Karen Hodsdon, Petitioner

CAL .

STA T

T .C . Summary Opinion 2008-8 5

UNITED STATES TAX COUR T

KAREN HODSDON, Petitioner v . .

COMMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 1089-07S .

Filed July 15, 2008 .

Karen Hodsdon, pro se .

Kim Nguyen , for respondent .

HAINES,- Judge :

This-case was heard pursuant to the provisions of section 7463 of the Infernal Revenue Code in effec t when the petition was filed .' Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, an d 'Unless otherwise indicated, section references are to the Internal Revenue Code as in effect fior the year at issue, and all Rule references are to the Tak Court; Rules of Practice and Procedure . Amounts are rounded to the nearest dollar .

11l,z, T- ,, 1 this opinion shall n o be treated as precedent for any othe r case .+ Respondent determined a deficiency in petitioners 2004 r !I Federal income tax of$944 and additions to tax under section 6651 (a) (1) and (2) ofii 'i$212 and $76, respectively .

The issues are :

(1) Whether petitioner receivediincom e during 2004 ;(2) whether petitioner is liable for the addition s to tax ; and (3) whethe section 6673(a) .

Background Petitioner resided in California at the time her ;;jpetition 1 11 was filed .

During 2004 petitioner earned wages of $16,632 from her employer, Goodwill Industries of Orange County . Petitioner and her husband, Michael E~ . Hodsdon, submitted a joint Federal income II tax return for 2004 that reported zeros on all lines, except the return reported a standard deduction, two exemptions, ! Federa l income tax withheld, alnd a refund requested . Respondent .i ~~ 11 determined the return,lwas not valid and did not process it .

' P ' On August 2, 2006, respondent prepared for petitioner a substitute return under section 6020(b) for 2004 . On .October 13, 2006, respondent issued petitioner a notice of deficiency .

Petitioner timely petitioned this Court . Trial was held in,Lo s t IF Angeles, California, of March 10, 2008 .

Discussio n I .

Unreported Income Generally, a taxpayer bears the burden of proving th e Commissioner's determinations incorrect . Rule 142(a) ; Welch v .

Helverina , 290 U .S . 111, 115 (1933) .' However, the U .S . Court of Appeals for the Ninth Circuit, the court to which appeal in this case would lie, .has held that the Commissioner must-establish "some evidentiary foundation"-connecting the taxpayer with the income-producing activity, or otherwise demonstrate that the taxpayer received unreported income, Ifor the presumption of correctness to attach to the deficiency determination in unreported income cases .

Weimerskirch v . Commissioner , 596 F .2 d .358, 361-362'(9th Cir . 1979), revg . 67 T .C . 672 (1 .977) .

. ; If the commissioner introduces such evidence demonstrating that th e taxpayer received unreported ._ income , ~the burden shifts to the taxpayer to show by a preponderance of the evidence that the deficiency was arbitrary or erroneous .

See Hardy v .

Commissioner , . 181 F .3d 1002 , 1004 ( 9th Cir . 1999), affg . T .C .

Memo . 1997-97 .

J{J Respondent introduced into evidence a computer - generate d form stating that respondent received from Goodwill Industries of Orange County a Form W-2, Wage(cid:127)and Tax Statement,`reporting that it paid petitioner wages of $16,632 during 2004 . Respondent has therefore made . the requisite connection between petitioner and the .unreported income . See id . at 1005 (evidentiary foundation requirement satisfied when the taxpayer's employer reported th e taxpayer's income to l the Commissioner) .

Petitioner does', not deny that she received the income a t issue . Rather, she~r'kaises frivolous and groundless challenges t o the taxation .of the ii ncome at issue .

For example, petitione r argues that private citizens are not liable for income tax .

Petitioner's arguments have been rejected by this Court and other courts, and "We perce-ive 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 ."

Crain v . Commissioner!, 737 F .2d 1417, 1417 (5th, Cir .j 1984) ; see United States v . Romero , 640 F .2d 1014, 1016 (9th Cir . 1981 ) II (compensation for labor or services, paid in the form of wages or salary, has been unilIersally held by the courts of the Unite d States to be income subject to the income tax laws currently applicable) . We therefore find that petitioner received the income at issue andshe is liable for Federal ...income,tax upon it .

II .

Additions-to Ta x i ;The CommissioneI bears the initial burden of production with respect to a taxpayer's liability for additions to tax under section 6651(a)(1) a, d (2) . Sec . 7491(c) ; Rule 142 ('a) ; Higbee v .

Commissioner , 116 T .-C . 438, 446-447 (2001) . To meet ;; this burden 'the,Commissioner must come forward with sufficient evidence :

indicating it is appropriate to impose the additions to tax .

Higbee v . Commissioner , supra at 446-447 . Once the Commissioner meets his burden, the . taxpayer must come forward with evidenc e sufficient to persuade the Court tha t the Comm'issioner' s determinations are incorrect .

Section 6651(a)(1) imposes an addition to tax for failure to file a return on=the date prescribed (determined with regard to any extension of time for filing) unless .the taxpayer ca n establish that such failure is due-to reasonable cause and no t due to willful neglect . A return that reports zeros on al l relevant lines is not a valid return for purposes of sectio n 6651 .(a)(1) .

Cabirac v . Commissioner , 120 T .C . 163, 169-17 0 (2003) . -Petitioner's 2004 return reported zeros on all .relevan t lines, and she did not make an honest and reasonable attempt t o supply the information required by the Internal Revenue Code . We therefore find that petitioner did not file a valid 2004 return .

Petitioner did not establish that her failure to .file was due to reasonable cause . Accordingly, we sustain the section 6651(a)(1 ) addition to tax as determined .

Section 6651(x)(2) imposes an addition to tax of 0 .5 percent per month (up to a maximum of 25 percent) for failure to make timely payment-of the tax .shown on a return unless the taxpaye r shows that the failure is due to reasonable cause and not due t o willful neglect . The addition to tax applies only when an amount of tax is shown on aH return .

Cabirac v . Commissioner , supra at 170 . Under section '6 651(g), a return prepared by the Secretar y pursuant to section '6020(b) is treated as a return filled by the taxpayer for the puripose of determining the amount of an additio n to. tax under section"~6651(a)(2) . For these purposes, a section 6020(b) return, in the context of section 6651(a)(2) and (g ) (2) , "must be subscribed , ;Lit must contain sufficient .information from which to compute the, taxpayer's tax liability, and the retur n form ; and any attachments must purport . to-be a `return' ."

11 11 Spurlock v . Commiss26ner , T .C . Memo . 2003-124 ; see also Cabirac v . Commissioner , supra at 170-171 . Respondent prepared a substitute for return that satisfied the requirements of section s 6651 (a) (2) and (g) (2j and 6020(b) . Petitioner has not paid th e tax ;due and has not if Ilstablished that her failure to timely pay I was due to reasonabl 6651(a)(2) addition 6 cause . Accordingly, we sustain the section l¹ to tax as determined .

III . Section 6673 Penalt y Section 6673(a)(1) authorizes the Court to require a taxpayer to pay . the, United States a penalty in an amount not to exceed $25,000 whenever it appears to the Court that! the proceedings . were instituted primarily for delay or the taxpayer' s position is frivoloull or groundless . The Court may sua spont e determine whether to impose such a penalty .

This is not the first time petitioner'has been faced with the imposition of a section 6673 (a) () penalty by this Court .

docket No . 23930-04S the Court imposed a .penalty of $1,000 against petitioner and her husband for instituting th e proceedings for the purpose of delay and for raising frivolous arguments . In docket No . 15420-05S, the Court did not impose a penalty but warned petitioner and her husband that they could be held liable for a section 6673(a)(1)Ipenalty because the y insisted on raising frivolous and groundless arguments .

The record shows that petitioner regards this case as a vehicle to protest the tax laws of this country and espouse he r own misguided views . She has repeatedly wasted the Court's tim e and resources . The Court previouslyimposed upon petitioner a .$1,000 penalty in the hope that she would cease this unacceptable behavior . However, it appears that .the $1,000 penalty was insufficient to deter her from behaving in a similar fashion in this .case . For that reason we now require petitioner to pay a penalty of $2,000 pursuant to section 6673(a)(1) . Petitioner an d her husband are warned that if they nsist on taking frivolous o r groundless positions in this Court, much harsher penalties wil l be imposed in the future .

In reaching our holdings herein we have considered al l arguments made, and to the extent not mentioned above, we conclude they are moot, irrelevant, or without merit .

To reflect the regoing, Decision will be entered fo r respondent .