                        T.C. Memo. 2010-201



                      UNITED STATES TAX COURT



              DANIEL GERARD CALLAHAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12907-08.              Filed September 14, 2010.



     Daniel Gerard Callahan, pro se.

     James M. Klein, for respondent.



                        MEMORANDUM OPINION


     PARIS, Judge:   On February 25, 2008, respondent determined a

deficiency of $2,261 in petitioner’s Federal income tax and

additions to tax of $508.73 under section 6651(a)(1)1 for failure

to file a return, $237.41 under section 6651(a)(2) for failure to


     1
      All section references are to the Internal Revenue Code of
1986, as amended.
                               - 2 -

pay tax, and $90.69 under section 6654 for failure to make

estimated tax payments for tax year 2005.2    Petitioner timely

petitioned this Court for redetermination of the tax deficiency

as well as the additions to tax for tax year 2005.

     The principal issue for decision is whether the payments

petitioner received in exchange for services he provided are

gross income on which taxes should be paid.

                            Background

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

The stipulation of facts is incorporated herein by this

reference.   During tax year 2005 petitioner worked as an

assistant supervisor and clinician for the Midwest College of

Oriental Medicine in Racine, Wisconsin, an institution owned by

Acupuncture Center, Inc. (ACI).   Petitioner was paid $13,150 with

checks issued by ACI for services he provided to ACI pursuant to

a contract which stated that ACI would file a Form 1099-MISC,

Miscellaneous Income, with the Internal Revenue Service and that

petitioner would be responsible for paying any tax liability

which resulted from the payments.   Petitioner has a B.S. degree

in economics, a master’s degree in industrial relations, a B.S.

degree in nutrition, and a master’s degree in nutrition and is

currently working on a doctorate in nutrition.    Petitioner,



     2
      Respondent has conceded the $237.41 addition to tax
determined under sec. 6651(a)(2).
                               - 3 -

although not an attorney, also has 4 years of experience as a

municipal court judge in Sturtevant, Wisconsin.

     Petitioner did not file a tax return for tax year 2005.     He

did not pay any Federal income tax or make any payments of

estimated tax for that year.   On February 25, 2008, respondent

mailed to petitioner a notice of deficiency setting forth

respondent’s determination of a deficiency in petitioner’s income

tax for tax year 2005 and additions to tax under sections

6651(a)(1) and (2) and 6654(a).   The notice of deficiency

reflected a filing status of married filing separately.

Petitioner filed a timely petition with this Court on May 27,

2008.   At the time of filing petitioner resided in Wisconsin.

Petitioner’s marital status was not further addressed by the

parties.

                            Discussion

Tax Deficiency

     Petitioner argues that he is a citizen of the “Republic of

Wisconsin” and not a citizen of the State of Wisconsin or of the

United States.   Consequently, petitioner argues that he does not

have to pay Federal income taxes.

     Petitioner’s argument that he is not a citizen of Wisconsin

or of the United States is a frivolous argument of the sort that

this Court and other courts have consistently rejected.   See

United States v. Hilgeford, 7 F.3d 1340, 1342 (7th Cir. 1993);
                               - 4 -

United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993);

United States v. Sileven, 985 F.2d 962 (8th Cir. 1993); Bland-

Barclay v. Commissioner, T.C. Memo. 2002-20; Solomon v.

Commissioner, T.C. Memo. 1993-509, affd. without published

opinion 42 F.3d 1391 (7th Cir. 1994).

     Petitioner claims that the compensation he received during

tax year 2005 is not income for Federal taxation purposes.

Petitioner admits that he was “associated” with ACI and was

monetarily compensated for services he performed for ACI.

However, petitioner contends that his time and talent are a like-

kind exchange for the money received, akin to an exchange of

property.   ACI’s Dean of Faculty testified for respondent that

ACI made payments to petitioner in 2005 for the work he performed

that year under a contract with ACI.    ACI reported the payments

made to petitioner on Form 1099-MISC.

     Wages and other compensation received in exchange for

personal services are taxable income.    Casper v. Commissioner,

805 F.2d 902, 904-905 (10th Cir. 1986), affg. T.C. Memo. 1985-

154; Funk v. Commissioner, 687 F.2d 264, 265 (8th Cir. 1982),

affg. T.C. Memo. 1981-506.   For Federal income tax purposes,

“gross income” means all income from whatever source derived and

includes compensation for services.    Sec. 61(a).   Petitioner

performed services for ACI and was compensated for those
                                - 5 -

services.    Therefore, the compensation petitioner received for

those services is taxable as gross income under section 61(a).

Section 6651(a)(1) and (2) and 6654(a) Additions to Tax

     Respondent determined that petitioner is liable for

additions to tax for failure to file a return and failure to pay

estimated income tax under sections 6651(a)(1) and 6654(a),

respectively.3   Respondent bears the burden of production; i.e.,

the burden of producing evidence that it is appropriate to impose

the additions to tax.   See sec. 7491(c); Higbee v. Commissioner,

116 T.C. 438, 446-447 (2001).    Once the Commissioner meets his

burden of production under section 7491(c), the taxpayer bears

the burden of proof regarding reasonable cause or similar

provisions.    Higbee v. Commissioner, supra at 447.

     Petitioner received a Form 1099-MISC from ACI which

reflected the amount of money he received for the services he

performed.    However, petitioner did not file a tax return for tax

year 2005.    Petitioner did not offer a cognizable defense for his

failure to file a Federal income tax return.    The failure to file

addition to tax under section 6651(a)(1) is sustained.

     Respondent determined that petitioner is liable for a

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

income taxes for tax year 2005.    Absent a statutory exception, an


     3
      As previously noted, respondent conceded the sec.
6651(a)(2) addition to tax before trial.
                                 - 6 -

addition to tax for failure to pay estimated income tax is

mandatory once an underpayment of a required installment of the

tax is established.    Bagby v. Commissioner, 102 T.C. 596, 613

(1994); Stoddard v. United States, 664 F. Supp. 2d 774, 792 (E.D.

Mich. 2009); United States v. Cowan, 535 F. Supp. 2d 1135, 1145

(D. Haw. 2008).   Respondent has the burden of production to show

that an addition to tax is appropriate.    See sec. 7491(c);

Wheeler v. Commissioner, 127 T.C. 200, 206 (2006), affd. 521 F.3d

1289 (10th Cir. 2008).   Respondent met his burden of production

by presenting evidence that petitioner paid no estimated tax for

2005 and provided the same services to ACI the previous year but

filed no income tax return for the previous year.    Petitioner has

not argued that any of the statutory exceptions apply.     See Bagby

v. Commissioner, supra at 613.    Therefore, the addition to tax

under section 6654(a) is sustained.

Section 6673 Penalty

     Section 6673(a)(1) authorizes the Court to require a

taxpayer to pay to the United States a penalty not in excess of

$25,000 whenever it appears that the taxpayer has instituted or

maintained the proceedings primarily for delay or that the

taxpayer’s position in such proceeding is frivolous or

groundless.   Respondent has filed a motion to impose on

petitioner a penalty under section 6673.    On the basis of the

record presented, the Court is convinced that petitioner’s
                                 - 7 -

position is frivolous.    While petitioner is not an attorney,

petitioner is a sophisticated individual who holds advanced

degrees and has 4 years of experience as a municipal judge.

Petitioner argued that he does not have citizenship in the State

of Wisconsin or in the United States but he is a citizen of the

“Republic of Wisconsin”, an argument that this Court and other

courts have consistently rejected.       United States v. Hilgeford, 7

F.3d 1340 (7th Cir. 1993); United States v. Gerads, 999 F.2d 1255

(8th Cir. 1993); United States v. Sileven, 985 F.2d 962 (8th Cir.

1993); Bland-Barclay v. Commissioner, supra; Solomon v.

Commissioner, supra.     Petitioner’s alternative argument that he

did not “work” or provide “services” but instead exchanged his

talents and property for tax-free payment has also been

consistently found by this Court and other courts to be frivolous

and without merit.   United States v. Sloan, 939 F.2d 499, 500

(7th Cir. 1991); United States v. Connor, 898 F.2d 942, 943-944

(3d Cir. 1990); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th

Cir. 1981), affg. T.C. Memo. 1981-122.

     This opinion does not undertake to address petitioner’s

other frivolous arguments such as:       The Form 1099-MISC reflecting

his compensation is “unsworn to under bounds of perjury [sic]

under the laws of either the United States of America, or the
                               - 8 -

United States”;4 the “‘factual notion’ that the payments received

were ‘income’ and a basis of the actions taken by respondent have

created a ‘legal fiction based on color of law’”; that the Tax

Court may not use other Tax Court cases as precedent; that “there

is a difference between the United States (a Corporation created

under the District of Columbia Organic Act of 1869) and the

United States of America”; that the only applicable section of

the Code authorizing tax petitioner’s income is section 1.61-15,

Income Tax Regs.; and that the terms “wages” and “compensation”

are defined under other United States Code titles and are

unrelated to income tax.

     Petitioner made similar frivolous arguments before this

Court and a penalty of $1,500 was imposed under section 6673(a).

See Callahan v. Commissioner, T.C. Memo. 2007-301, affd. 334 Fed.

Appx. 754 (7th Cir. 2009).5   On appeal, the Court of Appeals for

the Seventh Circuit affirmed this Court’s decision and imposed a

“presumptive” $4,000 sanction for filing a frivolous appeal.6



     4
      Petitioner makes this argument while claiming that he is
not a citizen of the United States.
     5
      Perhaps this is the reason petitioner argues that the Tax
Court may not use other Tax Court cases as precedent.
     6
      See Callahan v. Commissioner, 334 Fed. Appx. 754, 755 (7th
Cir. 2009) (where the Seventh Circuit imposed a “presumptive”
$4,000 sanction for filing a frivolous appeal in a tax case),
affg. T.C. Memo 2007-301; see also Szopa v. United States, 460
F.3d 884, 887 (7th Cir. 2006) (noting that “the presumptive award
will be doubled for a recidivist litigator”).
                               - 9 -

Therefore, this Court finds that petitioner was aware of the

consequences of making frivolous arguments, yet he continued to

assert them.   The Court is also aware that the tax liability in

this case without accrued interest is approximately $3,000.

Accordingly, the Court grants respondent’s motion in that it

imposes on petitioner a $3,000 penalty pursuant to section

6673(a).

     Finally, in reaching the conclusions herein, the Court has

considered all arguments made, and to the extent not mentioned

above, concludes they are moot, irrelevant, or without merit.

    To reflect the foregoing, including respondent’s concession,


                                        An appropriate order and

                                   decision will be entered.
