                  T.C. Summary Opinion 2006-172



                     UNITED STATES TAX COURT



                 GARY DON ERWIN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23500-04S.               Filed October 24, 2006.


     Gary Don Erwin, pro se.

     Elke Esbjornson, for respondent.



     GOLDBERG, Special Trial Judge:     This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the year at issue.
                                 2

     Respondent issued petitioner a notice of deficiency in the

amount of $4,167 for taxable year 2001.     In the same notice,

respondent determined the following additions to tax:

     Sec. 6651(a)(1)      Sec. 6651(a)(2)       Sec. 6654(a)(2)

           $937                 $562                  $164

     After concessions,1 the sole issues for decision are whether

petitioner is liable for additions to tax under sections

6651(a)(1) and 6654(a).   We hold that he is.

                             Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by reference.

     At the time the underlying petition was filed, petitioner

resided in Clifton, Texas.

     During the taxable year at issue, 2001, and the previous

taxable year, 2000, petitioner worked as a corporate trainer for

Compliance Systems, Inc. (Compliance).    Under the terms of his

employment, Compliance provided petitioner with materials

necessary for him to lead hazardous materials training courses

for its employees.

     A dispute arose between petitioner and Compliance sometime

in late 2001 regarding petitioner’s employment status.       Although


     1
       Respondent has conceded the addition to tax under sec.
6651(a)(2) for failure to pay. Petitioner conceded that he
received wages of $17,588 and interest income of $11.
                                 3

petitioner filed his 2000 Federal income tax return, paying self-

employment tax on the income he received that year from

Compliance, petitioner believed that he was actually an employee

rather than an independent contractor.   Thus, in 2001, petitioner

contacted the Austin Customer Service Center and submitted Form

SS-8, Determination of Worker Status for Purposes of Federal

Employment Taxes and Income Tax Withholding, which requested a

determination of his employment status at Compliance for Federal

employment tax purposes.

     Petitioner received taxable wages of $17,5882 from

Compliance for work performed in 2001.   Compliance believed that

petitioner was an independent contractor, and accordingly,

withheld no Federal income tax from his paycheck.   Although

petitioner was aware that Compliance considered him an

independent contractor, he did not pay any estimated tax payments

in 2001.   In summary, Compliance withheld no Federal income tax

from petitioner’s 2001 wages, and petitioner did not make any

estimated tax payments in 2001 with respect to his income from

Compliance.

     On May 10, 2002, respondent issued a determination letter

that stated petitioner was an employee, and not an independent


     2
       Petitioner received total wages of $18,423 from Compliance
in 2001; however, he claimed that a portion of that amount was
received for business expense reimbursement. Respondent concedes
that $835 should be subtracted from the income reported to
respondent by Compliance.
                                  4

contractor.   Respondent requested that Compliance amend its

payroll taxes for 2001 and issue petitioner a Form W-2, Wage and

Tax Statement.

     Petitioner did not file a Federal income tax return for

taxable year 2001.   Accordingly, respondent prepared a substitute

return.

                              Discussion

     Although petitioner does not contest his 2001 Federal income

tax liability stemming from the wages he received from Compliance

and unreported interest income, he challenges the section

6651(a)(1) and 6654(a) additions to tax imposed by respondent.

Petitioner claims that he could not file his 2001 return because

he was awaiting respondent’s determination of his employment

status, and thereafter, because Compliance failed to issue him a

Form W-2 for that year.

Section 6651(a)(1) Addition to Tax

     Section 6651(a)(1) imposes an addition to tax for failure to

file a return by its due date.    The addition to tax equals 5

percent for each month or fraction thereof that the return is

late, not to exceed 25 percent.    Sec. 6651(a)(1).   Respondent

bears the burden of production with respect to the section

6651(a)(1) addition to tax.    See sec. 7491(c); see also, e.g.,

Swain v. Commissioner, 118 T.C. 358, 363 (2002); Higbee v.
                                  5

Commissioner, 116 T.C. 438 (2001).    For the reasons stated

forthwith, we hold that respondent has met this burden.

     In the absence of an extension, the last date for petitioner

to file his Federal income tax return for taxable year 2001 was

April 15, 2002.   Petitioner testified that he filed an extension

request, but he has been unable to produce any evidence that this

request was sent to the IRS.

     Assuming, arguendo, that petitioner had timely submitted an

extension request, an extension would have provided petitioner

until October 15, 2002, to file his 2001 Federal income tax

return.   Sec. 6081(a).   However, the only bearing a timely

submitted extension request would have had on the instant case

would be in the calculation of the addition to tax.    Because we

are unpersuaded that a request for extension of time to file the

return was properly sought, we need not consider a recalculation

of the addition to tax under section 6651(a).

     “A failure to file a tax return on the date prescribed leads

to a mandatory penalty unless the taxpayer shows that such

failure was due to reasonable cause and not due to willful

neglect.”   McMahan v. Commissioner, 114 F.3d 366, 368 (2d Cir.

1997), affg. T.C. Memo. 1995-547; see sec. 6651(a).    A showing of

reasonable cause requires taxpayers to demonstrate that they

exercised “ordinary business care and prudence”, but were

nevertheless unable to file the return within the prescribed
                                   6

time.     United States v. Boyle, 469 U.S. 241 (1985); sec.

301.6651-1(c)(1), Proced. & Admin. Regs.

        Petitioner testified that he did not file his Federal income

tax return on its original due date because he was awaiting

respondent’s determination of his employment status and

thereafter, because Compliance did not provide him with a Form W-

2, nor did it report his wages to respondent.

        Petitioner’s reasoning as to why he did not file his 2001

return is misguided and without merit.     Petitioner did not

contest that he received gross income for 2001 of $17,588, nor

did he dispute his obligation to pay tax on this income and file

a return.     Further, he did not challenge that his employer

withheld no Federal income tax from his compensation for 2001.

Secs. 63(a), 6001.     Therefore, petitioner’s employment status had

no bearing on his obligation under law to file a Federal income

tax return.     Moreover, if we were to believe petitioner’s claim

that he timely filed a request for an extension to file, his

return would have been due on October 15, 2002.     Since

respondent’s determination letter was received on May 10, 2002,

petitioner would have had sufficient time to file a return for

2001.

        Petitioner next claimed that he did not file his return

after receiving respondent’s determination letter because

Compliance did not file a Form W-2 as requested by respondent.
                                  7

On this point, petitioner’s reasoning is without merit.

Compliance treated petitioner as an independent contractor

throughout 2001.   It withheld no Federal income tax from

petitioner’s wages.   Accordingly, respondent’s determination

matters little against the fact that petitioner’s 2001 wages and

interest income were subject to tax.   Since Compliance withheld

no Federal income tax from petitioner’s wages during the year, it

was petitioner’s obligation to pay the tax when due.

Section 6654(a) Addition to Tax

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

pay estimated income tax where prepayments of such tax, either

through withholding or by making estimated quarterly tax payments

during the course of the year, do not equal the percentage of

total liability required under the statute, unless the taxpayer

shows that one of the statutory exceptions applies.    Sec.

6654(a); Niedringhaus v. Commissioner, 99 T.C. 202, 222 (1992).

The amount required to be paid through each such estimated

quarterly payment is 25 percent of the “required annual payment”.

Sec. 6654(d)(1)(A).   The “required annual payment” is, in turn,

the lesser of 90 percent of the tax shown on the return for that

taxable year or 100 percent of the tax shown on the return of the

individual for the preceding taxable year.   Sec. 6654(d)(1)(B).

     Unlike section 6651(a), there is no broadly applicable

reasonable cause exception to the section 6654 addition to tax;
                                  8

generally, it is mandatory, and extenuating circumstances are

irrelevant.    Estate of Ruben v. Commissioner, 33 T.C. 1071, 1072

(1960); see also Grosshandler v. Commissioner, 75 T.C. 1, 20-21

(1980) (imposition of section 6654 addition to tax is mandatory

where estimated payments do not equal statutorily required

percentage).

       However, as with section 6651(a)(1), the Commissioner bears

the burden of production regarding the section 6654 addition to

tax.    For the reasons stated herewith, we hold that respondent

has met this burden.

       Petitioner conceded that he did not pay any estimated tax on

the wages he received from Compliance in 2001.     Petitioner did

not offer any explanation for his failure to pay beyond his

reasoning that he had to wait for respondent’s determination

letter and thereafter, had to wait for Compliance to file a Form

W-2 with respondent and send one to him.     Both lines of

petitioner’s reasoning are wrong.     During 2001, petitioner was

treated by Compliance as an independent contractor.     No Federal

income tax was withheld from his wages.     Accordingly, petitioner

was under an obligation to remit estimated payments pursuant to

section 6654(c) and (d).    The fact that respondent ultimately

determined petitioner was a Compliance employee does not negate

petitioner’s failure to make these payments when they were due in

2001.
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     In view of the foregoing, we sustain respondent’s additions

to tax under sections 6651(a)(1) and 6654(a)(2), respectively.

          Reviewed and adopted as the report of the Small

Tax Case Division.


                                         Decision will be entered

                                    for respondent as to the

                                    deficiency, and additions to

                                    tax under sections 6651(a)(1)

                                    and 6654(a)(2), and for

                                    petitioner as to the addition

                                    to tax under section

                                    6651(a)(2).
