T.C. Memo. 1998-70

UNITED STATES TAX COURT

LAVONNE ALLEN HODGSON, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 21185-96. Filed February 19, 1998.

LaVonne Allen Hodgson, pro se.

Michelle Or, for respondent.

MEMORANDUM OPINION

JACOBS, Judge: Respondent determined a $15,287 deficiency in

petitioner's Federal income tax for 1994. The deficiency arises

from petitioner's tax protester claims that we reject.
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1 The Internal Revenue Service "froze" the refund and

applied it as a prepayment credit against the 1994 deficiency. 

All section references are to the Internal Revenue Code in

effect for 1994, and all Rule references are to the Tax Court Rules

of Practice and Procedure.

Petitioner resided in Santa Maria, California, at the time he

filed his petition. 

Background

During 1994, petitioner was employed as an engineer for the

Northrop Grumman Corp., for which he was paid $67,337 for services

rendered. On his 1994 Federal income tax return, petitioner

reported the wages from his employment, but claimed a deduction in

an amount equal to the wages for "Non Taxable

Compensation/Renumeration Eisner vs McComber [sic] 252 US 189". As

a result, petitioner reported no taxable income and claimed a

$12,342 refund due to the Federal income taxes withheld by his

employer during the year.1 Above his signature on the return,

petitioner stamped the words "'Under Protest' UCC 1-207". 

In his petition, filed September 30, 1996, petitioner stated

that he "disagree[d] with the disallowance of compensation for

labor as non-taxable income." During October and November 1997,

petitioner served on respondent two requests to produce documents,

a set of interrogatories, and requests for admissions, all seeking

the factual and legal basis for respondent's deficiency
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determination. In his pretrial memorandum, petitioner stated that

"his self assessment determined that he was not a 'taxpayer' as

that word of art is used in the Internal Revenue Code". He further

stated that he was not engaged in any taxable activity that would

subject him to income tax. At trial, petitioner presented no

evidence to refute respondent's deficiency determination.

Discussion

Instead of attempting to challenge the merits of respondent's

determinations, petitioner raises the usual "tax protester"

arguments which we and other courts have always rejected. See,

e.g., Wilcox v. Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg.

T.C. Memo. 1987-225. We do not believe it appropriate to address

petitioner's assertions as to the validity of the Federal income

tax system "with somber reasoning and copious citation of

precedent; to do so might suggest that these arguments have some

colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th

Cir. 1984). Suffice to say, section 61(a)(1) includes in gross

income compensation for services rendered, and it is undisputed

that petitioner received $67,337 as wages from services rendered to

the Northrop Grumman Corp.

Respondent's deficiency determinations are presumed correct,

and the burden is on petitioner to show that the determinations are

wrong. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933).
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Petitioner failed to do so. Consequently, we sustain respondent's

deficiency determination.

Respondent filed a motion seeking to impose a penalty on

petitioner pursuant to section 6673(a). Section 6673(a)(1)

authorizes the Court to require a taxpayer to pay to the United

States a penalty up to $25,000 whenever it appears that proceedings

in this Court have been instituted or maintained by the taxpayer

primarily for delay, or that the taxpayer's position in such

proceeding is frivolous or groundless. A taxpayer's position is

frivolous or groundless "if it is contrary to established law and

unsupported by a reasoned, colorable argument for change in the

law." Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).

We find that petitioner instituted this proceeding primarily

for delay and maintained a frivolous and groundless position.

Petitioner was made aware of the frivolous and groundless nature of

his arguments. He failed to heed these warnings and allowed his

case to proceed. Petitioner's insistence on pursuing his fruitless

argument has consumed the time and effort of both this Court and

the Commissioner that could have otherwise been devoted to

resolving bona fide claims of other taxpayers. See Cook v.

Spillman, 806 F.2d 948 (9th Cir. 1986). Accordingly, we shall

grant respondent's motion for an award of a penalty under section

6673 and require petitioner to pay a penalty to the United States

in the amount of $1,000, although we advise petitioner that the
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amount of the penalty may be greater if he persists with his tax

protester position in the future.

To reflect the foregoing,

An appropriate order will

be issued, and a decision will

be entered for respondent.