T.C. Memo. 2001-213
UNITED STATES TAX COURT
ROY WATSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3609-00L. Filed August 10, 2001.
Roy Watson, pro se.
Pamela J. Sewell, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HALPERN, Judge: This case is based on a petition filed
under section 6330(d) for review of a determination made by
respondent’s Office of Appeals (Appeals) that respondent’s action
to collect certain taxes may proceed. By Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330,
dated February 24, 2000 (the notice), Appeals determined that
- 2 -
respondent’s Collection Division be allowed to proceed with
appropriate action to collect from petitioner certain income
taxes for 1991 and 1992. Petitioner asks us to review such
determination.
Unless otherwise indicated, all section references are to
the Internal Revenue Code presently in effect.
FINDINGS OF FACT
At the time the petition was filed, petitioner resided in
Provo, Utah.
On September 28, 1994, respondent mailed a notice of
deficiency (the notice of deficiency) to petitioner, determining
deficiencies in, and additions to, his Federal income taxes for
petitioner’s taxable (calendar) years 1991 and 1992. On
October 18, 1994, petitioner received the notice of deficiency
and signed the domestic return receipt, Postal Service Form 3811,
which accompanied the notice of deficiency.
On March 13, 1995, respondent assessed taxes, an estimated
tax penalty, and late filing penalty in the amounts of $10,138,
$581, and $2,535, respectively, for 1991. Also, on March 13,
1995, respondent assessed taxes, an estimated tax penalty, and
late filing penalty in the amounts of $10,394, $453, and $2,599,
respectively, for 1992.
On June 15, 1999, respondent mailed a final notice of intent
to levy to petitioner. That notice states that petitioner owed
- 3 -
taxes, penalties, and interest totaling $26,169.72 and $25,040.72
for 1991 and 1992, respectively.
On July 15, 1999, petitioner submitted requests for
collection due process hearings for 1991 and 1992 (the requests).
In the requests, petitioner states his basis for the hearing as
follows: “I deny that I had ‘income’ for the year of 1991 [1992]
that is the subject of A tax.”
On January 31, 2000, in response to the requests, Appeals
Officer Jose Gonzales sent a letter to petitioner (the letter).
Among other things, the letter informs petitioner that, since
petitioner had received the notice of deficiency, petitioner
could not, under section 6330, appeal his tax liability for 1991
and 1992. The paragraph of the letter preceding the valediction
states:
If you wish to make arrangements to pay the tax
for 1991 and 1992 please provide Forms 433A and/or 433B
or if you have other collection alternatives you would
like to discuss, such as Installment Agreements or
Offer-In-Compromise, contact me by February 15, 2000.
This will be your opportunity for a hearing. For the
reasons stated above I will not discuss the liabilities
for 1991 and 1992 unless it pertains to filing correct
returns due to IRC §6330(c)(2)(B). If I receive no
response I will send a determination letter providing
your judicial rights. I can be reached at the
telephone number shown above.
Petitioner did not reply to the letter or otherwise contact
Appeals Officer Gonzales prior to February 15, 2000.
On February 24, 2000, respondent mailed the notice to
petitioner. In part, the notice states: “We have reviewed the
- 4 -
proposed collection action for the period(s) shown above. This
letter is your legal Notice of Determination, as required by
law.” The notice includes the following “Summary of
Determination”: “It is Appeals’ decision that Collection be
allowed to proceed with the appropriate collection action.”
Accompanying the notice is the following explanation:
Attachment - 3193
ENCLOSURE TO NOTICE OF DETERMINATION
ROY A. WATSON
The Secretary has provided sufficient verification
that the requirements of any applicable law or
administrative procedure have been met.
Your request for a hearing with Appeals was made under
IRC §6330 to prevent appropriate collection action.
You state in your request that you deny that you had
income for 1991 and 1992 that is subject to tax. Tax
was assessed for the years 1991 and 1992 under IRC
§6020(b) because you failed to voluntarily file income
tax returns. You were provided an opportunity to
dispute the assessments. You responded with
arguments previously determined by the courts to be
frivolous. IRC §6330(c)(2)(B) precludes you from
raising liability as an issue at your hearing. You
were offered the opportunity for a hearing with Appeals
to discuss alternative collection proposals and the
filing of corrected returns for the years at issue.
You did not respond.
Without further cooperation, it is Appeals decision
that the proposed collection action balances the need
for efficient collection of taxes with the taxpayer’s
legitimate concern that any collection action be no
more intrusive than necessary.
In the petition, petitioner assigns the following errors:
- 5 -
the Service was willfully negligent when it failed to
provide an Pre-Determination Evidentiary hearing and
make available to me:
a.) presentment of copies of all evidence used
by the government against me;
b.) meaningful hearing on all of the facts of
this case;
c.) notification of procedure, forms, or
opportunity to refute the evidence against me
(which is also the making of contentions of
factual nature);
d.) hearing before an independent and impartial
hearing officer; and
e.) opportunity to confront and cross-examine
all adverse witnesses, for the creation of a
complete defense and administrative record to
support any subsequent appeal.
OPINION
I. Section 6331
Section 6331(a) provides that, if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by levy upon property belonging to the taxpayer.
Section 6331(d) provides that the Secretary is obliged to provide
the taxpayer with notice, including notice of the administrative
appeals available to the taxpayer, before proceeding with
collection by levy on property of the taxpayer.
- 6 -
II. Section 6330
Section 6330 generally provides that respondent cannot
proceed with collection of taxes by way of levy on a taxpayer’s
property until the taxpayer has been given notice of and the
opportunity for an administrative review of the matter (in the
form of a section 6330(b) hearing).1 Section 6330(e) provides
for the suspension of the period of limitations on collection
while the hearing and any appeals are pending, and, in no event
shall such period of limitations expire before the 90th day after
the day on which there is a final determination in the hearing.
Section 6330(c) prescribes the matters that may be raised by
the taxpayer at a section 6330(b) hearing. In pertinent part,
section 6330(c)(2)(B) provides: “The person may also raise at
the hearing challenges to the existence or amount of the
underlying tax liability for any tax period if the person did not
receive any statutory notice of deficiency for such tax
liability”.
Section 6330(d) provides for judicial review of the
determination resulting from the section 6330(b) hearing.
1
In pertinent part, section 6330(a)(1) provides:
No levy may be made on any property or right to
property of any person unless the Secretary has
notified such person in writing of their right to a
hearing under this section before such levy is made.
* * *
- 7 -
III. Petitioner’s Claims
A. Meaningful Hearing
In the petition, petitioner claims that he was not afforded
a meaningful hearing on all of the facts of the case, apparently
because respondent erred in failing to allow petitioner the right
to examine documents, present his case as he saw fit, and cross-
examine witnesses. In Davis v. Commissioner, 115 T.C. 35, 41-42
(2000), we rejected similar claims, finding that, in providing to
a person the right to request a section 6330(b) hearing, Congress
intended an informal administrative hearing, of the type that,
traditionally, had been conducted by appeals and was prescribed
by section 601.106(c), Statement of Procedural Rules. We held
that the right to a section 6330(b) hearing does not include the
right to subpoena witnesses. Id. at 42. We stated: “The nature
of the administrative Appeals process does not include the taking
of testimony under oath or the compulsory attendance of
witnesses.” Id. at 41-42. We concluded that the taxpayer could
have a meaningful hearing without being accorded rights to
subpoena witnesses and documents. Id. Petitioner has failed to
demonstrate that he is entitled to any relief on account of his
claim that respondent erred in failing to allow him the right to
examine documents, present his case as he saw fit, and cross-
examine witnesses.
- 8 -
B. Hearing Before an Independent and Impartial Hearing
Officer
In the petition, petitioner claims he was not afforded a
hearing before an independent and impartial hearing officer. If
petitioner’s complaint is that Appeals Officer Gonzales was not
independent and impartial, see sec. 6330(b)(3), petitioner did
not pursue that issue at trial. Therefore, we assume, that he
has abandoned that issue, and we shall not further discuss it.
See, e.g., Bernstein v. Commissioner, 22 T.C. 1146, 1152 (1954),
affd. 230 F.2d 603 (2d Cir. 1956); Lime Cola Co. v. Commissioner,
22 T.C. 593, 606 (1954).
C. No Harm in Fact
Moreover, as to any other complaint of petitioner with
respect to the notice, we note that, at trial, the Court had an
extended discussion with petitioner concerning the exact nature
of the claim that brought him to this Court. Petitioner agreed
more than once that he had been afforded the opportunity for a
hearing. His only claim was that he had no tax liability because
his indebtedness to the Internal Revenue Service had been assumed
by the Federal government:
MR. WATSON: That House Joint Resolution 192 of
June 5th and 6th, 1933, which was the suspension of the
gold standard specie which kept the nation stable only
discharged the debt, not pay debt.
Under House Joint Resolutions, all debts, public
and private, the Government agreed to assume.
- 9 -
THE COURT: So your basic position is that your
debt to the Internal Revenue Service was assumed by the
Federal Government?
MR. WATSON: That is correct, through that
resolution. And I believe in good faith that all
matters have been brought to a conclusion by accord and
satisfaction by the presentation to the agency, the
Internal Revenue Service, for them to present the 1040-
ESs [Forms 1040-ES: Estimated Tax Payment Vouchers]
for payment through the Secretary of the Department of
Transportation or the Secretary of the Department of
Treasury and that would close the matter.
THE COURT: Sir, let me see if I understand your
position.
* * * * * * *
your position is that declarations of estimated tax by
a taxpayer received by the IRS * * * should be
presented to the Secretary of Transportation or the
Secretary of Treasury for payment?
MR. WATSON: Yes, sir.
THE COURT: And that would discharge your tax
liability?
MR. WATSON: Yes, sir.
THE COURT: And that’s why you don’t owe anything
to the Government?
MR. WATSON: Yes, sir.
THE COURT: That’s your case; right?
MR. WATSON: Yes, sir.
D. Section 6330(c)(2)(B)
Petitioner can only challenge the underlying tax liability
if he did not receive the notice of deficiency. See sec.
6330(c)(2)(B).
- 10 -
Petitioner claims that he did not receive the notice of
deficiency. By letter dated November 18, 1994, however,
petitioner acknowledges receiving correspondence from respondent
dated September 28, 1994, the date of the notice of deficiency.
With respect to that correspondence, petitioner states:
“[H]owever, I am not a person required to file.” Respondent also
has a return receipt from the U.S. Postal Service showing receipt
by petitioner of the notice of deficiency. That receipt shows a
signature in petitioner’s name. Petitioner denies that he signed
the receipt. Petitioner offers no explanation for the signature.
We do not believe petitioner when he claims that he did not sign
the receipt and did not receive the notice of deficiency. We
have found that petitioner did receive the notice of deficiency.
E. Conclusion
We have reviewed the notice in light of petitioner’s claims
and we find no error. We deny petitioner any relief.
IV. Section 6673(a)(1)
In pertinent part, section 6673(a)(1) provides a penalty of
up to $25,000 if proceedings before the Tax Court have been
instituted or maintained by the taxpayer primarily for delay or
the taxpayer’s position in the proceeding is frivolous or
groundless. In the petition and in communications to respondent
and this Court, petitioner insists that he has no tax liability
notwithstanding that he has paid nothing to respondent. He
- 11 -
insists that he has submitted to respondent declarations of
estimated tax, which should be presented to the Secretary of
Transportation for payment, which would discharge petitioner’s
tax liability. Petitioner’s argument is a frivolous tax-
protester argument. In addition, petitioner adopted tactics at
trial, such as initially refusing to state his name, that delayed
this proceeding. At the conclusion of the trial, at petitioner’s
request, the Court left the record open for any support of
petitioner’s legal position that he could provide. Petitioner
submitted a document entitled “Letter of Correction” (the letter
of correction) that we have filed as such. The letter of
correction claims: “An error was made by submitting a 1040ES
form and is therefore canceled by this letter of correction.”
Attached to the letter of correction is a copy of respondent’s
trial memorandum bearing repeated stampings by petitioner
stating:
Accepted for value $51,210.44. This property is Exempt
from Levy and account is prepaid.
Please adjust this account and release the proceeds;
products, accounts; and fixtures and release the order
or orders of the court to Me immediately.
Date February 16, 2001
Employer ID # 530149347
Endorsement [signed] Roy-Allen: Watson
Whatever credit we might give petitioner for the implied
concession in the letter of correction that petitioner owes tax
is negated by the attachment to that letter, which makes no
- 12 -
sense, and seems just another frivolous argument or groundless
claim.
Because of petitioner’s frivolous and groundless arguments,
and his tactics, which we conclude petitioner engaged in only to
delay these proceedings, the Court imposes on petitioner a
penalty under section 6673(a) of $1,500. See Hoffman v.
Commissioner, T.C. Memo. 2000-198.
Decision will be entered
for respondent.