T.C. Memo. 2007-315



                UNITED STATES TAX COURT



           STANLEY C. WOLCOTT, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket Nos. 4371-06, 4372-06.      Filed October 18, 2007.


     P failed to file Federal income tax returns for
2000 and 2001 until after he was issued a notice of
deficiency for those taxable years. R determined
deficiencies and additions to tax pursuant to secs.
6651(a)(1) and (2) and 6654(a), I.R.C. P conceded the
deficiencies.

     Held: P is liable for the additions to tax
pursuant to secs. 6651(a)(1) and (2) and 6654(a),
I.R.C.


Stanley C. Wolcott, pro se.

Beth A. Nunnink, for respondent.
                                - 2 -

               MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:    These consolidated cases are before the

Court on petitions for judicial review of statutory notices of

deficiency dated November 28, 2005.     After concessions,1 the

issues for decision are:

     (1) Whether petitioner is liable for additions to tax under

sections 6651(a)(1) and (2) and 6654(a) for the two taxable years

at issue;2 and

     (2) whether the Court should impose a penalty under section

6673(a)(1).

                           FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by

reference.    At the time he filed his petitions, petitioner

resided in Loudon, Tennessee.

     Petitioner failed to file Federal income tax returns for the

2000 and 2001 taxable years until February 23, 2007.3    Petitioner


     1
       Petitioner has conceded the deficiencies, as increased in
accordance with the computations of respondent’s counsel, infra
at 4, and at trial sought to discuss only his liability for the
additions to tax and the sec. 6673(a)(1) penalty that respondent
has asked the Court to impose.
     2
       Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and in effect for
the years in issue.
     3
         Petitioner also never filed a Federal income tax return
                                                    (continued...)
                                 - 3 -

did not have any Federal income tax withheld and did not make any

estimated tax payments for the 2000 and 2001 taxable years.

     On November 28, 2005, respondent issued the aforementioned

notices of deficiency in which, for petitioner’s 2000 taxable

year, respondent determined a Federal income tax deficiency in

the amount of $2,014.20 and additions to tax pursuant to sections

6651(a)(1) and (2) and 6654(a) in the amounts of $453.20,

$503.55, and $107.60, respectively.      For petitioner’s 2001

taxable year, respondent determined a Federal income tax

deficiency in the amount of $2,851 and additions to tax pursuant

to sections 6651(a)(1) and (2) and 6654(a) in the amounts of

$641.48, $598.71,4 and $113.94, respectively.

         Petitioner then filed timely petitions with this Court.     On

February 23, 2007, shortly before trial, petitioner submitted to

respondent’s counsel Forms 1040, U.S. Individual Income Tax

Return, for the 2000 and 2001 taxable years.      Those joint returns

included the income of petitioner’s spouse.      Respondent agreed

with the filing status and income reported in those returns.

Respondent then filed motions for leave to file amended answers



     3
      (...continued)
for 1999, which is relevant to his liability for an addition to
tax under sec. 6654(a) for the 2000 taxable year.
     4
       Respondent notes that the addition to tax under sec.
6651(a)(2) was only applied at 0.5 percent for the first 42
months after the return was due and that the addition to tax will
continue to apply, not to exceed 25 percent in the aggregate.
                                 - 4 -

to amended petitions out of time.     Petitioner did not oppose

either the motions or the amended answers.     The Court then

granted respondent’s motions for leave, and the amended answers

were filed reflecting recalculated and increased deficiencies and

additions to tax for the 2000 and 2001 taxable years.     The

recalculated and increased deficiencies and additions to tax were

as follows:     For petitioner’s 2000 taxable year, a Federal income

tax deficiency in the amount of $4,444 and additions to tax

pursuant to sections 6651(a)(1) and (2) and 6654(a) in the

amounts of $999.90, $1,111, and $239, respectively.     For

petitioner’s 2001 taxable year, a Federal income tax deficiency

in the amount of $5,389 and additions to tax pursuant to sections

6651(a)(1) and (2) and 6654(a) in the amounts of $1,212.53,

$1,131.69,5 and $195, respectively.

     Before trial, respondent filed a motion to consolidate these

cases, which the Court granted on March 2, 2007.     A trial was

held on March 5, 2007, in Knoxville, Tennessee.

                                 OPINION

I.   Respondent’s Burden of Production

         Under section 7491(c), respondent bears the burden of

production with respect to a taxpayer’s liability for penalties

or additions to tax.     This means that respondent “must come

forward with sufficient evidence indicating that it is


     5
         See supra note 4.
                                   - 5 -

appropriate to impose the relevant penalty.”          Higbee v.

Commissioner, 

, 446 (2001).          In instances where an

exception to the penalty or addition to tax is afforded upon, for

example, a showing of reasonable cause or substantial authority,

the taxpayer bears the burden of “[coming] forward with evidence

sufficient to persuade a Court that the Commissioner’s

determination is incorrect.”

        Additions to Tax

       Section 6651(a)(1) imposes an addition to tax of 5 percent

per month or a fraction thereof up to a maximum of 25 percent for

failure to file a timely return unless it is shown that such

failure is due to reasonable cause and not to willful neglect.

Section 6651(a)(2) imposes an addition to tax of 0.5 percent per

month up to a maximum of 25 percent for failure to pay the amount

of tax shown on a return.       The two penalties combined, however,

may not exceed 5 percent per month.        See sec. 6651(c).      Section

6654(a) imposes an addition to tax for underpayment of estimated

income tax by an individual taxpayer.        That addition to tax is

computed by reference to four required installment payments of

the taxpayer’s estimated tax liability, each constituting 25

percent of the “required annual payment”.         Sec. 6654(c)(1),

(d)(1)(A).    For taxpayers whose adjusted gross income for the

preceding year was $150,000 or less, the “required annual

payment” is equal to the lesser of (1) 90 percent of the tax
                              - 6 -

shown on the individual’s return for the 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)(A) and (B)(i) and (ii).

     Respondent has satisfied his burden of production with

respect to all three additions to tax.   With respect to the

section 6651(a)(1) addition to tax, respondent has satisfied his

burden of production because, as the parties have stipulated,

petitioner failed to file tax returns for the 2000 and 2001

taxable years until February 23, 2007.

     Respondent has satisfied his burden of production with

respect to the section 6651(a)(2) addition to tax because

petitioner failed to pay his entire 2000 and 2001 tax liabilities

as shown on the late returns that petitioner filed on February

23, 2007.6

     Finally, respondent has satisfied his burden of production

with respect to the section 6654(a) addition to tax because

petitioner failed to file 2000 and 2001 Federal income tax

returns until February 23, 2007, and made no estimated tax



     6
       Mendes v. Commissioner, 

, 324-325 (2003),
which suggests that petitioner’s late return is not considered a
“return” for purposes of the addition to tax, is distinguishable
because respondent filed amended answers to the amended petitions
and because petitioner then stipulated the recalculated and
increased tax deficiencies.
                               - 7 -

payments for the 2000 or 2001 taxable year.    Because petitioner

did not file a Federal income tax return for the preceding

taxable years, 1999 and 2000, respondent has met his burden of

producing evidence that petitioner had a required annual payment

of estimated tax for 2000 and 2001.    The Court also notes that

petitioner does not fit within any of the exceptions listed in

section 6654(e).7

     At trial and in his briefs, petitioner challenges the

additions to tax on the basis that Form 1040 does not comply with

the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. secs. 3501-

3520 (2000).   This meritless argument and others like it have

been rejected repeatedly by this Court and Federal Courts of

Appeals.   See Wheeler v. Commissioner, 

, 208 (2006)

(“The Paperwork Reduction Act is not a defense to the addition to

tax under section 6651(a)(1), nor does it create a loophole in


     7
       Sec. 6654(e) provides two exceptions to the sec. 6654(a)
addition to tax. First, the addition is not applicable if the
tax shown on the taxpayer’s return for the year in question (or,
if no return is filed, the taxpayer’s tax for that year), reduced
for these purposes by any allowable credit for wage withholding,
is less than $1,000. Sec. 6654(e)(1). Second, the addition is
not applicable if the taxpayer’s tax for the full 12-month
preceding taxable year was zero and the taxpayer was a citizen or
resident of the United States. Sec. 6654(e)(2). In light of our
earlier conclusion regarding petitioner’s 2000 and 2001
deficiencies, petitioner is liable for deficiencies for 2000 and
2001 that net of withholding exceed $1,000. Furthermore, in
light of our earlier conclusion regarding petitioner’s liability
for a deficiency for 2000, it has not been shown that petitioner
had no tax liability in 2000. Because petitioner never filed a
Federal income tax return for 1999, it has not been shown that he
had no tax liability for that year.
                              - 8 -

the Code.”); Dodge v. Commissioner, T.C. Memo. 2007-236 (finding

that petitioner was “incorrect” insofar as he argued that

respondent could not impose additions to tax pursuant to sections

6651(a)(1) and 6654(a) because Form 1040 does not comply with the

PRA); see also Salberg v. United States, 

, 384 (7th

Cir. 1992) (“Statutes are not subject to the PRA and, as the

government points out in its brief, every court that has

considered the argument that the regulations and the instruction

books promulgated by the IRS are within the scope of the PRA has

rejected it.”); United States v. Dawes, 

, 1193 (10th

Cir. 1991) (“Congress enacted the PRA to keep agencies, including

the IRS, from deluging the public with needless paperwork. It did

not do so to create a loophole in the tax code.”); United States

v. Hicks, 

, 1359 (9th Cir. 1991) (“But even assuming

without deciding that the IRS failed to comply with the PRA here,

its failure does not prevent Hicks from being penalized.”).8


     8
        Petitioner relies heavily on the Court of Appeals for the
Tenth Circuit’s unpublished decision in Pond v. Commissioner, 

(10th Cir. 2007), affg. T.C. Memo. 2005-255, in
support of his argument regarding the PRA. An appeal in this
case would normally lie in the Court of Appeals for the Sixth
Circuit, absent a stipulation to the contrary. The Court of
Appeals for the Tenth Circuit, in Pond, never reached the merits
of the taxpayer’s argument because the taxpayer did not include
any of the Form 1040 in the record for the Court of Appeals for
the Tenth Circuit to review. See

n.2. Moreover, the
Court of Appeals for the Tenth Circuit noted that “while the
[Form] 1040 is an information request, it might be excepted from
the provisions of * * * [the PRA, 44 U.S.C. sec. 3512] under the
statutory origin theory discussed but neither adopted nor
                                                    (continued...)
                                    - 9 -

        Accordingly, the Court concludes that petitioner is liable

for the section 6651(a)(1) and (2) and section 6654(a) additions

to tax for his 2000 and 2001 taxable years.

III.        Section 6673(a)(1) Penalty

        Respondent, in his pretrial memorandum and on brief, has

asked the Court to impose a penalty under section 6673(a)(1).

Section 6673(a)(1) authorizes the Tax Court to impose a penalty

not in excess of $25,000 on a taxpayer for proceedings instituted

primarily for delay or in which the taxpayer’s position is

frivolous or groundless.        “A position maintained by the taxpayer

is ‘frivolous’ where it is ‘contrary to established law and

unsupported by a reasoned, colorable argument for change in the

law.’”        Williams v. Commissioner, 

, 144 (2000)

(quoting Coleman v. Commissioner, 

, 71 (7th Cir.

1986)).

       Because the Court has already classified arguments regarding

the PRA as frivolous and as tax-protester arguments, petitioner

should have known of the frivolous nature of his position in this

case.       See, e.g., Andreas v. Commissioner, T.C. Memo. 1993-551

(characterizing as frivolous an argument that Commissioner’s



        8
      (...continued)
rejected in United States v. Dawes, 

, 1191-92 (10th
Cir. 1991).”

already rejected reliance on
Pond for the proposition that 1995 amendments to 44 U.S.C. sec.
3512 should alter the manner in which we view arguments based on
the PRA. See Pate v. Commissioner, T.C. Memo. 2007-132.
                             - 10 -

alleged failure to comply with the PRA may bar the assessment and

collection of Federal income tax); Aldrich v. Commissioner, T.C.

Memo. 1993-290; McDougall v. Commissioner, T.C. Memo. 1992-683,

affd. without published opinion 

(9th Cir. 1993).

Nevertheless, in light of the newness at the time of trial in

this case of the Tenth Circuit’s decision in Pond v.

Commissioner, 

(10th Cir. 2007), affg. T.C.

Memo. 2005-255, which petitioner appears to have misunderstood,

we shall exercise great restraint and shall not this time impose

a penalty under section 6673(a)(1).    Petitioner is warned,

however, that we shall not be so inclined should he again advance

before the Court arguments, incorrectly relying on Pond v.

, as frivolous as those advanced in these

cases.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.    To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                           Appropriate decisions

                                 will be entered.