T.C. Memo. 2008-258

UNITED STATES TAX COURT

KRIS A. MISSALL, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 26642-07. Filed November 17, 2008.

Kris A. Missall, pro se.

Heidi I. Hansen, for respondent.

MEMORANDUM OPINION

HALPERN, Judge: This case is before us to redetermine

deficiencies in, and additions to, tax determined by respondent. 

Respondent has moved for summary judgment and to impose a penalty 
- 2 -

1 Unless otherwise indicated, all section references are to

the Internal Revenue Code of 1986, as amended, and all Rule

references are to the Tax Court Rules of Practice and Procedure. 

under section 6673 (the motion).1 Petitioner objects (the

response). We shall grant the motion in both respects. We shall

also strike this case from the trial session of the Court set to

begin December 2, 2008, in Phoenix, Arizona, and enter a decision

for respondent.

This Court may grant summary judgment “if the pleadings,

answers to interrogatories, depositions, admissions, and any

other acceptable materials, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and

that a decision may be rendered as a matter of law.” Rule

121(b). In pertinent part, Rule 121(d) provides: “When a motion

for summary judgment is made and supported * * *, an adverse

party may not rest upon the mere allegations or denials of such

party’s pleading, but such party’s response * * * must set forth

specific facts showing that there is a genuine issue for trial.”

In support of his request for summary judgment, respondent

sets forth the following facts with respect to his

determinations, which facts petitioner does not contest and which

we shall take as true for purposes of disposing of the motion. 

By notice of deficiency dated August 1, 2007, respondent

determined deficiencies in, and additions to, tax as follows:
- 3 -

Year Deficiency

 Additions to Tax 

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

2002 $37,869 $8,520.53 $9,467.25 $1,265.50

2003 40,298 9,067.05

To be

determined 1,054.63

2004 8,925 2,008.13

To be

determined 259.07

By the amended petition, petitioner assigns error to

respondent’s determinations, claiming only that he is exempt from

Federal income tax.

In further support of his request for summary judgment,

respondent relies on a declaration of Jeanne M. Bechtold (the

declaration), a tax compliance officer employed by the Internal

Revenue Service (IRS) in its Phoenix, Arizona, office. Ms.

Bechtold attests to the authenticity of 14 exhibits (Exs. 1

through 14) attached to the declaration. Exhibits 6 through 8

consist of the Information Returns Processing File On-Line

Transcripts (IRPs) for petitioner for taxable years 2002 through

2004. The 2002 IRP shows that petitioner had self-employment

compensation from Water Resources International, Inc., of

$114,378. The 2003 and 2004 IRPs show that petitioner had selfemployment compensation from Arizona Environmental Progress,

Inc., of $126,913 and $37,329, respectively. Exhibits 2 through

5 consist of Forms 4340, Certificate of Assessments, Payments,

and Other Specified Matters. The Forms 4340 show that petitioner
- 4 -

failed to file Federal income tax returns for 2001, 2002, 2003,

and 2004.

Petitioner does not challenge the declaration except with

respect to the accuracy of the amounts of self-employment income

derived from the IRPs. Petitioner states: “The figures used in

* * * [the section of the motion entitled ‘Applicability of

Income Tax’] are inaccurate.” Petitioner neither denies that he

received self-employment income nor states to what extent the

figures are inaccurate. Petitioner has not carried his burden

under Rule 121(d) of showing that there is a material issue of

fact in dispute with respect to the claim in the declaration that

he received self-employment income in the amounts set forth

therein. See generally Thorpe v. Commissioner, T.C. Memo. 1997-

342 (granting partial summary judgment where taxpayer failed to

come forward with any evidence of specific amounts excludable

from gross income as damages received on account of personal

injuries or sickness). We accept the facts set forth in the

declaration as true for purposes of disposing of respondent’s

request for summary judgment. Respondent has established that

petitioner failed to report income in the amounts stated in the

declaration for the years in issue and failed to file returns for

those years.

Petitioner’s only defense to respondent’s determinations is

his claim that he is exempt from Federal income tax. Petitioner
- 5 -

cites nothing persuasive in support of that claim. In one of the

documents received by the IRS and attached to the declaration

petitioner asserts that he is a “Utah Sole Corporation” “exempt

from Federal Income Tax under Section 501(d) of the Internal

Revenue code”. Section 501(d) applies to “Religious or apostolic

associations or corporations”. Petitioner has shown nothing to

support the claim that he is an organization of any kind. Nor is

there any merit to petitioner’s implied claim in the response

that compensation for labor is not subject to tax. Section 61

provides in part: “(a) General Definition--. Except as

otherwise provided in this subtitle, gross income means all

income from whatever source derived, including (but not limited

to) the following items: (1) Compensation for services,

including fees, commissions, fringe benefits, and similar items”. 

In United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981),

the Court of Appeals said: “Compensation for labor or services,

paid in the form of wages or salary, has been universally, [sic]

held by the courts of this republic to be income, subject to the

income tax laws currently applicable.” Petitioner claims that he

has “many more court cases regarding my position showing just the

opposite is true”, yet petitioner cites neither cases nor other

persuasive authority in support of that claim. Thus, petitioner

has made no legal argument that precludes summary judgment in
- 6 -

respondent’s favor with respect to the deficiencies in tax

determined by respondent.

The Commissioner bears the burden of production with respect

to penalties and additions to tax. Sec. 7491(c). 

Notwithstanding that petitioner did not specifically assign error

to respondent’s determinations of additions to tax under sections

6651 and 6654, respondent has carried that burden. Section

6651(a)(1) imposes an addition to tax when a taxpayer fails to

file a timely return. The amount of the addition is equal to 5

percent of the amount required to be shown as tax on the

delinquent return for each month or fraction thereof during which

the return remains delinquent, up to a maximum addition of 25

percent for returns more than 4 months delinquent. Respondent

offered uncontroverted evidence that petitioner failed to file

Federal income tax returns for the 3 years in issue (i.e., 2002,

2003, and 2004). Because the returns for these years are all

more than 4 months late, section 6651(a)(1) imposes on petitioner

the maximum 25-percent addition to tax for each year. 

Section 6651(a)(2) imposes an addition to tax when a

taxpayer fails to pay the amount of tax shown on a return by the

prescribed date. The amount of the addition is equal to 0.5

percent of the tax for each month or fraction thereof during

which the tax remains unpaid, up to a maximum addition of 25

percent. Under section 6020(b), when any taxpayer fails to make
- 7 -

any return required by law, the IRS (acting for the Secretary of

the Treasury) must make a return from such information as it can

obtain. Under section 6651(g)(2), any return so made is treated

as the taxpayer’s return for purposes of section 6651(a)(2). 

Respondent offered uncontroverted evidence that petitioner 

failed to pay any Federal income tax for the 3 years in issue. 

Because the IRS made a return for each year pursuant to section

6020(b), section 6651(a)(2) imposes on petitioner an addition to

tax for each year.

Section 6654 imposes an addition to tax when a taxpayer

fails to pay a required installment of estimated income tax. 

Each required installment is equal to 25 percent of the required

annual payment. Sec. 6654(d)(1)(A). The required annual payment

is the lesser of (1) 90 percent of the tax shown on the return

for the taxable year (or, if the taxpayer filed no return, 90

percent of the tax for that year), or (2) 100 percent of the tax

shown on the return, if any, for the preceding taxable year. 

Sec. 6654(d)(1)(B). Respondent offered uncontroverted evidence

that petitioner failed to file a return for every year in issue

and for every year preceding a year in issue. Thus, petitioner’s

required annual payment for each year in issue was 90 percent of

the tax for that year. Because petitioner failed to pay any

Federal income tax for the 3 years in issue, section 6654 imposes

on petitioner an addition to tax for each year. 
- 8 -

Under section 6673(a)(1)(A) and (B), this Court may require

a taxpayer to pay a penalty not in excess of $25,000 if (1) the

taxpayer has instituted or maintained a proceeding primarily for

delay or (2) the taxpayer’s position is “frivolous or

groundless”. We can see no reason for this case other than

delay. Moreover, petitioner’s whole case is groundless, and his

arguments are frivolous. A taxpayer’s position is frivolous if

it is contrary to established law and unsupported by a reasoned,

colorable argument for change in the law. E.g., Nis Family Trust

v. Commissioner, 115 T.C. 523, 544 (2000). Petitioner has

offered no plausible argument that he is exempt from Federal

income tax; indeed, his arguments employ familiar tax-protester

rhetoric that has been universally rejected by this and other

courts. See, e.g., Crain v. Commissioner, 737 F.2d 1417 (5th

Cir. 1984); Williams v. Commissioner, 114 T.C. 136 (2000). 

Petitioner has failed to report substantial amounts of income for

3 years and deserves a substantial penalty for initiating this

proceeding. We shall, therefore, require petitioner to pay a

penalty under section 6673(a)(1) of $5,000.

An appropriate order will

 be issued, and decision will

 be entered under Rule 155.