                        T.C. Memo. 2011-30



                     UNITED STATES TAX COURT



ROBERT MICHAEL BURCHFIELD AND PAMELA O. BURCHFIELD, Petitioners
        v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16676-09.            Filed February 1, 2011.



     Robert Michael Burchfield and Pamela O. Burchfield, pro se.

     Jeanne Gramling, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MORRISON, Judge:   The Commissioner of Internal Revenue

issued a notice of deficiency to the Burchfields determining a

deficiency in income tax for 2006 and various additions to tax.

The Burchfields contend that they are exempt from federal income

tax because they work for private-sector employers, Wachovia Bank

and Carolinas Healthcare System.   We find that the Burchfields
                               - 2 -

are liable for the deficiency in income tax, the addition to tax

for failure to file a timely income tax return, and the addition

to tax for failure to make estimated tax payments.    In addition,

we impose a $5,000 penalty on them for making frivolous arguments

and instituting this litigation as a delaying tactic.

                         FINDINGS OF FACT

     Michael Burchfield was an employee of Wachovia Bank.    He

earned $110,782 in wages during 2006.    Wachovia Bank withheld

$2,555.93 from his wages for federal income tax.    His wife,

Pamela Burchfield, was an employee of Carolinas Healthcare

System.   She earned $1,965 in wages during 2006.   She also earned

$65 in dividend income from First Clearing and received a $17,000

individual retirement account (IRA) distribution from American

Skandia Life Assurance Co.   Information returns the payors filed

with the IRS reflected that the Burchfields received these

amounts (with the exception that there is no information return

in the record regarding the $65 dividend from First Clearing).

     On February 2, 2009, the IRS received from the Burchfields a

copy of a Form 1040, U.S Individual Income Tax Return, for the

tax year 2006 dated November 14, 2006.    On the Form 1040, the

Burchfields reported zero wage income and minor amounts of other

types of income ($271 in interest income, and $515.33 in refunds)

and claimed itemized deductions of $23,335.18.
                                - 3 -

     On April 15, 2009, the Commissioner issued a notice of

deficiency to the Burchfields determining a deficiency of

$21,343, a late-filing addition to tax of $4,227.30, an addition

to tax for failure to pay tax shown on a return, and an

estimated-tax addition to tax of $875.70.      A Form 4549, Income

Tax Examination Changes, attached to the notice of deficiency

explained that the $21,343 tax liability was calculated from a

taxable income of $112,912.   The $112,912 was equal to:       $65 of

dividends + $17,000 from an IRA distribution + $1,965 of

secondary wages + $110,782 of wages - a $10,300 standard

deduction - $6,600 of exemptions.    The form stated that the

Burchfields should be credited $2,555.00 in prepayments.

     The Burchfields filed a petition in the Tax Court

challenging the deficiency notice.      In the petition, the

Burchfields claim that they “completed” a return for the year

2006 on November 11, 2006.    Their petition contains a series of

bogus legal arguments.   The Burchfields were residents of North

Carolina when they filed the petition.

     In the answer respondent conceded that the Burchfields were

not liable for the penalty for failure to pay tax shown on a

return.   Respondent contended that the late-filing addition to

tax of section 6651(a)(1)1 should be applied at a rate of 5


     1
      Unless otherwise indicated, all section references are to
                                                   (continued...)
                                - 4 -

percent per month, instead of the 4.5 percent rate used in the

notice of deficiency.   See sec. 6651(c)(1).    As calculated in the

answer, the addition to tax was $4,697.00; i.e., 25 percent of

the difference between the deficiency of $21,343.00 and prepaid

credits of $2,555.00.

      At the trial, the Burchfields regaled the Court with their

frivolous legal arguments.    The Commissioner filed a motion for

penalty under section 6673.   The Burchfields filed a response

that they had prepared before trial.

                               OPINION

I.   Deficiency

      The first issue for decision is whether the Burchfields are

liable for a deficiency of $21,343.      The taxpayer generally bears

the burden of proving that the Commissioner’s determination set

forth in a notice of deficiency is incorrect.     See Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).      However, if the

taxpayer introduces credible evidence and meets other

requirements with respect to a factual issue affecting the

taxpayer’s liability for tax the Commissioner has the burden of

proof with respect to the issue.   Sec. 7491(a)(1).    The



      1
      (...continued)
the Internal Revenue Code of 1986, as amended and in effect for
the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
                               - 5 -

Burchfields have not presented credible evidence that any of the

adjustments that produced the deficiency of $21,343 were

incorrect.   Thus, the Burchfields bear the burden of proof.2    The

Burchfields have failed to carry the burden.   They have produced

no evidence that they did not earn the income the IRS says they

earned.   Instead, they advance a phalanx of bogus legal

arguments.   They argue that we have jurisdiction to determine

only the rate of tax; that the refusal of the IRS to answer

questions from the Burchfields constituted an admission that the

Burchfields were not liable for tax; that the Burchfields are

citizens of the “several States”; that the Constitution prohibits

the federal government from collecting tax except through the

states; that the word “income” is limited to income from

federally licensed occupations, to dividends, and to other

things, but does not include the earnings of employees of the

“private sector”; that the IRS cannot issue a deficiency notice


     2
      The Court of Appeals for the Ninth Circuit in Weimerskirch
v. Commissioner, 596 F.2d 358, 360 (9th Cir. 1979), revg. 67 T.C.
672 (1977), held that for the Commissioner to prevail in a case
involving unreported income, there must be some evidentiary
foundation linking the taxpayer to the alleged income-providing
activity. The Weimerskirch opinion has been cited by the Fourth
Circuit. Williams v. Commissioner, 999 F.2d 760, 764 (1993),
affg. T.C. Memo. 1992-153. The Commissioner did not provide any
evidence that Pamela Burchfield was linked to the $65 dividend
that it alleges she received from First Clearing. This failure
does not matter. The Burchfields did not, in their petition,
challenge the IRS’s determination that Pamela Burchfield earned
$65 in dividend income. They have therefore waived that issue.
See Rule 34(b)(4).
                                 - 6 -

without making an assessment; and that their 2006 Form 1040 must

be presumed correct because it is not apparent from its face that

it is frivolous.    None of these arguments have merit.   See, e.g.,

United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985) (the

argument that “under 26 U.S.C. § 3401(c) the category of

‘employee’ does not include privately employed wage earners is a

preposterous reading of the statute”).     The Burchfields are

liable for the deficiency determined by the Commissioner.

II.   Section 6651(a)(1) Addition to Tax

      The second issue for decision is whether the Burchfields are

liable for a late-filing addition to tax of $4,697.     The

Commissioner bears the burden of production with respect to this

addition to tax and the estimated-tax addition to tax discussed

later.    See sec. 7491(c).   If the Commissioner produces evidence

demonstrating that the taxpayer is liable for an addition to tax,

the taxpayer must provide the Court with sufficient evidence to

convince the Court that the Commissioner’s determination is

incorrect.    Higbee v. Commissioner, 116 T.C. 438, 447 (2001).3

With regard to certain defenses that the taxpayer can assert in

response, such as that the taxpayer had reasonable cause for not


      3
      The Commissioner has the burden of proof in respect of any
new matter pleaded in the answer. Rule 142(a)(1). The increase
in the sec. 6651(a)(1) addition to tax from $4,227.30 in the
deficiency notice to $4,697 in the answer does not involve a
disputed issue of fact. It is a computation arising from the
concession of the sec. 6651(a)(2) addition to tax.
                                - 7 -

filing the return, it is the taxpayer’s responsibility to raise

the defense, and the burden of proof concerning it is on the

taxpayer.    Id. at 446.

       We find that the Commissioner has produced evidence showing

that the Burchfields are liable for a late-filing addition to tax

of $4,697.    Section 6651(a)(1) imposes an addition to tax for

failure to file a return by the filing deadline (as extended),

unless such failure is due to reasonable cause and not due to

willful neglect.    The amount of this addition to tax is 5 percent

of the net amount required to be shown as tax on the return for

each month the failure to file continues, not to exceed 25

percent in the aggregate.    Sec. 6651(a)(1), (b)(1).   The 2006 tax

return was due April 15, 2007, and the IRS transcript of accounts

does not show the deadline was extended.    Mr. Burchfield claimed

that he sent the Form 1040 to the IRS on March 22, 2008.    This

was too late.    By then the Burchfields were liable for the full

25-percent amount.    The Commissioner has produced sufficient

evidence that the Burchfields are liable for the addition to tax.

The Burchfields have not demonstrated that they are not liable

for the addition to tax.    We find that they are liable for the

section 6651(a)(1) addition to tax for the 2006 tax year.

III.    Section 6654 Addition to Tax

       The third issue is whether the Burchfields are liable
                                - 8 -

for an estimated-tax addition to tax of $875.70 for the 2006 tax

year.   The record demonstrates that the Burchfields failed to

make the four installments of the “required annual payment”

required by section 6654.    The required annual payment for a tax

year is 90 percent of the tax liability for the year if the

taxpayer has not filed a return for the year and for the

preceding year.   Sec. 6654(d)(1)(B).   The Burchfields’ Form 1040

for 2006 was not a valid return.   It is mainly a list of zero

entries, not a genuine attempt to report the Burchfields’ tax

liability.   Furthermore, it was accompanied by Forms 4852,

Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R,

Distributions From Pensions, Annuities, Retirement or Profit-

Sharing Plans, IRAs, Insurance Contracts, Etc., that contradicted

the accuracy of the Forms W-2, Wage and Tax Statement, issued to

the Burchfields by their employers and did not give any specific

explanation for the discrepancy.   Such a Form 1040 is not a valid

return.   See Cabirac v. Commissioner, 120 T.C. 163, 169-170

(2003); Ulloa v. Commissioner, T.C. Memo. 2010-68.    The Form 1040

for 2005 was similar, as Mr. Burchfield testified.   It, too, was

not a valid return.   The Burchfields are liable for the addition

to tax for failure to pay estimated tax.

IV.   Section 6673 Penalty

      The fourth issue for decision is whether the Burchfields are

liable for a penalty under section 6673.   Section 6673(a)(1)
                                 - 9 -

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 or groundless positions in Tax Court proceedings or

instituted the proceedings primarily for delay.       The Burchfields

took numerous legal positions that were frivolous and groundless.

We believe they instituted and maintained these proceedings

primarily for delay.    In view of the abuse of this Court’s

resources in these proceedings, we hold the Burchfields liable

for a $5,000 penalty.

     To reflect the foregoing,


                                         An appropriate order and

                                 decision will be entered.
