NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 14-4700
___________
ALVIN SHELDON KANOFSKY,
Appellant
v.
COMMISSIONER OF INTERNAL REVENUE
____________________________________
On Appeal from the United States Tax Court
(Tax Court No. 10283-13L)
Tax Court Judge: Honorable Howard A. Dawson, Jr.
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
July 8, 2015
Before: FISHER, KRAUSE and VAN ANTWERPEN, Circuit Judges
(Opinion filed: July 13, 2015)
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OPINION*
___________
PER CURIAM
Appellant Alvin Sheldon Kanofsky, pro se, appeals from an order of the United
States Tax Court granting summary judgment for the Commissioner of Internal Revenue
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
(“Commissioner” or “IRS”) in an action challenging a tax collection proceeding. For the
following reasons, we will affirm the Tax Court’s judgment.
I.
This is the third iteration of this tax dispute to come before us. In 1996 through
2000, Kanofsky claimed substantial deductions from alleged business activities on his
federal individual income tax returns, despite reporting zero gross receipts or income
from those activities. After determining that Kanofsky was not engaged in a qualifying
trade or business during those years, the IRS denied the majority of his business
deductions and assessed him with tax deficiencies as well as an accuracy-related penalty.
Kanofsky filed a petition in the Tax Court, which, following a trial, substantially upheld
the IRS’s determination while slightly adjusting the IRS’s deficiency and penalty
assessments. We affirmed. Kanofsky v. Comm’r, 271 F. App’x 146 (3d Cir. 2008) (per
curiam) (“Kanofsky I”).
In 2007, the IRS sent Kanofsky notice of intent to levy in order to collect on his
outstanding liability. At a collection due process (“CDP”) hearing, Kanofksy opposed
the levy on the ground that his appeal of the deficiency assessment was still pending.
The IRS Office of Appeals approved the proposed levy and, following a trial, the Tax
Court sustained that determination. We affirmed, noting that Kanofsky’s accusations of
public fraud, corruption, and obstruction of justice and requests for due consideration of
2
his “whistleblowing” activities were irrelevant and unhelpful. See Kanofsky v. Comm’r,
424 F. App’x 189, 191–92 (3d Cir. 2011) (per curiam) (“Kanofsky II”).1
In 2012, the IRS sent Kanofksy notification of a federal tax lien in order to collect
on his still-outstanding federal income tax liabilities from 1996, 1997, 1998, and 2000,
which together totaled $41,807.22. In a CDP hearing, 2 Kanofksy objected on the grounds
that the lien exceeded the amount he owed and that his liability was still being litigated
and should be mitigated in light of his whistleblower status and his business activities.
He did not, however, provide the financial information and unfiled tax returns requested
by an IRS settlement officer for purposes of considering collection alternatives, or
himself propose any such alternatives. The IRS Office of Appeals approved the proposed
lien. Kanofsky filed a petition for relief in the Tax Court, raising the same arguments and
again asserting that he has been the victim of fraud, corruption, and retaliation. The Tax
Court sustained the IRS’s decision and also fined Kanofsky $10,000 for instituting
frivolous proceedings for the sake of delay. See 26 U.S.C. § 6673(a)(1). The Tax Court
denied Kanofsky’s timely motion to vacate or revise its judgment. Kanofsky timely
appealed. See 26 U.S.C. § 7483; Fed. R. App. P. 13(a)(1)(B).
1
Kanofksy’s attempts to obtain Supreme Court review of both of our 2008 and 2011
decisions were unsuccessful. See Kanofsky v. Comm’r, 555 U.S. 1071 (2008); Kanofksy
v. Comm’r, 555 U.S. 1208 (2009); Kanofksy v. Comm’r, 132 S. Ct. 1956 (2012).
2
A CDP hearing “typically comprises informal oral and written communications between
the IRS and the taxpayer.” Dalton v. Comm’r, 682 F.3d 149, 155 (1st Cir. 2012). In this
case, Kanofsky missed his scheduled telephone hearing with his IRS settlement officer,
but subsequently communicated with her via faxed documents.
3
II.
We have jurisdiction pursuant to 26 U.S.C. § 7482(a) and exercise plenary review
over the Tax Court’s entry of summary judgment. See Conn. Gen. Life Ins. Co. v.
Comm’r, 177 F.3d 136, 143 (3d Cir. 1999). Rule 121(b) of the Tax Court Rules of
Practice and Procedure provides that summary judgment is appropriate where there is no
genuine issue as to any material fact and a decision may be rendered as a matter of law.
Craig v. Comm’r, 119 T.C. 252, 259–60 (2002). Where the underlying tax liability is not
at issue, both we and the Tax Court review the IRS Office of Appeals’ determination in a
CDP hearing for abuse of discretion. See Kindred v. Comm’r, 454 F.3d 688, 694 (7th
Cir. 2006); Living Care Alternatives of Utica v. United States, 411 F.3d 621, 625 (6th
Cir. 2005). We will set aside such a determination only if it is “unreasonable in light of
the record compiled before the agency.” Dalton v. Comm’r, 682 F.3d 149, 154–55 (1st
Cir. 2012). Finally, we review the imposition of a penalty under 26 U.S.C. § 6673 for
abuse of discretion. See Sauers v. Comm’r, 771 F.2d 64, 70 (3d Cir. 1985).
III.
Kanofsky argues that, in upholding the tax lien and imposing the § 6673 sanction,
the Tax Court: prevented him from introducing evidence of his business activities;
ignored his “affirmative defenses of bribery, corruption, conspiracy, duress, etc.”; and
failed to take into consideration his “whistleblower status.” To the extent that these
arguments bear any relevance to the tax lien at issue here, they appear to comprise a
4
challenge to the initial determination in Kanofsky I that Kanofsky lacked sufficient
business activity to account for the deductions he claimed in 1996 through 2000.
At a CDP hearing, a taxpayer can challenge the “existence or amount of the
underlying tax liability for any tax period” if the taxpayer “did not receive any statutory
notice of deficiency for such tax liability or did not otherwise have an opportunity to
dispute such tax liability.” 26 U.S.C. § 6330(c)(2)(B); see also 26 U.S.C.
§ 6330(c)(4)(A) (precluding a taxpayer from asserting at a CDP hearing an issue raised
and considered “in any other previous administrative or judicial proceeding” in which the
taxpayer meaningfully participated). Kanofsky received notice of his deficiency for the
years at issue and availed himself of opportunities to dispute it, including litigating the
matter through trial before the Tax Court. The Tax Court sustained his liability for most
of the deficiency the IRS claimed, and we affirmed. See Kanofsky I, 271 F. App’x at
146–50. He is therefore precluded from relitigating that liability in these proceedings.
See 26 U.S.C. § 6330(c)(4)(A); see also Comm’r v. Sunnen, 333 U.S. 591, 598 (1948)
(“[I]f a claim of liability or non-liability relating to a particular tax year is litigated, a
judgment on the merits is res judicata as to any subsequent proceeding involving the
same claim and the same tax year.”) 3
3
Kanofsky additionally claims that, during his 2004 trial to determine his tax liability, an
IRS attorney fraudulently claimed that Kanofsky had failed to timely submit certain
evidence. This claim fails to assist Kanofsky both because it represents a now-precluded
attack on his underlying liability, see Sunnen, 333 U.S at 598, and because there is no
indication that Kanofsky raised it in his CDP hearing. See Giamelli v. Comm’r, 129 T.C.
107, 115 (2007) (holding that review of CDP determinations extends only to those issues
5
A CDP hearing permits a taxpayer to challenge the appropriateness of a pending
tax lien or levy and/or propose an alternative method of collection. See 26 U.S.C.
§ 6330(c)(2)(A); Tucker v. Comm’r, 676 F.3d 1129, 1131 (D.C. Cir. 2012). In rendering
its determination, the IRS Office of Appeals must verify the legality of the proposed lien
and, taking into consideration issues raised by the taxpayer, decide whether the lien
“balances the need for the efficient collection of taxes with the legitimate concern of the
person that any collection action be no more intrusive than necessary.” See 26 U.S.C.
§ 6330(c)(3). The Tax Court found that the IRS settlement officer verified the legality of
the lien and that Kanofsky neither proposed an alternative collection method nor provided
the information necessary for the officer to consider one. Given the absence of
alternative proposals and Kanofsky’s failure to raise any other cognizable challenge to
the propriety of the lien, 4 we conclude that the IRS did not abuse its discretion in
determining that a lien was appropriate. See Dalton, 682 F.3d at 154–55; Kindred, 454
F.3d at 694. The Tax Court therefore did not err in sustaining that determination. See
Conn. Gen. Life Ins. Co., 177 F.3d at 143.
IV.
The Tax Court also did not abuse its discretion in imposing the $10,000 penalty
under § 6673. The Tax Court may fine a taxpayer up to $25,000 when it appears that the
raised before the IRS Office of Appeals).
4
Kanofsky also argued in his CDP correspondence that a lien was inappropriate because
he was still litigating the underlying tax liability. He does not, however, raise this
6
taxpayer (1) instituted or maintained proceedings before the Tax Court “primarily for
delay,” (2) advanced a “frivolous or groundless” position, or (3) “unreasonably failed to
pursue available administrative remedies.” 26 U.S.C. § 6673(a)(1). An argument is
frivolous for purposes of § 6673(a)(1) when it is “contrary to established law and
unsupported by a reasoned, colorable argument for change in the law.” Coleman v.
Comm’r, 791 F.2d 68, 71 (7th Cir. 1986).
In challenging the lien, Kanofksy asserted the same arguments concerning fraud
and corruption and his whistleblower status that we and the Tax Court previously told
him are irrelevant to his tax dispute. See Kanofsky II, 424 F. App’x at 192. While he
claims that he continues to discover more and more evidence of fraud and corruption by
“entities obstructing his business activities,” he does not explain how such evidence, even
if cumulative, shows the inappropriateness of imposing a tax lien. His position neither
addressed the criteria set forth at 26 U.S.C. § 6330(c)(3) nor constituted a “reasoned,
colorable” legal argument for requiring IRS consideration of the additional circumstances
he alleged. See Coleman, 791 F.2d at 71. Moreover, the Tax Court previously warned
Kanofsky that the Government was accusing him of asserting “frivolous and groundless”
positions for which he could be penalized and that, if he made the same arguments as in
Kanofsky I and Kanofsky II, the Tax Court “may well agree” with the Government. See
Kanofsky v. Comm’r, T.C. Memo. 2014-153, 108 T.C.M. (CCH) 99 (2014). Under these
circumstances, Kanofsky knew or should have known that his arguments were frivolous
argument on appeal. 7
and could subject him to the imposition of a penalty. Therefore, the Tax Court acted
within its discretion in imposing the $10,000 penalty. See 26 U.S.C. § 6673(a)(1);
Sauers, 771 F.2d at 70.
For the foregoing reasons, we will affirm the judgment of the Tax Court.
8