                                T.C. Memo. 2012-66



                         UNITED STATES TAX COURT



                    ALLEN PARKER, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 3743-10.                        Filed March 12, 2012.



      Allen Parker, pro se.

      John D. Davis, for respondent.



                              MEMORANDUM OPINION


      THORNTON, Judge: Respondent determined a $3,340 deficiency in

petitioner’s 2007 Federal income tax, additions to tax of $752 and $301 under
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section 6651(a)(1) and (2), respectively, and an accuracy-related penalty of $668

under section 6662(a).1 After concessions, the issues for decision are whether

petitioner is liable for an increased deficiency and a section 6651(a)(1) addition to

tax.2 When he petitioned the court, petitioner resided in Oregon.

                                     Background

      During 2007 petitioner worked as a seafarer on various ships. On or about

October 9, 2008, he submitted to the Internal Revenue Service (IRS), with respect

to his 2007 tax year, a Form 1040, U.S. Individual Income Tax Return, on which he

listed “0000” for all income items. On this document he claimed head of household

filing status and also claimed a $7,300 standard deduction, a $3,200 personal

exemption, and $5,816 in tax withholdings, resulting in a claimed refund of $5,816.

Attached to this document were Forms W-2, Wage and Tax Statement, showing

wages of $13,124 from Armada Cos., Inc. (Armada), wages of $9,838 from

Horizon Lines Vessels, LLC (Horizon), and wages of $11,101 from Interocean

American Shipping Corp. (Interocean). Also attached to the Form 1040 were self-

      1
       Unless otherwise indicated, all section references are to the Internal Revenue
Code (Code) in effect for the year at issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure. All monetary amounts are rounded to the
nearest dollar.
      2
      Respondent concedes the sec. 6651(a)(2) addition to tax and the sec.
6662(a) accuracy-related penalty.
                                        -3-

generated Forms 4852, Substitute for Form W-2, Wage and Tax Statement, or Form

1099-R, Distributions From Pension, Annuities, Retirement or Profit-Sharing Plans,

IRAs, Insurance Contracts, etc., on which petitioner purported to correct the Forms

W-2 attached to his return by changing the wages reported on them to zero. On

these Forms 4852 petitioner does not deny receiving the reported remuneration but

with respect to each Form W-2 makes identical frivolous arguments, including the

argument that “by definition my pay is not ‘wages’ ” and therefore is not subject to

Federal income tax.

      In the notice of deficiency respondent determined that petitioner had

unreported compensation from Horizon and Interocean as reported on the Forms W-

2 attached to petitioner’s Form 1040; the notice did not include any unreported

income from Armada. The notice also determined, on the basis of third-party

information reports data, that petitioner had received $8,775 of unreported wages

from Seafarers Vacation Plan (Seafarers) and unemployment compensation of $560

from the Missouri Division of Employment Security, of $4,824 from the New Jersey

Department of Labor, and of $5,336 from the Washington State Employment

Security Department. In the notice respondent determined that petitioner’s filing

status was single and allowed him, as a negative adjustment to taxable income,

“Exemptions” of $10,200.
                                         -4-

       The petition asserts only frivolous and groundless arguments. Respondent

initially moved to dismiss the case for failure to state a claim upon which relief

could be granted but subsequently requested that the Court deny this motion so that

he might assert an increased deficiency. The Court denied without prejudice

respondent’s motion to dismiss. Respondent then filed his answer, asserting that

petitioner’s deficiency should be increased by $4,290 to $7,630 as the result of

including in petitioner’s income $13,124 from Armada as reported on the Form W-2

attached to petitioner’s Form 1040 and reducing the exemptions allowed in the

notice of deficiency--which the answer characterizes as representing three

dependency exemptions--to one dependency exemption.

                                      Discussion

I. Unreported Income

      Gross income includes “all income from whatever source derived,” including

compensation for services. Sec. 61(a)(1). Gross income also includes

unemployment compensation. Sec. 85(a). Respondent determined that petitioner

received wages and unemployment compensation as reported to the IRS by third-

party payers. Petitioner has not properly disputed these determinations. In his

petition, contrary to Rule 34(b)(5), he makes no claims of factual error and instead

makes frivolous and groundless arguments, principally that there is no basis for
                                         -5-

imposing Federal income tax on the wages of private sector employees. Petitioner

raised essentially identical arguments in a previous Tax Court case involving his

2006 tax year, at docket No. 17301-09. In an order dismissing that case for failure

to state a claim upon which relief could be granted, we observed:

      Suffice it to say that petitioner, a resident of the State of Oregon, is a
      taxpayer subject to the Federal income tax who is obliged to file a
      Federal income tax return and pay Federal income tax on his income,
      specifically including wages, unemployment compensation, and
      interest. See secs. 1, 61(a), 85, 6012(a)(1), 7701(a)(1) and (14). See
      also United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981)
      (“Compensation for labor or services, paid in the form of wages or
      salary, has been universally held by the courts of this republic to be
      income, subject to the income tax laws currently applicable.”).

These observations pertain equally to this case. We need not dignify petitioner’s

frivolous and groundless arguments with further discussion. See Crain v.

Commissioner, 737 F.2d 1417 (5th Cir. 1984); Heisey v. Commissioner, T.C.

Memo. 2002-41, aff’d, 59 Fed. Appx. 233 (9th Cir. 2003).

       In an attachment to his petition, petitioner requests, among other things, that

the Court require respondent to meet his “burden of proof * * * to produce

reasonable verification of those information returns on which Respondent has based
                                          -6-

its claims for tax year 2007.”3 But contrary to Rule 34(b)(5) he includes no

statement of facts on which he relies in support of this request.

      Section 6201(d) provides that if, in any court proceeding, a taxpayer fully

cooperates with the Commissioner and raises a reasonable dispute with respect to

an information return, the Commissioner has the burden of producing reasonable

and probative evidence to verify the information return. Respondent asserts that

petitioner has not cooperated with requests for information. Petitioner has not

asserted otherwise and has offered no evidence in this regard. Insofar as the record

shows, petitioner did not bring any factual dispute over any item of income to the

IRS’ attention within a reasonable time as contemplated by section 6201(d) but

instead raised frivolous legal arguments. See McQuatters v. Commissioner, T.C.

Memo. 1998-88. Nor, with the exception discussed below relating to Armada, does

petitioner claim to have made known any such dispute to the third parties who

prepared the information returns.

      At trial petitioner sought for the first time to raise factual disputes about the

information reports upon which respondent’s determinations are based. His

      3
        The petition also invokes a number of other Code sections that are not
germane to this proceeding; e.g., sec. 6330, which pertains to collection
proceedings; sec. 6703(a), relating to penalties under secs. 6700, 6701, and 6702
that are not at issue in this proceeding; and sec. 6511(a), relating to the period of
limitation on filing refund claims.
                                         -7-

testimony in this regard was vague, evasive, and noncredible. He testified generally

that he was uncertain or could not remember whether he had received the amounts

reported on most of the information returns and suggested, without any

corroborating evidence, that the unemployment compensation he received from the

Missouri Department of Labor had been “refunded”. Petitioner proffered a letter

that he had allegedly written to Armada, complaining of discrepancies in his 2007

pay. But the thrust of that letter, like his testimony that Armada “shorted me $3

thousand”, seems to be that Armada actually understated petitioner’s 2007 wages.

Finally, in response to a question on cross-examination petitioner stated that he did

not “work for Seafarers” in 2007, which in the light of other statements he made at

trial, seems to be a dodge based on his insistence that “Seafarers is not a ship. They

don’t operate any ships”, but is instead a union-affiliated benefits program.

Ultimately, it appears to us that petitioner’s testimony about Seafarers and the other

third-party payers fits his pattern of evasiveness and connivance about items of

income reported on information returns, consistent with his “correcting” his wages

to zero on his self-generated Forms 4852. Petitioner has not raised a reasonable

dispute about the Seafarers information return or any of the other information

returns in question.
                                            -8-

         Because petitioner has failed to show that he cooperated with respondent and

has failed to raise a reasonable dispute about the items of income on the information

returns in question, we conclude that the provisions of section 6201(d) are

inapplicable to shift the burden of production to respondent with respect to these

items.

         Absent the application of a special statutory provision such as section

6201(d), the Commissioner’s determinations in a notice of deficiency are generally

presumed correct, and the taxpayer bears the burden of proving those

determinations erroneous.4 See Rule 142(a); Welch v. Helvering, 290 U.S. 111

(1933). Respondent bears the burden of proof with respect to the increased

deficiency asserted in his answer. See Rule 142(a); Lane v. Commissioner, T.C.

Memo. 1994-381, aff’d without published opinion, 70 F.3d 1276 (8th Cir. 1995).

         In his pretrial memorandum and posttrial brief, as in his petition, petitioner

raises only frivolous and groundless arguments. Moreover, his brief fails to set forth

any objections to respondent’s proposed findings of fact, which include detailed

proposed findings as to the sources and amounts of petitioner’s unreported income.

We deem petitioner to have waived any objections to these proposed findings of

         4
        Petitioner does not claim and has not established that the conditions of sec.
7491(a) have been met to shift the burden of proof to respondent with regard to any
factual issue as to his tax liability.
                                         -9-

fact. See Rule 151(e)(3) (“In an answering or reply brief, the party shall set forth

any objections, together with the reasons therefor, to any proposed findings of any

other party”).

      But even if we were to assume, for the sake of argument, that petitioner had

not waived objections to respondent’s proposed findings of fact, we would

nevertheless conclude, for essentially the reasons previously discussed, that he has

failed to show error in respondent’s determinations in the notice of deficiency. The

Forms W-2 that petitioner attached to his Form 1040, the official IRS transcripts

that respondent has placed in evidence, and the testimony of respondent’s Appeals

officer provide an adequate evidentiary foundation as might be required to support

respondent’s determinations in the notice of deficiency regarding petitioner’s

unreported income. See Rapp v. Commissioner, 774 F.2d 932, 935 (9th Cir. 1985);

Weimerskirch v. Commissioner, 596 F.2d 358, 360 (9th Cir. 1979), rev’g 67 T.C.

672 (1977). And the Form W-2 from Armada, combined with petitioner’s testimony

that the income reported on this Form W-2 (which he attached to his Form 1040)

was actually understated, suffices to carry respondent’s burden of proof that

petitioner received at least $13,124 of wages from Armada in 2007.
                                         - 10 -

      In sum, we sustain respondent’s determinations in the notice of deficiency as

to the amounts and sources of petitioner’s unreported income and also hold that he

had $13,124 of additional taxable income from Armada.

II. Exemptions

      In the notice of deficiency respondent allowed petitioner a $10,200 negative

adjustment to taxable income for “Exemptions”. The notice of deficiency contains

no other explanation for this item. In his answer respondent asserts that the notice

of deficiency erroneously allowed petitioner three “dependency exemptions”

totaling $10,200 and asserts further that petitioner is entitled to only one

“dependency exemption”, giving rise to an increased deficiency. The burden of

proof is upon respondent as to this new matter. See Rule 142(a).

      At trial respondent’s counsel stated that petitioner was entitled to one

personal exemption for himself and a dependency exemption for his daughter. On

brief respondent asserts that his “correct position as set forth in respondent’s answer

is that petitioner may only claim one personal exemption and no exemptions for

dependents.” But this statement is inconsistent with respondent’s answer, which

states that petitioner is entitled to one “dependency exemption”. We are left in
                                         - 11 -

doubt as to what the “Exemptions” allowed in the notice of deficiency actually

represent and what respondent’s position is with respect to them.

       Having seemingly conceded in his answer that petitioner is entitled to one

“dependency exemption” without specifying to whom it relates, and having

conceded at trial and on brief that petitioner is entitled to a personal exemption, and

having failed to present any evidence as to the basis for the determination in the

notice that petitioner is entitled to three “Exemptions”, respondent has failed to

carry his burden of proving that petitioner is not entitled to three “Exemptions” as

allowed in the notice of deficiency.

III. Filing Status

       In the notice of deficiency respondent calculated petitioner’s taxes for a

“single” filing status. Petitioner contends that he is entitled to “head of household”

filing status.

       To qualify as a head of a household, a taxpayer must be unmarried or treated

as such under section 7703(b), which treats certain married individuals who live

apart as unmarried. See sec. 2(b) and (c). Petitioner testified that he was married

during 2007 and that his wife lived with him. Petitioner has failed to show that he is

entitled to head of household filing status. If petitioner was married in 2007, as he
                                         - 12 -

testified, he was not disadvantaged by the use of a “single” filing status rather than

“married filing separately”. See Clark v. Commissioner, T.C. Memo. 2007-172.

IV. Section 6651(a)(1) Addition to Tax

      The petition contains no specific allegations or supporting facts regarding the

section 6651(a)(1) addition to tax, as determined in the notice of deficiency.

Petitioner’s frivolous and groundless arguments at trial and on brief similarly do not

raise any legitimate issue or defense regarding this addition to tax. We deem

petitioner to have conceded the section 6651(a)(1) addition to tax as determined in

the notice of deficiency and hold that respondent has no burden of production under

section 7491(c) with respect to this addition to tax.5 See Funk v. Commissioner,

      5
        Even if we were to assume, for the sake of argument, that petitioner had
properly stated a claim with respect to the sec. 6651(a)(1) addition to tax,
respondent has satisfied any burden of production under sec. 7491(c). The Form
1040 that petitioner submitted, showing zeros for all income items, accompanied by
self-generated Forms 4852 containing tax-protester rhetoric, did not contain
“sufficient data to calculate tax liability” and did not constitute “an honest and
reasonable attempt to satisfy the requirements of the tax law”. See Beard v.
Commissioner, 82 T.C. 766, 777 (1984), aff’d per curiam, 793 F.2d 139 (6th Cir.
1986). Consequently, petitioner did not file a return for purposes of sec. 6651. See
Oman v. Commissioner, T.C. Memo. 2010-276; Coulton v. Commissioner, T.C.
Memo. 2005-199 (distinguishing United States v. Long, 618 F.2d 74 (9th Cir.
1980), which held that forms with all zeros constituted “returns” for purposes of
criminal sanctions under sec. 7203 for willful failure to file). For reasons discussed
above, the evidence establishes that tax was required to be shown on petitioner’s
2007 Federal income tax return. Petitioner has asserted no credible argument and
presented no facts that would establish reasonable cause as a defense to the sec.
                                                                           (continued...)
                                           - 13 -

123 T.C. 213, 217-218 (2004); Swain v. Commissioner, 118 T.C. 358, 363-365

(2002). We conclude and hold that petitioner is liable for the section 6651(a)(1)

addition to tax.

V. Section 6673 Penalty

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

the United States a penalty of up to $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 the proceedings is frivolous or groundless.

       Petitioner has based his case on frivolous and groundless positions that are

very similar to the positions he took in the case at docket No. 17301-09. In the

order dismissing that case for failure to state a claim on which relief could be

granted, this Court stated: “Petitioner is advised that if he returns to the Court in the

future and raises arguments such as those in the instant case, he may find himself the

recipient of a substantial penalty under section 6673(a)(1).” Petitioner has chosen

to ignore this warning, as well as additional warnings that this Court and respondent

have given him in this proceeding. Although he showed some willingness to discuss

relevant factual issues at trial, after trial he reverted to his old ways, filing a


       5
      (...continued)
6651(a)(1) addition to tax.
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frivolous and groundless motion for judgment and a posttrial brief consisting of

nothing but frivolous and groundless arguments. Petitioner has wasted this Court’s

and respondent’s time and resources. It appearing to the Court that petitioner’s

positions in this proceeding are frivolous and groundless and that he has instituted

and maintained this proceeding primarily for delay, pursuant to section 6673(a)(1)

we shall require petitioner to pay to the United States a penalty of $3,000.

      To reflect the foregoing and to give effect to respondent’s concessions,


                                                       Decision will be entered

                                                 under Rule 155.
