T.C. Memo. 2002-88
UNITED STATES TAX COURT
WAYNE A. AND MARYKAY WEISHAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10025-01L. Filed April 4, 2002.
Wayne A. and Marykay Weishan, pro sese.
Karen Lynne Baker, Alan C. Levine, and Wendy S. Harris, for
respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent’s motion to dismiss for failure to state
a claim upon which relief may be granted and to impose a penalty
- 2 -
under section 6673.1 Because respondent has presented matters
outside of the pleadings, we treat respondent’s motion to dismiss
as a motion for summary judgment pursuant to Rule 121. See Rule
40.
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law.” Rule 121(a) and (b); Sundstrand
Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The moving
party bears the burden of proving that there is no genuine issue
of material fact, and factual inferences will be read in a manner
most favorable to the party opposing summary judgment. Dahlstrom
v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
1
Section references are to sections of the Internal
Revenue Code, as amended, and Rule references are to the Tax
Court Rules of Practice and Procedure.
- 3 -
We are satisfied that there is no genuine issue as to any
material fact and that a decision may be rendered as a matter of
law. As explained in detail below, we shall grant respondent’s
motion for summary judgment, although we shall deny respondent’s
request for the imposition of a penalty under section 6673(a).
Background
On June 18, 1999, respondent issued a notice of deficiency
to petitioners determining a deficiency of $9,817 in their
Federal income tax for 1997 and an accuracy-related penalty in
the amount of $496.40. On July 26, 1999, petitioners wrote a
letter to respondent that stated in pertinent part: “Before I
file, pay, or take action with respect to your ‘Notice’ I must
first establish whether or not it was sent pursuant to law,
whether or not it has the ‘force and effect of law’, and whether
you have any authority to send me such ‘Notice’ in the first
place.” Petitioners did not file a petition for redetermination
with the Court challenging the notice of deficiency.
On December 27, 1999, respondent mailed a letter to
petitioners informing them that their account for 1997 had been
changed to reflect assessments for the adjustments set forth in
the above-described notice of deficiency and the imposition of
statutory interest of $425.92, reduced by a credit for
withholding taxes of $7,335.18, leaving a balance due of
$3,404.94. The letter included a request that petitioners pay
- 4 -
the amount due by January 17, 2000. On January 9, 2000,
petitioners wrote a letter to respondent challenging respondent’s
December 27, 1999, letter as a “bootleg, fraudulent document”.
On July 22, 2000, respondent mailed to petitioners a Final
Notice of Intent to Levy and Notice of Your Right to a Hearing.
The notice stated that petitioners owed taxes and statutory
additions totaling $3,738.23 for 1997, and that respondent was
preparing to collect the amount due by levy.
Petitioners filed with respondent a Request for a Collection
Due Process Hearing that included allegations that respondent was
barred from proceeding with collection because petitioners were
not served with a valid notice of deficiency or notice and demand
for payment. Petitioners also challenged the validity of the
underlying assessment and requested that respondent provide them
with a copy of a summary record of assessment.
On May 9, 2001, the Appeals Office issued a letter to
petitioners informing them that their administrative hearing was
scheduled for June 11, 2001. Along with the letter, the Appeals
Office provided petitioners with a transcript of their account
for 1997 that showed that a credit was posted to petitioners’
account for withheld taxes of $7,335.18 on April 15, 1998. The
transcript of account also showed that petitioners filed their
1997 tax return reporting a tax liability of zero on September 7,
1998, and three assessments were entered against petitioners for
- 5 -
tax, penalties, and interest of $9,817.80, $496.40, and $425.92,
respectively, on December 27, 1999.
Petitioners attended the Appeals Office hearing conducted on
June 11, 2001. During the hearing, petitioners challenged the
validity of the notice of deficiency dated June 18, 1999,
asserted that they did not receive a notice and demand for
payment under section 6303(a), and argued that the transcript of
account (described above) was insufficient to satisfy the
verification requirement imposed upon the Appeals Office under
section 6330(c)(1). On July 12, 2001, respondent issued to
petitioners a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 stating that respondent
would proceed with collection.
On August 10, 2001, petitioners filed with the Court a
petition for review of respondent’s notice of determination. The
petition included the same allegations and arguments that
petitioners raised at the Appeals Office hearing. In response to
the petition, respondent filed a motion to dismiss for failure to
state a claim upon which relief may be granted and to impose a
penalty under section 6673. Respondent contends that, because
the record shows that petitioners received the notice of
deficiency dated June 18, 1999, petitioners are barred under
section 6330(c)(2)(B) from challenging the notice of deficiency
and/or their underlying tax liability in this proceeding.
- 6 -
Respondent further asserts that respondent’s letter to
petitioners dated December 27, 1999, served as a notice and
demand for payment under section 6303(a), and that the transcript
of account provided to petitioners in advance of the Appeals
Office hearing satisfied the verification requirement imposed
under section 6330(c)(1).
This matter was called for hearing at the Court’s motions
session held in Washington, D.C. Counsel for respondent appeared
at the hearing and presented argument in support of respondent’s
motion. Although no appearance was made by or on behalf of
petitioners at the hearing, petitioners did file with the Court a
written statement pursuant to Rule 50(c).
Discussion
Section 6330 generally provides that the Commissioner cannot
proceed with the collection of taxes by way of a levy on a
person’s property until the person has been given notice of and
the opportunity for an administrative review of the matter.
Under section 6330(d), judicial review of the administrative
determination may be obtained in either the Tax Court or Federal
District Court.
In Goza v. Commissioner, 114 T.C. 176 (2000), we explained
that section 6330 provides for administrative and judicial review
with respect to collection issues such as spousal defenses, the
appropriateness of the Commissioner’s intended collection action,
- 7 -
and possible alternative means of collection. Section
6330(c)(2)(B) provides that neither the existence nor the amount
of the underlying tax liability can be contested at an Appeals
Office hearing unless the taxpayer did not receive a notice of
deficiency for the taxes in question or did not otherwise have an
earlier opportunity to dispute such tax liability. The taxpayer
in Goza had received a notice of deficiency, yet failed to file a
petition for redetermination with the Court. When the taxpayer
subsequently attempted to use the Court’s collection review
procedure as a forum to assert frivolous and groundless
constitutional arguments against the Federal income tax, the
Court dismissed the petition for failure to state a claim upon
which relief can be granted.
As was the case in Goza v. Commissioner, supra, petitioners
received a notice of deficiency for the year in issue and failed
to file a timely petition for redetermination with the Court. It
follows that section 6330(c)(2)(B) bars petitioners from
challenging the existence or amount of their underlying tax
liability in this collection review proceeding. Even if
petitioners were permitted to challenge their underlying tax
liability, their argument that respondent cannot assess an amount
in excess of that reported in their tax return is frivolous and
groundless.
- 8 -
We likewise reject petitioners’ assertion that the Appeals
officer failed to verify that all applicable laws and procedures
were complied with as required under section 6330(c)(1). First,
the record shows that the letter that respondent issued to
petitioners dated December 27, 1999, served as a notice and
demand for payment. In particular, the letter informed
petitioners that changes had been made to their account for 1997
and requested that they pay the amount due by January 17, 2000.
The issuance of this letter corresponded with the date of
assessment of tax, penalties, and interest as reflected in the
transcript of account that respondent provided to petitioners
before the Appeals Office hearing. We hold that the letter
constituted a notice and demand for payment within the meaning of
section 6303(a). See, e.g., Hughes v. United States, 953 F.2d
531, 536 (9th Cir. 1992).
We also reject petitioners’ assertion that the Appeals
officer’s reliance on a transcript of account was insufficient
verification from the Secretary that the requirements of all
applicable laws and administrative procedures were met as
required under section 6330(c)(1). Petitioners assert that they
are entitled to a copy of a record of assessment.
Federal tax assessments are formally recorded on a summary
record of assessment. Sec. 6203. The summary record of
assessment must “provide identification of the taxpayer, the
- 9 -
character of the liability assessed, the taxable period, if
applicable, and the amount of the assessment.” Sec. 301.6203-1,
Proced. & Admin. Regs.
Section 6330(c)(1) does not require the Commissioner to rely
upon a particular document (i.e., the summary record itself
rather than a transcript of account) to satisfy the verification
requirement imposed therein. Kuglin v. Commissioner, T.C. Memo.
2002-51. In this regard, we note that the transcript of account
that the Appeals officer relied upon in this case contained all
the information prescribed in section 301.6203-1, Proced. &
Admin. Regs. Id.
Petitioners have not demonstrated any irregularity in the
assessment procedure that would raise a question about the
validity of the assessments or the information contained in the
transcript of account. See Mann v. Commissioner, T.C. Memo.
2002-48. Accordingly, we hold that the Appeals officer satisfied
the verification requirement imposed under section 6330(c)(1).
Petitioners have failed to raise a spousal defense, make a
valid challenge to the appropriateness of respondent’s intended
collection action, or offer alternative means of collection.
These issues are now deemed conceded. Rule 331(b)(4). In the
absence of a valid issue for review, and there being no dispute
- 10 -
as to a material fact, it follows that respondent is entitled to
judgment as a matter of law sustaining the notice of
determination dated July 12, 2001.
Section 6673(a)(1) authorizes the Tax Court to require a
taxpayer to pay to the United States a penalty not in excess of
$25,000 whenever it appears that proceedings have been instituted
or maintained by the taxpayer primarily for delay or that the
taxpayer’s position in such proceeding is frivolous or
groundless. The Court has indicated its willingness to impose
such penalties in collection review cases. Pierson v.
Commissioner, 115 T.C. 576 (2000). Although we shall not impose
a penalty upon petitioners pursuant to section 6673(a)(1), we
admonish petitioners that the Court will consider imposing such a
penalty should they return to the Court and advance similar
arguments in the future.
To reflect the foregoing,
An order and decision will be
entered granting respondent’s
motion for summary judgment and
denying respondent’s request for
the imposition of a penalty
pursuant to section 6673(a).