1 These cases were consolidated for purposes of trial,

briefing, and opinion by order of this Court dated Aug. 19, 1994.

T.C. Memo. 1996-195

UNITED STATES TAX COURT

ROSA JANUS, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 20150-93, 1174-94. Filed April 23, 1996.

Rosa Janus, pro se.

Mayer Y. Silber, Victoria Crosley, and Terri L. Parrott, for

respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

WOLFE, Special Trial Judge: These consolidated1 cases were

heard pursuant to the provisions of section 7443A(b)(3) and Rules
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2 All section references are to the Internal Revenue Code in

effect for the years at issue, unless otherwise indicated. All

Rule references are to the Tax Court Rules of Practice and

Procedure.

180, 181, and 182.2 In six notices of deficiency, one dated

October 19, 1993, and the other five dated June 22, 1993,

respondent determined the following deficiencies in and additions

to petitioner's Federal income tax:

 Additions To Tax 

Year Deficiency Sec. 6651(a) Sec. 6654(a)

1986 $1,406 $352 -- 

1987 1,649 412 -- 

1988 3,001 750 -- 

1989 2,745 686 $187

1990 2,434 593 155

1991 2,389 597 139

The issues for decision are: (1) Whether petitioner is

liable for tax on her income for the years in issue as determined

by respondent; (2) whether petitioner is liable for additions to

tax under section 6651(a) for failure to file returns for the

taxable years in issue; (3) whether petitioner is liable for

additions to tax under section 6654(a) for failure to pay

estimated taxes for taxable years 1989, 1990, and 1991; and (4)

whether a penalty pursuant to section 6673(a) should be imposed

on petitioner.

FINDINGS OF FACT

Prior to consolidation of these cases, docket No. 20150-93

came on for trial on May 23, 1994. We continued that case
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because petitioner had failed to cooperate in the stipulation

process and respondent was not prepared to try the case without a

stipulation of facts. This Court had earlier participated in an

extended pretrial conference to help the parties reach agreement

on at least a minimal stipulation, but petitioner refused to

stipulate even the most basic facts. Petitioner's refusal to

stipulate undisputed facts was consistent with a purpose of

delay.

On September 6, 1994, after consolidation of these cases,

respondent filed a motion for order to show cause under Rule

91(f) why proposed facts in evidence should not be accepted as

established. A proposed stipulation of facts and exhibits in

support thereof was attached to respondent's motion. 

Respondent's motion for order to show cause was granted. 

Petitioner filed a response, setting forth frivolous objections. 

At the hearing pursuant to the order to show cause, petitioner

offered nothing of merit to refute respondent's proposed

stipulation of facts. Respondent's order to show cause then was

made absolute, and the Court ordered that the facts and evidence

set forth in respondent's proposed stipulation of facts with

attached exhibits are deemed admitted for purposes of these

consolidated cases, with two exceptions. Paragraph 28 of the

proposed stipulation of facts, concerning Activity Code 532, was

deleted from the stipulation, and an additional document, a

portion of the Internal Revenue Manual in effect on November 15,
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1983, proposed by petitioner, was stipulated. That stipulation

of facts and the exhibits attached thereto are incorporated

herein by this reference.

Petitioner resided in Tinley Park, Illinois, when her

petition was filed. During 1986, petitioner received wages in

the amount of $11,333 and nonemployee compensation in the amount

of $1,168 from HCM Company. During 1987, she received wages in

the amount of $15,927 from HCM Company. HCM Company did not

withhold Federal income tax from the wages it paid petitioner

during 1986 and 1987.

During 1988, petitioner received wages from two companies,

HDM and Hamilton, Carver & Lee, Inc. (Hamilton), in the

respective amounts of $4,786 and $19,074. Petitioner completed

Form W-4, Employee's Withholding Allowance Certificate, and

claimed "exempt" from withholding for taxable year 1988. HDM and

Hamilton did not withhold Federal income tax from the wages each

paid petitioner that year. Also during 1988, petitioner received

a distribution in the amount of $76 from the HDM Company Savings

and Retirement Plan.

During 1989, petitioner received wages from Hamilton in the

amount of $20,503, plus a distribution of $710 from her vested

portion of Hamilton's profit sharing benefits. Hamilton withheld

no Federal income tax from the wages it paid petitioner that

year. Petitioner also received unemployment compensation during
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1989 in the amount of $1,708 from the Illinois Department of

Employment Security.

During 1990, petitioner received wages from Hackney's on

Lake, Inc. (Hackney's) and Esrock Corp. (Esrock) in the

respective amounts of $1,104 and $13,433. Hackney's withheld

Federal income tax in the amount of $16 from the wages it paid

petitioner that year and Esrock withheld $48. Petitioner also

received unemployment compensation during 1990 in the amount of

$6,972 from the Illinois Bureau of Employment Security. On

November 11, 1990, and November 6, 1990, petitioner completed two

Forms W-4 for 1989 and 1990, respectively. She claimed "exempt"

from withholding and signed both forms. However, the parties

have stipulated that petitioner "rescinded her signature", and

each of the forms bears the handwritten legend "signature

rescinded".

During 1991, petitioner received wages from Hackney's and

Ozinga Brothers, Inc. (Ozinga) in the respective amounts of

$3,094 and $14,280. Ozinga and Hackney's did not withhold

Federal income tax from the wages each paid petitioner that year. 

Petitioner also received unemployment compensation during 1991 in

the amount of $4,084 from the Illinois Department of Employment

Security.

Petitioner did not file a Federal income tax return for any

of the taxable years 1986 through and including 1991. Substitute

returns were prepared by respondent in connection with the
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subject examination of petitioner's tax liability for those

years. Respondent has not made any tax assessment for those same

years.

OPINION

In statutory notices of deficiency, respondent determined

deficiencies in petitioner's Federal income tax for the years

1986 through and including 1991. Respondent also determined

additions to tax under section 6651(a) for failure to file a

return for each of those years, and under section 6654(a) for

failure to pay estimated taxes for 1989, 1990, and 1991. 

Respondent's determinations as to petitioner's tax liability are

presumed correct, and petitioner has the burden of proving

otherwise. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115

(1933).

Petitioner asserts frivolous tax protester-type arguments

that essentially ask this Court to "look behind" the notices of

deficiency and find them arbitrary and excessive. Petitioner

argues that the notices of deficiency and the determinations

therein are invalid because respondent: (1) Failed to identify

the type of tax involved; (2) improperly prepared for petitioner

tax returns that did not satisfy the requirements of section

6020; (3) failed to follow Internal Revenue Manual procedures and

did not identify the statute or regulation relied upon in issuing

the statutory notices; (4) misclassified her source of income;

and (5) did not issue the notices within the statutory
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3 Each notice contains a description that satisfies sec. 7522,

which provides for the general content of tax due, deficiency,

and other notices. We note that this provision was originally

enacted as sec. 7521(2) by sec. 6233(a) of the Technical and

Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat.

3342, 3735, applicable to mailings made on or after January 1,

1990, and was redesignated as sec. 7522 by sec. 11704(a)(3) of

the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508,

104 Stat. 1388, 1388-519.

limitations period. Petitioner also argues that the Forms W-2

filed by her employers satisfied her filing requirement for the

years at issue. She did not otherwise address the determination

that she failed to pay estimated taxes.

1. The Notices of Deficiency Satisfied All Requirements

Each of the notices of deficiency in these cases 

unambiguously identifies both the amounts of the deficiencies and

the years involved. Each statutory notice tells the taxpayer all

that is required.3 See Foster v. Commissioner, 80 T.C. 34, 229-

230 (1983), affd. in part and vacated in part 756 F.2d 1430 (9th

Cir. 1985); Jarvis v. Commissioner, 78 T.C. 646, 655-656 (1982). 

Except in rare circumstances, this Court will not look behind a

notice of deficiency to examine the administrative proceedings or

the propriety of respondent's motives leading to the deficiency

determination. Berkery v. Commissioner, 91 T.C. 179, 186-187

(1988), affd. without published opinion 872 F.2d 411 (3d Cir.

1989); Vallone v. Commissioner, 88 T.C. 794, 806 (1987). 

Exceptions to this general rule have been recognized where there

has been substantial evidence of unconstitutional conduct by
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4 Petitioner submitted a copy of one of respondent's internal

files monitoring the status of her purported deficiencies. The

file references an "activity code" number that can be correlated

to the manufacture of pistols and revolvers. Petitioner gleans

from this that her source of income was misclassified. However,

none of the notices of deficiency attribute income to petitioner

from the manufacture of pistols and revolvers.

respondent in determining the deficiency and in unreported

illegal income cases where respondent introduced no evidence. 

Berkery v. Commissioner, supra at 186-187.

Petitioner's frivolous contentions do not involve the

exceptions to the general rule summarized above nor do they

otherwise warrant our reviewing respondent's administrative

procedures. None of the notices fails to identify the subject

tax; each clearly describes the "Kind of Tax" involved as

"INDIVIDUAL INCOME". The alleged substitute returns are forms

that were included in the notices of deficiency and that detailed

the adjustments determined by respondent. The forms in question

merely facilitated the processing of the notices and did not

serve as substitute returns under section 6020. Nothing in the

Internal Revenue Code requires the Secretary to file a return

pursuant to section 6020 before assessing a deficiency. Schiff

v. United States, 919 F.2d 830 (2d Cir. 1990); Manka v. United

States, 71 AFTR 2d 93-1735, 93-2 USTC par. 50,371 (D. Colo.

1993). Petitioner's contention that respondent misclassified her

source of income is spurious.4 Each notice describes her

unreported income and lists the payor source or sources.
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Petitioner's assertions that respondent failed to identify

the statute or regulation relied upon in issuing the notices, and

that respondent failed to observe all of the requirements of the

Internal Revenue Manual also are without merit. Lack of

reference or citation to the Internal Revenue Code does not

invalidate a notice of deficiency. See Jarvis v. Commissioner,

supra; McCabe v. Commissioner, T.C. Memo. 1985-202. Internal

Revenue Manual procedures are generally directory in nature and

not mandatory, and the alleged procedural violations herein are

not of a kind that would render respondent's determinations

invalid. See United States v. Horne, 714 F.2d 206, 207 (1st Cir.

1983); Vallone v. Commissioner, supra at 806-808; Levy v.

Commissioner, T.C. Memo. 1987-609, affd. without published

opinion 884 F.2d 574 (5th Cir. 1989).

Finally, petitioner's contention that the notices of

deficiency were not timely issued is frivolous. Petitioner

contends that the Forms W-2 filed by her employers with the

Internal Revenue Service satisfied her filing requirement and

triggered the limitations period for assessment. In support of

this argument, petitioner referenced Income Tax regulations in

effect during 1946. For taxable years 1944 through 1947, Income

Tax regulations provided that individuals required to file were

to file their tax returns on Form 1040 or, under certain
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5 Specifically, the regulations provided that for taxable

years beginning after Dec. 31, 1943, the return was to be on Form

1040, except in the case of a taxpayer entitled to elect, and who

so elected, to use the Form W-2 (Rev.). Sec. 29.51-2, Regs. 111

(1943), as amended by T.D. 5425, 1945 C.B. 10 and T.D. 5649,

1948-2 C.B. 57. An individual was entitled to elect to use as

his return Form W-2 (Rev.), provided his or her gross income was

less than $5,000, inter alia. Id.

6 The amended regulations provided that for taxable years

beginning after Dec. 31, 1947, the return was to be on Form 1040,

except in the case of a taxpayer entitled to elect, and who so

elected, to use the Form 1040A. Sec. 29.51-2, Regs. 111 [26 CFR,

Part 29], as amended by T.D. 5649, 1948-2 C.B. 57. Use of the

Form 1040 or 1040A had been prescribed by sec. 29.51-2, Regs.

111, when originally promulgated on Oct. 26, 1943. 

circumstances, on a Form W-2.5 Sec. 29.51-2, Regs. 111 (1943),

as amended by T.D. 5425, 1945 C.B. 10 and T.D. 5649, 1948-2 C.B.

57. For taxable years beginning after December 31, 1947,

however, the regulations prescribed the use of Form 1040A,

instead of Form W-2, as the alternative to Form 1040.6 Sec.

29.51-2, Regs. 111 (1943), as amended by T.D. 5649, 1948-2 C.B.

57.

During the taxable years in issue, the Income Tax

regulations prescribed the use of a Form 1040 or, under limited

circumstances, a Form 1040A. Sec. 1.6012-1(a)(6), Income Tax

Regs. The terms of Income Tax regulations, in effect during the

taxable years in issue, do not state that a Form W-2 is an

acceptable substitute for a Form 1040. The filing of a Form W-2

by a taxpayer's employer does not satisfy the requirements that

such taxpayer file an individual income tax return. Manka v.
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United States, 71 AFTR 2d 93-1735 at 93-1737, 93-2 USTC par.

50371 at 89,033 (D. Colo. 1993); see Beard v. Commissioner, 82

T.C. 766, 774-779 (1984), affd. 793 F.2d 139 (6th Cir. 1986);

Sickler v. Commissioner, T.C. Memo. 1994-462; Koeneman v.

Commissioner, T.C. Memo. 1958-186. Section 6501(c) provides that

in the case of a failure to file a return, the tax may be

assessed at any time. Since petitioner failed to file tax

returns for the years at issue, the notices of deficiency were

timely issued.

We hold that the wages and other income attributed to

petitioner in the notices of deficiency are taxable income. See

Coleman v. Commissioner, 791 F.2d 68, 70 (7th Cir. 1986). Gross

income is expressly defined under the Internal Revenue Code as

all income from whatever source derived, unless excluded by law,

including compensation for services and unemployment

compensation. Sec. 61(a), 85; secs. 1.61-1 and 1.61-2, Income

Tax Regs. Aside from her frivolous tax protester-type arguments,

petitioner offered nothing to contradict the determination of

wage and other income in the notices of deficiency, nor did she

offer any grounds for excluding those items from her gross

income. 

Petitioner's general protester-type arguments have been

rejected by this Court and others, including the Court of Appeals

for the Seventh Circuit, to which appeal in this case lies. See

Coleman v. Commissioner, supra; see also Crain v. Commissioner,
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737 F.2d 1417, 1417 (5th Cir. 1984), where the Court of Appeals

for the Fifth Circuit stated, "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."

Respondent's determinations of the deficiencies in these

cases are sustained.

2. Section 6651(a) Failure to File

Respondent determined that petitioner is liable for

additions to tax under section 6651(a) for each of the taxable

years at issue. Section 6651(a)(1) imposes an addition to tax

for a taxpayer's failure to file a required return on or before

the specified filing date, including extensions. The addition to

tax may be avoided, however, if the taxpayer can show that the

failure to file the return was due to reasonable cause and not

due to willful neglect. Sec. 6651(a)(1); Richardson v.

Commissioner, 72 T.C. 818, 826-827 (1979). The burden of proof

is on petitioner. Rule 142(a).

Petitioner did not file a Form 1040, U.S. Individual Income

Tax Return, a Form 1040A, U.S. Individual Income Tax Return, or a

Form 1040EZ, Income Tax Return for Single Filers with No

Dependents, for any of the taxable years at issue. Petitioner

did not offer any evidence or testimony to the contrary, but

argued instead that the Forms W-2 filed by her employers with the

Internal Revenue Service satisfied her filing obligations. As
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discussed above, the filing by another of a Form W-2 does not

satisfy the requirements for filing an individual income tax

return. See Manka v. United States, supra; Koeneman v.

Commissioner, supra. Respondent is sustained on this issue.

3. Section 6654(a) Estimated Taxes

Respondent determined that petitioner is liable for

additions to tax under section 6654(a) for failure to pay

estimated income tax for 1989, 1990, and 1991. Where payments of

tax, either through withholding or by making estimated quarterly

tax payments during the course of the year, do not equal the

percentage of total liability required under the statute,

imposition of the addition to tax under section 6654 is

applicable, unless petitioner shows that one of the statutory

exceptions applies. Niedringhaus v. Commissioner, 99 T.C. 202,

222 (1992); Grosshandler v. Commissioner, 75 T.C. 1, 20-21

(1980). Petitioner bears the burden to show qualification for

such exception. Habersham-Bey v. Commissioner, 78 T.C. 304, 319-

320 (1982). 

The parties stipulated that for each of the taxable years at

issue, with the exception of 1990, Federal income tax was not

withheld from the wages attributed to petitioner herein. During

1990, Hackney's withheld Federal income tax in the amount of $16

on wages of $1,104 and Esrock withheld Federal income tax in the

amount of $48 on wages of $13,433. There is no showing in the

record that petitioner made estimated tax payments for any of the
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years in issue. Petitioner offered no evidence or testimony to

refute the stipulated facts. Petitioner has not satisfied her

burden of proof. Respondent is sustained on this issue.

4. Section 6673 Sanctions

At trial respondent moved for sanctions under section 6673

against petitioner on the grounds that she had instituted and

maintained the proceedings primarily for delay and that her

positions were frivolous and groundless. Section 6673(a)(1)

provides that a penalty not in excess of $25,000 may be awarded

"Whenever it appears to the Tax Court that * * * proceedings

before it have been instituted or maintained by the taxpayer

primarily for delay, * * * [or] the taxpayer's position in such

proceeding is frivolous or groundless".

The records in these cases establish that petitioner sought

to delay these proceedings by refusing to stipulate even the most

basic elements of the cases and that she raised only frivolous

factual and legal arguments. Her claims that the notices of

deficiency failed to identify the type of tax involved and that

her source of income was misclassified, for example, 

contradicted the record. Petitioner demonstrated that she was

able to research the law, yet she took positions contrary to

established law and unsupported by a reasoned colorable argument. 

See Coleman v. Commissioner, supra at 71. Accordingly, we shall

require petitioner to pay a penalty to the United States in the
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7 Sec. 6601 provides for interest on delinquent payments of

tax running from the last date prescribed for payment to the date

paid. 

8 Sec. 7214 provides that any officer or employee of the U.S.

convicted of certain criminal acts in connection with any revenue

law of the U.S. may be dismissed from office or discharged from

his employment and fined not more than $10,000, or imprisoned not

more than 5 years, or both. It also provides for damages against

such officer or employee in favor of the party injured by such

officer's or employee's actions.

amount of $5,000. See Coulter v. Commissioner, 82 T.C. 580, 584-

586 (1984); Abrams v. Commissioner, 82 T.C. 403, 408-411 (1984).

In her trial memorandum and posttrial briefs, petitioner

makes two arguments that we address summarily. First, petitioner

contends that the "additions to tax under section 66017 [were]

not * * * claimed in the notices of deficiency for 1986 through

1991." We reviewed the notices and each did in fact make a

determination for interest under section 6601. Second,

petitioner's allegation that respondent in some way violated

section 72148 is a criminal matter over which this Court has no

jurisdiction. See Boger v. Commissioner, T.C. Memo. 1981-629;

Rice v. Commissioner, T.C. Memo. 1978-334.

Decisions will be entered

for respondent.