                         T.C. Memo. 2009-248



                       UNITED STATES TAX COURT



               RONALD W. DAVENPORT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3998-08.                Filed November 2, 2009.



     Ronald W. Davenport, pro se.

     Steven G. Cappellino, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Respondent determined the following

deficiencies in and additions to petitioner’s Federal income tax:
                                      - 2 -

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

2002        $12,853         $100.00           $107.25           --
2003         13,073            –-                –-             --
2005         13,997          409.28            154.62         $18.69

       The issues for decision are:       (1) Whether wages constitute

taxable income; (2) whether petitioner is liable for additions to

tax under section 6651(a)(1) and (2)1 for 2002 and 2005; (3)

whether petitioner is liable for an addition to tax under section

6654(a) for 2005; and (4) whether petitioner is liable for a

penalty under section 6673(a)(1).

                              FINDINGS OF FACT

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

are so found.2        The stipulations, with accompanying exhibits, are

incorporated herein by this reference.        Petitioner resided in

Michigan at the time he filed his petition.




       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.
       2
        Under Rule 91(f), 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. The Court granted respondent’s motion and ordered
petitioner to file a response in compliance with Rule 91(f)(2).
Although petitioner timely filed his response, the Court found it
evasive and not fairly directed to respondent’s proposed
stipulation of facts, and as a result, granted respondent’s
motion.
                                - 3 -

     Petitioner is no stranger to the Court.     The following is

petitioner’s history in this Court:

                                                  Sec. 6673 Damages
Docket No.   Tax Year(s)   Tax Court Dismissal    or Penalty Imposed

13914-87        1981       Failure to state            $2,500
                1982         a claim
                1983

13917-87        1984       Failure to state             2,500
                             a claim

 8253-88        1985       Failure to state             2,500
                             a claim

33047-88        1986       Failure to state             2,500
                             a claim

 1707-91        1987       Lack of jurisdiction           --

21666-91        1988       Failure to state             3,000
                             a claim

  461-93        1989       Failure to state             2,500
                             a claim

17614-93       1990        Failure to state            25,000
               1991          a claim

     During the years in issue petitioner was employed by the

E.I. du Pont de Nemours and Co. (EI) and received compensation

from EI of $65,754 in 2002, $72,012 in 2003, and $76,504 in 2005.

EI reported petitioner’s compensation on Forms W-2, Wage and Tax

Statement, and withheld Federal income tax of $12,424 in 2002,

$13,588 in 2003, and $12,178 in 2005.     Petitioner did not file a

tax return for 2002, 2003, or 2005.     Respondent prepared and

mailed petitioner notices of deficiency for 2002, 2003, and 2005
                                 - 4 -

on November 13, 2007.   Petitioner received these notices and

timely petitioned this Court.3

     Petitioner did not cooperate with respondent at any time

during the administrative or judicial process.   Petitioner failed

to meet with respondent or provide respondent with any

information that would have enabled respondent to properly

determine petitioner’s tax liability.    Instead, petitioner sent

respondent two letters advancing frivolous legal arguments as to

the deficiencies for 2002, 2003, and 2005.

     At trial we informed petitioner that his arguments were

frivolous.   We reminded him that this Court had previously

imposed penalties under section 6673 against him.   We further

reminded him that the U.S. Court of Appeals for the Sixth Circuit

(to which an appeal in this case would lie) affirmed this Court’s

sanction of $5,000 ($2,500 in each of two dockets) under section

6673 and assessed $1,200 of damages against petitioner.

Davenport v. Commissioner, 869 F.2d 1489 (6th Cir. 1989)

(unpublished disposition).




     3
        In his posttrial brief, petitioner claims the Court’s
grant of respondent’s Rule 91(f) motion to show cause and
adoption of respondent’s proposed stipulation of facts, which
includes the statement that petitioner received the three notices
of deficiency, is invalid because petitioner’s Individual Master
File does not contain any record that he was issued a notice of
deficiency for 2002, 2003, or 2005. However, in his petition,
petitioner checked “Notice of Deficiency” as the IRS notice he
was disputing.
                               - 5 -

                              OPINION

I.   Income Tax Deficiencies for 2002, 2003, and 2005

      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).     Section

7491(a), however, 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.   Additionally,

section 6201(d) provides that if a taxpayer asserts a reasonable

dispute with respect to any item of income reported on an

information return filed with the Commissioner by a third party

and the taxpayer has fully cooperated with the Commissioner, the

Commissioner shall have the burden of producing reasonable and

probative information concerning such deficiency in addition to

such information return.

      Petitioner does not dispute that he received compensation

from EI for the years in issue.   However, petitioner does dispute

that the compensation he received is wages and therefore taxable

income.   Accordingly, since petitioner does not dispute the

facts, has failed to introduce credible evidence, and has not

asserted a reasonable dispute regarding the items listed on the
                                - 6 -

information returns, sections 6201(d) and 7491(a) do not apply.

See Rhodes v. Commissioner, T.C. Memo. 2005-184.

      On brief petitioner advanced shopworn arguments regarding

why he did not earn wages and questioned the authority of the

Secretary.    His arguments are 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.”       Crain v. Commissioner, 737

F.2d 1417, 1417 (5th Cir. 1984).

      Accordingly, we sustain respondent’s deficiency

determinations for 2002, 2003, 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,

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

(2002); see also Higbee v. Commissioner, 116 T.C. 438, 446
                                - 7 -

(2001).   If a taxpayer files a petition alleging some error in

the determination of an addition to tax or penalty, the

taxpayer’s challenge will succeed unless the Commissioner

produces evidence that the addition to tax or penalty is

appropriate.    Swain v. Commissioner, supra at 363-365.   The

Commissioner, however, does not have the obligation to introduce

evidence regarding reasonable cause or substantial authority.

Higbee v. Commissioner, supra at 446-447.

     B.   Section 6651(a)(1)

     Respondent determined that petitioner is liable for

additions to tax under section 6651(a)(1) for 2002 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 such failure is due to reasonable cause and not

willful neglect.

     Petitioner failed to file Federal income tax returns for the

years at issue.    The Court finds respondent has met his burden of

production with regard to the additions to tax under section

6651(a)(1).    Petitioner has presented no evidence indicating his

failure to file was due to reasonable cause or that respondent’s

determination is otherwise incorrect.   Accordingly, petitioner is

liable for additions to tax under section 6651(a)(1) for 2002 and

2005.
                                 - 8 -

     C.   Section 6651(a)(2)

     Respondent determined that petitioner is liable for an

addition to tax under section 6651(a)(2) for 2002 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 a substitute for return (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
     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 knowledge and from such information as he
     can obtain through testimony or otherwise.
                                - 9 -

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

Because respondent is relying upon an alleged SFR to support his

determination under section 6651(a)(2), respondent must introduce

evidence that an SFR satisfying the requirements of section

6020(b) was made.    See Wheeler v. Commissioner, supra at 210.

Respondent has not done so.

       We have addressed on several occasions what constitutes an

SFR.    See Wheeler v. Commissioner, supra at 208-210 (describing

Phillips v. Commissioner, 86 T.C. 433, 437-438 (1986), affd. in

part and revd. in part on another issue 851 F.2d 1492 (D.C. Cir.

1988), Millsap v. Commissioner, 91 T.C. 926, 930 (1988), and

Cabirac v. Commissioner, supra at 170-173).    In Wheeler v.

Commissioner, supra at 210, we noted that in “each of the cases

discussed above, the record included the SFRs that the

Commissioner contended met the requirements of section 6020(b)

and/or stipulations that the SFRs had been filed.”    Although

respondent alleged that a valid SFR was prepared for petitioner

for each year in issue, respondent did not introduce the SFRs

into evidence, and the parties did not stipulate that a valid SFR

was made.    Instead, respondent provided Forms W-2 and Forms 4549,

Income Tax Examination Changes, for 2002 and 2005.

       These documents do not mention, much less establish, that

respondent made SFRs meeting the requirements of section 6020(b),
                                - 10 -

and respondent has not satisfied his burden of production under

section 7491(c).    See Lewis v. Commissioner, T.C. Memo. 2007-44

(finding Commissioner did not meet burden of production under

section 7491(c) for section 6651(a)(2) addition to tax although

respondent provided as follows:     Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, indicating

respondent prepared a SFR on a certain date; Form 4549 pertaining

to the taxpayer’s year in issue; Individual Master File Tax

Module; and Form 13496, IRC Section 6020(b) Certification,

pertaining to the taxpayer’s year in issue), affd. 523 F.3d 1272

(10th Cir. 2008).    Accordingly, petitioner is not liable for

additions to tax under section 6651(a)(2) for 2002 and 2005.

     D.   Section 6654(a)

     Respondent determined that petitioner is liable for an

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

estimated tax payments for 2005.     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 (1) 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 such year), or (2) 100 percent

of the tax shown on the return of the individual for the
                              - 11 -

preceding taxable year.   Sec. 6654(d)(1)(B); Wheeler v.

Commissioner, supra at 210-211; Heers v. Commissioner, T.C. Memo.

2007-10.   Respondent’s burden of production under section 7491(c)

requires him to produce evidence that petitioner had a required

annual payment for 2005 under section 6654(d), and respondent

failed to do so.

     Respondent introduced evidence that petitioner was required

to file a Federal income tax return for 2005, failed to file a

return for that year, and failed to make any estimated tax

payments for that year, other than the amounts withheld.     This

evidence was sufficient to permit this Court to make the analysis

required by section 6654(d)(1)(B)(i).   However, in order to

permit this Court to make the analysis required by section

6654(d)(1)(B)(ii)4 and to conclude that respondent had met his

burden of producing evidence that petitioner had a required

annual payment for 2005 payable in installments under section

6654, respondent also had to introduce evidence showing whether

petitioner filed a return for the preceding taxable year and, if

he did, the amount of the tax shown on that return.   See Wheeler

v. Commissioner, supra at 212.   Respondent did not do so.

Without that evidence, we cannot identify the number equal to 100



     4
        Sec. 6654(d)(1)(B)(ii) does not apply if the preceding
taxable year was not a taxable year of 12 months or if the
individual did not file a return for the preceding taxable year.
Sec. 6654(d)(1)(B).
                               - 12 -

percent of the tax shown on petitioner’s 2004 return, we cannot

complete the comparison required by section 6654(d)(1)(B), and we

cannot conclude that petitioner had a required annual payment for

2005 that was payable in installments under section 6654.

Consequently, respondent’s determination regarding the section

6654 addition to tax is not sustained.

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 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) against petitioner.     However, the Court may, sua

sponte, impose this penalty.    Pierson v. Commissioner, 115 T.C.

576, 580 (2000); see Rewerts v. Commissioner, T.C. Memo. 2004-

248.

       This Court has previously imposed section 6673(a)(1)

penalties on petitioner.    In Davenport v. Commissioner, T.C.

Memo. 1989-434, we imposed a $5,000 penalty.    Five years later,

in Davenport v. Commissioner, T.C. Memo. 1994-3, we imposed a

$25,000 penalty.    Additionally, the U.S. Court of Appeals for the

Sixth Circuit imposed a $1,200 sanction on petitioner under rule

38 of the Federal Rules of Appellate Procedure for bringing a
                                - 13 -

frivolous tax protest appeal.    See Davenport v. Commissioner, 869

F.2d 1489 (6th Cir. 1989).

     Petitioner’s petition and pretrial memorandum contain

frivolous tax-protester arguments as to the deficiencies.     At

trial the Court informed petitioner that his arguments were

frivolous.   Despite the warning of the Court, petitioner

presented further frivolous tax-protester arguments in his

posttrial brief.   We conclude that petitioner’s arguments were

frivolous and groundless and that petitioner instituted and

maintained these proceedings primarily for delay.    Accordingly,

under section 6673(a)(1), we hold petitioner is liable for a

$25,000 penalty.

     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,


                                           An appropriate decision

                                      will be entered under

                                      Rule 155.
