                   T.C. Summary Opinion 2005-120



                      UNITED STATES TAX COURT



                 BRYANT KEITH ADAMS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 15732-03S, 10326-04S.     Filed August 11, 2005.


     Bryant Keith Adams, pro se.

     Edwina L. Jones, for respondent.



     GOLDBERG, Special Trial Judge:     These consolidated cases

were heard pursuant to the provisions of section 7463 of the

Internal Revenue Code in effect at the time each petition was

filed.   The decisions to be entered are not reviewable by any

other court, and this opinion should not be cited as authority.

Unless otherwise indicated, subsequent section references are to
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the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     In separate notices of deficiency, respondent determined

that petitioner is liable for the following deficiencies in

Federal income taxes and additions to tax:

Docket No. 15732-03S

                                                  Addition to Tax
     Taxable Year      Deficiency                 Sec. 6651(a)(1)

         2001            $2,876                       $539.25

Docket No. 10326-04S

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

         2002            $4,048              $1,153.68          $135.27

     After concessions,1 the issues for decision are:           (1)

Whether petitioner had unreported wage income of $24,036 and

$25,732 from Wal-Mart Associates, Inc., for taxable years 2001

and 2002, respectively; (2) whether petitioner had unreported

wage income of $1,815 for taxable year 2001 from National

Restaurant Enterprises, Inc., also known as Ameriking; (3)

whether petitioner is liable for the additions to tax under

section 6651(a)(1) for failure to file his income tax returns for


     1
      At trial, respondent conceded that the unreported income
from real estate sales of $10,500, which was determined in the
notice of deficiency for taxable year 2002, does not need to be
reported because petitioner actually suffered a loss on the sale
of the property.
                                - 3 -

taxable years 2001 and 2002; and (4) whether petitioner is liable

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

estimated taxes for taxable year 2002.

                             Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time the

respective petitions were filed, petitioner resided in

Statesville, North Carolina.

     During the taxable years at issue, petitioner was married to

Terri Adams (Ms. Adams).   Ms. Adams filed a Federal income tax

return separately for taxable years 2001 and 2002.

     Also during taxable years 2001 and 2002, petitioner was

employed by Wal-Mart Associates, Inc. (Wal-Mart), and received

salary of $24,036 and $25,732, respectively.    Wal-Mart issued to

petitioner Forms W-2, Wage and Tax Statement, which reflected

these amounts as wages.    During taxable year 2001, petitioner was

also employed by National Restaurant Enterprises, Inc., also

known as Ameriking (Ameriking), and received a salary of $1,815.

Ameriking issued to petitioner a Form W-2 which reflected this

amount as wages.

     Petitioner submitted to respondent a Form 1040, U.S.

Individual Income Tax Return, for taxable year 2001, dated March

22, 2002.   However, the return was not received by the Internal
                               - 4 -

Revenue Service until May 7, 2002.     Petitioner entered zeros on

line 7 for wages and salaries, line 22 for total income, lines 33

and 34 for adjusted gross income, line 39 for taxable income,

line 40 for tax, and line 58 for total tax.    Petitioner also

reported, on his Form 1040, Federal income tax withheld of

$719.40 on line 59, and he claimed a refund of an overpayment in

this amount.

     Petitioner attached copies of each of his Forms W-2 for 2001

to the 2001 Federal income tax return.    Also attached to the 2001

Form 1040 is a two-page document in which petitioner explains his

position regarding his entering zeros on that Form.    In this

document petitioner argues, inter alia, that no section of the

Internal Revenue Code establishes an income tax liability or

provides that income taxes have to be paid on the basis of a

return, that he is protected by the Fifth Amendment of the

Constitution from providing information on a return, that he had

“zero” income according to the Supreme Court’s definition of

income since he had no earnings in 2001, and that he is putting

the IRS on notice that his 2001 tax return and claim for refund

cannot be considered “frivolous” on any basis pursuant to section

6702, and various similar arguments.

     Petitioner also submitted to respondent a Form 1040X,

Amended U.S. Individual Income Tax Return, for taxable year 2001,

dated April 16, 2002.   The Form 1040X was received by the
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Internal Revenue Service on April 20, 2002.    Petitioner entered

zeros, on the Form 1040X, on line 1 for adjusted gross income,

line 5 for taxable income, line 6 for tax, and line 10 for total

tax.

       Petitioner again reported, on his Form 1040X, Federal income

tax withheld of $719.40 on line 11, and he claimed a refund of an

overpayment in this amount.    Petitioner explained his entitlement

to the refund in the amount of $719.40 by claiming:

       Due to ignorance we reported as income sources of income as
       being income itself when in fact I had no statutory income
       tax to report. Apart from line 1 above I also had no
       statutory liability with respect to income taxes and
       pursuant to code sec. 31(a)(1) I have a constitutional right
       to have the wage tax imposed in section 3402(a)(1) refunded
       since it represents an unapportioned direct tax on wages and
       thus would be unconstitutional if I could not have the [sic]
       refunded because of the misleading of code sec. 3402(a)(1).
       I did not realize that what was deducted from my pay was not
       income taxes but a direct tax on my wages.

       The Internal Revenue Service did not process either the Form

1040 for taxable year 2001 or the Form 1040X for taxable year

2001.    Petitioner was informed in a letter dated September 13,

2002, that the Form 1040 for taxable year 2001 “does not contain

the information the law requires you to give, and it does not

comply with certain Internal Revenue Code requirements.”

       Respondent issued a notice of deficiency to petitioner for

taxable year 2001 on August 6, 2003, based on the substitute for

return procedures.    In the notice of deficiency, respondent

determined that petitioner received wage income of $25,851 during
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taxable year 2001.   Respondent also determined that petitioner is

liable for a tax deficiency of $2,876 and an addition to tax

pursuant to section 6651(a)(1) of $539.25 for taxable year 2001.

     In correspondence submitted to respondent on June 28, 2004,

petitioner claims that he does not owe income tax for taxable

year 2001 because he filed a Form W-4, Employee’s Withholding

Allowance Certificate, claiming that he is “exempt” from

withholding.

     Petitioner did not file a tax return for taxable year 2002.

Petitioner submitted a letter to respondent, which respondent

received on August 6, 2004, which stated that he had not filed an

income tax return for 2002 because “I didn’t have to file one.”

Petitioner reasons that because he filed a Form W-4 claiming that

he is “exempt” from withholding, he has no tax liability.

Specifically petitioner states:

     Because every year, I also turn in a withholding exemption
     certificate, so I have no tax withheld, because I have no
     tax liability. Plus I call the IRS and asked them if I have
     no taxes taken out for the yr [year] do I have to file and
     they said no.

     Respondent issued a notice of deficiency to petitioner for

taxable year 2002 on May 28, 2004, based on the substitute for

return procedures.   As relevant here, respondent determined that

petitioner received wage income of $25,732 during taxable year

2002 and that petitioner is liable for a tax deficiency of $4,048
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and additions to tax pursuant to sections 6651(a)(1) and 6654(a)

of $1,153.68 and $135.27, respectively, for taxable year 2002.

                              Discussion

      As a general rule, the determinations of the Commissioner in

a notice of deficiency are presumed correct, and the taxpayer

bears the burden of proving them to be in error.   Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).   As one exception

to this rule, section 7491(a) places upon the Commissioner the

burden of proof with respect to any factual issue relating to

liability for tax if the taxpayer maintained adequate records,

satisfied the substantiation requirements, cooperated with the

Commissioner, and introduced during the Court proceeding credible

evidence with respect to the factual issue.   We decide the issues

in these cases without regard to the burden of proof.

Accordingly, we need not decide whether the general rule of

section 7491(a)(1) is applicable.    See Higbee v. Commissioner,

116 T.C. 438 (2001).   Respondent, however, has the burden of

production with respect to the additions to tax.   Sec. 7491(c);

Higbee v. Commissioner, supra at 446-447.

1.   Unreported Wage Income

      As previously stated, respondent determined that petitioner

received wage income of $25,851 during taxable year 2001 and wage

income of $25,732 during taxable year 2002.   However, petitioner

contends that because he filed a Form W-4 claiming that he is
                                - 8 -

“exempt” from withholding, he has no tax liability for salaries

received of $25,851 and $25,732 during taxable years 2001 and

2002, respectively.   Petitioner further contends that no section

of the Internal Revenue Code establishes an income tax liability

or provides that income taxes have to be paid on the basis of a

return and that he had “zero” income according to the Supreme

Court’s definition of income.

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

whatever source derived,” unless otherwise provided.    The Supreme

Court has consistently given this definition of gross income a

liberal construction “in recognition of the intention of Congress

to tax all gains except those specifically exempted.”

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955); see

also Roemer v. Commissioner, 716 F.2d 693, 696 (9th Cir. 1983)

(all realized accessions to wealth are presumed taxable income,

unless the taxpayer can demonstrate that an acquisition is

specifically exempted from taxation), revg. 79 T.C. 398 (1982).

It is beyond contention that wages represent gross income.    See

sec. 61(a)(1); United States v. Connor, 898 F.2d 942, 943 (3d

Cir. 1990); Grimes v. Commissioner, 82 T.C. 235, 237 (1984).

     Petitioner has failed to provide any evidence to disprove

respondent’s determinations.    He simply presented this Court with

frivolous contentions that merit no discussion.   See Rowlee v.

Commissioner, 80 T.C. 1111 (1983); Hallock v. Commissioner, T.C.
                                 - 9 -

Memo. 1983-684.    Thus, we sustain respondent’s determination that

petitioner’s wages constitute gross income under section 61(a).

2.   Additions to Tax

      a.   Section 6651

      Respondent determined that petitioner is liable for

additions to tax for:     (1) Failure to file a timely return for

taxable year 2001 pursuant to section 6651(a)(1); and (2) failure

to file a timely return for taxable year 2002 pursuant to section

6651(a)(1).

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

timely file a tax return.     The addition to tax is equal to 5

percent of the amount of the tax required to be shown on the

return if the failure to file is not for more than 1 month.       See

sec. 6651(a)(1).    An additional 5 percent is imposed for each

month or fraction thereof in which the failure to file continues,

to a maximum of 25 percent of the tax.     See id.   Section

6651(a)(2) provides for an addition to tax of 0.5 percent per

month, up to 25 percent, for failure to pay the amount shown or

required to be shown on a return.     A taxpayer may be subject to

both paragraphs (1) and (2), in which case the amount of the

addition to tax under section 6651(a)(1) is reduced by the amount

of the addition to tax under section 6651(a)(2) for any month to

which an addition to tax applies under both paragraphs (1) and
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(2).    The combined amounts under paragraphs (1) and (2) cannot

exceed 5 percent per month.    Sec 6651(c)(1).

       The additions to tax under section 6651(a)(1) are applicable

unless the taxpayer establishes:    (1) The failure to file did not

result from “willful neglect”; and (2) the failure to file was

“due to reasonable cause”.    United States v. Boyle, 469 U.S. 241,

245-246 (1985); Heman v. Commissioner, 32 T.C. 479, 489-490

(1959), affd. 283 F.2d 227 (8th Cir. 1960).      If petitioner

exercised ordinary business care and prudence and was nonetheless

unable to file his return within the date prescribed by law, then

reasonable cause exists.    See sec. 301.6651-1(c)(1), Proced. &

Admin. Regs.    “Willful neglect” means a “conscious, intentional

failure or reckless indifference.”      United States v. Boyle, supra

at 245.

       Petitioner filed what he claimed to be a valid return and

amended return for taxable year 2001.     However, these purported

returns contain zeros on the relevant lines for computing

petitioner’s tax liability.    Respondent did not accept these

returns and treated the documents that petitioner filed as

frivolous returns.

       To determine whether a taxpayer has filed a valid return, we

follow the test set forth in Beard v. Commissioner, 82 T.C. 766,

777 (1984), affd. 793 F.2d 139 (6th Cir. 1986), to the effect

that a document constitutes a “return” for Federal income tax
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purposes if:   (1) It contains sufficient data to calculate tax

liability; (2) it purports to be a return; (3) it represents an

honest and reasonable attempt to satisfy the requirements of the

tax law; and (4) it is executed under penalties of perjury.    The

majority of courts, including this Court, have held that,

generally, a return that contains only zeros is not a valid

return.   See United States v. Mosel, 738 F.2d 157 (6th Cir.

1984); United States v. Grabinski, 727 F.2d 681 (8th Cir. 1984);

United States v. Rickman, 638 F.2d 182 (10th Cir. 1980); United

States v. Moore, 627 F.2d 830 (7th Cir. 1980); United States v.

Smith, 618 F.2d 280 (5th Cir. 1980); Turner v. Commissioner, T.C.

Memo. 2004-251; Lee v. Commissioner, T.C. Memo. 1986-294; Cline

v. Commissioner, T.C. Memo. 1982-44; Teixera v. United States, 85

AFTR 2d 1657, 2000-1 USTC par. 50,479 (D.S.C. 2000).   For

example, in United States v. Moore, supra at 835, the Court of

Appeals for the Seventh Circuit noted that a tax might

conceivably be calculated on the basis of the zero entries;

however, “it 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.”   See also

United States v. Mosel, supra at 158.    In United States v.

Edelson, 604 F.2d 232, 234 (3d Cir. 1979), the Court of Appeals

for the Third Circuit stated:    “it is now well established that

tax forms that do not contain financial information upon which a
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taxpayer’s tax liability can be determined do not constitute

returns within the meaning of the Internal Revenue Code”.

     The Forms 1040 and 1040X that petitioner submitted contain

only zero entries and an entry of the Federal income tax

withheld, and it is clear from the attachments to those returns

that he did not make an honest and reasonable attempt to supply

the information required by the Internal Revenue Code.    We hold

that petitioner did not file valid returns.    Petitioner did not

establish that his failure to file was due to reasonable cause.

We therefore sustain the section 6651(a)(1) addition to tax with

respect to taxable year 2001, as determined.

     As previously stated, petitioner did not file a tax return

for taxable year 2002.   Petitioner submitted a letter to

respondent, which respondent received on August 6, 2004, which

stated that he had not filed an income tax return for 2002

because “I didn’t have to file one.”    Petitioner reasons that

because he filed a Form W-4 claiming that he is “exempt” from

withholding, he has no tax liability.    Specifically petitioner

states:

     Because every year, I also turn in a withholding exemption
     certificate, so I have no tax withheld, because I have no
     tax liability. Plus I call the IRS and asked them if I have
     no taxes taken out for the yr [year] do I have to file and
     they said no.

     Petitioner’s filing a Form W-4 does not “exempt” him from

filing a Federal income tax return for taxable year 2002.
                                - 13 -

Although petitioner has provided a reason for failing to file his

2002 return, he has not provided a reason for which his failure

to file can be excused.     Respondent has carried his burden of

producing evidence to show the applicable addition to tax is

appropriate.   Petitioner has failed to show that he exercised

ordinary business care and prudence in this case.      We conclude

petitioner is liable for the addition to tax pursuant to section

6651(a)(1) with respect to taxable year 2002.      Because of

respondent’s concession, the addition to tax pursuant to section

6651(a)(1) applicable to taxable year 2002 requires computation.

     b.   Section 6654(a)

     Respondent also determined that petitioner is liable for an

addition to tax for the underpayment of estimated tax pursuant to

section 6654(a) for taxable year 2002.

     Section 6654(a) provides that in the case of an underpayment

of estimated tax by an individual, there shall be added to the

tax an amount determined by applying the underpayment rate

established under section 6621 to the amount of the underpayment

for the period of the underpayment.      Unless the taxpayer

demonstrates that one of the statutory exceptions applies,

imposition of the section 6654(a) addition to tax is mandatory

where prepayments of tax, either through withholding or by making

estimated quarterly tax payments during the course of the taxable

year, do not equal the percentage of total liability required
                              - 14 -

under the statute.   See sec. 6654(a); Niedringhaus v.

Commissioner, 99 T.C. 202, 222 (1992).

     The amount of the addition to tax under section 6654(a)

stated in the notice of deficiency is based on the return

respondent prepared for petitioner before the issuance of the

notice of deficiency.   Nothing in the record indicates petitioner

made the required amount of estimated tax payments for taxable

year 2002.   Petitioner has not shown that he falls within any of

the exceptions to the section 6654(a) addition to tax.   See sec.

6654(e); Grosshandler v. Commissioner, 75 T.C. 1, 20-21 (1980).

Accordingly, we conclude petitioner is liable for the addition to

tax pursuant to section 6654(a) for taxable year 2002.   Because

of respondent’s concession, the addition to tax applicable to

taxable year 2002 requires computation.

     We have considered all of the other arguments made by the

parties, and, to the extent that we have not specifically

addressed them, we conclude they are without merit.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect respondent’s concession and our resolution of

the disputed matters,


                                    Decisions will be entered

                               under Rule 155.
