T.C. Memo. 2011-31

UNITED STATES TAX COURT

SCOTT RAY HOLMES, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 10381-09, 14995-09, Filed February 1, 2011.

 17840-09.

Scott Ray Holmes, pro se.

Ann L. Darnold, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

MARVEL, Judge: Respondent determined the following

deficiencies in and additions to petitioner’s 2004-2006 Federal

income taxes:
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Additions to Tax

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

2004 $17,226 $2,076 $2,215 239

2005 16,414 1,760 1,252 -0-

2006 11,601 1,383 615 262

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

liable for Federal income tax deficiencies for 2004-2006, (2)

whether petitioner is liable for additions to tax under sections

6651 and 6654,1 and (3) whether petitioner is liable for a

penalty under section 6673 for instituting proceedings primarily

for delay or for maintaining frivolous or groundless positions.

FINDINGS OF FACT

Some of the facts have been stipulated. We incorporate the

stipulated facts into our findings by this reference. Petitioner

resided in Texas when he filed his petitions.2

Petitioner worked for Cooper Tire & Rubber Co. in 2004,

2005, and 2006, and he earned wages of $78,267, $82,553, and

$68,364, respectively. Petitioner made no Federal income tax

payments in 2004-2006, other than the amounts withheld from his

wages.

1Unless otherwise indicated, all section references are to

the Internal Revenue Code, as amended, and all Rule references

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

monetary amounts have been rounded to the nearest dollar.

2Respondent issued a separate notice of deficiency with

respect to each of the years 2004-2006, and petitioner filed a

timely petition with respect to each year. On Mar. 22, 2010, we

granted respondent’s motion to consolidate the three cases for

purposes of trial, briefing, and opinion.
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I. 2004

On his 2004 Form 1040, U.S. Individual Income Tax Return,

which respondent received on August 16, 2006, petitioner reported

zero wages and $6,536 of total pension and annuity income, $1,519

of which was taxable. Petitioner claimed the standard deduction,

a filing status of married filing separately, and one exemption,

and he sought a refund of $7,999. Petitioner attached to the

2004 Form 1040 a Form 4852, Substitute for Form W-2, Wage and Tax

Statement, or Form 1099-R, Distributions From Pensions,

Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance

Contracts, Etc., which reflected zero wages. Petitioner wrote

the phrase “Non assumpsit by” above his signature on the jurats3

of the Form 1040 and Form 4852. Petitioner also attached a 39-

page document entitled “Notice of Affidavit Statement in Rebuttal

to Internal Revenue Code Section 6011 For Year Period Ending

December 31, 2004” (2004 affidavit). Petitioner stated in the

2004 affidavit that he “never realized that the fine print on the

bottom of all so-called ‘income’ tax forms meant that I was

claiming to be under oath * * *. I have never sworn such an oath

and for reasons of conscience, never will”. In the 2004

3The jurat is the portion of the Form 1040 which reads: 

“Under penalties of perjury, I declare that I have examined this

return and accompanying schedules and statements, and to the best

of my knowledge and belief, they are true, correct, and

complete.” The jurat of the Form 4852 contains a similar

affirmation.
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affidavit petitioner asserted, among other things, that the

filing of Federal income tax returns and the payment of Federal

income tax is voluntary and that only narrow groups of

individuals, such as Federal employees, are required to pay

taxes.

Respondent determined that petitioner’s 2004 Form 1040 was

not a valid return and prepared a substitute for return (SFR)

pursuant to section 6020(b) on the basis of information reported

by petitioner’s employer on Form W-2, Wage and Tax Statement. On

the basis of the SFR respondent determined a Federal income tax

deficiency for 2004, which included a 10-percent additional tax

under section 72(t) for receiving an early distribution from a

qualified retirement plan,4 and additions to tax for failure to

file a return, failure to pay tax, and failure to pay estimated

tax under sections 6651(a)(1) and (2) and 6654(a), respectively.

4In the notice of deficiency for 2004 respondent treated all

of petitioner’s pension and annuity income as taxable and

determined additional tax under sec. 72(t) accordingly. 

Respondent now concedes that only $1,519 of petitioner’s pension

income was taxable. Respondent also erroneously computed

petitioner’s tax using the “single” filing status but now agrees

that petitioner was married at the end of 2004. Consequently, a

Rule 155 computation will be required in docket No. 17840-09.
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II. 2005

On his 2005 Form 1040, which respondent received on October

2, 2006, petitioner reported zero wages, $30 in taxable interest,

and $1,909 of taxable pension and annuity income. Petitioner

claimed the standard deduction, a filing status of married filing

separately, and one exemption, and he sought a refund of $8,593. 

Petitioner attached to the 2005 Form 1040 a Form 4852 reflecting

zero wages for 2005. Petitioner wrote “Non assumpsit by” above

his signature on the jurats of the Form 1040 and Form 4852. 

Petitioner also attached a 67-page document entitled “Notice of

Affidavit Statement in Rebuttal to Internal Revenue Code Section

6011 For Year Period Ending December 31, 2005” (2005 affidavit). 

In the 2005 affidavit petitioner stated that he did not intend to

sign his 2005 Federal tax filings under penalties of perjury,

repeated the same general arguments that he made in the 2004

affidavit (e.g., payment of Federal taxes is voluntary) and added

several new arguments (e.g., IRS employees’ collection of Federal

income tax is akin to treason).

Respondent determined that petitioner’s 2005 Form 1040 was

not a valid return and prepared an SFR on the basis of

information reported by petitioner’s employer on Form W-2. On

the basis of the SFR respondent determined a Federal income tax

deficiency for 2005, which included a 10-percent additional tax
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under section 72(t), and additions to tax for failure to file a

return and failure to pay tax.

III. 2006

Petitioner’s 2006 Form 1040, which respondent received on

April 19, 2007, reported zero wages, $79 of taxable interest, and

$121 of taxable pension and annuity income. Petitioner claimed

the standard deduction, a filing status of married filing

separately, and one exemption, and he sought a refund of $5,474. 

Petitioner attached to the 2006 Form 1040 a Form 4852 that also

reflected zero wages for 2006. Petitioner wrote “‘WITHOUT

PREJUDICE’ UCC 1-207” above his signature on the jurats of the

Form 1040 and Form 4852.5

Respondent determined that petitioner’s 2006 Form 1040 was

not a valid return and prepared an SFR on the basis of

information reported by petitioner’s employer on Form W-2. On

the basis of the SFR respondent determined a deficiency for 2006,

which included a 10-percent additional tax under section 72(t),

and additions to tax for failure to file a return, failure to pay

tax, and failure to pay estimated tax.

IV. Petitioner’s Forms 1040X

Petitioner received several letters from respondent

informing him that his 2004-2006 Forms 1040 were frivolous,

5Petitioner did not attach an affidavit to his 2006 Form

1040.
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advising him of the consequences of filing frivolous tax returns,

and imposing penalties under section 6702 for frivolous tax

submissions. After receiving the letters and the notices of

deficiency with respect to 2005 and 2006, petitioner prepared and

submitted to respondent Forms 1040X, Amended U.S. Individual

Income Tax Return, and new Forms 4852 with respect to 2004, 2005,

and 2006.6 In the Forms 1040X petitioner made minor adjustments

to the amounts reported on his 2004-2006 Forms 1040. However,

petitioner continued to take the position on the Forms 1040X that

his wages were not income. Petitioner signed the jurats of the

Forms 1040X and Forms 4852 and did not include any language on

the forms or in attachments that would negate the jurats. 

Respondent did not treat the Forms 1040X as valid tax returns.

Petitioner filed timely petitions contesting the notices of

deficiency. In the petitions and at trial petitioner maintained

that his wages are not taxable and that the payment of Federal

income tax is voluntary.

OPINION

I. Burden of Proof

Generally, the Commissioner’s determination of a deficiency

is presumed correct, and the taxpayer bears the burden of proving

that it is incorrect. Rule 142(a); Welch v. Helvering, 290 U.S.

6The record does not disclose whether respondent received

petitioner’s 2006 Form 1040X.
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111, 115 (1933). The U.S. Court of Appeals for the Fifth

Circuit, to which an appeal would lie absent a stipulation to the

contrary, see sec. 7482(b)(1)(A), has held that for the

presumption of correctness to attach in an unreported income

case, the Commissioner must establish “some factual foundation”

for the assessment, see Portillo v. Commissioner, 932 F.2d 1128,

1133 (5th Cir. 1991), affg. in part and revg. in part T.C. Memo.

1990-68; Carson v. United States, 560 F.2d 693, 696 (5th Cir.

1977) (“The tax collector’s presumption of correctness has a

herculean muscularity of Goliathlike reach, but we strike an

Achilles’ heel when we find no muscles, no tendons, no ligaments

of fact.”). Petitioner concedes that he received wages,

interest, and pension and annuity income in 2004-2006. 

Consequently, the presumption of correctness attaches to

respondent’s notices of deficiency, and petitioner bears the

burden of proving that the determinations are incorrect. 

Petitioner does not contend, nor does the record allow us to

conclude, that the requirements of section 7491(a) have been met.

II. Petitioner’s Taxable Income

Petitioner’s assertions that his wages are not taxable are

similar to assertions he raised unsuccessfully in Holmes v.

Commissioner, T.C. Memo. 2006-80 (Holmes I), with respect to his

2002 tax liability, Holmes v. Commissioner, T.C. Memo. 2010-42

(Holmes II), with respect to his 2003 tax liability, and Holmes
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v. Commissioner, T.C. Memo. 2010-50 (Holmes III), with respect to

the collection of the 2002 tax liability. Petitioner’s

groundless and frivolous assertions warrant no further

discussion. See Crain v. Commissioner, 737 F.2d 1417, 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.”). 

Petitioner does not dispute that he received wages, interest, and

pension and annuity income in the amounts respondent determined. 

Consequently, respondent’s determinations with respect to

petitioner’s deficiencies for 2004-2006 are sustained.7

III. Additions to Tax

Section 7491(c) provides that the Commissioner bears the

burden of production in any court proceeding with respect to the

liability of any individual for any penalty, addition to tax, or

additional amount. Higbee v. Commissioner, 116 T.C. 438, 446-447

(2001). To meet his burden of production, the Commissioner must

come forward with sufficient evidence that it is appropriate to

impose the penalty, addition to tax, or additional amount. Id.

Once the Commissioner meets his burden, the taxpayer must come

7Petitioner does not specifically address the additional

taxes under sec. 72(t) for receiving early distributions from a

retirement account, and there is no evidence in the record that

any of the exceptions to sec. 72(t) apply. Accordingly, we deem

petitioner to have conceded this issue. See Rule 34(b)(4).
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forward with evidence sufficient to persuade the Court that the

determination is incorrect. Id.

Respondent argues that petitioner is liable for an addition

to tax for failure to file a return for each year in issue under

section 6651(a)(1). Section 6651(a)(1) imposes an addition to

tax for failure to file a return on the date prescribed unless

the taxpayer can establish that the failure was due to reasonable

cause and not due to willful neglect. Respondent introduced into

evidence petitioner’s account transcripts, which indicate that

respondent did not treat petitioner’s 2004-2006 submissions as

processable Federal income tax returns. Consequently, we

conclude that respondent has satisfied his burden of production

under section 7491(c), and petitioner must come forward with

evidence sufficient to persuade the Court that respondent’s

determination is inappropriate. Petitioner argues that he is not

liable for the section 6651(a)(1) addition to tax because he

filed valid Forms 1040 and Forms 1040X for 2004-2006. We

disagree.

Section 6011(a) provides that any person liable for any tax

imposed by the Internal Revenue Code must file a return according

to the forms and regulations prescribed by the Secretary.8 See

also sec. 1.6011-1(a), Income Tax Regs. The Code does not define

8The term “Secretary” means the Secretary of the Treasury or

his delegate. Sec. 7701(a)(11)(B).
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the word “return”. Swanson v. Commissioner, 121 T.C. 111, 122-

123 (2003). On the basis of the Supreme Court’s opinions in

Zellerbach Paper Co. v. Helvering, 293 U.S. 172, 180 (1934), and

Florsheim Bros. Drygoods Co. v. United States, 280 U.S. 453, 464

(1930), we used in Beard v. Commissioner, 82 T.C. 766, 777

(1984), affd. per curiam 793 F.2d 139 (6th Cir. 1986), a fourpart test (Beard test) to determine whether a document submitted

by a taxpayer is a valid return. To qualify as a return, the

document must meet the following requirements:

First, there must be sufficient data to calculate tax

liability; second, the document must purport to be a

return; third, there must be an honest and reasonable

attempt to satisfy the requirements of the tax law; and

fourth, the taxpayer must execute the return under

penalties of perjury. [Id.]

The test applies for purposes of section 6651(a)(1). Oman v.

Commissioner, T.C. Memo. 2010-276.

Petitioner’s Forms 1040 do not satisfy the Beard test

because they did not contain sufficient data to allow respondent

to calculate petitioner’s tax liability, see, e.g., id. (holding

that a Form 1040 lacked information sufficient to allow the

Commissioner to calculate the taxpayers’ liability where the form

showed withholding but contained no information as to the income

from which tax was withheld); and did not represent an honest and

reasonable attempt to satisfy the requirements of the tax law,

see, e.g., Watson v. Commissioner, T.C. Memo. 2007-146

(concluding that a return that reported income on one line and
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zeros on other lines was invalid because it did not constitute a

reasonable attempt to comply with the requirements of the tax

law), affd. 277 Fed. Appx. 450 (5th Cir. 2008).

With respect to petitioner’s Forms 1040X, we note that the

“‘treatment of amended returns is a matter of internal

administration, and solely within the discretion of the

Commissioner.’” Evans Cooperage Co. v. United States, 712

F.2d 199, 204 (5th Cir. 1983) (quoting Badaracco v. Commissioner,

693 F.2d 298, 301 n.5 (3d Cir. 1982), revg. T.C. Memo. 1981-404,

affd. 464 U.S. 386 (1984)); see also Owens v. Commissioner, T.C.

Memo. 2010-265. Respondent never indicated that he had accepted

or would accept petitioner’s Forms 1040X. In any event, the

Forms 1040X fail to satisfy the Beard test. Although signed

under penalty of perjury, the Forms 1040X, which reported zero

wages for 2004-2006, did not contain sufficient information to

allow respondent to calculate petitioner’s tax liabilities and

did not represent honest and reasonable attempts to satisfy the

requirements of the tax law. Consequently, we conclude that

petitioner is liable for the addition to tax under section

6651(a)(1) for failure to file timely tax returns for 2004, 2005,

and 2006.

Petitioner did not specifically address in his petitions, in

his pretrial memoranda, or at trial the other additions to tax

for failure to pay under section 6651(a)(2) or for failure to pay
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estimated tax under section 6654(a). Consequently, we deem

petitioner to have conceded these issues and conclude that

respondent has no burden of production under section 7491(c) with

respect to these additions to tax. See Funk v. Commissioner, 123

T.C. 213, 217-218 (2004); Swain v. Commissioner, 118 T.C. 358,

363 (2002). Respondent’s determinations as to the additions to

tax under sections 6651(a)(2) and 6654(a) are sustained.

IV. Section 6673 Penalty

Under section 6673(a)(1), this Court may require a taxpayer

to pay a penalty not in excess of $25,000 whenever it appears (1)

that the taxpayer has instituted or maintained proceedings

primarily for delay or (2) 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(a)(1) because he took frivolous positions before and during

trial despite repeated warnings from respondent before trial and

he instituted and maintained the proceedings primarily for delay. 

More than a year after our decision in Holmes I, petitioner filed

his petition in Holmes II, in which he reasserted many of the

same arguments we had rejected as frivolous in Holmes I. 

Consequently, in Holmes II we found that petitioner was liable

for a $10,000 penalty under section 6673(a)(1).

We are now faced with yet another proceeding involving three

consolidated cases in which petitioner, despite repeated warnings
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from respondent and this Court, persists in making the frivolous

and groundless arguments that this Court and others have

repeatedly rejected. See, e.g., Gittinger v. Commissioner, 448

F.3d 831, 832 (5th Cir. 2006); Grimes v. Commissioner, 82 T.C.

235, 237 (1984); Blaga v. Commissioner, T.C. Memo. 2010-170. At

the trial, which was held after we had released our opinions in

Holmes I, Holmes II, and Holmes III, petitioner clung to the same

type of tired arguments that we had rejected in those opinions

and in countless other cases. Petitioner has demonstrated that

he is unwilling to change his behavior regarding his tax

compliance obligations, and consequently, we conclude, in the

exercise of our discretion, that the maximum sanction under

section 6673(a)(1) is appropriate. We shall require petitioner

to pay a $25,000 penalty under section 6673(a)(1) in each of the

consolidated cases.

V. Conclusion

We conclude that (1) petitioner is liable for a reduced

deficiency and additions to tax for 2004 as respondent conceded,

and (2) petitioner is liable for the deficiencies and additions

to tax for 2005-2006 as respondent determined. We also conclude

that petitioner is liable for a $25,000 penalty under section

6673(a)(1) in each of the consolidated cases.
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We have considered all of the arguments raised by the

parties and, to the extent not discussed above, we conclude they

are irrelevant, moot, or without merit.

To reflect the foregoing,

Decision will be entered

under Rule 155 in docket No.

17840-09.

Decisions will be entered for

respondent in docket Nos. 10381-09

and 14995-09.