T.C. Memo. 2010-42

UNITED STATES TAX COURT

SCOTT RAY HOLMES, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 23291-07. Filed March 4, 2010.

Scott Ray Holmes, pro se.

Ann L. Darnold, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

THORNTON, Judge: Respondent determined a $17,197 deficiency

in petitioner’s 2003 Federal income tax and additions to tax of

$1,516 under section 6651(a)(1) for failure to file, $1,246 under
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1Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue. 

Amounts have been rounded to the nearest dollar.

section 6651(a)(2) for failure to pay tax, and $275 under section

6654(a) for failure to make sufficient estimated tax payments.1

The issues for decision are: (1) Whether petitioner

received taxable income in the amounts respondent determined; (2)

whether petitioner is liable for a 10-percent additional tax

under section 72(t)(1); (3) whether petitioner is liable for

additions to tax as respondent determined; and (4) whether

petitioner is liable for a penalty under section 6673 for

instituting proceedings primarily for delay and for maintaining

frivolous or groundless positions.

FINDINGS OF FACT

The parties have stipulated some facts, which we incorporate

herein by this reference. Petitioner, born in 1952, resided in

Texas when he filed his petition. In 2003 he received $82,978 of

wages from Cooper Tire & Rubber Co., $51 of interest, and a

qualified retirement plan distribution, $2,735 of which was

taxable.

Petitioner made no Federal income tax payments for 2003

apart from the $10,461 his employer withheld from his wages

during the year. On his 2003 Form 1040, U.S. Individual Income

Tax Return, petitioner reported zero wages and $2,735 of taxable

pension and annuity income; he claimed the standard deduction and
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a refund in the amount of his $10,461 of withholdings. In

addition to the Form 1040, petitioner submitted Form 4852,

Substitute for Form W-2, Wage and Tax Statement, which also

reflected zero wages. Petitioner wrote the phrase “non assumpsit

by” next to his signature on both Form 1040 and Form 4852.

Petitioner attached to the Form 1040 a 51-page document

entitled “Notice of Affidavit Statement in Rebuttal to Internal

Revenue Code Section 6011 For Year Period Ending December 31,

2003”. In this document petitioner asserted that he was not

subject to tax for 2003 because, inter alia: (1) Filing Federal

income tax returns is voluntary; (2) paying income tax based on a

Form 1040 is an illegal kickback; (3) taxable income applies only

to sources from international or foreign commerce; (4)

petitioner’s domicile is outside the United States because he

lives in the “compact state of Texas state republic”; (5) he is

not a “United States Person”, domestic partnership, domestic

corporation, estate or trust; (6) the term “employee” applies

only to those working for public service; (7) “the income tax is

a slave tax prohibited by the Thirteenth Amendment”; (8) the term

“Secretary of the Treasury” in the Internal Revenue Code applies

only to the Secretary of the Treasury of Puerto Rico; (9) the

capitalization of the letters of petitioner’s name in Court

documents creates a false legal impression that he is a

“fictional legal entity” and not entitled to his constitutional
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rights; and (10) his wages are not includable in gross income. 

Petitioner attached about 60 pages of exhibits to the 51-page

document.

By notice of deficiency respondent determined that for 2003

petitioner had a deficiency of $17,197. Respondent also

determined that petitioner owed additional tax under section

72(t) and additions to tax under sections 6651(a)(1) and (2) and

6654(a). In response to the notice of deficiency, petitioner

sent to respondent a letter that asserted more frivolous

arguments and repeated a demand for a refund of his withholdings

plus interest. 

OPINION

I. Taxable Income

In 2003 petitioner received wages and other income as

respondent determined. Petitioner’s assertions that this income

is not taxable are similar to assertions that he raised

unsuccessfully in Holmes v. Commissioner, T.C. Memo. 2006-80

(Holmes I), with respect to his 2002 tax liability. These

groundless and frivolous assertions warrant no further

discussion. See Crain v. Commissioner, 737 F.2d 1417 (5th Cir.

1984) (“We perceive no need to refute these arguments with somber

reasoning and copious citation of precedent; to do so might

suggest that these arguments have some colorable merit.”). We
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sustain respondent’s determination as to petitioner’s deficiency

for 2003. 

II. Section 72(t) Additional Tax

Respondent determined that petitioner is liable for a

10-percent additional tax on the $2,735 taxable portion of his

distribution from a qualified retirement plan in 2003. Section

72(t)(1) generally imposes, subject to various exceptions under

section 72(t)(2), a 10-percent additional tax on early

distributions from a qualified retirement plan. Petitioner

reported the distribution on his Form 4852, thereby admitting

that he received it in 2003, when he had not yet attained age 

59-1/2. Petitioner has not shown and the evidence does not

suggest that any exception under section 72(t)(2) applies. We

sustain respondent’s determination. 

III. Other Additions to Tax

The petition contains no specific allegations or supporting

statements of facts regarding any of the additions to tax that

respondent determined in the notice of deficiency pursuant to

sections 6651(a)(1) and (2) and 6654(a). Petitioner’s frivolous

challenges to his obligation to pay tax do not specifically

address any issue regarding the additions to tax. We deem

petitioner to have conceded these issues and hold that respondent

has no burden of production under section 7491(c) as to the

additions to tax. See Funk v. Commissioner, 123 T.C. 213 (2004);
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Swain v. Commissioner, 118 T.C. 358 (2002). We sustain

respondent’s determinations as to the additions to tax under

sections 6651(a)(1) and (2) and 6654(a).

IV. Section 6673 Penalty

Respondent has moved to impose a penalty under section

6673(a)(1), which authorizes this Court to require a taxpayer to

pay to the United States a penalty not in excess of $25,000

whenever it appears that proceedings have been instituted or

maintained by the taxpayer primarily for delay or that the

taxpayer’s position in such proceedings is frivolous or

groundless. In Holmes I, we found that petitioner was liable for

a $2,000 penalty under section 6673 because he “took frivolous

positions before and during trial despite ample warnings before

trial from respondent.” Holmes v. Commissioner, supra. 

Notwithstanding the sanctions imposed in Holmes I, issued more

than a year before he filed his petition in this case, petitioner

has persisted in his misguided course of conduct. In furtherance

of the purpose of section 6673(a)(1) to deter such conduct, we

believe a more significant sanction is now appropriate. Pursuant

to section 6673(a)(1) we shall require petitioner to pay to the

United States a penalty of $10,000.

To reflect the foregoing,

Decision will be entered

for respondent.