeded –- they didn’t have
     jurisdiction, and    essentially, it was a forced
     confession, and I    was being nice and submitting one


     6
       All Rule references are to the Tax Court Rules of Practice
and Procedure.
                                 - 7 -

     anyway, even though I didn’t have to.

E.   Prior Litigation by Petitioner in This Court

     Since 1986, petitioner has commenced at least five other

cases in this Court, all of which have been dismissed.

     A.    Docket No. 672-86

     In docket No. 672-86, the Court dismissed petitioner’s case

for failure to state a claim upon which relief can be granted.

In its order of dismissal and decision, the Court sustained

respondent’s determination of deficiencies in income taxes and

additions to tax for the taxable years 1981 and 1982; also,

acting sua sponte, the Court awarded damages to the United States

against petitioner in the amount of $5,000 pursuant to section

6673.     In taking this action, the Court stated, in part, as

follows:

          The deficiencies were attributable to unreported
     wages and pension receipts. * * *

          In his amended petition * * * petitioner alleged
     that respondent lacks jurisdiction over him and that
     wages and pension benefits which he received as a
     retired military officer are not income and are not
     subject to income tax.

          Petitioner’s tax protestor arguments repeatedly
     have been rejected by this Court and others as
     inapplicable or without merit. See, e.g., Rowlee v.
     Commissioner, 80 T.C. 1111 (1983). Clearly, petitioner
     is an individual subject to Federal income tax, he is
     required to file Federal income tax returns, his
     military and other income is subject to Federal
     taxation and he is subject to the jurisdiction of this
     court. See, e.g., Hyslep v. United States, 765 F.2d
     1083 (11th Cir. 1985); Howell v. Commissioner, T.C.
     Memo. 1981-631 (holding that military pensions are
                                 - 8 -

     taxable income to recipient).

                 *   *   *   *     *     *   *

          The record as a whole plainly demonstrates that
     petitioner well knew that his income was taxable.
     Petitioner has appeared before this Court raising
     frivolous and meritless arguments previously. See
     Simanonok v. Commissioner, 731 F.2d 743 (11th Cir.
     1984), affg. an unpublished order of this Court.[7] His
     arguments have been rejected in many decisions by this
     Court in the recent past. We conclude that petitioner
     is maintaining his action in this Court primarily for
     delay and that his position in these proceedings is
     frivolous and groundless. Accordingly, on our motion,
     we award the United States damages in the amount of
     $5,000 pursuant to section 6673. Coulter v.
     Commissioner, 82 T.C. 580 (1984); Abrams v.
     Commissioner, 82 T.C. 403 (1984).

     The Court of Appeals for the Eleventh Circuit affirmed this

Court’s order of dismissal and decision.



     7
       In Simanonok v. Commissioner, 731 F.2d 743, 744 (11th Cir.
1984), the Court of Appeals rejected petitioner’s contention that
the Tax Court is unconstitutional. The Court of Appeals also
rejected petitioner’s contentions (inter alia) that he is not an
individual subject to tax, that he is not required to file
returns, and that he did not receive income because his paychecks
were received in exchange for his costs and disbursements of
labor. See Motes v. United States, 785 F.2d 928 (11th Cir. 1986)
(citing Simanonok v. Commissioner, supra, for the proposition
that claims such as wages are not income subject to tax are
frivolous); Hyslep v. United States, 765 F.2d 1083, 1084 (11th
Cir. 1985) (same).
     In Simanonok v. United States, 76 AFTR2d 95-6565 (1st Cir.
1995), the Court of Appeals for the First Circuit imposed double
costs on petitioner because his appeal from an order of the
District Court was frivolous in part. As relevant herein, the
Court of Appeals stated as follows:

     Simanonok claimed that his military status exempted him
     from federal income taxation, a claim which he knew was
     frivolous. Other courts have told him so, and he has
     been sanctioned for making it.
                                - 9 -

     Docket No. 41603-86

     In docket No. 41603-86, the Court again dismissed

petitioner’s case for failure to state a claim upon which relief

can be granted.    In its order of dismissal and decision, the

Court sustained respondent’s determination of deficiencies in

income taxes and additions to tax for the taxable years 1979,

1980, and 1983; also, the Court again awarded damages to the

United States against petitioner in the amount of $5,000 pursuant

to section 6673.

     As in the prior case, the deficiencies were attributable to

unreported wages and pension receipts, and petitioner again

alleged that respondent lacked jurisdiction over him and that

wages and pension benefits received as a retired military officer

were not income and were not subject to income tax.

     The Court of Appeals for the Eleventh Circuit dismissed

petitioner’s appeal.

     Docket No. 1566-91

     In docket No. 1566-91, the Court denied: (1) Petitioner’s

motion for relief alleging that the Court lacked jurisdiction and

that respondent had failed to state a claim; (2) petitioner’s

motion to waive filing fee; and (3) petitioner’s motion for

summary dismissal for lack of jurisdiction and respondent’s

failure to state a claim.    Thereafter, because petitioner failed

to respond to the Court’s order directing the filing of a proper
                               - 10 -

amended petition and the payment of the filing fee, the Court sua

sponte dismissed petitioner’s case.

     Docket No. 12115-96

     In docket No. 12115-96, the Court received a one-page

document from petitioner titled “petition and request for time to

amend”, which was filed as a petition to begin the case.     An

order was then issued directing petitioner to file an amended

petition and pay the filing fee.   Petitioner responded by

submitting a document labeled “petitioner’s motion to dismiss for

lack of jurisdiction and respondent’s failure to state a claim”,

which the Court lodged.    Thereafter, petitioner having failed to

file a proper amended petition and to pay the filing fee, the

Court dismissed the case.

     Docket No. 17685-96

     In docket No. 17685-96, petitioner filed an imperfect

petition and did not pay the filing fee.   The Court then issued

an order directing the filing of a proper amended petition and

the payment of the filing fee.   Petitioner did not respond to

that order.   Thereafter, the Court sua sponte dismissed the case.
                              - 11 -

                             OPINION8

A.   Military Retirement Income

      Petitioner contends that the taxation of his military

retirement pay is “a fraudulent claim for federal pension

benefits” and “that the IRS can’t tax the Armed Forces * * * or

make adjudications.”   Essentially, petitioner contends that his

military retirement pay is exempt from income tax.   We disagree;

petitioner’s contention is wrong, and it is frivolous.

      Section 61(a)(11) expressly defines gross income to include

pensions.   Petitioner’s military retirement pay constitutes a

pension within the meaning of that section.   See, e.g., Eatinger

v. Commissioner, T.C. Memo. 1990-310 (“A military retirement

pension, like other pensions, is simply a right to receive a

future income stream from the retiree’s employer.”); Howell v.

Commissioner, T.C. Memo. 1981-631 (holding that military pensions

are taxable income to the recipients); sec. 1.61-11, Income Tax

Regs. (“Pensions and retirement allowances paid either by the

Government or by private persons constitute gross income unless

excluded by law.”).




      8
        As a preliminary matter, we note that we decide the
issues in this case without regard to the burden of proof. In
any event, we note that sec. 7491 does not apply to this case
because the examination of petitioner’s 1996 taxable year
commenced no later than January 1998. See Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
secs. 3001(a), (c)(1), 112 Stat. 726-727.
                                - 12 -

       We hold that petitioner’s military retirement pay is

includable in petitioner’s gross income.    Respondent’s

determination in this regard is sustained.

B.   Social Security Benefits

       Petitioner contends that Social Security benefits “can’t be

the subject of a legal process”.    Essentially, petitioner

contends that no portion of his Social Security benefits is

subject to Federal income tax.    We disagree; petitioner’s

contention is wrong, and it is frivolous.

       Section 86 provides for the taxability of Social Security

benefits pursuant to a statutory formula.    Thus, if a taxpayer’s

“modified adjusted gross income” plus one-half of the taxpayer’s

Social Security benefits exceeds a certain base amount, then a

portion of the taxpayer’s Social Security benefits is includable

in gross income; i.e., such portion is subject to Federal income

tax.    Sec. 86(a)-(d); see Clark v. Commissioner, T.C. Memo. 1998-

280, affd. without published opinion 187 F.3d 641 (8th Cir.

1999); Roberts v. Commissioner, T.C. Memo. 1998-172, affd.

without published opinion 182 F.3d 927 (9th Cir. 1999).    That 42

U.S.C. sec. 407 (1994) may provide that a taxpayer’s Social

Security benefits are not subject to levy or other legal process,

but see sec. 6334(c), has nothing to do with the taxability of

those benefits.

       In view of the foregoing, we hold that petitioner’s Social

Security benefits are includable in petitioner’s gross income as
                              - 13 -

determined by respondent.

C.   Addition to Tax for Failure To File

      Petitioner contends that he is not liable for the addition

to tax under section 6651(a)(1) because he is not required to

file a Federal income tax return.   We disagree; petitioner’s

contention is wrong, and it is frivolous.

      Section 6651(a)(1) imposes an addition to tax for failure to

file an income tax return.   The addition to tax may be avoided if

the failure to file is due to reasonable cause and not willful

neglect.   “Reasonable cause” contemplates that the taxpayer

exercised ordinary business care and prudence and was nonetheless

unable to file a return within the prescribed time.     United

States v. Boyle, 469 U.S. 241, 246 (1985); sec. 301.6651-1(c)(1),

Proced. & Admin. Regs.   “Willful neglect” means a conscious,

intentional failure or reckless indifference.   United States v.

Boyle, at 245.

      As applicable herein, section 6012(a)(1)(A)(i) provides that

an individual under 65 years of age (as of the end of the taxable

year) must file an income tax return if the individual’s gross

income is at least $6,550; an individual 65 years or older (as of

the end of the taxable year) must file an income tax return if

the individual’s gross income is at least $7,550.     As previously

discussed, petitioner’s gross income for 1996 far exceeded the

greater of these two standards.
                                - 14 -

     The record demonstrates that petitioner was well aware of

his obligation to file an income tax return but chose not to do

so in pursuit of what can only be regarded as a protest against

the Federal income tax.   In our view, petitioner’s failure to

file was willful.

     In view of the foregoing, we hold that petitioner is liable

for the addition to tax under section 6651(a)(1).    Respondent’s

determination in this regard, modified as to amount, see supra

note 1, is sustained.

D.   Addition to Tax for Failure To Pay Estimated Tax

     Petitioner contends that he is not liable for the addition

to tax under section 6654(a).    We disagree; petitioner’s

contention is wrong, and it is frivolous in the context of this

case.

     Section 6654 imposes an addition to tax for failure to pay

estimated tax.   As applicable herein, imposition of the addition

is mandatory whenever prepayments of tax, either through

withholding or the making of estimated quarterly tax payments

during the course of the taxable year, do not equal the

percentage of total liability required under the statute.    See

sec. 6654(a); Niedringhaus v. Commissioner, 99 T.C. 202, 222

(1992); Grosshandler v. Commissioner, 75 T.C. 1, 20-21 (1980).

Thus, in the present case, we need not address any issue relating

to reasonable cause and lack of willful neglect; extenuating
                              - 15 -

circumstances are simply irrelevant.9   See Estate of Ruben v.

Commissioner, 33 T.C. 1071, 1072 (1960); see also Grosshandler v.

Commissioner, supra at 21.

      Petitioner did not pay any estimated tax, nor was any tax

withheld from any of his income.   Under these circumstances, and

in the absence of any applicable statutory exception, see sec.

6654(e), we hold that petitioner is liable for the addition to

tax under section 6654(a).   Respondent’s determination in this

regard, modified as to amount, see supra note 1, is sustained.

E.   Section 6673 Penalty

     We turn now, on our own motion, to the award of a penalty

against petitioner under section 6673(a).

     As relevant herein, section 6673(a)(1) authorizes the Tax

Court to require a taxpayer to pay to the United States a penalty

not in excess of $25,000 whenever it appears that proceedings

have been instituted or maintained by the taxpayer primarily for

delay or that the taxpayer’s position in such proceeding is

frivolous or groundless.

     The record in this case convinces us that petitioner was not

interested in disputing the merits of either the deficiency in

income tax or the additions to tax determined by respondent in

     9
        We should not be understood to imply that petitioner had
reasonable cause or that there were any extenuating circumstances
relating to petitioner’s failure to pay estimated tax. Indeed,
the record demonstrates that petitioner did not have reasonable
cause and that there were no extenuating circumstances.
                                - 16 -

the notice of deficiency.     See Coleman v. Commissioner, 791 F.2d

68, 71 (7th Cir. 1986).     Rather, the record demonstrates that

petitioner regards this case as a vehicle to espouse his own

misguided views.   Petitioner’s position, as set forth in his

petition and as enunciated at trial, consists solely of frivolous

and meritless claims.

     We are also convinced that petitioner instituted and

maintained this proceeding primarily, if not exclusively, for

purposes of delay.   Having to deal with this matter wasted the

Court’s time, as well as respondent’s.     Moreover, taxpayers with

genuine controversies may have been delayed.

     Petitioner has previously been told by this Court, as well

as by two Courts of Appeals, that his contentions are completely

without merit or frivolous.     He has also twice been sanctioned by

this Court pursuant to section 6673 in the amount of $5,000.

     Accordingly, we exercise our discretion under section

6673(a)(1) and require petitioner to pay a penalty to the United

States in the amount of $5,000.
                              - 17 -

F.   Conclusion

      In order to give effect to our disposition of the disputed

issues, the imposition of the penalty under section 6673(a)(1),

and the parties’ concessions (see supra note 1),



                                    Decision will be entered for

                               respondent in the amounts of the

                               reduced deficiency, additions to

                               tax, and penalty.
