Janet A. Phillips - Page 9

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          penalties).  Consequently, the Court sustains respondent’s                  
          imposition of an addition to tax pursuant to section 6651(a)(1).            
               C.  Section 6654(a) Addition to Tax                                    
               Section 6654(a) imposes an addition to tax for underpayment            
          of estimated income tax by an individual taxpayer.  That addition           
          to tax is computed by reference to four required installment                
          payments of the taxpayer’s estimated tax liability, each                    
          constituting 25 percent of the “required annual payment.”  Sec.             
          6654(d)(1)(A).  For taxpayers whose adjusted gross income for the           
          preceding year was $150,000 or less, the “required annual                   
          payment” is equal to the lesser of (1) 90 percent of the tax                
          shown on the individual’s return for the year or, if no return is           
          filed, 90 percent of his or her tax for such year, or (2) if the            
          individual filed a return for the immediately preceding taxable             
          year, 100 percent of the tax shown on that return.  Sec.                    
          6654(d)(1)(A), (B)(i) and (ii).                                             
               Here, petitioner failed to file a 2004 Federal income tax              
          return and made no estimated tax payments for 2004 except for the           
          amount withheld from her wages.8  Petitioner had a tax liability            

               8 Again, because petitioner’s “zero return” is deemed                  
          invalid, it is as though she filed no return for her 2004 taxable           
          year.  In addition, the $3,573.81 in Federal income tax withheld            
          from petitioner’s wages is creditable under sec. 31 and is                  
          treated as a payment of estimated tax pursuant to sec.                      
          6654(g)(1).  See Mendes v. Commissioner, 121 T.C. 308, 323 n.12             
          (2003).  However, in light of her unreported income, petitioner             
          underpaid her estimated tax for 2004 and respondent has                     

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