                         T.C. Memo. 2009-293



                       UNITED STATES TAX COURT



                    HENRY NINO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 27645-07.               Filed December 21, 2009.



     Henry Nino, pro se.

     Timothy S. Murphy, for respondent.



                         MEMORANDUM OPINION


     VASQUEZ, Judge:    For 2004 and 2005 respondent determined

deficiencies in petitioner’s Federal income taxes and additions

to tax as follows:
                                    - 2 -

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

 2004      $35,714      $8,035.65           $4,999.96       $1,036.65
 2005       27,988       6,122.03            2,176.72        1,087.93

      The issues for decision are whether petitioner is liable for

the deficiencies in his Federal income taxes and whether

petitioner is liable for the additions to tax under sections

6651(a)(1) and (2) and 6654(a).1

                               Background

I.   Respondent’s Rule 91(f) Motion

      Under Rule 91(f)(1), respondent moved the Court to issue an

order requiring petitioner to show cause why the facts and

evidence set forth in respondent’s proposed stipulation of facts

should not be accepted as established for the purposes of this

case (Rule 91(f) motion).     We granted respondent’s Rule 91(f)

motion and ordered petitioner to file a response in compliance

with Rule 91(f)(2) on or before January 7, 2009.        On January 6,

2009, petitioner sent a response to the Court that we filed on

January 15, 2009 (response).     On January 16, 2009, we ordered

that respondent’s Rule 91(f) motion be made absolute and that the

facts and evidence set forth in respondent’s proposed stipulation

of facts be deemed established for the purposes of this case.



      1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) in effect for the years in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                - 3 -

      Petitioner moved the Court to set aside the January 16,

2009, order granting respondent’s Rule 91(f) motion (motion to

set aside).   On March 11, 2009, we denied petitioner’s motion to

set aside.    Our reasoning for denying the motion to set aside was

twofold:   First, we found that petitioner’s response was evasive

and unresponsive and offered nothing of merit to refute

respondent’s proposed stipulation of facts as to paragraphs 4

through 12; Second, we found paragraphs 1 through 32 of

respondent’s proposed stipulation of facts not to be prejudicial

to petitioner.

II.   Factual Background

      The facts have been deemed stipulated under Rule 91(f)(3)

and are so found.   The stipulation of facts and the exhibits

attached thereto are incorporated herein by this reference.     When

petitioner filed his petition, he resided in Michigan.

      During 2003 through 2005 petitioner worked for Ford Motor

Co. (Ford).   Ford issued Forms W-2, Wage and Tax Statement, to

petitioner reporting wages of $143,126.29 and $121,780.94 for




      2
        Par. 1 states petitioner’s residence and sets forth his
street address (last known address). The parties agree as to the
locations, and we also pointed out that petitioner used his last
known address on his petition to the Court (and other documents
he filed with the Court). Pars. 2 and 3 identify as Exhibits 1-R
and 2-R copies of the notices of deficiency for 2004 and 2005,
respectively. We also pointed out that petitioner attached
copies of the notices of deficiency to his petition to the Court.
                                 - 4 -

2004 and 2005, respectively.3    Ford did not withhold any Federal

income tax for 2003 and 2004 from petitioner’s wages because he

filed a Form W-4, Employee’s Withholding Allowance Certificate,

with Ford for each year claiming that he was exempt from Federal

income tax withholding.    Ford withheld Federal income tax of

$779.87 for 2005.    Petitioner did not file Federal income tax

returns for 2003 through 2005.

     Respondent filed substitutes for returns (SFR) for

petitioner for 2004 and 2005.    Respondent, using third-party

payer reports, determined that petitioner received wages of

$143,126 and $121,780 in 2004 and 2005, respectively.    For 2004

respondent determined petitioner’s filing status was married

filing separate and that petitioner had taxable income of

$136,974.    For 2005 respondent determined petitioner’s filing

status was married filing separate and that petitioner had

taxable income of $114,220.     Respondent determined deficiencies

in petitioner’s Federal income taxes of $35,714 and $27,988 for

2004 and 2005, respectively.    For 2004 respondent also determined

additions to tax pursuant to section 6651(a)(1) of $8,035.65,

section   6651(a)(2) of $4,999.96, and section 6654(a) of

$1,036.65.    For 2005 respondent determined additions to tax



     3
        The parties did not provide a copy of petitioner’s 2003
Form W-2. According to Ford’s payroll records, it appears that
petitioner was employed by Ford in December 2003 and earned wages
of $1,602.64.
                              - 5 -

pursuant to section 6651(a)(1) of $6,122.03, section 6651(a)(2)

of $2,176.72, and section 6654(a) of $1,087.93.

     Respondent introduced into evidence Ford’s payroll records

to prove that petitioner was employed by Ford during 2003 through

2005 and that Ford paid petitioner wages of $143,126.29 and

$121,780.94 in 2004 and 2005, respectively.    Petitioner did not

deny receipt of the wage income and did not deny that he worked

at Ford.

     Petitioner is no stranger to the Court.   In Nino v.

Commissioner, T.C. Memo. 2006-59, we warned petitioner that we

might impose sanctions against him if he continued to make

frivolous arguments before the Court in the future.   At trial we

advised petitioner that his arguments were frivolous.   We warned

petitioner that if he continued to assert frivolous arguments in

his posttrial brief, we would consider imposing a sanction

against him under section 6673(a)(1).    In his posttrial brief he

asserted that no valid notices of deficiency exist or were sent

to and received by him because:   (1) The individual master file

transcripts of his account do not contain transaction code 494;

and (2) respondent did not document the issuance of the notices

of deficiency in his records, and thus, he failed to maintain an

accurate and complete system of records as required by the

Privacy Act, 5 U.S.C. sec. 552a(e)(5).
                                 - 6 -

                              Discussion

I.   Deficiencies in Federal Income Tax and Unreported Wage Income

      Section 61(a)(1) defines gross income as all income from

whatever source derived, including compensation for services

(i.e., wage income).

          As a general rule, the taxpayer bears the burden of

proving the Commissioner’s deficiency determinations incorrect.

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).      The

Court of Appeals for the Sixth Circuit, to which an appeal in

this case would lie, however, has held that the Commissioner’s

determination of unreported income must be supported by at least

a minimal factual predicate or foundation of substantive evidence

linking the taxpayer to the income-generating activity or to the

receipt of funds.     United States v. Walton, 909 F.2d 915, 918-919

(6th Cir. 1990).     In addition, section 7491(a) provides that if

the taxpayer introduces credible evidence and meets certain other

prerequisites, the Commissioner shall bear the burden of proof

with respect to factual issues relating to the liability of the

taxpayer for a tax imposed under subtitle A or B of the Code.4

      Petitioner has not alleged that section 7491(a) applies, and

he failed to cooperate with respondent’s reasonable requests for



      4
        Petitioner did not dispute the accuracy of the
information reported by Ford on the 2004 and 2005 Forms W-2.
Therefore, sec. 6201(d) does not apply.
                                - 7 -

information.    See sec. 7491(a)(2)(B).   Accordingly, the burden of

proof remains on him.

      To satisfy respondent’s initial burden of production, he

provided evidence to the Court of petitioner’s employment and

wages earned during 2004 and 2005 through Ford’s payroll records.

Petitioner does not challenge the facts on which respondent’s

determinations are based or respondent’s calculation of tax.

Rather, he has advanced arguments characteristic of tax-protester

rhetoric that has been universally rejected by this and other

courts.    See Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir.

1988), affg. T.C. Memo. 1987-225; Carter v. Commissioner, 784

F.2d 1006, 1009 (9th Cir. 1986).    We shall not painstakingly

address petitioner’s assertions “with somber reasoning and

copious citation of precedent; to do so might suggest that these

arguments have some colorable merit.”     See Crain v. Commissioner,

737 F.2d 1417, 1417 (5th Cir. 1984).      Accordingly, we sustain

respondent’s deficiency determinations for 2004 and 2005.

II.   Additions to Tax

      A.   Burden of Proof and Production

      Section 7491(c) provides that the Commissioner will bear the

burden of production with respect to the liability of any

individual for additions to tax.    “The Commissioner’s burden of

production under section 7491(c) is to produce evidence that it

is appropriate to impose the relevant penalty, addition to tax,
                               - 8 -

or additional amount”.   Swain v. Commissioner, 118 T.C. 358, 363

(2002); see also Higbee v. Commissioner, 116 T.C. 438, 446

(2001).   Once the Commissioner satisfies this burden of

production, the taxpayer must persuade the Court that the

Commissioner’s determination is in error by supplying sufficient

evidence of an applicable exception.     Higbee v. Commissioner,

supra at 446.

     B.   Section 6651(a)(1)

     Respondent determined that petitioner is liable for an

addition to tax under section 6651(a)(1) for 2004 and 2005.

     Section 6651(a)(1) imposes an addition to tax for failure to

file a return on the date prescribed (determined with regard to

any extension of time for filing), unless the taxpayer can

establish that the failure is due to reasonable cause and not due

to willful neglect.5

     Petitioner did not file Federal income tax returns for 2004

and 2005.   Respondent has produced sufficient evidence that

petitioner is liable for the section 6651(a)(1) addition to tax.

See Higbee v. Commissioner, supra at 446; Ruggeri v.

Commissioner, T.C. Memo. 2008-300.     Petitioner provided no



     5
        If the Secretary makes a return for the taxpayer under
sec. 6020(b), it is disregarded for purposes of determining the
amount of the addition to tax under sec. 6651(a)(1), but it is
treated as a return filed by the taxpayer for purposes of
determining the amount of the addition to tax under sec.
6651(a)(2). Sec. 6651(g).
                                 - 9 -

evidence of a reasonable cause defense.    Consequently, petitioner

has not met his burden of persuasion, and respondent’s

determinations are sustained.    See United States v. Rylander, 460

U.S. 752, 758 (1983); Traficant v. Commissioner, 89 T.C. 501, 504

(1987), affd. 884 F.2d 258 (6th Cir. 1989).

     C.   Section 6651(a)(2)

     Respondent determined that petitioner is liable for an

addition to tax under section 6651(a)(2) for 2004 and 2005.

     Section 6651(a)(2) provides for an addition to tax where

payment of the amount reported as tax on a return is not timely

“unless it is shown that such failure is due to reasonable cause

and not due to willful neglect”.

     With respect to the section 6651(a)(2) addition to tax, the

Commissioner must introduce evidence that the tax was shown on a

Federal income tax return to satisfy his burden of production

under section 7491(c).     Cabirac v. Commissioner, 120 T.C. 163

(2003).   When a taxpayer has not filed a return, the section

6651(a)(2) addition to tax may not be imposed unless the

Secretary has prepared an SFR that meets the requirements of

section 6020(b).     Wheeler v. Commissioner, 127 T.C. 200, 208-209

(2006), affd. 521 F.3d 1289 (10th Cir. 2008).

     Section 6020(b) provides:

     SEC. 6020(b).    Execution of Return by Secretary.--

          (1) Authority of Secretary to execute return.-–If
     any person fails to make any return required by any
                               - 10 -

       internal revenue law or regulation made thereunder at
       the time prescribed therefor, or makes, willfully or
       otherwise, a false or fraudulent return, the Secretary
       shall make such return from his own knowledge and from
       such information as he can obtain through testimony or
       otherwise.

            (2) Status of returns.-–Any return so made and
       subscribed by the Secretary shall be prima facie good
       and sufficient for all legal purposes.

        Respondent submitted to the Court copies of the SFRs that

he prepared for petitioner.    The SFRs meet the requirements of

section 6020(b).    Petitioner did not pay his 2004 and 2005

Federal income taxes as shown on the SFRs by April 15, 2005 and

2006, respectively.    See Wheeler v. Commissioner, supra at

208-209; see also Hawkins v. Commissioner, T.C. Memo. 2008-168.

Respondent has produced sufficient evidence that petitioner is

liable for the section 6651(a)(2) addition to tax.    See Higbee v.

Commissioner, supra at 446; Ruggeri v. Commissioner, supra.

Petitioner provided no evidence of a reasonable cause defense.

Consequently, petitioner has not met his burden of persuasion,

and respondent’s determinations are sustained.    See United States

v. Rylander, supra at 758; Traficant v. Commissioner, supra at

504.

       D.   Section 6654(a)

       Respondent determined that petitioner is liable for an

addition to tax under section 6654(a) for failure to pay

estimated income taxes for 2004 and 2005.
                              - 11 -

     Section 6654(a) imposes an addition to tax “in the case of

any underpayment of estimated tax by an individual”.   A taxpayer

has an obligation to pay estimated tax for a particular year only

if he has a “required annual payment” for that year.   Sec.

6654(d).   A required annual payment generally is equal to the

lesser of:   (i) 90 percent of the tax shown on the return for the

taxable year (or, if no return is filed, 90 percent of the tax

for the year); or (ii) 100 percent of the tax shown on the return

of the individual for the preceding taxable year.   Sec.

6654(d)(1)(B); Wheeler v. Commissioner, supra at 210-211; Heers

v. Commissioner, T.C. Memo. 2007-10.    Clause (ii) does not apply,

however, if the individual did not file a return for the

preceding year.   Sec. 6654(d)(1)(B).   Respondent’s burden of

production under section 7491(c) requires him to produce evidence

that petitioner had a required annual payment for 2004 and 2005.

     Petitioner did not file Federal income tax returns for 2003

through 2005.   Accordingly, his required annual payment was 90

percent of the tax for 2004 and 2005. He did not make any

estimated income tax payments for 2004, and he made estimated

income tax payments of only $779.87 for 2005 (his required annual

payment for 2005 was $25,189.20 ($27,988 x 90 percent)).

Respondent has produced sufficient evidence that petitioner is

liable for the section 6654(a) addition to tax.   See Higbee v.

Commissioner, supra at 446.   Petitioner neither argued nor
                               - 12 -

established any of the defenses enumerated in section 6654(e).

Consequently, petitioner has not met his burden of persuasion,

and respondent’s determinations are sustained.     See United States

v. Rylander, supra at 758; Traficant v. Commissioner, supra at

504.

III.    Section 6673(a)(1) Penalty

       Section 6673(a)(1) authorizes this Court to impose a penalty

not to exceed $25,000 if the taxpayer took frivolous or

groundless positions in the proceeding or instituted the

proceeding primarily for delay.

       Respondent has not asked the Court to impose a penalty under

section 6673(a)(1) against petitioner.     The Court may, however,

impose this penalty sua sponte.      Pierson v. Commissioner, 115

T.C. 576, 580 (2000); see also Rewerts v. Commissioner, T.C.

Memo. 2004-248.

       Petitioner’s petition, pretrial memorandum, and response to

respondent’s Rule 91(f) motion contain frivolous and groundless

arguments.    At trial we advised petitioner that his arguments

were frivolous.    We warned petitioner that if he continued to

assert frivolous arguments in his posttrial brief, we would

consider imposing a sanction against him under section

6673(a)(1).    Petitioner asserted frivolous and groundless

arguments in his posttrial brief.     Moreover, in Nino v.

Commissioner, T.C. Memo. 2006-59, we warned petitioner that we
                             - 13 -

might impose sanctions against him if he continued to make

frivolous arguments before the Court in the future.     Petitioner

has ignored the Court’s warnings.   He has wasted the time and

limited resources of the Court.   Accordingly, we will impose a

penalty of $2,000 under section 6673(a)(1).

     In reaching our holdings, we have considered all arguments

made, and, to the extent not mentioned, we conclude that they are

moot, irrelevant, or without merit.

     To reflect the foregoing,


                                           Decision will be entered

                                      for respondent.
