                        T.C. Memo. 2010-188



                      UNITED STATES TAX COURT



             CHARLES RAYMOND WHEELER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23596-07.                 Filed August 25, 2010.



     Charles Raymond Wheeler, pro se.

     Philip E. Blondin, for respondent.



                        MEMORANDUM OPINION


     COHEN, Judge:   Respondent determined deficiencies and

additions to tax for 2002, 2004, and 2005 as follows:
                                       - 2 -

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

2002         $5,357        $1,079.55           $1,199.50         $158.26
                                                    1
2004          5,453         1,117.35                              142.57
                                                    1
2005          5,589         1,151.78                              203.28
       1
      The addition to tax will continue to accrue from the due
date of the return at a rate of 0.5 percent for each month, or
fraction thereof, of nonpayment, not exceeding 25 percent.

The deficiencies are attributable to petitioner’s failure to

report pension income he received from the Defense Finance and

Accounting Service (DFAS), the military’s paymaster, and modest

amounts of dividend income in 2004 and 2005 and interest income

in each year.         The only bona fide issue for decision is whether

petitioner is liable for a penalty under section 6673 and, if so,

how much that penalty should be.           Unless otherwise indicated, all

section references are to the Internal Revenue Code in effect for

the years in issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure.

                                  Background

       None of the facts have been stipulated, even though the

material facts are not fairly in dispute.          See Rule 91(a).

Petitioner resided in Colorado at the time he filed his petition.

       This is one of six cases brought by petitioner docketed in

this Court.       Since at least 1994, petitioner has failed to file

timely Federal income tax returns, relying on a variety of

repetitious and frivolous arguments.           See Wheeler v.

Commissioner, 127 T.C. 200 (2006) (determining petitioner’s
                               - 3 -

liability for 2003), affd. 521 F.3d 1289 (10th Cir. 2008);

Wheeler v. Commissioner, T.C. Memo. 2006-109 (determining

petitioner’s liabilities for 1994 through 2001), affd. 528 F.3d

773 (10th Cir. 2008).   In docket No. 15205-08L, he challenged

collection actions for 1994 through 2001 and 2003; summary

judgment was granted against petitioner in that case on March 25,

2009, with the Court concluding that “Petitioner has failed to

raise bona fide issues or any genuine issue relating to a

material fact.”   That decision was affirmed by the Court of

Appeals for the Tenth Circuit on December 15, 2009.    Wheeler v.

Commissioner, 356 Fed. Appx. 188 (10th Cir. 2009).    In docket No.

615-10, he challenges a notice of deficiency for 2006.

     On June 29, 2007, the Internal Revenue Service (IRS)

prepared substitutes for returns pursuant to section 6020(b)

using information reported by third-party payors that included

payments from DFAS to petitioner of $41,083, $42,530, and $43,678

for 2002, 2004, and 2005, respectively.   The notice of deficiency

was sent on July 9, 2007.

     The early history of this case is recounted in an Order and

Order to Show Cause (O&OSC) served January 11, 2008, in part as

follows:

          Petitioner timely filed a petition for
     redetermination. The petition was frivolous and
     groundless.

          Thereafter, following the filing of respondent’s
     motion to dismiss and the Court’s Order dated November
                         - 4 -

28, 2007, requiring the filing of a proper amended
petition, petitioner filed an amended petition. The
amended petition was frivolous and groundless.

     On January 7, 2008, petitioner filed a second
amended petition. Other than the preamble, paragraphs
1., 3., and possibly 21., the second amended petition
is frivolous and groundless, and it will be struck from
the record except for the preamble and the three
specified paragraphs.

     Paragraph 21. of the second amended petition
states as follows: “The respondent further erred by
failing to include any deductions or credits for
property taxes, mortgage interest, cost of producing
labor, etc.” This allegation fails to specifically
identify the amount of each particular deduction to
which petitioner thinks he is entitled; it also seeks
to avoid requisite specificity by use of the word
“etc.”. Finally, it suggests that there is some
allowable deduction for “cost of producing labor”, when
respondent’s determination of income reflects only
passive income, i.e., pensions, dividends, and interest
income. In short, the paragraph 21. is contrary to
Rule 34(b)(4) and (5), Tax Court Rules of Practice and
Procedure, as well as the Court’s Order dated November
28, 2007, requiring the filing of a proper amended
petition.

     At no time has petitioner denied receipt of DFAS
retirement income, dividends, or interest income, nor
has petitioner at any time alleged receiving DFAS
retirement income, dividends, or interest income in any
amount less than that determined by respondent in the
July 9, 2007, notice of deficiency. See Parker v.
Commissioner, 117 F.3d 785 (5th Cir. 1997); White v.
Commissioner, T.C. Memo. 1997-459. Similarly, at no
time has petitioner denied that he failed to file
income tax returns for the years in issue, nor has he
alleged that such failure was due to what would
constitute reasonable cause and not willful neglect.
The same may be said regarding the additions to tax
under I.R.C. section 6651(a)(2) for failure to pay tax.
Further, at no time has petitioner denied that he
failed to pay estimated tax for the years in issue, nor
has he alleged that such failure was excused by any
legitimate statutory exception.
                               - 5 -

          The frivolous and groundless nature of
     petitioner’s pleadings suggest that he instituted, and
     is maintaining, the present action primarily for
     purposes of delay. In this regard, I.R.C. 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. See
     Coleman v. Commissioner, 791 F.2d 68, 71-72 (7th Cir.
     1986); Crain v. Commissioner, 737 F.2d 1417, 1417-1418
     (5th Cir. 1984). Petitioner is certainly aware of that
     section, having previously been the recipient of a
     $3,000 penalty under I.R.C. section 6673(a)(1) in his
     prior case, reported at T.C. Memo. 2006-109 (May 22,
     2006), and a $1,500 penalty under I.R.C. section 6673
     in his other prior case, reported at 127 T.C. 200, 212-
     214 (December 6, 2006). Notwithstanding the imposition
     of these penalties, petitioner remains undeterred.1
           1
           Given the fact that petitioner’s military
     retirement income provides a ready source for
     enforced collection by respondent, petitioner’s
     persistence in pursuing a tax protest agenda is
     inexplicable. In any event, given the further
     fact that petitioner’s military retirement income
     is funded by taxpayer dollars, petitioner’s
     persistence in pursuing a tax protest agenda is
     inexcusable.

The O&OSC ordered petitioner to file a further amendment setting

forth “each and every specific deduction and credit to which he

thinks he is entitled and the amount of each such deduction and

credit.”   The O&OSC further directed petitioner to show cause why

the Court should not impose a penalty of $10,000, or some greater

amount not in excess of $25,000, pursuant to section 6673(a)(1).

     Petitioner filed his third amended petition on February 13,

2008, along with a memorandum in which he challenged the
                               - 6 -

preparation of section 6020(b) returns in this case.   The O&OSC

was discharged, and the case was subsequently set for trial in

Denver, Colorado, on February 23, 2009.   Petitioner appeared but

claimed that he was not prepared for trial as a result of an

accident and other physical ailments.   Respondent moved for

dismissal of the case and a penalty under section 6673.    The

Court permitted petitioner to file a response to the motion and

ultimately denied the motion, allowing petitioner another

opportunity to pursue his claimed deductions and credits.    The

case was thereafter set for trial in Denver on May 17, 2010.

     At no time before or during the proceedings on May 17, 2010,

did petitioner substantiate any deductions or dispute the receipt

of the income that was included in the statutory notice.    He

relied solely on arguments about tax return filing requirements,

preparation of substitutes for returns, and procedures for

determination of tax deficiencies and additions to tax.    At the

time of trial, petitioner raised various objections to exhibits

that should have been stipulated, and the Court ruled on those

objections.   The exhibits received in evidence were official and

business records reflecting the reporting of petitioner’s income,

the preparation of substitutes for returns under section 6020(b),

and petitioner’s failure to file returns for the years in issue.

This evidence satisfied respondent’s burden of production under
                                 - 7 -

section 7491(c).    See Higbee v. Commissioner, 116 T.C. 438, 446-

447 (2001).

     Petitioner pleaded for time to file a posttrial brief.      He

was warned by the Court that he had not presented a meritorious

or relevant argument to that time, but he was allowed to file a

brief.

                             Discussion

     In his posttrial brief, petitioner asserts misguided

arguments about burden of proof, attacks the Court’s rulings

during trial, and claims that the prior rulings of the Court that

denied summary dismissal of his case were rulings accepting his

arguments.    In essence, he asserts that determination of his

liabilities for 2002, 2004, and 2005 has not been and cannot be

accomplished.

     Petitioner has never raised a reasonable dispute with

respect to the income reported by third parties for the years in

issue.   Contrary to petitioner’s claims, respondent was not

required to produce witnesses.    See sec. 6201(d).   Although in

his prior cases deficiencies were reduced as a result of

concessions by respondent, no evidence in this case would justify

any reductions.    Petitioner has not shown reasonable cause for

his failure to file returns or to pay tax and has not shown an

exception to the requirement that he make estimated tax payments.
                                 - 8 -

The additions to tax determined in the statutory notice are

appropriate.

     Although the Court previously indulged petitioner’s pleas

for more time and his claims that he was entitled to deductions

and credits, at this stage it is apparent that his consistent

strategy has been to delay determination of his liabilities

without any intent to abandon the arguments that have been

characterized throughout as frivolous, irrelevant, and otherwise

totally lacking in merit.   Petitioner’s only authority for his

arguments is his own convoluted reading of various provisions of

the Internal Revenue Code, the Internal Revenue Manual, official

IRS transcripts, the Federal Rules of Evidence, and cases cited

out of context.   Because the Court advised him that his

interpretations were erroneous, he asserts that the Court is

biased against pro se taxpayers.    He claims that he was prevented

from presenting his case at trial “for fear of threatened

retribution”--an argument similar to one raised in a prior appeal

that he entered into a stipulation because “‘the spectre of

sanctions hung close over [his] head’”.   See Wheeler v.

Commissioner, 528 F.3d at 779.    Petitioner’s repetitious rhetoric

claiming victimization has no credibility.

     Petitioner’s contentions are merely stale and recycled

versions of unsuccessful arguments that he has made since 1994.

See id. at 776.   Under these circumstances, we are not compelled
                                 - 9 -

to address at length his latest concoctions.    To do so would be to

encourage the dilatory conduct that he has employed throughout the

history of this case and would neither dissuade petitioner nor

provide useful guidance to taxpayers with legitimate cases.       The

Court’s attempts at trial to direct petitioner to relevant issues

and to explain the errors in his arguments are cited by petitioner

in attacking the Court.   As the Court of Appeals for the Tenth

Circuit previously remarked:   “We are confronted here with [a

taxpayer] who simply [refuses] to accept the judgments of the

courts.”   Lonsdale v. United States, 919 F.2d 1440, 1448 (10th

Cir. 1990).

     Petitioner was penalized $1,500 in each of three prior

docketed cases.   See Wheeler v. Commissioner, 127 T.C. at 214;

Wheeler v. Commissioner, T.C. Memo. 2006-109.     The Court of

Appeals for the Tenth Circuit, in affirming the decision entered

pursuant to Wheeler v. Commissioner, 127 T.C. 200 (2006), noted

that his appeal was frivolous and that sanctions might be awarded,

but declined to do so because of dissatisfaction with respondent’s

request for an $8,000 lump-sum award.    See Wheeler v.

Commissioner, 521 F.3d at 1291-1292.     In the appeal from the

decision entered pursuant to Wheeler v. Commissioner, T.C. Memo.

2006-109, the Court of Appeals for the Tenth Circuit awarded a

sanction of $4,000 against petitioner.     See Wheeler v.

Commissioner, 528 F.3d at 785.
                                - 10 -

     Petitioner was warned in the January 11, 2008, O&OSC of the

likelihood of a penalty between $10,000 and $25,000 under section

6673 in this case.   Petitioner has not cured the defects in his

approach identified in the portions of that O&OSC quoted above,

and the conclusion that he has maintained this action primarily

for delay is now unavoidable.    His noncompliance with the tax

laws has continued for well over a decade and after repeated

rejections of his frivolous arguments in judgments of this Court

and the Court of Appeals rendered years before this case was

submitted.    A penalty in the maximum amount of $25,000 is

appropriate when lesser amounts have not deterred a taxpayer’s

defiance of the tax laws and of the rulings of the courts.    See,

e.g., Tinnerman v. Commissioner, T.C. Memo. 2010-150; Davenport

v. Commissioner, T.C. Memo. 2009-248.    Such a penalty is

justified here, and the decision in this case will include a

determination that petitioner owes to the United States a penalty

of $25,000.

     For the reasons explained above,


                                          Decision will be entered

                                     for respondent.
