                  T.C. Summary Opinion 2009-52



                       UNITED STATES TAX COURT



   SCOTT WILLIAMS SMITH AND VIRGINIA MAY SMITH, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4616-08S.              Filed April 15, 2009.



     Scott Williams Smith and Virginia May Smith, pro sese.

     A. Gary Begun, for respondent.



     CHIECHI, Judge:    This case is before the Court on respon-

dent’s motion for summary judgment (respondent’s motion).      We

shall grant respondent’s motion.   Petitioners filed the petition

in this case pursuant to the provisions of section 7463 of the

Internal Revenue Code in effect at that time.1   Pursuant to

     1
      Hereinafter, all section references are to the Internal
Revenue Code in effect for the year at issue. All Rule refer-
                                                   (continued...)
                               - 2 -

section 7463(b), the decision to be entered is not reviewable by

any other court, and this opinion shall not be treated as prece-

dent for any other case.

                            Background

     Many of the facts are deemed established pursuant to Rule

90(c).   The record establishes and/or the parties do not dispute

other facts.

     Petitioners resided in Michigan at the time they filed the

petition in this case.

     During 2005, the year at issue, petitioner Virginia May

Smith (Ms. Smith) worked for the organizations listed below and

received the compensation indicated:

      Name of Organization               Compensation Received
   Avci Medical Center, P.C.                    $13,570
     Michigan Neurosurgical                      14,785
       Specialists, P.C.1
     1
      In paragraph 8 of respondent’s request for admissions,
respondent identified the organization for which Ms. Smith worked
and from which she received $14,785 during 2005 as Michigan
Neurological Specialists, P.C. In paragraph 16 of that request
for admissions, respondent identified that organization as
Michigan Neurosurgical Specialists, P.C. Other portions of the
record for purposes of respondent’s motion also identified that
organization as Michigan Neurosurgical Specialists, P.C. We find
that the organization for which Ms. Smith worked and from which
she received $14,785 during 2005 is Michigan Neurosurgical
Specialists, P.C.




     1
      (...continued)
ences are to the Tax Court Rules of Practice and Procedure.
                               - 3 -

Avci Medical Center, P.C. (Avci Medical Center), and Michigan

Neurosurgical Specialists, P.C. (Michigan Neurosurgical Special-

ists), each reported the amount of compensation that each paid to

Ms. Smith and that she received during 2005 in Form W-2, Wage and

Tax Statement (Form W-2).

     During 2005, Ms. Smith also received a distribution of

$1,265 from Metropolitan Life Insurance Co. (Metropolitan Life).

Metropolitan Life reported that distribution in Form 1099.2

     During 2005, Ms. Smith also received compensation of $1,448

from the Michigan Department of Labor and Economic Growth Unem-

ployment Insurance Agency (Michigan Unemployment Insurance

Agency).   The Michigan Unemployment Insurance Agency reported

that compensation in Form 1099-G, Certain Government Payments.

     During 2005, petitioner Scott Williams Smith (Mr. Smith)

worked for the organizations listed below and received the

compensation indicated:

     Name of Organization              Compensation Received
    Unilock Michigan, Inc.                     $1,823
    Quality Carriers, Inc.                      6,360
    TNL Enterprises, LLC                       19,533

Unilock Michigan, Inc. (Unilock), Quality Carriers, Inc. (Quality

Carriers), and TNL Enterprises, LLC (TNL), each reported the




     2
      The record does not disclose the type of Form 1099 the
payor used.
                                - 4 -

compensation that each paid to Mr. Smith and that he received

during 2005 in Form W-2.

     During 2005, Mr. Smith also received compensation of $549

from DJJS Leasing, Inc. (DJJS Leasing).    DJJS Leasing reported

that compensation in Form 1099.3

     Petitioners submitted to respondent Form 1040, U.S. Individ-

ual Income Tax Return, for their taxable year 2005 (2005 return)

that they signed on August 4, 2006.     The following appeared above

their respective signatures:    “american citizens”.   In the 2005

return, petitioners entered zero on each line on page 1 relating

to “Income” and to “Adjusted Gross Income” except:     Line 19 on

which they reported “Unemployment compensation” of $1,448; line

22 on which they reported “total income” of $1,448; and line 37

on which they reported “Adjusted Gross Income” of the same

amount.   In the 2005 return, petitioners entered zero on each

line on page 2 except:    Line 40 on which petitioners claimed

$10,000 of “Itemized deductions”; line 42 on which they claimed

$6,400 of “exemptions”; line 64 on which they claimed “Federal

income tax withheld from Forms W-2 and 1099” of $11.18; line 67

on which they claimed “Excess social security and tier 1 RRTA tax

withheld” of $4,289.53; line 71 on which they claimed “total

payments” of $4,300.71; line 72 on which they claimed “amount




     3
      See supra note 2.
                               - 5 -

* * * overpaid” of $4,300.71; and line 73a on which they claimed

a refund due of $4,300.71.

     Petitioners included with the 2005 return Form 4852, Substi-

tute for Form W-2, Wage and Tax Statement, or Form 1099-R,

Distributions From Pensions, Annuities, Retirement or Profit-

Sharing Plans, IRAs, Insurance Contracts, etc. (Form 4852), that

pertained to each of the five organizations from which Ms. Smith

or Mr. Smith received compensation during 2005 that the organiza-

tion reported in Form W-2.   According to Form 4852, the purpose

of that form is to serve

     as a substitute for Forms W-2, W-2c and 1099-R and is
     completed by taxpayers or their representatives when
     (a) their employer or payer did not give them a Form W-
     2 or Form 1099-R and (b) when an employer or payer has
     issued an incorrect Form W-2 or Form 1099-R. * * *

        *       *       *        *        *       *       *

           If you received an incorrect Form W-2 or Form
     1099-R, you should always attempt to have your employer
     or payer issue a corrected form before filing Form
     4852.

     On August 4, 2006, Ms. Smith signed two of the five Forms

4852 included with the 2005 return.    The following appeared next

to her signature:   “american citizen”.   On August 4, 2006, Mr.

Smith signed three of the five Forms 4852 included with the 2005

joint return.   The following appeared next to his signature:

“american citizen”.

     One of the two Forms 4852 that Ms. Smith signed pertained to

Avci Medical Center, and one pertained to Michigan Neurosurgical
                                              - 6 -

Specialists.          One of the three Forms 4852 that Mr. Smith signed

pertained to Unilock, one pertained to Quality Carriers, and one

pertained to TNL.             In each of those respective forms, Ms. Smith

or Mr. Smith, as the case may be, indicated:

         For the tax year ending December 31, 2005, I have been
         unable to obtain (or have received an incorrect) * * *
         Form W-2 * * *.

         I have notified the           IRS of this fact. The amounts
         shown on line 7 are           my best estimates for all wages or
         payments made to me           and tax withheld by my employer or
         payer named on line           5.

         Ms. Smith completed part 7 of Form 4852 that she signed and

that pertained to Avci Medical Center as follows:

7(A) Form W-2. Enter wages, tips, other compensation, and taxes withheld.

  a   Wages, tips, and other compensation   0.00   g State income tax withheld . .       . . . .         0.00
  b   Social security wages . . . . . . .   0.00     (Name of state) Michigan
  c   Medicare wages and tips . . . . . .   0.00   h Local income tax withheld . .       . . . .         0.00
  d   Advance EIC payment . . . . . . . .   0.00     (Name of locality) Michigan
  e   Social security tips . . . . . . .    0.00   i Social security tax withheld        . . . . 841.36
  f   Federal income tax withheld . . . .   0.00   j Medicare tax withheld . . . .       . . . . 196.77


7(B) Form 1099-R. Enter distributions from pensions, annuities, retirement/profit-sharing plans,
IRAs, insurance contracts, etc.


  1 Gross distribution . . . . . . . .      0.00   4   Federal income tax withheld   .   .   .   .   .   0.00
  2a Taxable amount . . . . . . . . . .     0.00   5   State income tax withheld .   .   .   .   .   .   0.00
  2b Taxable amount not determined 9               6   Local income tax withheld .   .   .   .   .   .   0.00
     Total distribution . . . . . 9                7   Employee contributions . .    .   .   .   .   .   0.00
  3 Capital gain (included in 2a) . . .     0.00   8   Distribution codes . . . .    .   .   .   .   .   0.00


         Ms. Smith completed part 7 of Form 4852 that she signed and

that pertained to Michigan Neurosurgical Specialists as follows:
                                               - 7 -

7(A) Form W-2. Enter wages, tips, other compensation, and taxes withheld.

  a   Wages, tips, and other compensation    0.00   g State income tax withheld . .       . . . .          0.00
  b   Social security wages . . . . . . .    0.00     (Name of state) Michigan
  c   Medicare wages and tips . . . . . .    0.00   h Local income tax withheld . .       . . . .          0.00
  d   Advance EIC payment . . . . . . . .    0.00     (Name of locality) Michigan
  e   Social security tips . . . . . . .     0.00   i Social security tax withheld        . . . . 916.68
  f   Federal income tax withheld . . . .    0.00   j Medicare tax withheld . . . .       . . . . 214.38


7(B) Form 1099-R. Enter distributions from pensions, annuities, retirement/profit-sharing plans,
IRAs, insurance contracts, etc.


  1 Gross distribution . . . . . .    . .    0.00   4   Federal income tax withheld   .   .   .   .   .    0.00
  2a Taxable amount   . . . . . . .   . .    0.00   5   State income tax withheld .   .   .   .   .   .    0.00
  2b Taxable amount not determined    9             6   Local income tax withheld .   .   .   .   .   .    0.00
     Total distribution . . . . . .   9             7   Employee contributions . .    .   .   .   .   .    0.00
  3 Capital gain (included in 2a) .   . .    0.00   8   Distribution codes . . . .    .   .   .   .   .    0.00


         Mr. Smith completed part 7 of Form 4852 that he signed and

that pertained to Unilock as follows:

7(A) Form W-2. Enter wages, tips, other compensation, and taxes withheld.

  a   Wages, tips, and other compensation    0.00   g State income tax withheld . .       . . . .         16.36
  b   Social security wages . . . . . . .    0.00     (Name of state) Michigan
  c   Medicare wages and tips . . . . . .    0.00   h Local income tax withheld . .       . . . .          0.00
  d   Advance EIC payment . . . . . . . .    0.00     (Name of locality) Michigan
  e   Social security tips . . . . . . .     0.00   i Social security tax withheld        . . . . 113.05
  f   Federal income tax withheld . . . .   11.18   j Medicare tax withheld . . . .       . . . . 26.44


7(B) Form 1099-R. Enter distributions from pensions, annuities, retirement/profit-sharing plans,
IRAs, insurance contracts, etc.


  1 Gross distribution . . . . . . . .       0.00   4   Federal income tax withheld   .   .   .   .   .    0.00
  2a Taxable amount . . . . . . . . . .      0.00   5   State income tax withheld .   .   .   .   .   .    0.00
  2b Taxable amount not determined 9                6   Local income tax withheld .   .   .   .   .   .    0.00
     Total distribution . . . . . 9                 7   Employee contributions . .    .   .   .   .   .    0.00
  3 Capital gain (included in 2a) . . .      0.00   8   Distribution codes . . . .    .   .   .   .   .    0.00


         Mr. Smith completed part 7 of Form 4852 that he signed and

that pertained to Quality Carriers as follows:
                                              - 8 -

7(A) Form W-2. Enter wages, tips, other compensation, and taxes withheld.

  a   Wages, tips, and other compensation   0.00   g State income tax withheld .         . . . .          46.96
  b   Social security wages . . . . . .     0.00     (Name of state) Michigan
  c   Medicare wages and tips . . . . .     0.00   h Local income tax withheld .         . . . .           0.00
  d   Advance EIC payment . . . . . . .     0.00     (Name of locality) Michigan
  e   Social security tips . . . . . . .    0.00   i Social security tax withheld        . . . . 394.33
  f   Federal income tax withheld . . .     0.00   j Medicare tax withheld . . .         . . . . 92.22


7(B) Form 1099-R. Enter distributions from pensions, annuities, retirement/profit-sharing plans,
IRAs, insurance contracts, etc.


  1 Gross distribution   . . . . .   . .    0.00   4   Federal income tax withheld   .    .   .   .   .     0.00
  2a Taxable amount . . . . . . .    . .    0.00   5   State income tax withheld .   .    .   .   .   .     0.00
  2b Taxable amount not determined   9             6   Local income tax withheld .   .    .   .   .   .     0.00
     Total distribution . . . . .    9             7   Employee contributions . .    .    .   .   .   .     0.00
  3 Capital gain (included in 2a)    . .    0.00   8   Distribution codes . . . .    .    .   .   .   .     0.00


         Mr. Smith completed part 7 of Form 4852 that he signed and

that pertained to TNL as follows:

7(A) Form W-2. Enter wages, tips, other compensation, and taxes withheld.

  a   Wages, tips, and other compensation   0.00   g State income tax withheld .         . . . .           0.00
  b   Social security wages . . . . . . .   0.00     (Name of state) Michigan
  c   Medicare wages and tips . . . . . .   0.00   h Local income tax withheld .         . . . .           0.00
  d   Advance EIC payment . . . . . . . .   0.00     (Name of locality) Michigan
  e   Social security tips . . . . . . .    0.00   i Social security tax withheld        . . .        1211.07
  f   Federal income tax withheld . . . .   0.00   j Medicare tax withheld . . .         . . .         283.23


7(B) Form 1099-R. Enter distributions from pensions, annuities, retirement/profit-sharing plans,
IRAs, insurance contracts, etc.


  1 Gross distribution . . . . . . . .      0.00   4   Federal income tax withheld   .    .   .   .   .     0.00
  2a Taxable amount . . . . . . . . . .     0.00   5   State income tax withheld .   .    .   .   .   .     0.00
  2b Taxable amount not determined 9               6   Local income tax withheld .   .    .   .   .   .     0.00
     Total distribution . . . . . 9                7   Employee contributions . .    .    .   .   .   .     0.00
  3 Capital gain (included in 2a) . . .     0.00   8   Distribution codes . . . .    .    .   .   .   .     0.00


         In each of the respective Forms 4852 that Ms. Smith signed

and that pertained to Avci Medical Center and Michigan

Neurosurgical Specialists and in each of the respective Forms

4852 that Mr. Smith signed and that pertained to Unilock, Quality

Carriers, and TNL, Ms. Smith or Mr. Smith, as the case may be,

gave the following answer to a question asking each of them to

“Explain your efforts to obtain Form W-2, Form 1099-R, or Form W-

2c, Corrected Wage and Tax Statement”:                         “Requested, but the
                               - 9 -

company refuses to issue forms correctly listing payments as

‘wages as defined in 3401(a) and 3121(a) for fear of IRS Retalia-

tion.   The amounts listed as withheld on the W-2 if submitted are

correct however”.   (Reproduced literally.)

     Respondent issued a notice of deficiency to petitioners with

respect to their taxable year 2005 (2005 notice).   In that

notice, respondent determined that petitioners had taxable wages

of $56,071, nonemployee compensation of $549, and taxable retire-

ment income of $1,265 and that they were entitled to a self-

employment tax deduction of $39.   In the 2005 notice, respondent

also determined that petitioners are liable for an addition under

section 6651(a)(1) to, and an accuracy-related penalty under

section 6662(a) on, petitioners’ tax for their taxable year 2005

of $1,179 and $1,181, respectively.

     In an attachment to the petition, petitioners gave the

following explanation as to why they disagreed with the determi-

nations in the 2005 notice:

     1. 2005 1040 was mailed on August 6, 2006. Included
     with this return was form 4852 for “Avci Medical Cen-
     ter”, “Unilock Michigan, Inc”, “TNL Enterprises LLC”,
     “Quality Carriers, Inc.” and “Michigan Neurosurgical
     Specialists.”

     2. Scott and Virginia work in the private-sector and
     we have not been paid with Federally connected money
     for federally connected services performed, nor do we
     have anything to do with the performance of the func-
     tions of a public office.

     3. Since there is no requirement to report private-
     sector payments for private work, the form 4852 is used
                             - 10 -

     to correct the amounts listed on the W-2 forms as a
     “substitute for form W-2, Wage and Tax Statement, or
     form 1099-R, Distributions from pension, Annuities,
     Retirement or Profit Sharing Plan, IRA, Insurance
     Contract, Etc”

     4. Explanation Section of form CP 2000, does not match
     what was reported, unless the form 4852 was taken into
     consideration. As mentioned above we have, Under the
     penalty of perjury, declared that our corrected 4852
     form is true and correct to the best of our knowledge.
     This is our sworn testimony. It could be construed
     that you are tempting us to change this testimony or
     other wise tamper with our evidence.

     5. A letter was written after our initial submission
     of our 2005, 1040. This was afer speaking with Mr.
     Evans Badge #5909013 on September 12, 2006. Mr. Evan’s
     informed me that a computer error occurred on Line 67,
     of our submitted 1040 form. A letter was submitted
     allowing 10 days via certified mail w/return receipt
     requested #7005 1820 0008 0997 9832, asking for written
     clarification. This clarification was requesting
     written authorities with specific IRC section/s autho-
     rizing the alteration of submitted forms. As of this
     writing this still has not been received. On October
     24, 2006 we were asked by the IRS to allow 45 days for
     response, signature stamped by Dorothy M. Baylis,
     Operations Manager.

     6. I Do not have wages as defined in Internal Revenue
     Code sections n 3401(a) and 3121(a). [Reproduced
     literally.]

     In another attachment to the petition, petitioners alleged

the following as the facts upon which they were relying in

support of their disagreement with the determinations in the 2005

notice:4


     4
      At a hearing held on Apr. 23, 2008, respondent orally moved
that the Court strike paragraphs 3 through 11, 14 through 16, and
18 of the facts that petitioners alleged in an attachment to the
petition in support of their disagreement with the determinations
                                                   (continued...)
                             - 11 -

     1 Notice of Deficiency issued before the required
     “assessment” was made as required per 26 CFR 601.103(a)

     2. IRS error as proper jurisdiction was properly
     challenged each step of the administrative process but
     was ignored and unanswered.

         *      *       *       *       *       *       *

     12. IRS error in the presumption that Social Security
     Taxes withheld by Private Company Name was authorized
     by Proper Name signing a W-4 Voluntary Withholding
     Agreement. When the fact is no W-4 was every signed by
     Proper Name and any withholding made have been unlawful
     extortion.

     13. IRS error as W-4 information from Private Company
     Name used to create the Notice of Deficiency is unveri-
     fied hearsay and IRS Agents under Rules of Evidence
     Rule 602 “Lack of Personal Knowledge” have no personal
     knowledge in this matter.

         *      *       *       *       *       *       *

     17. IRS error in relying on inaccurately reported W-2
     statement from Private Company Name that mistakenly
     reported ALL CAPS NAME and Estate and/or Gift taxable
     income. IRS Agent failed to do the required Verifica-
     tion of Information Return Processing (IRP) Documents
     after being notified the reported W-2 was inaccurate
     per IRM 4.19.1.6.13 (10-01-2001) Non-filer Case Pro-
     cessing “circumstances suggest that the information
     report is not reliable or accurate, do not include the
     income item in the non-filers income” [Reproduced
     literally.]

     On February 5, 2009, the Court issued an Order (February 5,

2009 Order) in which the Court ordered petitioners to file a

written response to respondent’s motion, which was to be received


     4
      (...continued)
in the 2005 notice. On the same date, the Court issued an Order
granting respondent’s oral motion to strike and deeming stricken
all paragraphs of that attachment to the petition except para-
graphs 1, 2, 12, 13, and 17.
                               - 12 -

by the Court on or before February 20, 2009.    Petitioners did not

file a response to respondent’s motion.

     In the February 5, 2009 Order, the Court indicated that in

considering respondent’s motion the Court reviewed, inter alia,

the petition and the attachments to the petition.    The Court

found in the February 5, 2009 Order that those attachments

contain statements, contentions, and/or arguments that are

frivolous and/or groundless.    In the February 5, 2009 Order, the

Court reminded petitioners about section 6673(a)(1) and admon-

ished them that if they continued to advance frivolous and/or

groundless statements, contentions, and/or arguments, the Court

would impose a penalty not in excess of $25,000 on them under

section 6673(a)(1).

                             Discussion

     The Court may grant summary judgment where there is no

genuine issue of material fact and a decision may be rendered as

a matter of law.    See Rule 121(b); Sundstrand Corp. v. Commis-

sioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir.

1994).   We conclude that there is no genuine issue of material

fact regarding the questions raised in respondent’s motion.

     We find petitioners’ position in this case to be frivolous

and groundless.    The record establishes that during 2005 each

petitioner received certain income that petitioners did not
                              - 13 -

report in the 2005 return.5   We sustain respondent’s deficiency

determination in the 2005 notice.

     We turn now to the addition to tax under section 6651(a)(1)

that respondent determined in the 2005 notice.    In the petition,

petitioners alleged that they mailed the 2005 return to respon-

dent on August 6, 2006.   Except for unemployment compensation of

$1,448, petitioners reported zero income in that return.    We hold

that “under no circumstances can * * * [the 2005 return] be

rationally construed as a return.”     United States v. Mosel, 738

F.2d 157, 159 (6th Cir. 1984);6 see Beard v. Commissioner, 82

T.C. 766, 777 (1984), affd. 793 F.2d 139 (6th Cir. 1986).     We

conclude that respondent has satisfied respondent’s burden of

production under section 7491(c) with respect to the addition to



     5
      The only item of income reported in the 2005 return was
$1,448 of “Unemployment compensation” that Ms. Smith received.
     6
      The United States Court of Appeals for the Sixth Circuit,
the Court to which an appeal in this case would normally lie,
observed in United States v. Mosel, 738 F.2d 157, 158 (6th Cir.
1984):

     We particularly agree with the Seventh Circuit’s obser-
     vation in United States v. Moore[, 627 F.2d 830, 835
     (7th Cir. 1980)] that

          ... [I]t is not enough for a form to contain
          some income information; there must also be
          an honest and reasonable intent to supply the
          information required by the tax code .... In
          our self-reporting tax system the government
          should not be forced to accept as a return a
          document which plainly is not intended to
          give the required information.
                              - 14 -

tax under section 6651(a)(1) that respondent determined in the

2005 notice.   We sustain that determination.

     We turn finally to the accuracy-related penalty under

section 6662(a) that respondent determined in the 2005 notice.

We have found petitioners’ position in this case to be frivolous

and groundless, and we have sustained the deficiency determina-

tion in the 2005 notice.   We conclude that respondent has satis-

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

respect to the accuracy-related penalty under section 6662(a)

that respondent determined in the 2005 notice.    We sustain that

determination.

     Although respondent does not ask the Court to impose a

penalty on petitioners under section 6673(a)(1), the Court

considers sua sponte whether to impose such a penalty.    Section

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

penalty to the United States in an amount not to exceed $25,000

whenever it appears that a taxpayer instituted or maintained a

proceeding in the Court primarily for delay or that a taxpayer’s

position in such a proceeding is frivolous or groundless.

     We believe that petitioners instituted and maintained the

instant proceeding primarily for delay.   We have found petition-

ers’ position to be frivolous and groundless.    Nonetheless, we

shall not impose a penalty under section 6673(a)(1) on petition-
                                  - 15 -

ers.7       We caution them that they may be subject to such a penalty

if in the future they institute or maintain a proceeding in this

Court primarily for delay and/or their position in any such

proceeding is frivolous or groundless.       See Abrams v. Commis-

sioner, 82 T.C. 403, 409-413 (1984); White v. Commissioner, 72

T.C. 1126, 1135-1136 (1979).

        We have considered all of petitioners’ statements, conten-

tions, and arguments that are not discussed herein, and we find

them to be without merit and/or irrelevant.

        On the record before us, we shall grant respondent’s motion.

        To reflect the foregoing,


                                         An order granting respondent’s

                                    motion and decision for respondent

                                    will be entered.




        7
      Petitioners made no filings in this case after the Court
issued its February 5, 2009 Order in which the Court reminded
them about sec. 6673(a)(1) and admonished them that the Court
would impose a penalty on them under that section if they contin-
ued to advance frivolous and/or groundless statements, conten-
tions, and/or arguments.
