                           T.C. Memo. 2009-149



                         UNITED STATES TAX COURT



                  EDWARD C. KNITTEL, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



       Docket No. 26118-07.               Filed June 24, 2009.



       Edward C. Knittel, pro se.

       Beth A. Nunnink, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION


       COHEN, Judge:   Respondent determined a deficiency and

additions to tax with respect to petitioner’s 2003 Federal income

tax liability as follows:

                                      Additions to Tax
Year    Deficiency     Sec. 6651(a)(1)    Sec. 6651(a)(2)   Sec. 6654

2003      $9,283          $2,088.68         $1,763.77        $239.77
                                   - 2 -

The deficiency resulted from the determination that petitioner

had income from nonemployee compensation, a taxable pension

distribution, and stock sales.      After a concession as to the

amount of petitioner’s income from stock sales, respondent

recomputed the amounts in issue as follows:

                                      Additions to Tax
Year    Deficiency   Sec. 6651(a)(1)      Sec. 6651(a)(2)     Sec. 6654

2003      $9,007          $2,027                --                $232

The only bona fide issue for decision is whether a penalty under

section 6673 should be awarded to the United States and, if so,

how much.    All section references are to the Internal Revenue

Code.

                          FINDINGS OF FACT

       Some of the facts have been stipulated, and the stipulated

facts, to the extent relevant, are incorporated in our findings

by this reference.    Petitioner resided in Tennessee at the time

that he filed his petition.

       During 2003, petitioner performed services for H&H

Enterprises and was paid $32,494 for those services.        The

services were reported to the Internal Revenue Service (IRS) on

Form 1099-MISC, Miscellaneous Income.

       During 2003, petitioner received taxable distributions of

$4,293 and $2,649 from the Sheet Metal Workers Local 33 and the
                                - 3 -

Sheet Metal Workers National Pension Fund, respectively.    These

distributions were reported to the IRS on Forms 1099-R,

Distributions From Pensions, Annuities, Retirement or Profit-

Sharing Plans, IRAs, Insurance Contracts, etc.

     During 2003, petitioner engaged in securities transactions

through Scottrade Financial Services.    He realized short-term

capital gains of $1,104.44 on those transactions.

     Petitioner was born in Ohio in 1944 and lived in Tennessee

beginning in 1995.    On or about August 1, 2000, petitioner

provided to H&H Enterprises a Form W-8, Certificate of Foreign

Status, in which he represented that he was “an exempt foreign

person” as defined on that form.    That representation was false

and was based on petitioner’s frivolous position that he was not

a person required to pay taxes on his income or to file Federal

income tax returns.

     Petitioner did not file a Federal income tax return for

2003.   The notice of deficiency was based on third-party reports

showing petitioner’s taxable income.

     Petitioner’s liability for Federal income tax and additions

to tax for 2002 was the subject of his petition in this Court’s

docket No. 18952-05.    On May 21, 2007, the Court rendered an oral

opinion in that case.    The Court found that petitioner had

received taxable income from H&H Enterprises, Sheet Metal Workers

Local 33, and Sheet Metal Workers National Pension Fund in 2002.
                               - 4 -

The Court found that petitioner had maintained frivolous

positions with regard to the Federal income tax in his

communications with respondent and in his filings with the Court,

sustained additions to tax, and awarded to the United States a

penalty of $2,000 under section 6673.

     In this case, petitioner maintained frivolous positions in

his petition, in discovery promulgated to respondent, in motions

filed with the Court, in his pretrial memorandum, and at trial.

Respondent’s answer warned petitioner that his arguments were

frivolous, cited the prior oral opinion of the Court in docket

No. 18952-05, and asserted a penalty under section 6673.   In

response to a motion for protective order filed by respondent and

granted by the Court, the Court gave notice to petitioner as

follows:

          Petitioner has the burden of identifying and
     proving any deductions to which he might be entitled.
     Petitioner is warned that his failure to cooperate or
     to produce evidence on the issues may result in
     disregard of any deductions. Moreover, he is warned
     that his persistence in frivolous and groundless
     arguments may result in a penalty not to exceed $25,000
     under section 6673.

                              OPINION

     Petitioner declined to testify at trial.   He submitted

documentary “evidence” that merely confirmed that his positions

are frivolous.   Records establishing his receipt of income and

his failure to file returns or to pay tax were received under

rules 803(6) and (10) and 902 of the Federal Rules of Evidence.
                                 - 5 -

Petitioner did not dispute the amounts of income the payors

reported.    He persisted in arguing that his income is not

taxable, that alleged procedural requirements were not met, that

he had no obligation to make a return, and that “he is not a

United States person as defined in I.R.C. section 7701(a)(30).”

     Respondent brought to the Court’s attention a petition filed

by petitioner in docket No. 6489-09 with respect to a notice of

determination for 2004 and 2005.    That petition repeats

petitioner’s frivolous positions.

     Section 6673(a)(1) provides:

     SEC. 6673.    SANCTIONS AND COSTS AWARDED BY COURTS.

            (a) Tax Court Proceedings.--

                 (1) Procedures instituted primarily for
            delay, etc.–-Whenever it appears to the Tax Court
            that--

                       (A) proceedings before it have been
                  instituted or maintained by the taxpayer
                  primarily for delay,

                       (B) the taxpayer’s position in such
                  proceeding is frivolous or groundless, or

                       (C) the taxpayer unreasonably failed to
                  pursue available administrative remedies,

            the Tax Court, in its decision, may require the
            taxpayer to pay to the United States a penalty not in
            excess of $25,000.

     Despite repeated warnings by respondent and the Court,

petitioner continues to maintain the same frivolous positions and

to impose extra burdens on respondent in pursuing matters where
                                - 6 -

there is no reasonable dispute.   Arguments that compensation for

services is not taxable have been repeatedly and thoroughly

rejected in cases too numerous to mention.     Arguments such as

those pursued by petitioner have resulted in criminal

convictions, e.g., United States v. Sloan, 939 F.2d 499 (7th Cir.

1991; United States v. Collins, 920 F.2d 619 (10th Cir. 1990);

civil fraud penalties, e.g., Rowlee v. Commissioner, 80 T.C. 1111

(1983); Chase v. Commissioner, T.C. Memo. 2004-142; section 6673

penalties, e.g., Sawukaytis v. Commissioner, T.C. Memo. 2002-156,

affd. 102 Fed. Appx. 29 (6th Cir. 2004); and sanctions for

frivolous appeals, e.g., Martin v. Commissioner, 756 F.2d 38 (6th

Cir. 1985), affg. T.C. Memo. 1983-473; Perkins v. Commissioner,

746 F.2d 1187 (6th Cir. 1984), affg. T.C. Memo. 1983-474.

Petitioner has been adequately warned but not adequately

deterred.    A penalty in this case will be awarded in the amount

of $7,500.


                                        An order and decision will be

                                entered in accordance with

                                respondent’s revised computation.
