                    T.C. Memo. 2003-164



                  UNITED STATES TAX COURT



           JOHN PARKS TROWBRIDGE, Petitioner v.
       COMMISSIONER OF INTERNAL REVENUE, Respondent

SABRINA MARTIN, f.k.a. SABRINA L. TROWBRIDGE, Petitioner v.
        COMMISSIONER OF INTERNAL REVENUE, Respondent



  Docket Nos. 473-01, 474-01.       Filed June 4, 2003.



       R determined deficiencies in tax with respect to
  Ps (H and W) for the years 1991-95, as well as
  additions to tax under secs. 6651(a)(1) and 6654,
  I.R.C., with respect to various of those years. Ps
  filed petitions for redetermination but failed to
  appear at trial. R moved for default judgment with
  respect to the deficiencies in tax determined against
  Ps for all years and the additions to tax determined
  against H for the years 1991-93. R proceeded to trial
  on the issues of (1) the additions to tax determined
  against W for all years, and (2) the additions to tax
  determined against H for 1994 and 1995.
                                  - 2 -

            1.    Held: R’s motion for default judgment is granted.

          2. Held, further, Forms 1040 and 1040EZ filed by
     Ps do not constitute valid Federal income tax returns.

          3. Held, further, Ps are liable for the additions
     to tax at issue in the amounts determined by R, with
     minor adjustments.

          4. Held, further, H and W are liable for
     penalties under sec. 6673, I.R.C., in the amounts of
     $25,000 and $15,000, respectively.



     John Parks Trowbridge and Sabrina Martin, pro sese.

     M. Kathryn Bellis, for respondent.



                 MEMORANDUM FINDINGS OF FACT AND OPINION


     HALPERN, Judge:      These cases have been consolidated for

purposes of trial, briefing, and opinion.     By notices of

deficiency dated October 11, 2000 (the notices of deficiency),

respondent determined deficiencies in, and additions to, each

petitioner’s Federal income taxes as follows:

                 John Parks Trowbridge (Dr. Trowbridge)

                                       Additions to Tax
     Year          Deficiency     Sec. 6651(a)(1)   Sec. 6654
     1991            $6,533             --               $4
     1992             9,492           $1,380            222
     1993            83,478           20,870          3,498
     1994           121,075           30,269          6,283
     1995           130,699           32,595          7,068
                                - 3 -

                  Sabrina L. Trowbridge (Ms. Martin1)

                                     Additions to Tax
     Year         Deficiency    Sec. 6651(a)(1)   Sec. 6654
     1991           $6,197            $105             --
     1992            8,740           1,198            $190
     1993           74,612          18,653          3,126
     1994          102,588          25,647          5,323
     1995          111,266          27,679          6,000

     Respondent has moved that petitioners be held in default

with respect to the deficiencies in tax determined against them

for all years and that Dr. Trowbridge be held in default with

respect to the additions to tax determined against him for 1991,

1992, and 1993.    In addition, respondent has moved for partial

summary judgment in his favor with respect to the additions to

tax determined against Dr. Trowbridge for 1994 and 1995 and the

additions to tax determined against Ms. Martin for all years.

Respondent has also asked the Court to impose a penalty on each

petitioner under section 6673(a)(1) in the amount of $25,000.

For the reasons that follow, we shall grant respondent’s motions

for default judgment, sustain (with minor adjustments) the

additions to tax that are the subject of his motions for partial

summary judgment, and impose penalties under section 6673(a)(1).

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years at issue, and

all Rule references are to the Tax Court Rules of Practice and


     1
        During the years   at issue, Ms. Martin was married to Dr.
Trowbridge and was known   as Sabrina L. Trowbridge. She is now
known as Sabrina Martin,   and we shall refer to her as Ms. Martin
for all purposes in this   report.
                                 - 4 -

Procedure.   For the sake of convenience, all dollar amounts are

rounded to the nearest dollar.

                         FINDINGS OF FACT

Preliminary Facts

     At the time the petitions were filed in these cases, each

petitioner resided in Harris County, Texas.

     Petitioners were married to each other during the years at

issue but filed separate returns for those years.

     Dr. Trowbridge is a physician, and Ms. Martin is a nurse and

administrative assistant who, during the years at issue, was

sometimes employed by Dr. Trowbridge’s professional corporation.

     Both petitioners are calendar year taxpayers.

     Respondent’s examination with respect to Dr. Trowbridge’s

1991, 1992, and 1993 taxable years commenced before 1998.

Respondent’s examinations with respect to Dr. Trowbridge’s 1994

and 1995 taxable years and Ms. Martin’s 1991 through 1995 taxable

years commenced after July 1998.

Dr. Trowbridge’s 1993, 1994, and 1995 Forms 1040

     1993 Form 10402

     On November 26, 1996, Dr. Trowbridge mailed to the Internal

Revenue Service (IRS) a Form 1040, U.S. Individual Income Tax

Return 1993 (Dr. Trowbridge’s 1993 Form 1040), which the IRS



     2
        As discussed infra, Dr. Trowbridge’s 1993 Form 1040 is
relevant to the determination of whether he is liable for the
sec. 6654 addition to tax with respect to his 1994 taxable year.
                                - 5 -

received on December 3, 1996.   On page 2 of Dr. Trowbridge’s 1993

Form 1040, he reported tax of $92,494 but stated: “SEE ATTACHED

DISCLAIMER STATEMENT-–ADMITTED TAX LIABILITY IS ZERO”.   The

attached disclaimer statement (the 1993 disclaimer) reads in part

as follows:

     The assessment and payment of income taxes is voluntary
     * * * John respectfully declines to volunteer
     concerning assessment and payment of any tax balance
     due on the return or any redetermination of said tax.
     Be it known that we, separately and together,
     therefore, deny tax liability and do not admit that the
     stated amount of tax on return, as calculated solely by
     reference to provided tables, is due and collectible.
     The tax return read as a whole shows no amount as being
     the tax and shows the tax to be zero and zero is the
     starting point in determining a deficiency or any other
     action involving this return. * * *

     John has provided payment in the amount of $1,000 as a
     voluntary contribution.

The 1993 disclaimer is signed by Dr. Trowbridge and “Acknowledged

in full agreement” by Ms. Martin.

     Respondent determined a deficiency in Dr. Trowbridge’s tax

for 1993 of $83,478.

     1994 Form 1040

     On January 16, 1997, Dr. Trowbridge mailed to the IRS a Form

1040, U.S. Individual Income Tax Return 1994 (Dr. Trowbridge’s

1994 Form 1040), which the IRS received on January 21, 1997.    On

page 2 of Dr. Trowbridge’s 1994 Form 1040, he reported tax of

$170,144 but stated: “SEE ATTACHED DISCLAIMER STATEMENT-–ADMITTED
                               - 6 -

TAX LIABILITY IS ZERO”.   In substance, the attached disclaimer is

identical to the 1993 disclaimer.

     Dr. Trowbridge submitted to the IRS no other document

purporting to be a return for 1994.

     Respondent determined a deficiency in Dr. Trowbridge’s tax

for 1994 of $121,075.   The only payment made by Dr. Trowbridge

for 1994 was $1,000 paid on January 21, 1997, with his 1994 Form

1040.

     1995 Form 1040

     On January 20, 1997, Dr. Trowbridge mailed to the IRS a Form

1040, U.S. Individual Income Tax Return 1995 (Dr. Trowbridge’s

1995 Form 1040), which the IRS received on January 27, 1997.    On

page 2 of Dr. Trowbridge’s 1995 Form 1040, he reported tax of

$133,977 but stated: “SEE ATTACHED DISCLAIMER STATEMENT-–ADMITTED

TAX LIABILITY IS ZERO”.   In substance, the attached disclaimer is

identical to the 1993 disclaimer.

     Dr. Trowbridge submitted to the IRS no other document

purporting to be a return for 1995.

     Respondent determined a deficiency in Dr. Trowbridge’s tax

for 1995 of $130,699.   The only payment made by Dr. Trowbridge

for 1995 was $1,000 paid on January 27, 1997, with his 1995 Form

1040.
                                - 7 -

Ms. Martin’s 1991 Through 1995 Income Tax Filings

     1991 Form 1040

     On or around November 1, 1996, Ms. Martin mailed to the IRS

a Form 1040, U.S. Individual Income Tax Return 1991 (Ms. Martin’s

1991 Form 1040), which the IRS received on November 4, 1996.    On

page 2 of Ms. Martin’s 1991 Form 1040, she reported tax of $5,203

and withholding of $19,640.    She also stated: “SEE ATTACHED

DISCLAIMER STATEMENT-–ADMITTED TAX LIABILITY IS ZERO”.    The

attached disclaimer refers to her but, in substance, is identical

to the 1993 disclaimer.

     Ms. Martin submitted to the IRS no other document purporting

to be a return for 1991.

     Respondent determined a deficiency in Ms. Martin’s tax for

1991 of $6,197.   The only payment made by Ms. Martin for 1991 was

$100 paid on November 4, 1996, with her 1991 Form 1040.

     1992 Form 1040

     On or around November 1, 1996, Ms. Martin mailed to the IRS

a Form 1040, U.S. Individual Income Tax Return 1992 (Ms. Martin’s

1992 Form 1040), which the IRS received on November 4, 1996.    On

page 2 of Ms. Martin’s 1992 Form 1040, she reported tax of $1,805

and withholding of $7,944.    She also stated: “SEE ATTACHED

DISCLAIMER STATEMENT-–ADMITTED TAX LIABILITY IS ZERO”.    The

attached disclaimer refers to her but, in substance, is identical

to the 1993 disclaimer.
                                - 8 -

     Ms. Martin submitted to the IRS no other document purporting

to be a return for 1992.

     Respondent determined a deficiency in Ms. Martin’s tax for

1992 of $8,740.    The only payment made by Ms. Martin for 1992 was

$100 paid on November 4, 1996, with her 1992 Form 1040.

     1993 and 1994 Tax Obligations

     Ms. Martin did not file Federal income tax returns for

either 1993 or 1994.    She did not make any estimated tax payments

for those years.

     Respondent determined deficiencies of $74,612 and $102,588

in Ms. Martin’s taxes for 1993 and 1994, respectively.

     1995 Form 1040EZ

     On or about January 20, 1997, Ms. Martin mailed to the IRS a

Form 1040EZ, Income Tax Return for Singles and Joint Filers With

No Dependents 1995 (Ms. Martin’s 1995 Form 1040EZ), which the IRS

received on January 21, 1997.   On Ms. Martin’s 1995 Form 1040EZ,

she reported tax of $0, an earned income credit of $234, and

withholding of $635.    She also stated: “SEE ATTACHED DISCLAIMER

STATEMENT-–ADMITTED TAX LIABILITY IS ZERO”.   The attached

disclaimer refers to her but, in substance, is identical to the

1993 disclaimer.

     Ms. Martin submitted to the IRS no other document purporting

to be a return for 1995.
                                - 9 -

     Respondent determined a deficiency in Ms. Martin’s tax for

1995 of $111,266.    The only payment made by Ms. Martin for 1995

was $100 paid on January 21, 1997, with her 1995 Form 1040EZ.

The Pleadings and Related Matters

     The Petitions

     In response to the notices of deficiency, both petitioners

filed petitions on January 9, 2001.     In many respects, the

petitions are identical.   Dr. Trowbridge’s petition is 74 pages

long, and Ms. Martin’s petition is 75 pages long.     Although the

petitions do assign error to respondent’s determinations, for the

most part, they make a convoluted argument that subjecting

petitioners to the same rate of tax as Federal employees

constitutes impermissible “disparate treatment”.     Petitioners

cite a variety of Code sections and regulatory materials to show

that public employees and certain others receive benefits from

the Federal Government that are not available to petitioners as

“private independent contractors” or “private sector workers”.

They state:

          In direct contrast to the private independent
     contractor, or non-government workers whose economic
     position, and rate of personal earnings are not fixed
     and guaranteed by statute, the rate instead is
     controlled by what the market place will bear and
     without any position fixed by statute. This gives the
     government employees or officers a great personal and
     economic advantage over that afforded to the private
     independent contractor, or non-government workers, and
     as such creates a disparate or unequal treatment under
     the law, because the Internal Revenue Service
     administratively states that the private independent
                                - 10 -

     contractors, or private sector workers pay [sic] must
     pay the same rate or percentage of tax on net income as
     do the government employees under Title 26 USC §§ 1, or
     3, without affording these same government privileges,
     services, benefits, contributions, or funds.

They argue that either respondent has to afford them a lower,

special tax rate or they must be afforded the same benefits as

Federal Government employees:

     it is the position of this petitioner, that there is
     within the Internal Revenue Code (IRC), a separate
     taxing statute with a reduced or compensatory rate of
     tax for the taxpayers who are “private independent
     contractors”, or “private sector workers”. If not,
     then this petitioner is entitled to receive the same
     compensation in benefits and economic protections as
     the federal employee, appointed or elected official, or
     corporate or partnership individuals.

     Respondent’s Motions for a More Definite Statement

     In response to the petitions, respondent moved in each case

for a more definite statement or to dismiss for failure to state

a claim upon which relief can be granted.   Following a hearing on

respondent’s motions, we declined to dismiss but concluded that

the petitions contained frivolous and groundless allegations.    We

struck from the petitions all such allegations, which constituted

the bulk of the petitions.

     The Answers

     On May 17, 2001, respondent filed his answers to the

abridged petitions, denying all material allegations of fact made

in support of the lone remaining assignment of error contained

therein.
                              - 11 -

     Standing Pretrial Order and Notice

     On May 29, 2001, the Court issued its Standing Pretrial

Order and Notice in each case, setting the cases for trial at the

trial session of the Court commencing on December 3, 2001, in

Houston, Texas.

Petitioners’ Discovery Requests

     On September 20 and 25, 2001, Ms. Martin and Dr. Trowbridge,

respectively, served on respondent a request for admissions.

Each request is over 140 pages in length (without attachments)

and requests over 600 admissions.

     On September 27, 2001, each petitioner served on respondent

interrogatories and a request for production of documents.   Each

set of interrogatories is over 125 pages in length and contains

over 500 interrogatories.

     On October 4, 2001, respondent filed motions for protective

orders with respect to the requests for admissions,

interrogatories, and requests for production of documents served

by petitioners.   Respondent argued that such requests were not

timely, addressed improper issues, and were intended to burden

respondent unduly, waste his resources, and divert him from trial

preparation.   We asked petitioners to respond and, after

considering their responses, granted respondent relief

“substantially for the reasons stated in respondent’s motions.”
                              - 12 -

Petitioners’ Dismissal Efforts

     Motions To Dismiss for Lack of Jurisdiction

     On November 21, 2001, Dr. Trowbridge submitted “for the

petitioners” a motion styled “Petitioner’s Verified Challenge to

Jurisdiction of the Court”, which we filed in each case as a

motion to dismiss for lack of jurisdiction.   The motion “denies

the existence of any contracts or commercial agreements which

create an attachment of an equity relationship between the

‘United States’ and/or The State of Texas and Petitioner.”    The

motion also states:   “Petitioner has specifically forfeited,

waived, rejected, declined, and refused to voluntarily accept any

and all benefits, especially admiralty and limited debt liability

benefits, from the ‘United States’ and its instrumentalities.”

Apparently on those bases, the motion then states:   “Petitioner

hereby gives formal notice to the Court of Petitioner’s status as

a nonjuristic person, a Texas state Citizen, and that, in such

status, Petitioner squarely challenges and voids the jurisdiction

of this Court.”   Petitioners claimed in the motion that we lack

“in personam” jurisdiction and subject matter jurisdiction.     We

denied the motion.

     Motions To Dismiss

     On November 23, 2001, Dr. Trowbridge submitted (and Ms.

Martin signed “in full agreement”) a motion styled “Petitioner’s

Notice of Withdrawal of Petition”, which we filed in each case as
                                - 13 -

a motion to dismiss (the motions to dismiss) and denied.3    In

those motions, petitioners reiterated their claims that we lack

jurisdiction and stated that they wished to withdraw their

petitions:    “Petitioner hereby gives Notice of WITHDRAWAL of the

petition for review by the United States Tax Court.   This Notice

of Withdrawal of petition makes moot, voids, and cancels all

proceedings previously scheduled by this Court for action upon

the petition filed in error.”

Trial Session

     These cases were called from the calendar at the Court’s

trial session commencing on Monday, December 3, 2001, in Houston,

Texas.   On Friday, November 30, 2001, an employee of the Court

Clerk’s Office contacted petitioners and reminded them that they

were expected to appear at the call of the calendar on Monday,

December 3.   When, on that date, the cases were called from the

calendar, petitioners failed to appear.   Counsel for respondent

appeared and announced ready for trial.   The Court set the cases

for trial on Tuesday, December 4, 2001, at 9:00 a.m., and

directed the deputy trial clerk to contact petitioners by

telephone and notify them of the date and time of the trial.

When the cases were recalled from the calendar on December 4, for


     3
        To the extent petitioners were relying on grounds other
than jurisdiction, a decision dismissing the proceedings would
have been considered a decision sustaining the deficiencies
determined by respondent. See sec. 7459(d). Since we did not
believe that was the result petitioners intended, we denied the
motions to dismiss.
                              - 14 -

trial, petitioners failed to appear.    Counsel for respondent

appeared and announced ready for trial.    The deputy trial clerk

reported that he had left messages for both petitioners as to the

date and time of the trial.   Respondent moved to dismiss for

default in both cases and the Court set those motions for a

hearing on Friday, December 7, 2001.    The Court instructed

respondent’s counsel to arrange personal service of the

petitioners, to inform them of the hearing.    The Court heard one

witness in support of respondent’s case.

      On Friday, December 7, 2001, the cases were recalled from

the calendar for a hearing on respondent’s motions to dismiss for

default.   Petitioners failed to appear.   Counsel for respondent

appeared and announced ready for the hearing.    Internal Revenue

Agent Marilyn MacIness testified that she had served each

petitioner personally with notice of the hearing.    The Court took

respondent’s motions to dismiss for default under advisement.



                              OPINION

I.   Motions To Dismiss for Default

      Respondent has moved (1) that Dr. Trowbridge be held in

default with respect to, and that a decision be entered in

respondent’s favor in the full amount of, the deficiencies in tax

determined by respondent against Dr. Trowbridge for the years

1991 through 1995 and the additions to tax determined by
                             - 15 -

respondent against Dr. Trowbridge for the years 1991 through

1993, and (2) that Ms. Martin be held in default with respect to,

and that a decision be entered in respondent’s favor in the full

amount of, the deficiencies in tax determined by respondent

against Ms. Martin for the years 1991 through 1995.   Petitioners

object, respectively, to those motions (collectively, the default

motions).4

     In pertinent part, Rule 123(a) provides:

     (a) Default: If any party has failed to plead or
     otherwise proceed as provided by these Rules or as
     required by the Court, then such party may be held in
     default by the Court either on motion of another party
     or on the initiative of the Court. Thereafter, the
     Court may enter a decision against the defaulting
     party, upon such terms and conditions as the Court may
     deem proper * * *

     Respondent argues that petitioners’ failures to appear for

the call of these cases on December 3, 2001, and at the trial of

the cases on December 4, 2001, constitute defaults and that it is

appropriate for the Court to enter default judgments against each

with respect to the deficiencies and additions to tax that are

the subject of the default motions.




     4
        Although petitioners failed to appear at the hearing on
the default motions, they did submit a document to the Court that
day styled “Mandatory Judicial Notice of Petitioner’s Refusal for
Cause of Respondent’s Motion for Default Judgment”, which we
filed in each case as an objection to the respective default
motions.
                                - 16 -

      Petitioners object to the default motions principally on the

ground that each had withdrawn his or her petition (by the

motions to dismiss, which we had denied).

      We have no doubt that petitioners had knowledge of the call

of these cases on December 3, 2001, and the recall of the cases

on December 4 and 7, 2001.   We assume that petitioners failed to

answer those calls because they no longer wished to continue

their cases in this Court; that is the position taken by them in

the motions to dismiss (which we denied).     We shall, therefore,

hold each of them in default.      We shall enter a decision against

each petitioner that includes the full amount of the deficiencies

in tax and additions to tax that are the subject of the default

motions.   That is appropriate since respondent had denied all

material allegations of fact set forth in the petitions in

support of the assignments of error and none of petitioners’

filings has otherwise convinced us that respondent in any way

erred in determining the deficiencies in tax and additions to tax

that are the subject of the default motions.

II.   Remaining Additions to Tax

      A.   Introduction

      Respondent proceeded to trial on the issues of the additions

to tax determined against Dr. Trowbridge for the years 1994 and

1995 and the additions to tax determined against Ms. Martin for

the years 1991 through 1995 (collectively, the remaining
                                 - 17 -

additions to tax) on account of the burden of production imposed

on the Secretary by current section 7491(c) (hereafter section

7491(c).5    As will be discussed, respondent has carried that

burden.

     B.     Summary Adjudication Unnecessary

     Respondent has moved for partial summary judgment in his

favor with respect to the remaining additions to tax.

Petitioners object, respectively, to those motions (collectively,

the summary judgment motions).

     A party may move for “summary adjudication in the moving

party’s favor upon all or any part of the legal issues in

controversy.”     Rule 121(a).   “Summary judgment is a device used

to expedite litigation and is intended to avoid unnecessary and

expensive trials of ‘phantom factual questions.’”        Espinoza v.

Commissioner, 78 T.C. 412, 416 (1982).      “The party moving for

summary judgment has the burden of showing the absence of a

genuine issue as to any material fact.”        Id.; see Rule 121(b).

“The opposing party is to be afforded the benefit of all

reasonable doubt, and any inference to be drawn from the

underlying facts contained in the record must be viewed in a

light most favorable to the party opposing the motion for summary

judgment.”     Espinoza v. Commissioner, supra at 416.


     5
        We do not decide whether respondent was required to
satisfy sec. 7491(c) in this default setting.
                               - 18 -

     Respondent has moved for partial summary judgments, but,

since there was a trial in these cases, at which respondent

presented evidence pertaining to the remaining additions to tax,

we need not determine whether the summary judgment motions

satisfy the standards for summary adjudication.     We shall,

therefore, deny the summary judgment motions (although we largely

sustain respondent’s substantive positions therein, as discussed

below).

     C.   Substantive Provisions

           1.   Section 6651(a)(1)

     Section 6651(a)(1) provides for an addition to tax in the

event a taxpayer fails to file a timely return (determined

with regard to any extension of time for filing), unless it is

shown that such failure is due to reasonable cause and not due

to willful neglect.   The amount of the addition is equal to

5 percent of the amount required to be shown as tax on such

return for each month or fraction thereof during which such

failure continues, up to a maximum addition of 25 percent for

returns more than 4 months delinquent.      For these purposes, the

amount required to be shown as tax on the return is reduced by

any timely payments of the tax6 and any credits which may be

claimed on the return.   Sec. 6651(b)(1).

     6
        In general, payment of income tax is due on the due date
of the corresponding return, determined without regard to any
filing extensions. Sec. 6151(a).
                                   - 19 -

               2.   Section 6654

       Section 6654 provides for an addition to tax in the event of

an underpayment of a required installment of individual estimated

tax.       As relevant to these cases, each required installment of

estimated tax is equal to 25 percent of the “required annual

payment”, which in turn is equal to the lesser of (1) 90 percent

of the tax shown on the individual’s return for that year (or, if

no return is filed, 90 percent of his or her tax for such year),

or (2) if the individual filed a return for the immediately

preceding taxable year, 100 percent of the tax shown on that

return.       Sec. 6654(d)(1)(B)(i) and (ii).   The due dates of the

required installments for a calendar taxable year are April 15,

June 15, and September 15 of that year and January 15 of the

following year.       Sec. 6654(c)(2).   For purposes of section 6654,

an individual’s tax consists of income tax and self-employment

tax and is determined before the application of any wage

withholding credit7 (but after the application of other allowable

credits).       Sec. 6654(f); see sec. 31.

       There are two mechanical exceptions to the applicability of

the section 6654 addition to tax.        First, as relevant to these

cases, the addition is not applicable if the tax shown on the

individual’s return for the year in question (or, if no return is

filed, the individual’s tax for that year), reduced for these

       7
        Under sec. 6654(g)(1), wage withholding credits are
treated as payments of estimated tax.
                                  - 20 -

purposes by any allowable credit for wage withholding, is less

than $500.8    Sec. 6654(e)(1).    Second, the addition is not

applicable if the individual’s tax for the preceding taxable year

was zero.     Sec. 6654(e)(2).

     D.    Section 7491(c)

     Section 7491(c) imposes the burden of production in any

court proceeding (i.e., the burden of moving forward with

evidence) on the Commissioner with respect to the liability of

any individual for penalties and additions to tax.9      In order to

meet the burden of production under section 7491(c), the

Commissioner need only make a prima facie case that imposition of

the penalty or addition to tax is appropriate; he need not negate

the existence of any circumstantial defense such as reasonable

cause.    Higbee v. Commissioner, 116 T.C. 438, 446 (2001); H.

Conf. Rept. 105-599, at 241 (1998), 1998-3 C.B. 747, 995.

Furthermore, section 7491(c) has no effect on the burden of proof

(i.e., the burden of persuasion), Higbee v. Commissioner, supra

at 446-447, which remains on petitioners in these cases, Rule


     8
        Effective for taxable years beginning after Dec. 31,
1997, the threshold amount is $1,000. Taxpayer Relief Act of
1997, Pub. L. 105-34, sec. 1202(a), 111 Stat. 994.
     9
        Sec. 7491(c) applies to court proceedings arising in
connection with examinations commencing after July 22, 1998.
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3001(c)(1), 112 Stat. 727. As referenced
in our findings of fact, the additions to tax not included in the
default motions (collectively, the remaining additions to tax)
pertain to examinations commenced after July 1998.
                                - 21 -

142(a); cf. current sec. 7491(a) (shifting the burden of proof to

the Commissioner in certain circumstances).

     E.   Discussion

           1.   Petitioners’ Forms 1040 and 1040EZ

     Respondent contends that the Forms 1040 and 1040EZ filed by

petitioners with respect to the years at issue do not constitute

valid returns.10    In Williams v. Commissioner, 114 T.C. 136, 143

(2000), we held that a disclaimer statement similar to the ones

at issue in these cases rendered the Form 1040 to which it was

attached invalid.    We see no reason to depart from the reasoning

of that case here.     Accordingly, we conclude that Dr.

Trowbridge’s 1993-95 Forms 1040, and Ms. Martin’s 1991-92 Forms

1040 and 1995 Form 1040EZ, are not valid returns.

           2.   Respondent’s Section 6651(a)(1) Determinations

     As relevant to his section 6651(a)(1) determinations,

respondent produced evidence that petitioners did not file valid

Federal income tax returns for any of the years at issue.

Respondent also produced evidence that neither petitioner made

any timely payments of tax with respect to the years at issue.11

     10
        We address that contention separately because it is
relevant to our analysis of both the sec. 6651(a)(1) and the sec.
6654 additions to tax asserted by respondent.
     11
        In his sec. 6651(a)(1) computations, respondent properly
credited each petitioner with one-half of petitioners’ aggregate
wage withholding credit where applicable. See sec. 6651(b)(1);
sec. 1.31-1(a), Income Tax Regs. (rule for wage withholding
credits of separately filing spouses domiciled in a community
                                                   (continued...)
                              - 22 -

     Based on the foregoing, we conclude that respondent

established a prima facie case that the determination of 25-

percent additions to tax under section 6651(a)(1) with respect to

Dr. Trowbridge for the years 1994 and 1995, and with respect to

Ms. Martin for the years 1991-95, is appropriate, thereby

satisfying section 7491(c).   In the absence of any evidence

refuting that prima facie case (such as reasonable cause or lack

of willful neglect on the part of either petitioner), we conclude

that petitioners are liable for such additions to tax.    Except as

noted below,12 we also accept respondent’s computation of the

amounts of those additions as set forth in the notices of

deficiency.

          3.   Respondent’s Section 6654 Determinations

     As relevant to his section 6654 determinations, respondent

introduced into evidence Dr. Trowbridge’s invalid return for 1993

in addition to the evidence of invalid and nonexistent returns

discussed above in the context of his section 6651(a)(1)

determinations.   Respondent also produced evidence that, aside




     11
      (...continued)
property State). Respondent also properly credited Ms. Martin
with her earned income credit for 1995. See sec. 6651(b)(1).
     12
        Respondent inexplicably based his 1992 sec. 6651(a)(1)
computation for Ms. Martin on tax of $8,764 rather than the
$8,740 amount of tax that appears elsewhere in the notice of
deficiency issued to her. The correct amount of such addition
shall be the subject of a Rule 155 computation.
                                 - 23 -

from amounts withheld from wages,13 neither petitioner made any

timely payments of tax that could be applied against his or her

required annual payments for the years at issue.

     In the absence of valid returns, the applicability of the

$500 de minimis exception to the section 6654 addition to tax

discussed above is determined on the basis of each petitioner’s

tax (within the meaning of section 6654(f)) for the years at

issue.    See sec. 6654(e)(1).   In light of the deficiency

decisions that we shall enter against petitioners pursuant to our

disposition herein of the default motions, neither petitioner

qualifies for the $500 de minimis exception for any of the years

at issue.   The impending entry of those deficiency decisions also

precludes the applicability of the section 6654(e)(2) exception

(zero tax for preceding year) with respect to any of the years at

issue.

     Based on the foregoing, we conclude that respondent

established a prima facie case that the determination of

additions to tax under section 6654 with respect to Dr.

Trowbridge for the years 1994 and 1995, and with respect to Ms.

Martin for the years 1992-95, is appropriate, thereby satisfying

section 7491(c).    Absent any evidence refuting that prima facie


     13
        As is the case with his sec. 6651(a)(1) computations,
respondent properly credited each petitioner with one-half of
petitioners’ aggregate wage withholding credit where applicable.
See sec. 6654(g)(1), supra note 7; sec. 1.31-1(a), Income Tax
Regs., supra note 11.
                                     - 24 -

case, we conclude that petitioners are liable for such additions

to tax.     Except as noted below,14 we also accept respondent’s

computation of the amounts of those additions as set forth in the

notices of deficiency.

III.    Section 6673(a)(1) Penalties

       Respondent asks that we impose a penalty against each

petitioner under section 6673(a)(1) in the amount of $25,000.

       In pertinent part, section 6673(a)(1) provides:

       SEC. 6673.    SANCTIONS AND COSTS AWARDED BY COURTS.

             (a) Tax Court Proceedings.--

                  (1) Procedures instituted primarily for
             delay, etc.–-Whenever it appears to the Tax
             Court that--

                         (A) proceedings before it have been
                    instituted or maintained by the taxpayer
                    primarily for delay,

                         (B) the taxpayer’s position in such
                    proceeding is frivolous or groundless,
                    or

                         *   *   *     *      *   *   *

       the Tax Court, in its decision, may require the
       taxpayer to pay to the United States a penalty not in
       excess of $25,000.


       14
        Respondent inexplicably based his 1992 sec. 6654
computation for Ms. Martin on tax of $8,764 rather than the
$8,740 amount of tax that appears elsewhere in the notice of
deficiency issued to her. In his 1995 sec. 6654 computation for
Ms. Martin, rather than reducing her 1995 tax by the amount of
her 1995 earned income credit, respondent improperly treated that
credit as a payment of estimated tax. See sec. 6654(f)(3) and
(g)(1). The correct amounts of those additions to tax shall be
the subject of Rule 155 computations.
                                - 25 -

     The purpose of section 6673 “is to compel taxpayers to think

and to conform their conduct to settled principles before they

file returns and litigate.”     Coleman v. Commissioner, 791 F.2d

68, 71 (7th Cir. 1986); see also Grasselli v. Commissioner, T.C.

Memo. 1994-581 (quoting Coleman).     A taxpayer’s position is

frivolous if it is contrary to established law and unsupported by

a reasoned, colorable argument for change in the law.    E.g., Nis

Family Trust v. Commissioner, 115 T.C. 523, 544 (2000).     We need

not find specific damages to invoke section 6673(a)(1); rather,

that section is a penalty provision, intended to deter and

penalize frivolous claims and positions in deficiency

proceedings.   Bagby v. Commissioner, 102 T.C. 596, 613-614

(1994).

     Petitioners do not here argue for any change in the law, and

there is no plausible argument that, as maintained in the

disclaimers attached to their Forms 1040 and 1040EZ, the payment

of income taxes is voluntary.    E.g., Woods v. Commissioner, 91

T.C. 88, 90 (1988).   Similarly, there is no plausible argument

that, as maintained in the petitions, subjecting petitioners to

the same rate of tax that applies to Federal employees

constitutes impermissible disparate treatment.    See Rogers v.

Commissioner, T.C. Memo. 2001-20, affd. without published opinion

281 F.3d 1278 (5th Cir. 2001).    Whatever legitimate arguments may

underlie their assignments of error, petitioners have emphasized
                              - 26 -

frivolous arguments and, for that reason alone, deserve to have

section 6673(a)(1) penalties imposed against them.

     We are also convinced by petitioners’ conduct that they both

instituted and maintained these proceedings for delay, which is a

separate basis for imposing a section 6673(a)(1) penalty.    We

struck all but minimal portions of their 74- and 75-page

petitions.   Their discovery requests ran to hundreds of pages,

and we granted respondent’s motions for protective orders with

respect thereto, in part on the ground that we agreed with

respondent that the discovery was intended to burden respondent

unduly, waste his resources, and divert him from trial

preparation.   Petitioners actively, indeed, forcefully,

prosecuted these cases until 2 weeks before trial.   At that

point, they attempted to withdraw their petitions, asserting a

jurisdictional challenge premised on their disavowal of any

commercial relationship with, and any enjoyment of benefits from,

the United States.   They refused to appear for trial or for a

hearing on respondent’s motions to dismiss for default, despite

notice thereof in both instances.   We interpret petitioners’

actions in prosecuting (and not prosecuting) these cases as

evidence of their intent to delay these proceedings.   There are

numerous years and, for some years, large dollar amounts involved

in these cases.   There is before us another case, involving Dr.

Trowbridge and his 1996 and 1997 tax years.   That case involves
                              - 27 -

conduct similar to that in this case.    See Trowbridge v.

Commissioner, T.C. Memo. 2003-165.     We think that both

petitioners deserve large penalties under section 6673(a)(1).     It

is clear to us that Dr. Trowbridge took the lead in the

sanctionable activity here.   Therefore, we shall impose on him a

penalty of $25,000.   We shall impose on Ms. Martin, who filed her

own petition and submitted documents and took actions that

matched those submitted and taken by Dr. Trowbridge, a penalty of

$15,000.

     To reflect the foregoing,


                                           Appropriate orders will

                                     be issued, and decisions will

                                     be entered under Rule 155.
