                         T.C. Memo. 2002-16



                       UNITED STATES TAX COURT



                EUGENE J. MONAGHAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9981-99.             Filed January 16, 2002.


     Eugene J. Monaghan, pro se.

     Alvin A. Ohm, for respondent.



                         MEMORANDUM OPINION

     VASQUEZ, Judge:    Respondent determined a $20,582 deficiency

in petitioner’s Federal income tax for the 1996 taxable year, and

a $2,498.85 addition to tax pursuant to section 6651(a)(1),1 a




     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 2 -

$1,055.07 addition to tax pursuant to section 6651(a)(2), and a

$541.37 addition to tax pursuant to section 6654(a).

     The issues for decision are:   (1) Whether the amount

received by petitioner in 1996 from his employer is taxable; (2)

whether petitioner is liable for an addition to tax for failing

to file a Federal income tax return; (3) whether petitioner is

liable for an addition to tax for failing to pay Federal income

tax; (4) whether petitioner is liable for an addition to tax for

failing to make estimated Federal income tax payments; and (5)

whether petitioner engaged in behavior warranting the imposition

of a penalty pursuant to section 6673(a)(1).

Background

     Confronted with petitioner’s refusal to work toward a

stipulation of facts, respondent filed a Motion to Show Cause Why

Proposed Facts and Evidence Should Not Be Accepted As Established

under Rule 91(f) on September 18, 2000.   On September 27, 2000,

the Court issued an Order to Show Cause Under Rule 91(f),

requiring petitioner to respond as to why matters set forth in

respondent’s motion should not be deemed admitted.   Petitioner

failed to file a response.   On November 14, 2000, the Court made

absolute its Order to Show Cause Under Rule 91(f), providing that

the facts and evidence set forth in respondent’s proposed

stipulation of facts were deemed established.
                               - 3 -

     The facts deemed established are:   (1) At the time he filed

his petition, petitioner resided in Grapevine, Texas; (2) in

1996, petitioner received $80,621 as compensation for services

from his employer, Gulf Lake Contracting, $3,865 of taxable

income from the sale of stocks and bonds, and $125 as dividend

income; and (3) petitioner did not file a tax return for 1996.

Discussion

I.   Taxability of Amount Received

     Section 61 defines gross income as all income from whatever

source derived.   Gross income includes compensation for services.

Sec. 61(a)(1).

     Petitioner does not challenge whether he received the

amounts nor the calculation of the amounts received by him.

Petitioner contends:   (1) His wages are not taxable income

because he did not perform services within the “United States” as

defined by section 31.3121(e)-1, Employment Tax Regs.;2 and (2)

the reported wages are based on an erroneously submitted Form

W-2, Wage and Tax Statement, because petitioner did not

voluntarily submit his Social Security number and sign a Form

W-4, Employee’s Withholding Allowance Certificate, which resulted

in the issuance of the Form W-2.



     2
        This regulation applies to employment taxes and has no
effect on the income taxes that are at issue in this case.
                                 - 4 -

      Petitioner’s arguments are nothing more than tax-protester

rhetoric that has been universally rejected by this and other

courts.    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

determination that these amounts are taxable as income.

II.   Additions to Tax

      A.   Section 6651(a)(1):   Failure To File

      Respondent determined that petitioner is liable for an

addition to tax pursuant to section 6651(a)(1) for 1996.     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 due to

willful neglect.    The taxpayer has the burden of proving that the

addition is improper.    Rule 142(a); United States v. Boyle, 469

U.S. 241, 245 (1985).3   Petitioner stated that he did not file a



      3
        The Internal Revenue Service Restructuring & Reform Act
of 1998, Pub. L. 105-206, sec. 3001, 112 Stat. 726, added sec.
7491(c), which places the burden of production on the Secretary
with respect to a taxpayer's liability for penalties and
additions to tax in court proceedings arising in connection with
examinations commencing after July 22, 1998. Petitioner does not
contend, nor is there evidence, that his examination commenced
after July 22, 1998, or that sec. 7491 is applicable in this
case.
                                  - 5 -

return for 1996 and offered no evidence showing that his failure

to file was due to reasonable cause and not due to willful

neglect.     Accordingly, we hold that petitioner is liable for the

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

       B.   Section 6651(a)(2):   Failure To Pay

       Respondent also determined that petitioner is liable for an

addition to tax pursuant to section 6651(a)(2) for 1996.

       Petitioner presented no evidence or argument that the

addition was improper.     Additionally, petitioner did not present

evidence indicating that his failure to pay was due to reasonable

cause and not due to willful neglect.      Accordingly, on this

issue, we sustain respondent’s determination.

       C.   Section 6654(a):   Failure To Pay Estimated Tax

       Respondent determined that petitioner is liable for an

addition to tax pursuant to section 6654(a) for 1996.      Section

6654(a) imposes an addition to tax for failure to pay estimated

income tax.     Petitioner did not offer any evidence at trial

related to this issue and failed to address it on brief.

Therefore, we sustain respondent’s determination on this issue.

III.    Section 6673(a)(1) Penalty

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

taxpayer to pay to the United States a penalty not to exceed

$25,000 if the taxpayer took frivolous positions in the

proceedings or instituted the proceedings primarily for delay.       A
                                 - 6 -

position maintained by a taxpayer in the Tax Court is frivolous

“if it is contrary to established law and unsupported by a

reasoned, colorable argument for change in the law.”     Coleman v.

Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).    A penalty is

properly imposed when the taxpayer knew or should have known that

his claim or argument was frivolous.     See Hansen v. Commissioner,

820 F.2d 1464, 1470 (9th Cir. 1987).

     We find that petitioner’s arguments are frivolous.    He has

caused this Court to waste its limited resources on his erroneous

views of the tax law which he should have known are completely

without merit.   In view of the foregoing, the Court will exercise

our discretion under section 6673(a)(1), sua sponte, and require

petitioner to pay a penalty to the United States in the amount of

$1,500.

     To reflect the foregoing,

                                                Decision will be

                                           entered for respondent.
