                              T.C. Memo. 2016-18



                        UNITED STATES TAX COURT



                 BRUNO BRUHWILER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 26467-14.                        Filed February 8, 2016.



      Bruno Bruhwiler, pro se.

      Ron S. Chun, Katherine Holmes Ankeny, and Mindy S. Meigs, for

respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


      LAUBER, Judge: Petitioner is a tax protester. With respect to his Federal

income tax for 2011, the Internal Revenue Service (IRS or respondent) determined

a tax deficiency of $2,834 and additions to tax of $638 and $368 under section
                                        -2-

[*2] 6651(a)(1) and (2), respectively.1 We rule for respondent on all issues. We

will also require petitioner to pay under section 6673(a) a penalty of $3,500 to the

United States for advancing frivolous positions and maintaining these proceedings

primarily for delay.

                               FINDINGS OF FACT

      Petitioner is a self-employed post-production film compositor in Los

Angeles, California. During 2011 he performed services as an independent con-

tractor for at least three clients. In May 2011 he provided services to BDL Films

on a music video; he was paid $2,450 via two checks for these services. In July

2011 he provided services to Partizan Entertainment; he was paid $2,100 via two

checks for these services. Between September and December 2011 he provided

services to Avatar Films on a feature film; he was paid $12,960 via five checks for

these services. He also received interest income of $50 from Western Federal

Credit Union. The IRS received a Form 1099-MISC, Miscellaneous Income, from

each of petitioner’s clients and a Form 1099-INT, Interest Income, from Western

Federal Credit Union, reporting these payments to petitioner during 2011.




      1
        All statutory references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We round all dollar amounts to the nearest dollar.
                                          -3-

[*3] Petitioner has not filed a Federal income tax return for any year during the

last decade. Using the third-party information described above, the IRS prepared

for petitioner a substitute for return (SFR) that met the requirements of section

6020(b). The SFR reflected $17,510 of non-employee compensation as described

above and $50 of interest income; it allowed petitioner the standard deduction, one

personal exemption, and a self-employment tax deduction. The IRS determined a

basic tax liability of $683 plus self-employment tax of $2,151, for a total tax of

$2,834.

      On August 4, 2014, the IRS sent petitioner a timely notice of deficiency

based on the SFR, and he timely petitioned this Court. His petition did not address

respondent’s determination of his income or calculation of his tax liability. He

instead advanced 27 frivolous contentions, including the assertions that: (1) he “is

not a U.S. citizen but in fact is a California National”; (2) he is not “a resident of

the United States” or of “any Federal Territory”; (3) he is not subject to title 26

taxes; (4) the Social Security laws do not apply to him; (5) the IRS officials who

examined his return are “agents of a foreign principal”; (6) the IRS erroneously

treated him as “a fictional entity” whereas in fact “Bruno Bruhwiler is a man”; and

(7) “the due process of Bruno Bruhwiler has been violated and dishonored.”
                                         -4-

[*4] On October 15, 2015, respondent filed a motion under Rule 91(f) for an

order to show cause why proposed facts and evidence should not be accepted as

established. Respondent represented that petitioner had refused to stipulate to the

authenticity of any document or to the truth of any fact, except the fact that he had

not filed a return for 2011. On October 21, 2105, the Court ordered petitioner to

show cause why respondent’s motion should not be granted. This order advised

petitioner that the Court could impose sanctions if he refused to stipulate to facts

or the authenticity of documents as to which there should be no reasonable dis-

pute. The order also warned petitioner that section 6673 authorizes the Tax Court

to impose a penalty in an amount up to $25,000 if the taxpayer’s position is frivo-

lous or is being maintained solely for the purpose of delay.

      On October 26, 2015, petitioner opposed respondent’s motion, asserting that

it “was not presented in good faith”; that the IRS position “amounts to no more

than frivolous grandstanding”; and that respondent’s “proposal for facts is blatant

hearsay, unverified numbers, and claims from respondent’s internal administration

with no relevance, materiality or truthfulness regarding this matter.” On October

28, 2015, we made absolute our order to show cause. We again warned petitioner

that section 6673 authorizes this Court to impose a penalty of up to $25,000 if the

taxpayer’s position is frivolous or maintained solely for delay. We noted that his
                                         -5-

[*5] petition had advanced numerous frivolous arguments and warned him that, if

he “continued to advance such contentions, at trial of this case or otherwise in this

Court, he runs a very large risk of incurring a significant penalty.”

      On November 9, 2015, petitioner filed a motion to vacate our October 28

order and three other frivolous motions, each of which we denied. He then sent

the Court three letters with 38 attached “notices” to “file into the record.” These

documents contained variations on the themes that petitioner does not acknow-

ledge “the customs of the legal society” and that he comes into court “only as a

man and as one of the people.”

      We tried this case in Los Angeles on November 30, 2015. We accepted into

evidence the stipulation of facts deemed established by our October 28 order; a de-

claration from the record custodian for Western Federal Credit Union certifying

that it had paid petitioner interest of $50 in 2011; and declarations from the record

custodians for BDL Films, Partizan Entertainment, and Avatar Films certifying

that petitioner had invoiced them for, and that they had paid him, $2,450, $2,100,

and $12,960, respectively, for services he rendered them during 2011. Copies of

petitioner’s invoices to them, and documentation establishing their payments to

him, were attached to these declarations.
                                        -6-

[*6] We warned petitioner at the outset of trial that he risked penalties if he as-

serted frivolous arguments. The Court inquired whether he had any evidence to

submit regarding his receipt of income during 2011 from BDL Films, Partizan

Entertainment, Avatar Films, or Western Federal Credit Union. He replied: “I

don’t even know what you mean by ‘income.’ I have my own definition of in-

come.” Asked what that definition was, he replied: “It’s a cat with a pink bow. I

earned no income. I’m in my own jurisdiction. * * * I am not part of the legal

society; I have my own society.”

      The Court then advised petitioner that it would impose a penalty of at least

$3,000 if he persisted in advancing frivolous arguments. Undeterred, he proceed-

ed to contend, repeatedly, that the payments he received from his clients were not

“income” because they constituted an even exchange for his labor; that the Internal

Revenue Code “is not law”; that respondent’s counsel was not authorized to speak

because she was not “sworn in” or “verified”; and that no one in the courtroom

“has jurisdiction over me.”

                                     OPINION

A.    Burden of Proof

      The Commissioner’s determination of a deficiency is generally presumed

correct, though the taxpayer can rebut this presumption. See sec. 7491(a); Rule
                                        -7-

[*7] 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). In unreported income

cases, the IRS has the burden of going forward with some evidence linking the

taxpayer to the income-producing activity, but the burden of proof remains on the

taxpayer to show that the IRS determination was arbitrary or erroneous. See

Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir. 1999), aff’g T.C. Memo.

1997-97. With respect to additions to tax under section 6651, respondent bears

the burden of production, but petitioner bears the burden of proof. See sec.

7491(c). To meet his burden of production, respondent “must 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).

B.    Tax Deficiency

      Compensation for services is included in gross income. See sec. 61(a)(1).

Respondent has established through information returns and the payors’ business

records that petitioner during 2011 received interest income of $50 and income of

$17,510 from the performance of personal services for BDL Films, Partizan Enter-

tainment, and Avatar Films. While quibbling about the meaning of “income,” pe-

titioner did not deny receiving these payments. We accordingly sustain respon-

dent’s determination that petitioner had unreported income of $17,560 for 2011.
                                         -8-

[*8] Section 1401 imposes, in addition to other taxes, a tax “on the self-employ-

ment income of every individual.” The income petitioner received from the three

clients listed above was “self-employment income.” We accordingly sustain re-

spondent’s determination that petitioner is liable for self-employment tax in the

amount set forth in the notice of deficiency.

C.    Additions to Tax and Penalty

      1.     Section 6651(a)(1)

      Section 6651(a)(1) provides for an addition to tax of 5% of the tax required

to be shown on a return for each month, or a fraction thereof, for which there is a

failure to file the return, not to exceed 25% in the aggregate. The introduction into

evidence of an account transcript showing that petitioner has not filed a tax return

for the year in issue is sufficient to meet respondent’s burden of production for the

section 6651(a)(1) addition to tax. See Holmes v. Commissioner, T.C. Memo.

2011-31, 101 T.C.M. (CCH) 1141, 1144. Respondent introduced petitioner’s

2011 account transcript showing that he did not file a 2011 return. Petitioner has

admitted that he did not file a 2011 return, and he has not shown that this failure

was “due to reasonable cause and not due to willful neglect.” See sec. 6651(a)(1).

We will accordingly sustain the addition to tax for failure to timely file a tax

return.
                                        -9-

[*9] 2.      Section 6651(a)(2)

      Section 6651(a)(2) provides for an addition to tax when a taxpayer fails to

timely pay the tax shown on a return unless the taxpayer proves that the failure to

pay was due to reasonable cause and not due to willful neglect. An SFR prepared

by the IRS pursuant to section 6020(b) is treated as the “return” filed by the

taxpayer for purposes of section 6651(a)(2). See sec. 6651(g). To meet its burden

of production under section 7491(c) with respect to the section 6651(a)(2) addition

to tax, the IRS must introduce into evidence a tax return. Wheeler v.

Commissioner, 127 T.C. 200, 208-211 (2006), aff’d, 521 F.3d 1289 (10th Cir.

2008). This can be done by introducing a copy of the SFR into evidence or by

stipulation of the parties that the SFR is valid and meets the requirements of

section 6020. See, e.g., id.; Gardner v. Commissioner, T.C. Memo. 2013-67, at

*23-*24.

      Respondent met his burden of production by introducing into evidence a

certified copy of the SFR that the IRS prepared on petitioner’s behalf. This SFR

met the requirements of section 6020 and thus constituted a valid tax return. Peti-

tioner has not paid the tax shown on that return and has not shown that this failure

was “due to reasonable cause and not due to willful neglect.” Sec. 6651(a)(2).

We will accordingly sustain the addition to tax for failure to timely pay.
                                        - 10 -

[*10] 3.     Section 6673

       Section 6673(a)(1) authorizes this Court to require the taxpayer to pay to

the United States a penalty not in excess of $25,000 if it appears that the taxpayer

has instituted or maintained proceedings primarily for delay or the taxpayer’s

position is frivolous or groundless. The purpose of section 6673 is to compel tax-

payers to conform their conduct to settled tax principles and to deter the waste of

judicial resources. See Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.

1986); Salzer v. Commissioner, T.C. Memo. 2014-188.

      The petition that petitioner filed in this Court consists solely of frivolous

arguments. We warned petitioner four times--twice in advance of trial and twice

during trial--that he risked incurring a significant penalty if he persisted in advan-

cing frivolous arguments. He persisted. He has deluged this Court with gibberish

and has wasted the resources of respondent’s counsel and this Court. We will

accordingly require that he pay to the United States under section 6673(a) a

penalty of $3,500.

      To reflect the foregoing,


                                                 An appropriate order and decision

                                        will be entered.
