T.C. Summary Opinion 2007-148

UNITED STATES TAX COURT

NORMAN P. SCHIFF, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 6781-05S, 11265-05S. Filed August 27, 2007.

Norman P. Schiff, pro se.

Orsolya Kun, for respondent.

NIMS, Judge: These cases were heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petitions were filed. Pursuant to section 7463(b), the

decisions to be entered are not reviewable by any other court,

and this opinion shall not be treated as precedent for any other

case. Unless otherwise indicated, all section references are to 
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the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure. 

In these consolidated cases, petitioner requests

redetermination of deficiencies in the amounts of $24,548 and

$17,985 determined by respondent for taxable years 2002 and 2003,

respectively. Respondent has conceded that petitioner received

compensation as an employee during the taxable years in issue and

that he is not liable for self-employment tax. Petitioner has

conceded that he is liable for income tax. The issues remaining

for decision are: (1) Whether petitioner is entitled to the

benefit of joint filing status and deductions for his wife and

children for 2002 and 2003; (2) whether petitioner is liable for

additions to tax for failure to file returns pursuant to section

6651(a)(1) for 2002 and 2003; and (3) whether petitioner is

liable for additions to tax for failure to pay estimated tax

pursuant to section 6654 for 2002 and 2003. 

Background

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

The stipulation of facts and related exhibits are incorporated

herein by this reference.

At the time he filed the petitions, petitioner resided in

Ridgewood, New York. 
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During taxable years 2002 and 2003, the years in issue,

petitioner worked for Stull, Stull, & Brody, Attorneys at Law. 

During 2002, petitioner received compensation in the amount of

$74,808.96, which Stull, Stull, & Brody reported on a Form 1099-

MISC, Miscellaneous Income. During 2003, petitioner received

compensation from Stull, Stull, & Brody in the amount of

$61,888.05. This amount was also reported on a Form 1099-MISC.

Petitioner never supplied Stull, Stull, & Brody with a

completed Form W-4, Employee’s Withholding Allowance Certificate. 

Petitioner was aware that the firm was not withholding any

amounts from his paychecks. 

For each year in issue petitioner submitted to respondent a

Form 1040, U.S. Individual Income Tax Return. These returns

indicated the names of petitioner and his wife, listed their

address and Social Security numbers, indicated joint filing

status, contained petitioner’s and his wife’s signatures, and

included no financial information. The Forms 1040 had the words

“not liable” written on the heading and other parts of the

returns.

Respondent treated petitioner as a nonfiler and prepared

substitutes for returns for 2002 and 2003. On January 3, 2005,

respondent issued a statutory notice of deficiency for 
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petitioner’s taxable year 2003. On March 16, 2005, respondent

issued a statutory notice of deficiency for petitioner’s taxable

year 2002.

Discussion

Income Tax Liabilities

Petitioner has abandoned his position that he is not liable

for income taxes, for fear of imposition of frivolous argument

penalties. He has conceded his liability for income taxes for

the years in issue. Petitioner does, however, dispute the tax

due as calculated in the notices of deficiency. 

The Commissioner’s determination in a notice of deficiency

is generally presumed correct, and the taxpayer has the burden of

proving that the determination is erroneous. See Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933). Under certain

circumstances, the burden of proof with respect to relevant

factual issues may shift to the Commissioner under section

7491(a). Petitioner has neither alleged that section 7491(a)

applies nor established his compliance with the requirements of

section 7491(a)(2)(A) and (B) to substantiate items, maintain

records, and cooperate fully with respondent’s reasonable

requests. Therefore, the burden of proof does not shift to

respondent.

Petitioner alleges error in respondent’s use of married

filing separately as his filing status for calculation of his
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income tax liabilities for 2002 and 2003. Petitioner believes

that respondent should have used rates applicable to married

taxpayers filing joint returns.

To receive the benefit of joint return rates, taxpayers must

file a valid joint return pursuant to section 6013. Sec.

1(a)(1); see Thompson v. Commissioner, 78 T.C. 558 (1982). The

returns petitioner submitted for 2002 and 2003 were not valid

income tax returns. (See discussion below.) Petitioner did not

file any valid returns electing joint filing status before these

cases were submitted for decision. Cf. Millsap v. Commissioner,

91 T.C. 926 (1988); Phillips v. Commissioner, 86 T.C. 433, 441

(1986), affd. in part and revd. in part 851 F.2d 1492 (D.C. Cir.

1988). Furthermore, petitioner does not make a claim that he was

not legally required to file U.S. income tax returns, which would

first have to be rejected for the need or opportunity to elect

joint filing status to arise. Cf. Vazquez v. Commissioner, T.C.

Memo. 1993-368. Petitioner has also failed to present any

evidence regarding his eligibility for joint filing status. 

Thus, petitioner is not entitled to claim joint filing status,

and respondent correctly calculated petitioner’s tax liability

using married filing separately rates. See sec. 1(d).

Petitioner also claims that he is entitled to deductions for

his wife and children, which respondent did not allow in the

calculation of petitioner’s tax liabilities. Since petitioner
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offered no evidence concerning any eligible dependents at trial,

he is not entitled to any deductions other than those allowed by

respondent. See sec. 151(b) and (c).

We therefore sustain the 2002 and 2003 deficiencies in tax

as calculated by respondent.

Additions to Tax

For both taxable years in issue, respondent also seeks

additions to tax for failure to file a return under section

6651(a)(1) and for failure to pay estimated tax under section

6654(a). Petitioner argues that he should not be held liable for

the additions to tax. Pursuant to section 7491(c), the

Commissioner has the burden of production as to whether a

taxpayer is liable for an addition to tax. To meet this burden

of production, the Commissioner must produce sufficient evidence

showing that imposition of the addition to tax is appropriate in

the particular case. Higbee v. Commissioner, 116 T.C. 438, 446

(2001). Once this burden of production is met, the taxpayer has

the burden of proof regarding reasonable cause. Id.

The parties stipulated that petitioner filed what he alleged

were valid returns containing only petitioner’s and his wife’s

names, address, Social Security numbers, and signatures and

indicating joint filing status. These purported returns did not

include any financial information and had the words “not liable”

written on them. Frivolous returns such as these are not valid
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returns. See Cabirac v. Commissioner, 120 T.C. 163, 168-170

(2003); Beard v. Commissioner, 82 T.C. 766, 777 (1984), affd. 793

F.2d 139 (6th Cir. 1986). Respondent has met the burden of

production for the addition to tax for failure to file a return

pursuant to section 6651(a)(1) for each year in issue.

Petitioner’s argument that he had reasonable cause for

failing to file returns because of his sincere belief in various

tax-protester arguments is without merit. Reliance on such

arguments does not constitute reasonable cause for failing to

file a return. See Arnett v. Commissioner, T.C. Memo. 2006-134,

affd. without published opinion 99 AFTR 2d 2007-3418 (10th Cir.

2007); Coulton v. Commissioner, T.C. Memo. 2005-199. Petitioner

is liable for the additions to tax for failure to file returns

for 2002 and 2003.

Section 6654 provides for an addition to tax for failure to

make estimated tax payments. To meet the burden of production

for this addition to tax, respondent must show that petitioner

had a “required annual payment” as set forth in section 6654(d). 

Wheeler v. Commissioner, 127 T.C. 200, 211 (2006). The required

annual payment equals the lesser of (1) 90 percent of the tax

shown on the return for the taxable year (or 90 percent of the

tax for such year if no return is filed), or (2) 100 percent of 
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the tax shown on the individual’s return for the preceding

taxable year (if the individual filed a return for that preceding

year). Sec. 6654(d)(1)(B). 

Respondent has not met the burden of production for the

addition to tax for failure to make estimated tax payments for

2002. Respondent’s Form 4340, Certificate of Assessments,

Payments, and Other Specified Matters, indicates that a return

was filed for 2001. Respondent, however, did not introduce any

evidence regarding the amount of tax shown on the 2001 return. 

Consequently, we cannot determine whether petitioner had a

required annual payment for 2002.

Respondent has met the burden of production for the addition

to tax for failure to make estimated tax payments for 2003. 

Since petitioner did not file a return for 2002, petitioner’s

required annual payment for 2003 was 90 percent of the tax for

2003, which was greater than zero. Petitioner had no withholding

for 2003, and respondent’s records show that he made no other

payments for 2003. Therefore, respondent has met the burden of

production for the section 6654 addition to tax for 2003. 

Petitioner argues that he had reasonable cause for failing

to make estimated tax payments because he was not self-employed

and therefore was not obligated to make estimated tax payments. 
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Section 6654 makes no such distinction. Petitioner is liable for

the addition to tax for failure to make estimated tax payments

for 2003.

Decisions will be entered

under Rule 155.