                        T.C. Memo. 2008-142



                      UNITED STATES TAX COURT



                 MICHAEL CABIRAC, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24207-06.              Filed May 22, 2008.



     Michael Cabirac, pro se.

     James H. Harris, Jr., for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     FOLEY, Judge:   The issues for decision are whether

petitioner is liable for income tax deficiencies attributable to

unreported income, for sections 6651(a)(1)1 and (2) and 6654(a)



     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 2 -

additions to tax, for a section 6662(a) penalty, and for a

section 72(t) additional tax.

                         FINDINGS OF FACT

     Beginning in 2001, petitioner worked for United States

Liability Insurance Co. (USLIC) as an insurance underwriter.        In

2002 and 2003, USLIC paid petitioner $68,115 and $77,546,

respectively, and issued Forms W-2, Wage and Tax Statement,

reflecting those amounts.   In 2002, petitioner also received from

National Financial Services, L.L.C. retirement distributions

totaling $5,500.

     Petitioner did not file an income tax return relating to

2001.   In 2003, respondent prepared a substitute for return (SFR)

relating to petitioner’s 2001 taxable year.      On September 14,

2004, petitioner submitted Forms 1040, U.S. Individual Income Tax

Return, relating to 2002 and 2003.      On the 2002 Form 1040,

petitioner reported zero income and zero tax liability, and

requested an $8,610 refund.   Respondent did not accept the 2002

Form 1040 as a valid return, and prepared an SFR which set forth

a tax liability of $15,758.   On the 2003 Form 1040, petitioner

reported zero income and zero tax liability and requested a

refund of $10,010.   Respondent processed the 2003 Form 1040.

     On August 23, 2006, respondent issued petitioner notices of

deficiency relating to 2002 and 2003 determining income tax

deficiencies of $15,758 and $14,613, respectively.      Respondent
                                 - 3 -

also determined that petitioner was liable for a section

6651(a)(1) addition to tax for failure to timely file tax returns

relating to 2002 and 2003, a section 6651(a)(2) addition to tax

for failure to pay relating to 2002 and 2003, a section 6654(a)

addition to tax for failure to pay estimated tax relating to

2002, a section 6662(a) accuracy-related penalty for underpayment

of tax relating to 2003, and a section 72(t) additional tax for

retirement plan distributions relating to 2002.

     On November 24, 2006, petitioner, while residing in

Pennsylvania, filed his petition.

                               OPINION

     Petitioner concedes that in 2002 and 2003, respectively, he

received $68,115 and $77,546 from USLIC, and in 2002 received

distributions totaling $5,500 from National Financial Services,

L.L.C.    Petitioner raised numerous meritless contentions and

failed to present any credible evidence.2    Accordingly,

petitioner is liable for the deficiencies.

     A taxpayer shall be liable for additions to tax for failure

to timely file a return unless such failure was due to reasonable

cause and not willful neglect.    Sec. 6651(a)(1).   Petitioner

submitted both his 2002 and 2003 Forms 1040 on September 14,

2004.    Pursuant to section 7491(c), respondent bears and has met


     2
        Sec. 7491(a) is inapplicable because petitioner failed to
introduce credible evidence within the meaning of sec.
7491(a)(1).
                               - 4 -

his burden of production relating to section 6651(a), and

petitioner’s failure to timely file returns was a result of

willful neglect and not reasonable cause.   Accordingly,

petitioner is liable for the section 6651(a)(1) additions to tax.

     The section 6651(a)(2) addition to tax for failure to pay is

applicable only when an amount of tax is shown on a return.

Cabirac v. Commissioner, 120 T.C. 163, 170 (2003).   On the 2002

SFR, which was prepared in conformity with the requirements of

section 6020(b), respondent calculated and reported a tax

liability of $15,758.   On his 2003 Form 1040, petitioner reported

a zero tax liability.   Pursuant to section 7491(c), respondent

bears and has met the burden of production relating to section

6651(a)(2) relating to 2002.   With respect to 2002, petitioner is

liable for the section 6651(a)(2) addition to tax based on the

amount of tax shown on the 2002 SFR.   With respect to 2003,

however, we reject respondent’s determination because there is no

tax liability reported on petitioner’s Form 1040, which

respondent accepted as a valid return.

     Unless one of the section 6654(e) exceptions applies, a

section 6654(a) addition to tax is imposed when estimated tax

payments do not equal the percentage of total liability required

to be paid.   Niedringhaus v. Commissioner, 99 T.C. 202, 222

(1992).   In order to satisfy his burden of production,

respondent, at a minimum, must establish that petitioner was
                               - 5 -

required to make an annual payment.    Secs. 7491(c),

6654(d)(1)(B); Wheeler v. Commissioner, 127 T.C. 200, 211 (2006),

affd. 521 F.3d 1289 (10th Cir. 2008).    The required annual

payment is generally equal to the lesser of 90 percent of the tax

shown for the subject taxable year (or, if no return is filed, 90

percent of the tax for such year) or 100 percent of the tax shown

on the taxpayer’s return for the preceding year.    Sec.

6654(d)(1)(B)(i) and (ii).

     Pursuant to the SFRs prepared by respondent, petitioner was

required to make an annual payment relating to 2002.    Petitioner

does not meet the requirements of any exceptions to section 6654.

See sec. 6654(e).   Accordingly, we sustain the addition to tax

relating to 2002.   Pursuant to section 6654(g), petitioner is,

however, entitled to a credit for the Federal income tax withheld

from his wages.   See Bagby v. Commissioner, 102 T.C. 596, 613

(1994).

     Respondent determined that petitioner is liable for a

section 6662(a) accuracy-related penalty for the underpayment of

tax relating to 2003.   Petitioner earned $77,546 in 2003, yet

reported zero income and zero tax liability.    In short, he made

no attempt to comply with the Internal Revenue Code.

Accordingly, petitioner is liable for the section 6662 penalty.

     In 2002, petitioner received distributions from a retirement

plan.   Pursuant to section 72(t), a 10-percent additional tax is
                                   - 6 -

imposed upon such distributions unless the distributions meet the

requirements of one of the exceptions enumerated in section

72(t)(2).     Sec. 72(t)(1) and (2); see also Dwyer v. Commissioner,

106 T.C. 337 (1996).    The distributions do not meet any of those

exceptions.    Accordingly, petitioner is liable for the additional

tax.

       Contentions we have not addressed are irrelevant, moot, or

meritless.

       To reflect the foregoing,


                                                Decision will be entered

                                           under Rule 155.
