                  T.C. Summary Opinion 2010-78



                       UNITED STATES TAX COURT



               DAVID CAMERON PARKER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 26478-08S.              Filed June 21, 2010.



     David Cameron Parker, pro se.

     Anne W. Bryson, for respondent.


     CHIECHI, Judge:    This case was heard pursuant to the provi-

sions of section 7463 of the Internal Revenue Code in effect when

the petition was filed.1   Pursuant to section 7463(b), the deci-

sion to be entered is not reviewable by any other court, and this

opinion shall not be treated as precedent for any other case.




     1
      Hereinafter, all section references are to the Internal
Revenue Code in effect for the years at issue. All Rule refer-
ences are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

     Respondent determined that petitioner is liable for his

taxable years 2005 and 2006 for accuracy-related penalties under

section 6662(a) of $2,435.40 and $2,655.40, respectively.     We

must decide whether petitioner is liable for those penalties.      We

hold that he is.

                             Background

     Some of the facts have been stipulated and are so found.

     Petitioner resided in Washington, D.C., at the time he filed

the petition in this case.

     At a time not disclosed by the record before 2005, the first

year at issue, petitioner, who has a bachelor of science degree

in business administration, worked for 17 years for the Federal

Deposit Insurance Corporation (FDIC).

     After he stopped working for the FDIC, petitioner worked as

an independent contractor for the U.S. Agency for International

Development (AID) and the Office of Technical Assistance of the

U.S. Department of the Treasury (Treasury’s Office of Technical

Assistance).   His responsibilities in that work included provid-

ing advice regarding problem bank resolution and deposit insur-

ance.

     As of 2005, petitioner had approximately 20 years of experi-

ence in problem bank resolution and deposit insurance and viewed

himself as an expert in those areas.      Having worked extensively

in the areas of problem bank resolution and deposit insurance,
                                   - 3 -

petitioner was familiar with the regulatory regimes relating to

banking and other financial services industries.

        Immediately after working as an independent contractor for

AID and Treasury’s Office of Technical Assistance, petitioner

began working for the International Monetary Fund (IMF).      By

letter dated June 9, 2005 (IMF June 9, 2005 letter), the IMF

offered petitioner a contractual appointment as a headquarters-

based technical assistance advisor in the Monetary and Financial

Systems Department of the IMF that was to begin on May 25, 2005,

and to end on May 24, 2007.2      Petitioner accepted that appoint-

ment.       From May 25, 2005, through 2006, petitioner earned gross

annual compensation of approximately $175,000 while working as a

headquarters-based technical assistance advisor in the IMF’s

Monetary and Financial Systems Department.

     Petitioner’s work experience before and during the years at

issue included his consulting different publications, manuals,

and procedures promulgated by the different regulators of the

different financial services industries with which he worked in

order to attempt to resolve certain issues that he encountered.

     The IMF sent, and petitioner received, Form W-2, Wage and

Tax Statement (Form W-2), for his taxable year 2005.      The IMF

indicated in that form that it had not withheld Federal income



        2
      The IMF June 9, 2005 letter superseded an IMF letter to
petitioner dated May 18, 2005.
                                - 4 -

tax or Social Security tax from the earnings that petitioner had

received from the IMF during 2005.

     Petitioner timely filed Form 1040A, U.S. Individual Income

Tax Return, for his taxable year 2005 (2005 return).    Petitioner

used certain tax preparation software known as TurboTax in

preparing that return.3    At all relevant times, including when he

filed his 2005 return, petitioner was aware that the IMF had not

withheld Federal income tax or Social Security tax from the

earnings that he had received from the IMF during 2005 and that

he had an obligation to report and to pay self-employment tax

because the IMF had not withheld any Social Security tax for that

year.    Nonetheless, petitioner did not report any self-employment

tax in his 2005 return.4    In petitioner’s 2005 return, petitioner

reported tax of $20,212 and tax due of $5,172.5

     Around December 2006, the IMF announced by email to those

persons working for it that the Internal Revenue Service (IRS)



     3
      Petitioner indicated in his 2005 return that that return
was “Self-Prepared”.
     4
      Petitioner included with his 2005 return Form 2210, Under-
payment of Estimated Tax by Individuals, Estates, and Trusts. In
Part I of that form, petitioner made no entry on line 2 for
“Other taxes, including self-employment tax”. Petitioner also
included with his 2005 return Schedule AI--Annualized Income
Installment Method. In that schedule, petitioner made no entry
in Part I, line 13, for “Self-employment tax”.
     5
      Petitioner reduced the $20,212 of tax reported in his 2005
return by “2005 estimated tax payments and amounts applied from
2004 return” of $15,040.
                              - 5 -

had made a settlement initiative (IRS settlement initiative)

available for employees at foreign embassies, foreign consulate

offices, and international organizations in the United States.

     By letter to the IRS dated January 24, 2007 (petitioner’s

January 24, 2007 letter), petitioner made a request to partici-

pate in the IRS settlement initiative for his taxable year 2005.

In that letter, petitioner stated in pertinent part:

     Consider this my Notice of Election in the subject
     [IRS] Settlement Initiative. I have worked for the
     International Monetary Fund since May, 2005, and am
     afraid that I may not have paid Social Security taxes.

       *       *       *       *        *      *        *

     * * * I am enclosing copies of my original tax returns
     [sic] filed for the year 2005 (this return was not
     amended). Employer earnings statements for 2005 accom-
     pany this tax return.

     By letter to petitioner dated April 6, 2007 (IRS April 6,

2007 letter), the IRS accepted petitioner’s request to partici-

pate in the IRS settlement initiative for his taxable year 2005.

In that letter, the IRS requested additional information in order

to complete its review of petitioner’s request.    The IRS April 6,

2007 letter stated in pertinent part:

     You will be contacted shortly by an examiner to discuss
     your particular situation.

     Once we have completed our review of the documents you
     submitted and computed the total taxes, interest, and
     penalties owed, we will send a closing agreement for
     your signature which reflects the terms of the settle-
     ment.
                               - 6 -

      Shortly after petitioner sent the IRS petitioner’s January

24, 2007 letter in which he made a request to participate in the

IRS settlement initiative for his taxable year 2005, the IMF sent

to petitioner, and petitioner received, Form W-2 for his taxable

year 2006.   The IMF indicated in that form that the IMF had not

withheld Federal income tax or Social Security tax from the

earnings that petitioner had received from the IMF during 2006.

      Approximately a few months after petitioner sent the IRS

petitioner’s January 24, 2007 letter in which he made a request

to participate in the IRS settlement initiative for his taxable

year 2005, petitioner timely filed Form 1040, U.S. Individual

Income Tax Return, for his taxable year 2006 (2006 return).

Petitioner did not review that return very closely before filing

it.   Petitioner used TurboTax in preparing his 2006 return.6    At

all relevant times, including when he filed his 2006 return,

petitioner was aware that the IMF had not withheld Federal income

tax or Social Security tax from the earnings that he had received

from the IMF during 2006 and that he had an obligation to report

and to pay self-employment tax because the IMF had not withheld

any Social Security tax for that year.   Nonetheless, petitioner

did not report any self-employment tax in his 2006 return.      In




      6
      Petitioner indicated in his 2006 return that that return
was “Self-Prepared.”
                               - 7 -

petitioner’s 2006 return, petitioner reported tax of $39,673 and

tax due of $19,421.7

     Except for reviewing certain of the IRS instructions accom-

panying the respective Federal income tax returns that he pre-

pared and filed for his taxable years 2005 and 2006, petitioner

did not consult any publicly available IRS publications or IRS

guidance when he was preparing his 2005 return and his 2006

return.

     By letter dated November 27, 2007 (IRS November 27, 2007

letter), the IRS notified petitioner that it was examining his

2006 return.   In the IRS November 27, 2007 letter, the IRS asked

petitioner to provide it with certain information relating to

certain deductions that petitioner claimed in Schedule A, Item-

ized Deductions, that he had included with his 2006 return.

     By letter dated December 18, 2007 (IMF December 18, 2007

letter), the finance department of the IMF provided petitioner

with certain information regarding his compensation for 2005.

That letter stated in pertinent part:

          As reported on Form W-2, your 2005 compensation
     from the International Monetary Fund was $110,867.11.
     This amount should be included as wages on the Form
     1040, line 7 of your 2005 federal income tax return
     and, unless earned outside the United States, is sub-
     ject to self-employment tax [under sections 1402(a),
     1402(c)(2)(C), and 3121(1)(15)].


     7
      Petitioner reduced the $39,673 of tax reported in his 2006
return by “2006 estimated tax payments and amounts applied from
2005 return” of $20,212 and a certain credit of $40.
                              - 8 -

The IMF December 18, 2007 letter also explained and calculated

for petitioner how to determine the portion of his compensation

that he had earned outside the United States during 2005.

     On December 19, 2007, the IMF December 18, 2007 letter was

faxed to respondent along with a proposed amended return of

petitioner for his taxable year 2005.   By letter dated December

20, 2007 (IRS December 20, 2007 letter), the IRS informed peti-

tioner about the changes made under the IRS settlement initiative

for his taxable year 2005 and enclosed with that letter a copy of

Form 906-C, Closing Agreement on Final Determination Covering

Specific Matters (closing agreement), which reflected the settle-

ment agreement under the IRS settlement initiative between the

IRS and petitioner with respect to that year.

     Petitioner declined to agree to the settlement under the IRS

settlement initiative with respect to his taxable year 2005 and

did not sign the closing agreement that the IRS sent to him with

the IRS December 20, 2007 letter.   By letter dated January 8,

2008, petitioner withdrew from the IRS settlement initiative

(petitioner’s January 8, 2008 letter) for his taxable year 2005.

Petitioner included with that letter proposed amended returns for

his respective taxable years 2005 and 2006.   In petitioner’s

January 8, 2008 letter, petitioner stated in pertinent part:

     I am a contractual employee with the International
     Monetary Fund (IMF). IMF provides a W2 to me but does
     not withhold any federal income or social security
     taxes. In late 2006, a settlement initiative was
                              - 9 -

     announced for US citizen employees of international
     organizations who may have underpaid or miscalculated
     taxes.

     * * * For tax years 2005 and 2006, I calculated my own
     taxes using the computer program TurboTax. Because I
     had a little uncertainty whether TurboTax had made
     proper calculations, I entered the settlement initia-
     tive in January, 2007.

     As it turned out, TurboTax had provided erroneous
     information to me, to wit, that the social security
     taxes were included in my taxes due (see Attachment
     1).[8] Subsequently, I engaged a tax specialist to
     examine and re-calculate my 2005 and 2006 income tax
     returns and determine any additional taxes due.

     Last week, Ms. Shana Hart of your office informed me
     that because I only had one year of employment with an
     international organization (2005) the settlement ini-
     tiative would not benefit me.

     Ms. Hart further informed me that if I withdrew from
     the initiative she would be handling examination of my
     tax returns. To that end, I have enclosed my amended
     tax return for 2005, along with a check in the amount
     of $13,985 ($12,177 tax and $1,808 interest through
     January 16, 2008). Please note that this amended
     return differs slightly from the one I faxed previously
     because of a clerical error on the 2005 Self Employment
     Income memorandum (the tax is a bit higher).

     Previously, Ms. Hart had requested my tax return for
     2006. I assume that she is also handling the examina-
     tion for this return; therefore, I have also enclosed
     my amended tax return for 2006, along with a check in
     the amount of $14,105 ($13,277 tax and $828 interest
     through January 16, 2008).

     Since this is a voluntary action on my part I would
     like to respectfully request that you waive any addi-
     tional penalties in conjunction with the underpayments.



     8
      The record does not contain any document that purports to
be “Attachment 1” to petitioner’s January 8, 2008 letter.
                             - 10 -

     The proposed amended return for petitioner’s taxable year

2005 that petitioner submitted with petitioner’s January 8, 2008

letter reported an increase in tax of $12,177.   The proposed

amended return for petitioner’s taxable year 2006 that he in-

cluded with that letter reported an increase in tax of $13,277.

As stated in petitioner’s January 8, 2008 letter, petitioner

included with that letter two checks for $13,985 and $14,105,

respectively, in payment of the respective increases in tax

reported in his proposed amended returns for his taxable years

2005 and 2006, as well as interest thereon as provided by law.9

     By letter dated January 16, 2008, respondent confirmed

petitioner’s withdrawal from the IRS settlement initiative for

his taxable year 2005.

     Respondent issued to petitioner a notice of deficiency for

his taxable years 2005 and 2006.   In that notice, respondent

determined that petitioner is liable for his taxable years 2005

and 2006 for accuracy-related penalties under section 6662(a) of

$2,435.40 and $2,655.40, respectively.

                           Discussion

     It is respondent’s position that petitioner is liable for

each of his taxable years 2005 and 2006 for the accuracy-related


     9
      For his taxable year 2005, petitioner paid an increase in
tax of $12,177 and interest thereon of $1,808 through Jan. 16,
2008. For his taxable year 2006, petitioner paid an increase in
tax of $13,277 and interest thereon of $828 through Jan. 16,
2008.
                              - 11 -

penalty under section 6662(a) because of a substantial under-

statement of income tax (substantial understatement) under

section 6662(b)(2) for each of those years.

     Section 6662(a) imposes an accuracy-related penalty equal to

20 percent of the underpayment attributable to, inter alia, a

substantial understatement under section 6662(b)(2).   For pur-

poses of section 6662(b)(2), an understatement is equal to the

excess of the amount of tax required to be shown in the tax

return over the amount of the tax shown in the tax return, sec.

6662(d)(2)(A), and is substantial in the case of an individual if

it exceeds the greater of 10 percent of the tax required to be

shown in the return or $5,000, sec. 6662(d)(1)(A).

     The accuracy-related penalty under section 6662(a) does not

apply to any portion of an underpayment if it is shown that there

was reasonable cause for, and that the taxpayer acted in good

faith with respect to, such portion.   Sec. 6664(c)(1).   The

determination of whether the taxpayer acted with reasonable cause

and in good faith depends on the pertinent facts and circum-

stances, including the taxpayer’s efforts to assess such tax-

payer’s proper tax liability, the knowledge and the experience of

the taxpayer, and the reliance on the advice of a professional,

such as an accountant.   Sec. 1.6664-4(b)(1), Income Tax Regs.

Reliance on the advice of a professional does not necessarily

demonstrate reasonable cause and good faith unless, under all the
                                - 12 -

circumstances, such reliance was reasonable and the taxpayer

acted in good faith.    Id.   In this connection, a taxpayer must

demonstrate that the taxpayer’s reliance on the advice of a

professional was objectively reasonable.     Goldman v. Commis-

sioner, 39 F.3d 402, 408 (2d Cir. 1994), affg. T.C. Memo. 1993-

480.    A taxpayer’s reliance on the advice of a professional will

be objectively reasonable only if the taxpayer has provided

necessary and accurate information to the professional.     Neona-

tology Associates, P.A. v. Commissioner, 115 T.C. 43, 99 (2000),

affd. 299 F.3d 221 (3d Cir. 2002); see also Ma-Tran Corp. v.

Commissioner, 70 T.C. 158, 173 (1978).     Tax preparation software,

like TurboTax, “is only as good as the information one inputs

into it.”    Bunney v. Commissioner, 114 T.C. 259, 267 (2000).

       Respondent has the burden of production under section

7491(c) with respect to the accuracy-related penalties at issue.

To meet that burden, respondent must come forward with sufficient

evidence showing that it is appropriate to impose those penal-

ties.    See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).

Although respondent bears the burden of production with respect

to the accuracy-related penalties at issue, respondent “need not

introduce evidence regarding reasonable cause, substantial

authority, or similar provisions. * * * the taxpayer bears the

burden of proof with regard those issues.”     Id.
                                - 13 -

     On the record before us, we find that there is a substantial

understatement for each of petitioner’s taxable years 2005 and

2006.     On that record, we further find that respondent has

satisfied respondent’s burden of production under section 7491(c)

with respect to the accuracy-related penalty under section

6662(a) that respondent determined for each of those years.

     It is petitioner’s position that the accuracy-related

penalties at issue “should be waived.”     In support of that

position, petitioner asserts:

     During the period under question I worked as a contrac-
     tual employee with the International Monetary Fund
     (IMF). Because I was a contractual employee, IMF
     provided a W2 to me but did not withhold any federal
     income or social security (FICA) taxes. * * *

     For tax years 2005 and 2006, I calculated my own taxes
     using the computer program TurboTax. I even paid extra
     for the opportunity to specifically ask TurboTax pro-
     fessionals if FICA taxes were included in the tax
     computations they did for me. These representatives
     assured me that all the taxes were included (Exhibit
     A).[10]

     * * * Although I believed that I had paid all taxes
     due, because I had never filed in this capacity (self-
     employed), I was a little uncertain about whether
     TurboTax’s calculations included the self employment
     taxes, so I entered the IRS settlement initiative in
     January, 2007.




     10
      Petitioner attached to his brief a document that is not
part of the record in this case and that he labeled “Exhibit A”.
The Court had that document (as well as another document that he
attached to his brief as an exhibit) returned to petitioner. See
Rule 151(e)(3). Moreover, unsupported statements in briefs do
not constitute evidence. Rule 143(c).
                                 - 14 -

     As it turned out, TurboTax representatives were wrong;
     the social security taxes were not included in the tax
     computations they did for me. Then, I engaged a tax
     specialist to examine and re-calculate my 2005 and 2006
     income tax returns and determine any additional taxes
     due.

     * * * I then withdrew from the [IRS] settlement initia-
     tive and filed my amended returns along with payment of
     taxes and interest due. This resulted in total pay-
     ments of $32,389 plus $1,808 interest for 2005 and
     $52,950 plus $828 interest for 2006.

     Because I had initiated contact with the IRS and volun-
     tarily come forward with the problem, I respectfully
     requested that the IRS waive any additional penalties
     in conjunction with the underpayments. The IRS, de-
     spite my complete cooperation with all their informa-
     tion demands, refused my request and insisted on pay-
     ment of penalties of $2,435.40 for 2005 and $3,655.40
     [sic] for 2006.

          *       *       *       *       *       *       *

     According to I.R.C. § 6664(c) the accuracy related
     penalty “will not apply where the taxpayer can show
     reasonable cause for the understatement and action in
     good faith”. I voluntarily made the effort to comply
     with the tax laws; and paid all my federal taxes and
     interest due. I acted in good faith throughout this
     process and believe that I had reasonable cause for my
     understatement and actions.

     We turn first to petitioner’s claim that he “had reasonable

cause” within the meaning of section 6664(c)(1) for his respec-

tive underpayments for his taxable years 2005 and 2006 because he

relied on TurboTax.     At the respective times petitioner filed his

2005 return and his 2006 return he knew that he was responsible

for self-employment tax.11     Nonetheless, neither his 2005 return


     11
          The respective Forms W-2 that the IMF provided to peti-
                                                       (continued...)
                             - 15 -

nor his 2006 return reported any self-employment tax.   On the

record before us, we reject petitioner’s claimed reliance on

TurboTax.

     We turn next to petitioner’s claim that he “had reasonable

cause” within the meaning of section 6664(c)(1) for his respec-

tive underpayments for his taxable years 2005 and 2006 because he

relied on certain unidentified “TurboTax experts”.   We do not

find credible petitioner’s claim that any such “experts” told him

that self-employment tax was included in the computation of

petitioner’s tax in his 2006 return12 when that return itself did

not report any self-employment tax.   On the record before us, we

reject petitioner’s claimed reliance on certain unidentified

“TurboTax experts”.

     We turn finally to petitioner’s claim that he acted “in good

faith” within the meaning of section 6664(c)(1) because after he

filed his 2005 return and his 2006 return he “initiated contact

with the IRS and voluntarily * * *[came] forward” regarding his

respective self-employment taxes for his taxable years 2005 and


     11
      (...continued)
tioner for his taxable years 2005 and 2006 indicated that no
Federal income taxes or Social Security taxes had been withheld
for those years.
     12
      Petitioner’s unsupported assertion on brief that he con-
sulted “TurboTax experts” when he was preparing both his 2005
return and his 2006 return is inconsistent with his testimony in
which he claimed that it was only in connection with his prepara-
tion of his 2006 return that he “paid extra to ask * * * specific
questions about my return.”
                               - 16 -

2006 and “paid all my federal taxes and interest due” for those

years.    That claim suggests that petitioner believes that his

actions after he filed his 2005 return and his 2006 return

require the Court to find that he acted in good faith within the

meaning of section 6664(c)(1) with respect to the underpayment in

each of those returns.    Any such belief is wrong.   The determina-

tion under section 6664(c)(1) as to whether there was reasonable

cause for, and whether the taxpayer acted in good faith with

respect to, any portion of an underpayment is made by examining

any action or inaction of the taxpayer before, and at the time

of, the filing of the return with respect to which there is an

underpayment.    On the record before us, we reject petitioner’s

claimed reliance on his actions after he filed his 2005 return

and his 2006 return.

     At the times petitioner filed his 2005 return and his 2006

return he was aware that he was responsible for self-employment

taxes on the respective earnings that he had received from the

IMF during 2005 and 2006 and that the IMF had not withheld

Federal income taxes or Social Security taxes with respect to

those earnings.13   On the record before us, we reject as not

credible petitioner’s testimony that he was uncertain as to

whether he had included self-employment taxes in his 2005 return


     13
      At the times petitioner filed his 2005 return and his 2006
return he knew that he was required to report and to pay self-
employment taxes.
                              - 17 -

and his 2006 return.   When he filed those returns petitioner

knew, or certainly should have known by reviewing those returns,

that he had not reported self-employment taxes therein.   That is

because those returns did not report any self-employment taxes.14

     On the record before us, we find that petitioner has failed

to carry his burden of establishing that there was reasonable

cause for, and that he acted in good faith with respect to, any

portion of the underpayment for each of his taxable years 2005

and 2006.

     Based upon our examination of the entire record before us,

we find that petitioner has failed to carry his burden of estab-

lishing that he is not liable for each of his taxable years 2005

and 2006 for the accuracy-related penalty under section 6662(a).




     14
      Petitioner acknowledged at trial that he did not review
his 2006 return very closely before filing it.

     Petitioner filed Form 1040A for his taxable year 2005 and
Form 1040 for his taxable year 2006. Without deciding whether
petitioner should have filed Form 1040, instead of Form 1040A,
for his taxable year 2005 when he was required to report and to
pay self-employment tax for that year, we note that his 2005 Form
1040A included Form 2210, Underpayment of Estimated Tax by
Individuals, Estates, and Trusts. In Part I of that form,
petitioner made no entry on line 2 for “Other taxes, including
self-employment tax”. Petitioner also included with his 2005
Form 1040A Schedule AI--Annualized Income Installment Method. In
that schedule, petitioner made no entry in Part I, line 13, for
“Self-employment tax”.
                              - 18 -

     We have considered all of the contentions and arguments of

petitioner that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.15

     To reflect the foregoing,


                                        Decision will be entered

                                   for respondent.




     15
      We shall address briefly petitioner’s contention that the
IRS granted “favorable treatment” in a case involving U.S.
Secretary of the Treasury Timothy Geithner, which petitioner
described as “incredibly similar” to the instant case. According
to petitioner, “there should not be different, or favorable rules
for the well-connected”. The record in this case does not
establish any facts relating to the case to which petitioner
refers involving U.S. Secretary of the Treasury Timothy Geithner.
In any event, those facts would be irrelevant to our resolution
of the issue presented here. Regardless of the facts and circum-
stances relating to the case to which petitioner refers involving
U.S. Secretary of the Treasury Timothy Geithner, petitioner is
required to establish on the basis of the facts and circumstances
that are established by the record in his own case that there was
reasonable cause for, and that he acted in good faith with
respect to, the underpayment for each of his taxable years 2005
and 2006 that is attributable to his failure to report self-
employment tax. See 3K Inv. Partners v. Commissioner, 133 T.C.
___, ___ (2009) (slip op. at 8) (citing Avedisian v. Commis-
sioner, T.C. Memo. 1987-176); see also IBM Corp. v. United
States, 170 Ct. Cl. 357, 365, 343 F.2d 914, 919 (1965).
