                  T.C. Memo. 2006-233



                UNITED STATES TAX COURT



            JAMES S. ZIGMONT, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 9758-04.                 Filed October 31, 2006.


     P failed to file Federal income tax returns for
2000 and 2001. R determined deficiencies and additions
to tax pursuant to secs. 6651(a)(1) and 6654, I.R.C. P
contested the determinations based on tax-protester
rhetoric.

     Held: P is liable for the deficiencies determined
by R and additions to tax pursuant to secs. 6651(a)(1)
and 6654, I.R.C.


Philip A. Putman, for petitioner.

Frank W. Louis, for respondent.
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                         MEMORANDUM OPINION


     WHERRY, Judge: This case is before the Court on petitioner’s

motion to withdraw deemed admissions pursuant to Rule 90(f) and

respondent’s motion for summary judgment pursuant to Rule

121(a).1    Respondent determined the following deficiencies and

additions to tax with respect to petitioner’s Federal income

taxes for the 2000 and 2001 taxable years:

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

     2000          $186,109               $46,210.00         $9,865.68
     2001            87,905                21,976.25          3,513.00


                                Background

     Petitioner submitted to the Internal Revenue Service (IRS) a

Form 1040, U.S. Individual Income Tax Return, for the 2000

taxable year claiming a refund of $1,269.18 for wages withheld

and containing zeros on all other filled out lines between line 6

and line 58 of the tax return.      Petitioner similarly submitted a

Form 1040 for the 2001 taxable year that contained zeros on all

filled out lines from line 7 through line 70 of the tax return.

Petitioner also enclosed with his 2000 and 2001 returns a typed

statement challenging his duty to file returns and pay taxes.



     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.
                                - 3 -

Respondent issued notices of deficiency on February 27 and March

3, 2004, for the 2000 and 2001 taxable years, respectively,

determining the deficiencies and additions to tax set forth

above.

     Petitioner filed an imperfect petition with the Tax Court on

June 3, 2004.   Thereafter, the case so instituted was dismissed

twice for lack of jurisdiction on account of petitioner’s failure

to comply with the Court’s order regarding the filing of a proper

amended petition.    Each time the dismissal was subsequently

vacated after belated action on petitioner’s part.    Petitioner

eventually submitted an amended petition, which was filed on

January 19, 2005.2   A notice setting the case for trial in

October of 2005 and attaching the Court’s standing pretrial order

was issued to petitioner on May 19, 2005.

     On August 11, 2005, respondent filed with the Court requests

for admission, which requests had been served on petitioner the

previous day.   Petitioner failed to respond, and pursuant to Rule

90(c) each matter set forth in the requests for admission was

deemed admitted 30 days after the date of service.    As a result,

the following items are deemed admitted as material facts:



     2
      The petition and amended petition filed in this case each
listed an address for petitioner in Rochester, New Hampshire.
Shortly before the hearing on respondent’s motion, petitioner
submitted documents to the Court which listed an address for
petitioner of Clarksburg, West Virginia, and indicated that the
New Hampshire address was that of petitioner’s nephew.
                                - 4 -

     (1) Petitioner received Social Security payments of $10,758

and $12,180 in 2000 and 2001, respectively;

     (2) petitioner received the proceeds of stock and bond sales

totaling $490,268 and $234,728 in 2000 and 2001, respectively;

     (3) petitioner did not submit to respondent information

regarding the cost of the stocks and bonds sold in 2000 and 2001;

     (4) petitioner received payments from an IRA or other

retirement plan of $13,933 in 2000 and 2001;

     (5) petitioner received dividends on stock of $188 and $29

in 2000 and 2001, respectively;

     (6) petitioner earned interest of $17,228 and $28,296 in

2000 and 2001, respectively;

     (7) petitioner failed to file Federal income tax returns for

2000 and 2001; and

     (8) petitioner did not make the required payments of

estimated taxes for 2000 or 2001, through withheld taxes or

otherwise.

     Respondent then filed a motion for summary judgment on

September 26, 2005.    Petitioner did not file timely a response to

respondent’s motion.    However, on October 25, 2005, petitioner

filed a motion to withdraw deemed admissions, lodged petitioner’s

responses to respondent’s requests for admission, and filed a

Rule 50(c) statement in response to respondent’s motion for

summary judgment.    Petitioner’s motion to withdraw deemed
                                - 5 -

admissions stated that petitioner was in the process of

relocating to Los Angeles and had used his nephew’s mailing

address in New Hampshire and “Regrettably, petitioner’s nephew

was not as dependable in forwarding mail to petitioner, or

alerting petitioner that certain mail existed, as petitioner had

hoped.”   Petitioner’s proposed late response to respondent’s

request for admissions denied “that petitioner sold any stocks or

bonds or had any information relating thereto to submit to the

Internal Revenue Service.”   Petitioner’s Rule 50(c) statement in

response to respondent’s motion for summary judgment conceded

that “Should the Court deny petitioner’s motion to withdraw the

deemed admissions, petitioner confesses that the deemed

admissions alone are enough to cause the Court to award

respondent summary judgment.”

     A hearing was held on respondent’s motion on October 27,

2005, at which time respondent also filed an objection to

petitioner’s motion to withdraw deemed admissions.   Respondent’s

objection included as exhibits thereto copies of petitioner’s

2000 and 2001 Forms 1040, and third-party Forms 1099 for 2000 and

2001 reflecting significant unreported gross income of

petitioner.   At the close of the hearing by order, the Court

afforded petitioner an opportunity to submit a written response

to respondent’s objection.   Petitioner did not file a response.

After reviewing the record of this case, the Court by order dated
                                - 6 -

September 13, 2006, afforded petitioner a final opportunity to

respond to respondent’s objection to petitioner’s motion to

withdraw deemed admissions.    An untimely response from petitioner

failed to set forth any sufficient substantive basis for relief

from the deemed admissions, although it was filed for the record.

                              Discussion

I.   Petitioner’s Motion for Relief From Deemed Admissions

     Rule 90(a) permits a party to serve a written request for

admission of relevant and unprivileged matter upon the other

party.   Each matter contained in such request is deemed admitted

unless the served party responds within 30 days after service or

within such shorter or longer time as the Court may allow.    Rule

90(c).   Any fact deemed admitted under Rule 90(c) is conclusively

established.   Rule 90(f).   The Court may permit withdrawal or

modification of an admission if the “presentation of the merits

of the case will be subserved thereby,” and such withdrawal or

modification will not prejudice the party who obtained the

admission.   Rule 90(f).

     A party will be prejudiced by the withdrawal of deemed

admissions if “he has relied on them and will suffer delay, added

expense, and additional effort because of the withdrawal.”

Morrison v. Commissioner, 81 T.C. 644, 649 (1983).    Furthermore,

the Court should not “lightly weigh the burdens of establishing

admissions” on parties that properly use Rule 90 to “advance
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litigation initiated by the opposing party.”      Id. at 648.

Respondent properly used Rule 90 to expedite litigation.

Considering carefully the facts at issue in the deemed admissions

and the surrounding circumstances as described in the motion and

respondent’s objection, the Court concludes that permitting

petitioner to withdraw or modify the deemed admissions would

prejudice respondent and would not serve presentation of the

merits of the case.      Petitioner’s failure timely to respond to

respondent’s request for admissions is indicative of his behavior

in this case.   Petitioner has repeatedly filed documents late or

not at all, as well as failed to comply with the Court’s orders.

Therefore, petitioner’s motion to withdraw deemed admissions

shall be denied.

II.   Respondent’s Motion for Summary Judgment

      A. General Rules

      Rule 121(a) allows a party to move “for a summary

adjudication in the moving party’s favor upon all or any part of

the legal issues in controversy.”      Rule 121(b) directs that a

decision on such motion shall be “rendered if the pleadings,

answers to interrogatories, depositions, admissions, and any

other acceptable materials, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and

that a decision may be rendered as a matter of law.”      Admissions
                                 - 8 -

referenced in Rule 121(b) include deemed admissions pursuant to

Rule 90(c).   Marshall v. Commissioner, 85 T.C. 267, 272 (1985).

     The moving party bears the burden of proving that no genuine

issue of material fact exists and that he or she is entitled to

judgment as a matter of law.     Sundstrand Corp. v. Commissioner,

98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).

Facts and inferences drawn from the record are viewed in the

light most favorable to the nonmoving party.      Id.   Where the

moving party properly makes and supports a motion for summary

judgment, the nonmoving party “may not rest upon the mere

allegations or denials of such party’s pleading,” but must, by

affidavits or otherwise, set forth “specific facts showing that

there is a genuine issue for trial.”     Rule 121(d).

     B. Deficiency

     Based on the documents filed with the Court, including the

deemed admissions, supra, the Court concludes that respondent has

satisfied his burden of proving that no genuine issue of material

fact exists as to respondent’s deficiency determinations and that

respondent is entitled to judgment as a matter of law.

     C. Additions to Tax

     The Commissioner bears the burden of production in any court

proceeding with respect to an individual’s liability for

penalties or additions to tax.    Sec. 7491(c).   To meet this

burden, the Commissioner must present “sufficient evidence
                                - 9 -

indicating that it is appropriate to impose the relevant penalty”

or addition to tax.    Higbee v. Commissioner, 116 T.C. 438, 446

(2001).   In instances where an exception to the penalty or

addition to tax is afforded upon a showing of substantial

authority, reasonable cause, or similar provisions, the taxpayer

bears the burden of raising and prevailing on these issues.     Id.

at 446-447.

     1. Section 6651

     Section 6651(a)(1) imposes a 5-percent addition to tax for

each month or portion thereof a required return is filed after

the prescribed due date, not to exceed 25 percent in the

aggregate, unless such failure to file timely is due to

reasonable cause and not due to willful neglect.     Although not

defined in the Code, “reasonable cause” is described by the

applicable regulations as the exercise of “ordinary business care

and prudence”.   Sec. 301.6651-1(c)(1), Proced. & Admin. Regs; see

also United States v. Boyle, 469 U.S. 241, 246 (1985).

“[W]illful neglect” is interpreted as “a conscious, intentional

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

at 245.

     Respondent produced evidence that petitioner failed to file

a Federal income tax return for 2000 and 2001.     A Federal income

tax return that contains only zeros and is accompanied by tax-

protester rhetoric is generally not considered a valid return.
                                - 10 -

Cabirac v. Commissioner, 120 T.C. 163, 169 (2003) (and cases

cited thereat).3    As the Court of Appeals for the Seventh Circuit

has noted:    “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.”     United

States v. Moore, 627 F.2d 830, 835 (7th Cir. 1980).     Furthermore,

pursuant to the deemed admissions, supra, petitioner did not file

a Federal income tax return for either the 2000 or 2001 taxable

year.    Petitioner has not presented any evidence that his failure

to file was due to reasonable cause.     The Court concludes that

respondent has satisfied his burden of proving that no genuine

issue of material fact exists as to respondent’s addition to tax

determinations, and respondent is entitled to judgment as a

matter of law.     Therefore, the Court sustains the imposition of

additions to tax pursuant to section 6651(a)(1).




     3
      The Court of Appeals for the Ninth Circuit recognizes a
limited exception to this rule, see United States v. Long, 618
F.2d 74 (9th Cir. 1980), a minority view. Absent a stipulation
to the contrary, appeal in the instant case would appear to be to
the Court of Appeals for either the First or Fourth Circuit. See
supra note 2. Neither of these courts has expressed a position.
We therefore adhere to our view and that of the majority. See
Cabirac v. Commissioner, 120 T.C. 163 (2003); see also Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971).
                                - 11 -

        2. Section 6654

        Section 6654(a) imposes an addition to tax for failure to

pay estimated income tax where there has been an underpayment of

estimated tax by the taxpayer.     Pursuant to the deemed

admissions, supra, “petitioner did not make the required payments

of estimated taxes for 2000 or 2001, through withheld taxes or

otherwise".     This admission satisfies any burden of production on

the part of respondent.     Furthermore, petitioner conceded, supra,

that “Should the Court deny petitioner’s motion to withdraw the

deemed admissions, petitioner confesses that the deemed

admissions alone are enough to cause the Court to award

respondent summary judgment.”

     The Court concludes that respondent has satisfied his burden

of proving that no genuine issue of material fact exists as to

respondent’s addition to tax determinations, and respondent is

entitled to judgment as a matter of law.    Therefore, the Court

sustains the imposition of additions to tax pursuant to section

6654.     Respondent’s motion for summary judgment shall be granted.

III. Section 6673 Penalty

        Section 6673(a)(1) authorizes the Tax Court to impose a

penalty not in excess of $25,000 on a taxpayer for proceedings

instituted primarily for delay or in which the taxpayer’s

position is frivolous or groundless.     “A petition to the Tax

Court, or a tax return, is frivolous if it is contrary to
                              - 12 -

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).

     Respondent has not asked the Court to impose a penalty under

section 6673(a)(1), and the Court declines to impose such a

penalty.   At the hearing the Court warned petitioner that he

would be subject to a section 6673(a)(1) penalty if he continued

to raise frivolous arguments and cause further delays.

Petitioner heeded the Court’s warning.    The Court, therefore,

concludes that it is not appropriate to impose a penalty in the

instant case, but the Court explicitly admonishes petitioner that

he may, in the future, be subject to a penalty under section 6673

for any proceedings instituted or maintained primarily for delay

or for any proceedings which are frivolous or groundless.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.    To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,



                                      An appropriate order and

                                 decision will be entered.
