- 12 -
meet the burden of production under section 7491(c), the
Commissioner need only make a prima facie case that imposition of
the penalty or addition to tax is appropriate; he need not negate
the existence of any circumstantial defense such as reasonable
cause. Higbee v. Commissioner, 116 T.C. 438, 446 (2001); H.
Conf. Rept. 105-599, at 241 (1998), 1998-3 C.B. 747, 995; see
sec. 6654(e)(3) (providing for waiver of the addition to tax
under certain extenuating circumstances).
C. Discussion
We are concerned only with 1995, 1996, and 1997. Because
petitioner did not file returns for those years, the
applicability of the $500 de minimis exception under section
6654(e)(1) discussed above is determined on the basis of
petitioner’s actual tax for those years, less wage withholding.7
The stipulation of settled issues filed by the parties
establishes that petitioner’s tax, as so defined, for each of
those years exceeded $500. Those stipulations also preclude the
applicability of the section 6654(e)(2) exception (zero tax for
preceding year) to 1996 and 1997. However, nothing in the record
6(...continued)
Pub. L. 105-206, sec. 3001(c)(1), 112 Stat. 727. In his brief,
respondent concedes that his examination of petitioner’s 1995,
1996, and 1997 taxable years (i.e., the years remaining at issue)
commenced after July 22, 1998.
7 The stipulation of settled issues categorizes
petitioner’s earned income for the years 1995-97 as nonemployee
compensation, which by definition is not subject to wage
withholding. See secs. 3401(a), 3402(a).
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