                        T.C. Memo. 2011-207



                      UNITED STATES TAX COURT



                MATTHEW R. PERKINS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18240-09.             Filed August 29, 2011.



     Matthew R. Perkins, pro se.

     Alicia A. Mazurek, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Petitioner petitioned the Court for

redetermination of a deficiency of $15,265 and an addition to tax

under section 6654(a)1 of $145 for 2007.   The primary issue for


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code), as amended and in effect for
the taxable year at issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure. Amounts are rounded to
                                                   (continued...)
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decision after concessions is whether petitioner is liable for a

deficiency in his Federal income tax.    We must further decide

whether petitioner is liable for the addition to tax under

section 6654(a) and whether we should impose the penalty under

section 6673(a) upon petitioner.

                           FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts, together with the attached exhibits, is

incorporated herein by this reference.    At the time petitioner

filed his petition, he resided in Grand Rapids, Michigan.

     During 2007 petitioner worked for Mercy General Health

Partners (Mercy).   Mercy issued a Form W-2, Wage and Tax

Statement, to petitioner reporting wages of $81,042 and Federal

income tax withheld of $10,893. Petitioner submitted to the IRS

a 2007 Form 1040, U.S. Individual Income Tax Return, on which he

reported zero wage income and Federal income tax withheld of

$25,600.

     Respondent did not accept petitioner’s 2007 Form 1040 as a

valid return.   Instead, respondent filed a substitute for return

for petitioner for 2007.    Respondent, using third-party payer

reports, determined that petitioner had received wages of

$81,042.   Respondent determined petitioner’s filing status was



     1
      (...continued)
the nearest dollar.
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married filing separate and that petitioner was entitled to a

personal exemption.    Respondent determined a deficiency in

petitioner’s Federal income tax of $15,265 for 2007.    Respondent

also determined an addition to tax pursuant to section 6654(a) of

$145.

     Respondent introduced into evidence Mercy’s payroll records

to prove that petitioner was employed by Mercy during 2007, that

Mercy paid petitioner wages of $81,042, and that Mercy had

withheld Federal income tax of $10,893.    Petitioner did not deny

receipt of the wages, did not deny that he worked at Mercy, and

did not deny that Mercy had withheld Federal income tax.    Yet

petitioner argues that the Form W-2 Mercy issued is invalid.

     At trial we advised petitioner that his arguments were

frivolous and warned him that we might impose sanctions if he

continued to make frivolous arguments before the Court in the

future.

                              OPINION

I.   Deficiencies in Federal Income Tax and Unreported Wage
     Income

     Section 61(a)(1) defines gross income as all income from

whatever source derived, including compensation for services

(i.e., wage income).

     As a general rule, the taxpayer bears the burden of proving

the Commissioner’s deficiency determinations incorrect.    Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).     The Court
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of Appeals for the Sixth Circuit, to which an appeal in this case

would lie, however, has held that the Commissioner’s

determination of unreported income must be supported by at least

a minimal factual predicate or foundation of substantive evidence

linking the taxpayer to the income-generating activity or to the

receipt of funds.    United States v. Walton, 909 F.2d 915, 918-919

(6th Cir. 1990).    In addition, if a taxpayer asserts a reasonable

dispute with respect to any item of income reported on an

information return filed with the Secretary by a third party and

the taxpayer has fully cooperated with the Secretary, the

Secretary shall have the burden of producing reasonable and

probative information concerning such deficiency in addition to

such information return.    Sec. 6201(d).

     To satisfy respondent’s initial burden of production,

respondent provided evidence to the Court of petitioner’s

employment and wages earned during 2007 through petitioner’s Form

W-2 and Mercy’s payroll records confirming the information

reported on the Form W-2.

     Respondent having met his initial burden of production, the

burden shifts to petitioner to prove the deficiency determination

incorrect.   See Rule 142(a); Welch v. Helvering, supra.    However,

petitioner has alleged that section 7491(a) applies to this case,

shifting the burden back onto respondent.   We do not agree.

Section 7491(a) provides that if the taxpayer introduces credible
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evidence with respect to any factual issue relevant to

ascertaining the liability of the taxpayer for a tax imposed

under subtitle A or B of the Code, the Secretary shall have the

burden of proof with respect to such issue.     Petitioner has

failed to introduce any credible evidence with respect to the

factual issues relating to his tax liability.    See sec.

7491(a)(1).   Respondent’s determination of petitioner’s tax

liability is based upon the fact that petitioner was employed by

Mercy during 2007 and was paid wages by Mercy during 2007 and

that Mercy had withheld Federal income tax from his wages in

2007.   Petitioner has not introduced credible evidence to

challenge any of these facts.    Accordingly, the burden of proof

remains on petitioner.

     In order to meet his burden of proof, petitioner has

advanced arguments characteristic of tax-protester rhetoric that

have been universally rejected by this and other courts.     See

Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C.

Memo. 1987-225; Carter v. Commissioner, 784 F.2d 1006, 1009 (9th

Cir. 1986).   We shall not painstakingly address petitioner’s

assertions with somber reasoning and copious citation of

precedent, as to do so might suggest that these arguments have

some colorable merit.    See Crain v. Commissioner, 737 F.2d 1417,

1417 (5th Cir. 1984).    We conclude that petitioner has not met
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his burden of proof, and thus, we sustain respondent’s deficiency

determination for 2007.

II.   Section 6654(a)

      Respondent determined that petitioner is liable for an

addition to tax under section 6654(a) for failure to pay

estimated income tax for 2007.

      Section 6654(a) imposes an addition to tax “in the case of

any underpayment of estimated tax by an individual”.     A taxpayer

has an obligation to pay estimated tax for a particular year only

if he has a “required annual payment” for that year.     Sec.

6654(d).   A required annual payment generally is equal to the

lesser of:   (i) 90 percent of the tax shown on the return for the

taxable year (or, if no return is filed, 90 percent of the tax

for the year); or (ii) 100 percent of the tax shown on the return

of the individual for the preceding taxable year.     Sec.

6654(d)(1)(B); Wheeler v. Commissioner, 127 T.C. 200, 210-211

(2006), affd. 521 F.3d 1289 (10th Cir. 2008); Heers v.

Commissioner, T.C. Memo. 2007-10.     If the taxpayer did not file a

return for the preceding year, then clause (ii) does not apply.

Sec. 6654(d)(1)(B).     Respondent’s burden of production under

section 7491(c) requires respondent to produce evidence that

petitioner had a required annual payment for 2007.

      Respondent has satisfied his burden of production by

introducing evidence that (1) 90 percent of petitioner’s $15,265
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income tax liability for 2007 is $13,739, (2) that petitioner had

filed a Federal income tax return for 2006 showing a Federal

income tax liability of $13,337, and (3) that petitioner made

insufficient estimated payments for 2007, having paid only

$10,893.   See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).

Petitioner neither argued nor established any of the defenses

enumerated in section 6654(e).    Consequently, petitioner has not

met his burden of persuasion, and respondent’s determinations are

sustained.   See United States v. Rylander, 460 U.S. 752, 758

(1983); Traficant v. Commissioner, 89 T.C. 501, 504 (1987), affd.

884 F.2d 258 (6th Cir. 1989).

III. Section 6673 Penalty

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

taxpayer to pay to the United States a penalty in an amount not

to exceed $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).

     It is within our discretion whether to impose the section

6673 penalty.   We have often imposed the penalty in cases where,

for example, taxpayers have presented arguments in administrative

and judicial proceedings despite being warned those arguments

were frivolous.   See Burke v. Commissioner, 124 T.C. 189, 197

(2005); Rodriguez v. Commissioner, T.C. Memo. 2009-92; Ioane v.

Commissioner, T.C. Memo. 2009-68 ($10,000 penalty imposed where
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taxpayer was warned months before trial that his frivolous

arguments, lack of candor, and failure to cooperate in the

stipulation process could result in imposition of the section

6673 penalty), affd. 108 AFTR 2d 2011-5162, 2001-2 USTC par.

50,489 (9th Cir. 2011).   But see Lizalek v. Commissioner, T.C.

Memo. 2009-122 (declining to impose the section 6673 penalty

where the taxpayer raised frivolous arguments for the first time

in Federal court).

     Petitioner made frivolous arguments during the trial;

arguments universally rejected by this and other courts.       We have

made petitioner aware that by continuing to pursue these

arguments, he subjects himself to the possibility of a penalty

pursuant to section 6673.   However, at this time we decline to

impose this penalty.

     In reaching our holdings, we have considered all arguments

made, and, to the extent not mentioned, we conclude that they are

moot, irrelevant, or without merit.

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
