                        T.C. Memo. 2003-338



                      UNITED STATES TAX COURT



                  ISAIAH ISRAEL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 8825-02, 10753-02.      Filed December 15, 2003.


     Isaiah Israel, pro se.

     Thomas D. Yang, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   In these consolidated cases,1 respondent

determined the following deficiencies, additions to tax, and

penalties in petitioner’s Federal income taxes:




     1
        These cases were consolidated for purposes of trial,
briefing, and opinion.
                               - 2 -

                               Additions to Tax       Penalties
     Year      Deficiency      Sec. 6651(a)(1)        Sec. 6662

     1996        $2,617              $750               $523
     1997         6,292             1,605              1,258
     2000         5,723              ---                 837

     The issues for decision are:    (1) Whether petitioner is

liable for the deficiencies respondent determined in the notices

of deficiency for 1996, 1997, and 2000 (years in issue); (2)

whether petitioner is liable for additions to tax for failing to

timely file his Federal income tax returns (tax returns) under

section 6651(a)(1)2 for 1996 and 1997; (3) whether petitioner is

liable for accuracy-related penalties under section 6662 for the

years in issue; and (4) whether petitioner engaged in behavior

warranting the imposition of a penalty under section 6673.

                          FINDINGS OF FACT

     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 he filed the

petitions, petitioner resided in Chicago, Illinois.

     On May 28, 1999, respondent received from petitioner tax

returns for 1996 and 1997 signed by petitioner and purportedly

signed by Lori Israel, petitioner’s former spouse, reporting

wages received by petitioner from the U.S. Postal Service.


     2
        Unless otherwise indicated, all section references are to
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. Amounts are rounded to the nearest dollar.
                                 - 3 -

Petitioner attempted to file these tax returns with the filing

status of “Married filing joint return” by signing Lori Israel’s

name.    On or about April 26, 2000, petitioner filed amended tax

returns for 1996 and 1997, reporting taxable income of zero and

requesting a refund of all Federal income taxes withheld for both

years.

     Petitioner timely filed his tax return for 2000.    On this

tax return, petitioner reported zero taxable income and requested

a refund of all Federal income tax withheld.    Petitioner attached

to the tax return:    (1) A Form W-2, Wage and Tax Statement,

reporting that petitioner received $36,591 in wages and had

$1,538 of Federal income tax withheld by the U.S. Postal Service;

and (2) a two-page form letter containing tax-protester

boilerplate.

     On February 15, 2002, respondent sent petitioner a notice of

deficiency for 2000.    Respondent determined that petitioner

failed to report wages from the U.S. Postal Service, gain from

the sale or exchange of assets from National Financial Services

Co., and interest income from National Financial Services Co.

     On March 28, 2002, respondent sent petitioner a notice of

deficiency for 1996 and 1997 with regard to the original tax

returns filed on May 28, 1999.    Respondent determined that

petitioner failed to report capital gain income and interest
                              - 4 -

income from National Finance Services Co. and that petitioner was

not allowed to file a joint return.

     On May 16, 2002, petitioner filed a petition with the Court

disputing the notice of deficiency for 2000.3   On October 10,

2002, petitioner filed an amended petition, which stated:

     1) Notice of deficiency is not the statutory notice called
     for by code section 6303, 6321, 6331. 2) Code sections 6204
     6211 6213 only allow for supplemental assessments to be made
     when an initial assessment is made by the “Secretary” 3)
     Section 6201 only authorizes the Secretary to estimate a tax
     or his delegate 4) Section 6501(c) precludes IRS (absent a
     court order) that petitioner owe any more in Federal tax
     than the zero shown on the return. 5) by definition Section
     6211 precludes that a deficiency can exist with respect to a
     zero return please see page 11 of petitioner answer to
     jurisdiction to hear the matter! 6) 6212 - only “Secretary”
     can send a “Notice” of deficiency 7) 6215 - assessment paid
     upon notice of demand

     On June 26, 2002, petitioner filed a petition with the Court

disputing the notice of deficiency for 1996 and 1997.4   On

September 16, 2002, petitioner filed an amended petition.


     3
        The petition was originally filed under sec. 6330(d).
Petitioner simultaneously filed with the petition a motion to
dismiss for lack of jurisdiction, arguing that the
“determination” was invalid because a hearing was not conducted
and petitioner was not provided with information that he was
entitled to. Respondent filed a notice of objection, stating
that a notice of determination concerning collection actions for
2000 had not been issued and no attempts to collect the tax by
lien or levy have been made. The Court denied petitioner’s
motion and ordered petitioner to file a proper amended petition
if he wished to contest the notice of deficiency for 2000.
     4
        The petition was originally filed under sec. 6330(d).
Respondent filed a motion for more definite statement. On Aug.
19, 2002, the Court ordered petitioner to file an amended
petition with respect to the notice of deficiency for 1996 and
1997 by Sept. 19, 2002.
                               - 5 -

 Petitioner stated:

     (1)6020(b) only authorizes IRS to make changes to certain
     returns: 941, 940, 942, 943, 11(b), 720, 2290, 4638, 0141,
     1065-form 1040 is not applicable. (2) Code section 6212
     states “The Secretary of Treasury” determines a deficiency &
     the “Secretary” or his delegate shall notify taxpayer. (3)
     Code section 6215 makes it known a “notice of demand” form
     17A must be sent to taxpayer none was sent by “Secretary”
     (4) 6201 doesn’t allow Secretary to estimate a tax based on
     a return omitted (5) No statute makes me liable for tax


     On July 9, 2003, the Court issued Israel v. Commissioner,

T.C. Memo. 2003-198.   Petitioner had filed a petition in that

case in response to a notice of determination concerning

collection action(s) under section 6320 and/or 6330 for taxable

years 1994, 1995, and 1996.5   Id.   The Court concluded that

respondent did not abuse his discretion in determining to proceed

with the collection action with respect to 1996.    Further, the

Court stated:

     Finally, although petitioner did not receive a notice of
     deficiency [before the section 6330 hearing] with respect to
     petitioner’s unpaid liability for 1995 and 1996, the Court
     finds the contentions and arguments which petitioner
     advanced at his Appeals Office hearing, in his petition, and
     in petitioner’s trial memorandum and which challenge the
     existence or the amount of each such unpaid liability to be
     frivolous and/or groundless.




     5
        After petitioner filed a petition with this Court to
review the notice of determination for 1996, on Mar. 28, 2002,
respondent issued to petitioner the notice of deficiency for 1996
and 1997 on the basis of omitted capital gain and interest income
that was not at issue in the sec. 6330 proceeding, but is at
issue in the instant proceeding. Israel v. Commissioner, T.C.
Memo. 2003-198.
                               - 6 -

Id.   As a result of petitioner’s position and actions with

respect to the unpaid liabilities for 1995 and 1996, the Court

also imposed a penalty on petitioner pursuant to section

6673(a)(1) in the amount of $1,500.    Id.   Petitioner appealed

this decision to the U.S. Court of Appeals for the Seventh

Circuit, where it is currently pending.

      In preparation for the Court’s trial session in Chicago,

Illinois, beginning September 22, 2003, the parties submitted for

each docket a supplemental stipulation of facts, in which

petitioner admitted to receiving all the disputed income.     Each

supplemental stipulation, however, contained the following

statement:   “It is petitioner’s position that this amount is not

subject to income tax because the statutory notice of deficiency

was not properly issued under federal law by the Secretary of

Treasury.”   Further, petitioner filed with the Court trial

memoranda which contained similar frivolous and groundless

arguments.

      At trial, the Court warned petitioner on three separate

occasions that the arguments he was making have been deemed

frivolous by the Court and that the Court has imposed penalties

under section 6673 against taxpayers who bring such frivolous

arguments before the Court.   Additionally, the Court provided

petitioner with citations of three cases in which the Court

imposed a penalty pursuant to section 6673 because the taxpayers
                               - 7 -

brought frivolous and meritless cases before the Court:

Trowbridge v. Commissioner, T.C. Memo. 2003-165, Trowbridge v.

Commissioner, T.C. Memo. 2003-164, and Tornichio v. Commissioner,

T.C. Memo. 2002-291.   Despite the Court’s warnings, petitioner

continued with the frivolous and groundless arguments at trial

and in his subsequent brief filed with the Court.

                              OPINION

I.   Notices of Deficiency

      Petitioner argues that the person who sent the notices of

deficiency did not have the delegated authority to send them.

Respondent argues that, in light of the stipulations of facts in

which petitioner admits to receiving the disputed income, the

only issues in dispute are the additions to tax and penalties.

      The parties stipulated that for 1996 and 1997, petitioner

received payments for the sale of stocks/bonds and interest

income from National Financial Services Co., which form the basis

of the adjustments determined in the notice of deficiency.    The

parties also stipulated that for 2000, petitioner received

payments from the U.S. Postal Service for wages and payments for

the sale of stocks/bonds and interest income from National

Financial Services Co., which form the basis of the adjustments

determined in the notice of deficiency.

      Rule 91(e) provides that a stipulation is treated “as a

conclusive admission by the parties to the stipulation” and shall
                                - 8 -

be binding in the pending case.     Further, the Rule provides that

the Court will not permit a party to “qualify, change, or

contradict a stipulation” except that the Court may do so “where

justice requires.”    Rule 91(e).   For each of the years in issue,

petitioner conceded the amounts of unreported income in the

stipulations of facts.    Petitioner did not move to be relieved

from the stipulations or present grounds that he should not be

bound to his admission.    See Rule 91(e); Said v. Commissioner,

T.C. Memo. 2003-148.    We conclude that the stipulations are

binding.

     Further, petitioner’s argument that the person who sent the

notices of deficiency did not have the delegated authority to

send them has been deemed by this Court to be frivolous.

Petitioner bases his argument on the Court’s decision in Everman

v. Commissioner, T.C. Memo. 2003-137.     Petitioner misreads the

holding in Everman.    In Everman, as in countless other cases, the

Court held that the taxpayer’s argument that the notice of

deficiency was invalid because it was not signed by the Secretary

or an authorized delegate was meritless.     Id.; see, e.g., Nestor

v. Commissioner, 118 T.C. 162, 165 (2002); Bethea v.

Commissioner, T.C. Memo. 2003-278; Fink v. Commissioner, T.C.

Memo. 2003-61; Koenig v. Commissioner, T.C. Memo. 2003-40; Snyder

v. Commissioner, T.C. Memo. 2001-255; Browder v. Commissioner,

T.C. Memo. 1990-408.    Further, the Court noted that there is no
                                - 9 -

requirement that a notice of deficiency be signed.    Everman v.

Commissioner, supra.    We, therefore, find petitioner’s argument

to be similarly meritless and conclude that petitioner is liable

for the deficiencies respondent determined in the notices of

deficiency for the years in issue.

II.    Refund for 2000 Taxable Year

       Petitioner also argued that the “refund” requested on his

2000 tax return was incorrectly applied to the tax liabilities

for 2000 rather than being refunded to him.    We disagree.

       We do not find that petitioner made an overpayment in 2000

that should be refunded to him.    In general, if a taxpayer has

made an “overpayment” and the overpayment is not applied against

any of the taxpayer’s outstanding tax liabilities, the Secretary

must refund the payment, including interest.    Sec. 6402(a);

Bachner v. Commissioner, 109 T.C. 125, 128 (1997), affd. without

published opinion 172 F.3d 859 (3d Cir. 1998).    Section 6512(b)

gives the Court jurisdiction to determine the amount of any

overpayment to be credited or refunded where we have jurisdiction

to redetermine a deficiency.    Bachner v. Commissioner, supra at

128.

       We look to caselaw to define “overpayment” because there is

no specific definition of the term “overpayment” in the Code
                               - 10 -

which applies to the facts of these cases.6   Id.   This Court has

interpreted an overpayment as occurring when the taxpayer has

made a payment of tax greater than the amount properly due.     Id.

at 129; see Estate of Baumgardner v. Commissioner, 85 T.C. 445,

450 (1985).

     As determined above, petitioner is liable for the tax

liability for 2000 which exceeded the withholding payment of

$1,538, as respondent determined in the notice of deficiency.    As

a result, there is no overpayment that petitioner is entitled to

because he did not make a payment of tax greater than the amount

properly due.

III. Additions to Tax

     Respondent determined that petitioner is liable for

additions to tax pursuant to section 6651(a)(1) for 1996 and

1997.    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.   Section 7491(c) requires respondent to

carry the burden of production with respect to any addition to



     6
         Sec. 6401(a) provides:

     The term “overpayment” includes that part of the amount of
     the payment of any internal revenue tax which is assessed or
     collected after the expiration of the period of limitation
     properly applicable thereto.
                                - 11 -

tax for failure to file.    The Court has received into evidence

copies of petitioner’s tax returns for 1996 and 1997 stamped as

received by the Internal Revenue Service Center in Kansas City,

Missouri, on May 28, 1999, approximately 2 years and 1 year

delinquent, respectively.    Respondent has sustained his burden of

production to show that the section 6651(a)(1) addition to tax is

appropriate.   See Higbee v. Commissioner, 116 T.C. 438, 447

(2001).

      If petitioner establishes that the failure to file timely

returns was due to reasonable cause and not due to willful

neglect, he can avoid the addition to tax.    Sec. 6651(a)(1).

Petitioner 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 additions

to tax under section 6651(a).

IV.   Penalties

      A.   Section 6662

      Respondent determined that petitioner is liable for

accuracy-related penalties under section 6662(a) and (b)(1) for

1996, 1997, and 2000.     Section 6662(a) imposes a penalty in the

amount of 20 percent on the portion of the underpayment to which

the section applies.    As relevant to these cases, the penalty

applies to any portion of the underpayment that is attributable

to negligence or disregard of rules or regulations.    Sec.
                                - 12 -

6662(b)(1).     Negligence is any failure to make a reasonable

attempt to comply with the provisions of the internal revenue

laws.     Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs.

Moreover, negligence has been described as the failure to

exercise due care or the failure to do what a reasonable and

prudent person would do under the circumstances.     Neely v.

Commissioner, 85 T.C. 934, 947 (1985).     Disregard includes any

careless, reckless, or intentional disregard of rules or

regulations.     Sec. 6662(c); sec. 1.6662-3(b)(2), Income Tax Regs.

        Section 7491(c) requires respondent to carry the burden of

production because he seeks to impose an accuracy-related penalty

pursuant to section 6662(a).     With respect to the returns for

1996 and 1997, respondent and petitioner stipulated that

petitioner attempted to file those returns “as joint returns by

signing his former spouse’s name as well as his own name”,

thereby claiming an additional exemption and calculating the

income tax under the more favorable rates of section 1(a)(1).

The parties also stipulated that interest income and income from

the sale of stocks were omitted from the 1996 and 1997 returns.

        The 2000 return petitioner filed reported zero on all income

entries and no taxable income even though respondent and

petitioner stipulated that petitioner received $3,209 in 2000

from the sale of stock, $17 interest on an account with National

Financial Services Co., and $36,591 as wages from the U.S. Postal
                              - 13 -

Service.   Respondent has met his burden of production for his

determination of the accuracy-related penalty under section

6662(a) on the basis of negligence or disregard of rules or

regulations for 1996, 1997, and 2000.

     Even though respondent has met his burden of production, the

accuracy-related penalty will not be imposed if petitioner can

establish that he acted with reasonable cause and in good faith.

See sec. 6664(c)(1).   The record is devoid of any evidence of

reasonable cause and good faith on the part of petitioner.     No

attempt has been made to comply with applicable rules and

regulations, and accordingly, we hold that petitioner is liable

for the accuracy-related penalties under section 6662(a).     See

Higbee v. Commissioner, supra.

     B.    Section 6673

     Respondent does not ask the Court to impose a penalty on

petitioner under section 6673(a)(1).    The Court may sua sponte

determine whether to impose such a penalty.    See Frank v.

Commissioner, T.C. Memo. 2003-88; Robinson v. Commissioner, T.C.

Memo. 2003-77; Keene v. Commissioner, T.C. Memo. 2002-277;

Schmith v. Commissioner, T.C. Memo. 2002-252; Schroeder v.

Commissioner, T.C. Memo. 2002-190; Williams v. Commissioner, T.C.

Memo. 2002-111.

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

taxpayer to pay to the U.S. a penalty in an amount not to exceed
                             - 14 -

$25,000 whenever it appears to the Court that the taxpayer’s

position in the proceeding is frivolous or groundless.   Sec.

6673(a)(1)(B).

     In Israel v. Commissioner, T.C. Memo. 2003-198, we imposed a

penalty on petitioner pursuant to section 6673(a)(1) in the

amount of $1,500 because petitioner had:

     advanced, we believe primarily for delay, frivolous
     and/or groundless contentions, arguments, and requests
     with respect to petitioner’s unpaid liabilities for
     1995 and 1996, thereby causing the Court to waste its
     limited resources in addressing such matters. * * *

At trial in the instant cases, the Court warned petitioner on

three separate occasions that the Court has penalized taxpayers

under section 6673 for bringing frivolous and meritless cases

before the Court, giving petitioner the citations of cases in

which the Court imposed the penalty.

     Despite the warnings of the Court, petitioner has continued

to assert groundless arguments.   Under the circumstances, we

shall, on our own motion, impose a penalty on petitioner pursuant

to section 6673(a)(1) in the amount of $5,000.
                             - 15 -

     We have considered all of petitioner’s contentions,

arguments, and requests that are not discussed herein, and we

conclude that they are without merit or irrelevant.

     To reflect the foregoing,

                                             Decisions will be

                                        entered for respondent.
