TAX COURT OPINION

Case: Scott Ray Holmes
Docket Number: 23291-07
Judge: Thornton
Opinion Type: memo
Filed: 03/04/2010
Pages: 6

T .C . Memo . 2010-4 2 UNITED STATES TAX COUR T SCOTT RAY HOLMES, Petitioner v . COMMISSIONER OF INTERNAL'REVENUE, Responden t Docket No . 23291-07 . Filed March 4, 2010 . Scott Ray Holmes , pro se . Ann L . Darnold , for respondent . MEMORANDUM FINDINGS OF FACT AND OPINIO N THORNTON, Judge : Respondent determined a $17,197 deficiency in petitioner's 2003 Federal income tax and additions to tax of $1,516 under section 6651(a)(1) for failure to file, $1,246 unde r fVD MAR :: 4 2010 section 6651(a)(2) for failure to pay tax, and $275 under section 6654(a) for failure to make sufficient estimated tax payments . ' The issues for decision are : (1) Whether petitioner received taxable income in the amounts respondent determined ;_(2) whether petitioner is liable .for a 10-percent additional tax under section 72(t)(1) ; .(3) whether petitioner is liable for additions to tax as respondent determined ; and (4) whether petitioner is liable for a penalty under section 6673 for instituting proceedings primarily for delay and for maintaining frivolous or groundless positions . FINDINGS OF FAC T The parties have stipulated some facts, which we incorporate herein by this reference . Petitioner, born in 1952, resided in Texas when he filed his petition . In 2003 he received $82,978 of wages from Cooper Tire & Rubber Co ., $51 of interest, and a qualified retirement plan distribution, $2,735 of which was taxable . Petitioner made no Federal income tax payments for 2003 apart from the $10,461 his employer withheld from his wages during the year . On his 2003 Form 1040, U .S . Individual Income Tax Return, petitioner reported zero wages and $2,735 of taxable pension and annuity income ; he claimed the standard deduction an d 'Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue . Amounts have been rounded to the nearest dollar . 1, - 3 - a refund in the amount of his $10,461 of withholdings . I n addition to the Form 1040, petitioner submitted Form 4852, Substitute for Form W-2, Wage and Tax Statement, which also reflected zero wages . Petitioner wrote the phrase ".non assumpsit by" next to his signature on both Form 1040 and Form 4852 . Petitioner attached to the Form 1040 a 51-page document entitled " Notice of Affidavit Statement in Rebuttal to Internal Revenue Code Section 6011 For Year Period Ending December 31, 20 .03" . In this-document petitioner asserted that he was not subject to tax for 2003 because, inter alias (1) Filing Federal income tax returns is voluntary ; (2) paying income tax based on a Form 1040 is an illegal kickback ; (3) taxable income applies only to sources from international or foreign commerce ; (4) petitioner's domicile is outside . the United States because he lives in the "compact state of Texas state republic" ; (5) he is not a "United States Person", domestic partnership, domestic corporation, estate or trust ; (6) the term "employee" applies only to those working for public service ; (7) "the income tax is a slave tax prohibited by the Thirteenth Amendment" ; (8) the term "Secretary of the Treasury" in the Internal Revenue Code applies only to the Secretary of the Treasury of .Puerto Rico ; (9) the capitalization of the letters of petitioner's name in Court documents creates a false legal impression that he is a "fictional .legal entity" and not entitled to his constitutional rights ; and (10) his wages are not includable in gross income . Petitioner attached about 60 pages of exhibits to the 51-page - 4 - document . By notice of deficiency respondent determined that for 2003 petitioner had a deficiency of $17,197 . Respondent also determined that petitioner owed additional tax under section 72(t) and additions to tax under sections 6651(a)(1) and (2) and 6654(a) . In response to the notice of deficiency, petitioner sent to respondent a letter that asserted more frivolous arguments and repeated a demand for a refund of his withholdings plus interest . I . Taxable Incom e OPINIO N In 2003 petitioner received wages and other income as respondent determined . Petitioner's assertions that this income is not taxable are similar to assertions that he raised unsuccessfully in Holmes v . Commissioner , T .C . Memo . 2006-80 (Holmes I), with respect to his 2002 tax liability . These groundless and frivolous assertions warrant no further discussion . See Crain v . Commissioner , 737 F .2d 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 .") . We sustain'respondent ' s determination as to petitioner ' s deficiency for 2003 . II . Section 72(t) Additional Ta x Respondent determined that petitioner is liable for a 10-percent a,dditiohal . tax on the $ 2,735 taxable portion of his distribution from a qualified retirement plan in 2003 . Section 72(t)(1) generally imposes, subject to various exceptions under section 72 ( t)(2), a 10 -percent additional tax on earl y distributions from a qualified retirement plan . Petitioner reported t he distribution on his Form 4852 , thereby admitting that he received it in '2003 when he had not yet attained age 59-1/2 . Petitioner has not shown and the evidence does not suggest that any exception under section 72(t)(2 ) applies . We sustain respondent ' s determination . III . Other Additions to Tax The petition contains no specific allegations or supporting statements of'facts regarding any of . the additions to tax that respondent determined in the . notice of deficiency pursuant to sections 6651 ( a)(1) and ( 2) and ' 6654 ( a) . Petitioner ' s frivolous challenges to his obligation to pay tax do not specifically address any issue regarding the additions to tax . We deem petitioner to have conceded these issues and hold that respondent has no burden of production under section 7491 ( c) as to the additions to tax . See Funk v . Commissioner , 123 T . C . 213 ( 2004) ; - 6 - Swain v . Commissioner , 118 T .C . 358 (2002) . We sustain respondent's determinations as to the additions to tax under sections 6651(a)(1) and (2) and 6654(a) . IV . Section 6673 Penalt y Respondent has moved to impose a penalty under section 6673(a)(1), which authorizes this Court to require a taxpayer to pay to the United States a penalty not in excess of $25,000 whenever-it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or 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 because he "took frivolous positions before and during trial despite ample warnings before trial from respondent ." Holmes v . Commissioner , supra . Notwithstanding the sanctions imposed in Holmes I, issued more than a year before he filed his petition in this case, petitioner has persisted in his misguided course . of conduct . In furtherance of the purpose of section 6673(a)(1) to deter such conduct, we believe a more significant sanction is now appropriate . Pursuant to section 6673(a)(1) we shall require petitioner to pay to the United States .a penalty of $10,000 . To reflect the foregoing, Decision will be entere d for respondent .