                         T.C. Memo. 1999-277



                       UNITED STATES TAX COURT



                  WILLIAM C. WILLIAMS, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent*



       Docket No. 16359-98.             Filed August 20, 1999.

       William C. Williams, pro se.

       Nancy Graml, for respondent.


                         MEMORANDUM OPINION

       WOLFE, Special Trial Judge: This case was heard pursuant to

the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.    All section references are to the Internal Revenue Code in

effect for the tax year in issue, unless otherwise indicated.

All Rule references are to the Tax Court Rules of Practice and

Procedure.

       *This opinion replaces T.C. Memo. 1999-270, which was

withdrawn by Order dated August 18, 1999.
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     Respondent determined a deficiency in petitioner's 1995

Federal income tax in the amount of $4,476, an addition to tax

for failure to file timely a Federal income tax return pursuant

to section 6651(a)(1) in the amount of $947.03, and an addition

to tax for failure to pay estimated income tax pursuant to

section 6654 in the amount of $242.70.

     The issues for decision are: (1) Whether petitioner is

exempt from Federal income tax on his compensation for labor

during 1995; (2) whether petitioner is liable for an addition to

tax under section 6651(a)(1) for failure to file timely a Federal

income tax return for the year 1995; (3) whether petitioner is

liable for an addition to tax under section 6654 for failure to

pay estimated income tax for 1995; and (4) whether we should

impose a penalty on petitioner pursuant to section 6673(a).

Background

     Some of the facts have been stipulated, and the stipulation

of facts and the attached exhibits are incorporated by this

reference.   Petitioner resided in Brazoria, Texas, when he filed

his petition.

     Petitioner did not file a Federal income tax return for the

year 1995.   On July 21, 1998, respondent issued a statutory

notice of deficiency to petitioner for the year 1995 based upon

taxable income reports issued by third parties.   These reports

were that during 1995, petitioner received wages from Belmont
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Constructors, Inc., Fluor Daniel Service Corporation, Harmony

Corporation, U.S. Contractors, Inc., Mark III, Inc., Gulf States,

Inc., Instrument & Electric Corporation, and Harbert-Yeargin,

Inc. in the amounts of $1,431, $7,702, $700, $1,252, $2,418,

$7,445, $2,549, and $9,748, respectively.

     In the statutory notice of deficiency, in accordance with

the reports by third party employers, respondent determined that

in 1995 petitioner received wages in the amount of $33,245.

Petitioner presented no evidence at trial to refute respondent's

determinations but stipulated the accuracy of respondent's

determinations concerning his earnings during 1995.   Petitioner

argued that this Court should dismiss the case for lack of

jurisdiction because as a citizen of Texas he is exempt from the

Federal income tax law, that the U.S. Constitution forbids

taxation of compensation received for personal services, and that

the Commissioner is without authority to act absent self-

assessment and voluntary compliance.   At trial petitioner orally

moved for dismissal for lack of jurisdiction on grounds similar

to those summarized above, and petitioner's motion to dismiss was

denied.

Discussion

     Section 61 provides that "gross income means all income from

whatever source derived, including (but not limited to) * * *

Compensation for services."   Petitioner's contention that he is
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not subject to taxation and therefore not liable for income taxes

is without merit.   The short answer to petitioner's assertions is

that he is not exempt from Federal income tax.        See Abrams v.

Commissioner, 82 T.C. 403, 406-407 (1984).

     Petitioner's arguments are wholly frivolous and have been

repeatedly rejected by this Court as well as the Court of Appeals

for the Fifth Circuit, the circuit to which an appeal would lie

in this case.   See, e.g., United States v. Price, 798 F.2d 111

(5th Cir. 1986); Anderson v. United States, 754 F.2d 1270 (5th

Cir. 1985); Lonsdale v. Commissioner, 661 F.2d 71 (5th Cir.

1981), affg. per curiam T.C. Memo. 1981-122; Abrams v.

Commissioner, supra; Rowlee v. Commissioner, 80 T.C. 1111 (1983);

Sochia v. Commissioner, T.C. Memo. 1995-475, affd. without

published opinion 116 F.3d 478 (5th Cir. 1997).        Accordingly, we

hold that petitioner is liable for the deficiency in tax as

determined by respondent.

     Section 6651(a) imposes an addition to tax for a taxpayer's

failure to file a required return on or before the specified

filing date, including extensions.        The addition to tax is

inapplicable, however, if the taxpayer shows that the failure to

file the return was due to reasonable cause and not to willful

neglect.   See sec. 6651(a)(1).    It is undisputed that petitioner

failed to file a Federal income tax return for the year 1995.

Furthermore, petitioner has not provided this Court with any
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reasonable explanation for his failure to file.     Therefore, we

sustain respondent's determination with respect to the addition

to tax for delinquent filing.

     Section 6654(a) imposes an addition to tax for underpayment

of estimated tax by an individual.      The amount of this addition

to tax is equal to the amount of the underpayment multiplied by

the underpayment rate established under section 6621 for the

period of the underpayment.   The addition to tax under section

6654(a) is mandatory unless petitioner can prove that he complies

with one of the exceptions contained in section 6654(e).     See

Baldwin v. Commissioner, 84 T.C. 859, 871 (1985); Grosshandler v.

Commissioner, 75 T.C. 1, 20-21 (1980).      Since petitioner has

failed to introduce evidence on this issue, and the record does

not indicate that any of the exceptions in section 6654(e)

applies, we sustain respondent's determination concerning the

addition to tax under section 6654.

     Section 6673(a)(1) allows this Court to award a penalty not

in excess of $25,000 when proceedings have been instituted or

maintained primarily for delay, or where the taxpayer's position

is frivolous or groundless; i.e., it is contrary to established

law and unsupported by a reasoned, colorable argument for a

change in the law.   See Coleman v. Commissioner, 791 F.2d 68, 71

(7th Cir. 1986).   In our opinion, such is the case here, and we

believe that a penalty is appropriate.     The positions argued by
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petitioner are frivolous and wholly without merit.       Moreover, we

rejected petitioner's frivolous arguments when he raised them by

motion to dismiss.   Accordingly, petitioner was warned of our

opinion with regard to his arguments.       We shall require

petitioner to pay a $1,000 penalty under section 6673(a).

     To reflect the foregoing,

                                         An appropriate order imposing

                                 the penalty under section 6673(a)

                                 and decision will be entered for

                                 respondent.
