TOLOTTI v. COMMISSIONER

T.C. Memo. 2002-86

UNITED STATES TAX COURT

EMIL P. TOLOTTI, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 3011-01L. Filed April 1, 2002.

Emil P. Tolotti, Jr., pro se.

Sheara L. Gelman, for respondent.

MEMORANDUM OPINION

ARMEN, Special Trial Judge: This matter is before the Court

on respondent’s Motion for Summary Judgment, as supplemented,

filed pursuant to Rule 121(a).1 Respondent contends that there

is no dispute as to any material fact with respect to this

1
All Rule references are to the Tax Court Rules of
Practice and Procedure. Unless otherwise indicated, all section
references are to the Internal Revenue Code, as amended.
 - 2 -

collection review matter and that respondent’s determination

(that the filing of the Notice of Federal Tax Lien for

liabilities owing for the taxable year 1995 is appropriate)

should be sustained as a matter of law.

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).

As explained in detail below, there is no genuine issue as

to any material fact, and a decision may be rendered as a matter

of law. Accordingly, we shall grant respondent’s Motion for
 - 3 -

Summary Judgment, as supplemented.

Background

On April 15, 1996, petitioner filed a Form 1040, U.S.

Individual Income Tax Return, for the taxable year 1995.

Petitioner entered zero on virtually every line of the form and

claimed a refund in the amount of $19,212. Petitioner attached a

declaration to the form in which he stated that he is a “Union

State (Nevada) citizen by birth who lives outside any federal

enclave”, not a citizen or resident of the United States as

defined in the Internal Revenue Code, and that as a “non-

taxpayer”, he is not liable for Federal income tax. In the

declaration, petitioner also stated that “No IRC section

establishes ‘liability’ for an ‘income’ tax applicable to me or

my activities” and that “No IRC section requires me to pay an

‘income’ tax”.

On May 8, 1998, respondent issued a notice of deficiency to

petitioner. In the notice, respondent determined a deficiency of

$2,299 in petitioner’s Federal income tax for 1995, an addition

to tax under section 6654(a) in the amount of $124.51, and an

accuracy-related penalty under section 6662(a) in the amount of

$459.80. The deficiency in income tax was based on respondent’s

determination that petitioner failed to report (1) a taxable

pension distribution in the amount of $21,669 received from the

U.S. Office of Personnel Management and (2) taxable dividends in
 - 4 -

the amount of $46 received from several payors.

On July 22, 1998, John B. Kotmair, Jr. (Mr. Kotmair) of

Westminster, Maryland, wrote a letter to respondent on behalf of

petitioner. In the letter, Mr. Kotmair stated that petitioner

had received the foregoing notice of deficiency, and that such

notice was invalid because it was not signed under penalties of

perjury and because it did not explain petitioner’s appeal

rights.

In August 1998, petitioner executed a document entitled

“PRIVACY ACT RELEASE FORM AND POWER OF ATTORNEY”, by which

petitioner granted Mr. Kotmair the authority to “represent,

inquire of and procure from the Internal Revenue Service any and

all of the records, pertaining to income taxes, * * * regarding

the following years: 1980 through and including 1998.”2 The

record indicates that Mr. Kotmair wrote two additional letters to

respondent on petitioner’s behalf. Petitioner did not file a

petition for redetermination with the Court challenging the

notice of deficiency.

On April 27, 2000, respondent filed with the Washoe County

Recorder in Reno, Nevada, a Form 668(Y), Notice of Federal Tax

2
The above-described “power of attorney” identified John
B. Kotmair, Jr., as a fiduciary for Save-A-Patriot Fellowship and
stated that petitioner was a member of the group. Save-A-Patriot
Fellowship has been identified as an organization that is opposed
to the Federal income tax. See Save-A-Patriot Fellowship v.
United States, 962 F. Supp. 695 (D. Md. 1996).
 - 5 -

Lien. The Notice of Federal Tax Lien states that petitioner has

an outstanding Federal income tax liability of $1,688.79 for the

taxable year 1995. The signature block on the Notice of Federal

Tax Lien contains a facsimile signature.

On May 3, 2000, respondent mailed to petitioner a Notice of

Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320. On June 2, 2000, petitioner filed with respondent a

Request for a Collection Due Process Hearing that included

allegations challenging the existence and amount of petitioner’s

tax liability for 1995 on the ground that petitioner was not

informed of the statutory provisions imposing liability on him.

Petitioner also argued that the Notice of Federal Tax Lien Filing

was invalid because it did not include an original signature.

On July 10, 2000, Appeals Officer Donna Fisher conducted an

Appeals Office hearing in this matter that petitioner attended.

Prior to the hearing, Appeals Officer Fisher reviewed an

individual master file transcript dated April 4, 2000, and a

computer transcript known as TXMODA dated June 30, 2000,

regarding petitioner’s account for the 1995 taxable year. The

transcripts indicated that respondent made assessments against

petitioner on October 19, 1998, for the tax, addition to tax, and

accuracy-related penalty set forth in the notice of deficiency

dated May 8, 1998, and for statutory interest. In addition, the

transcripts indicated that on October 19 and November 9, 1998,
 - 6 -

respondent issued to petitioner a notice and demand for payment

of the assessed amounts.

During the Appeals Office hearing, petitioner requested that

the Appeals officer identify the statutory provisions

establishing petitioner’s liability for Federal income tax.

Petitioner was informed that although he would be permitted to

raise any valid challenge he might have to the specific amounts

of income that were reported to respondent by third-party payors,

he would not be permitted to raise constitutional challenges to

his underlying tax liability for 1995. The Appeals officer

terminated the hearing after petitioner declined to discuss

alternatives to collection.

On February 16, 2001, respondent issued to petitioner a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 stating that respondent’s determination

(that the filing of the Notice of Federal Tax Lien for

liabilities owing for the taxable year 1995 is appropriate)

should be sustained. On March 2, 2001, petitioner filed with the

Court an imperfect Petition for Lien or Levy Action seeking

review of respondent’s notice of determination.3 On April 6,

2001, petitioner filed an amended petition including the

following allegations: (1) The Notice of Federal Tax Lien was not

3
At the time that the petition was filed, petitioner
resided in Reno, Nevada.
 - 7 -

certified as required by the Uniform Federal Tax Lien

Registration Act as adopted by the State of Nevada; (2) the

Appeals officer conducted a sham hearing; (3) petitioner was

denied a fair hearing by an impartial Appeals officer; (4) the

Appeals officer failed to obtain verification from the Secretary

that the requirements of any applicable law or administrative

procedure were met as required under section 6330(c)(1); (5) the

Appeals officer failed to identify the statutes (a) making

petitioner liable for Federal income tax; (b) authorizing

respondent’s agents to enforce the Internal Revenue Code; and (c)

permitting respondent to file a Notice of Federal Tax Lien; (6)

respondent falsely claimed that petitioner earned foreign source

income during 1995 and respondent failed to identify the specific

source of such income; and (7) petitioner was denied the

opportunity to challenge (a) the appropriateness of the

collection action; and (b) the existence or amount of his

underlying tax liability.

After filing an answer to the amended petition, respondent

filed a Motion for Summary Judgment asserting that there is no

dispute as to a material fact and that respondent is entitled to

judgment as a matter of law. In particular, respondent contends

that because petitioner received a notice of deficiency for 1995,

petitioner is barred under section 6330(c)(2)(B) from challenging

the existence or amount of his tax liability in this proceeding.
 - 8 -

Respondent further asserts that the Appeals officer’s review of

the individual master file transcript dated April 4, 2000, and

the TXMODA computer transcript dated June 30, 2000, satisfied the

verification requirement imposed under section 6330(c)(1).

Petitioner filed an Objection to respondent’s motion.

This matter was called for hearing at the Court's motions

sessions held in Washington, D.C., on November 21, 2001, and

January 23, 2002. Counsel for respondent appeared at the

hearings and presented argument in support of respondent's

motion. Respondent filed a Supplement to Motion for Summary

Judgment attaching thereto: (1) A copy of Form 4340, Certificate

of Assessments, Payments and Other Specified Matters, with

respect to petitioner’s 1995 tax year; (2) a declaration by

Appeals Officer Fisher; (3) a copy of the TXMODA computer

transcript for petitioner’s 1995 tax year; and (4) a transcript

of the Appeals Office hearing. Respondent also filed a Second

Supplement to Motion for Summary Judgment attaching thereto a

certified copy of the Notice of Federal Tax Lien filed with the

Washoe County Recorder in Reno, Nevada. Although no appearance

was made by or on behalf of petitioner at either of the hearings,

petitioner did file with the Court a written statement pursuant

to Rule 50(c) and a response to respondent’s motion, as

supplemented.
 - 9 -

Discussion

Section 6321 imposes a lien in favor of the United States on

all property and rights to property of a person when a demand for

the payment of taxes has been made and the person fails to pay

those taxes. Such a lien arises when an assessment is made.

Sec. 6322. Section 6323(a) requires the Secretary to file notice

of Federal tax lien if such lien is to be valid against any

purchaser, holder of a security interest, mechanic’s lienor, or

judgment lien creditor. Lindsay v. Commissioner, T.C. Memo.

2001-285.

Section 6320 provides that the Secretary shall furnish the

person described in section 6321 with written notice of the

filing of a lien under section 6323. Such notice must be

provided not more than 5 business days after the day of the

filing of the notice of lien. Sec. 6320(a)(2). Section 6320

further provides that the person may request administrative

review of the matter (in the form of an Appeals Office hearing)

within 30 days beginning on the day after the 5-day period

described above. Section 6320(c) provides that the Appeals

Office hearing generally shall be conducted consistent with the

procedures set forth in sections 6330(c), (d), and (e).

Section 6330(c) provides for review with respect to

collection issues such as spousal defenses, the appropriateness

of the Commissioner's intended collection action, and possible
 - 10 -

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 person did not receive a notice of deficiency or did not

otherwise have an earlier opportunity to dispute such tax

liability. Goza v. Commissioner, 114 T.C. 176 (2000). Section

6330(d) provides for judicial review of the administrative

determination in the Tax Court or Federal District Court.

Petitioner contends that respondent’s Motion for Summary

Judgment, as supplemented, should be denied on the ground that

material issues of fact remain in dispute with regard to the

statutory basis for his tax liability and the integrity of the

Appeals Office hearing. As our summary of the amended petition

reveals, petitioner’s primary position is that the assessment

made against him is invalid because respondent failed to

demonstrate that he is liable for Federal income taxes.

Petitioner’s argument is untenable for two reasons. First,

there is no dispute in this case that petitioner received the

notice of deficiency dated May 8, 1998, and disregarded the

opportunity to file a petition for redetermination with this

Court. Under the circumstances, section 6330(c)(2)(B) bars

petitioner from challenging the existence or the amount of his

underlying tax liability for 1995 in this collection review

proceeding.
 - 11 -

In addition to the bar imposed by section 6330(c)(2)(B),

petitioner’s arguments that he is not liable for Federal income

tax and that he did not receive amounts taxable as income during

1995 are frivolous and groundless. Goza v. Commissioner, supra.

Petitioner asserts that respondent failed to identify the

statutory provisions: (1) Making petitioner liable for Federal

income tax; (2) authorizing respondent’s agents to enforce the

Internal Revenue Code; and (3) permitting respondent to file a

Notice of Federal Tax Lien. Petitioner also maintains that

respondent erroneously determined that petitioner earned “foreign

source” income during 1995 and respondent failed to identify the

specific source of such income. As the Court of Appeals for the

Fifth Circuit has remarked: "We perceive no need to refute these

arguments with somber reasoning and copious citation of

precedent; to do so might suggest that these arguments have some

colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417

(5th Cir. 1984).

Petitioner next asserts that respondent cannot proceed with

collection on the ground that the Notice of Federal Tax Lien

filed with the Washoe County Recorder in Reno, Nevada, was not

certified as required under Nev. Rev. Stat. Ann. sec. 108.829

(Michie 2001).4 We note that the Notice of Federal Tax Lien in

4
Nev. Rev. Stat. Ann. sec. 108.829 (Michie 2001) provides
in pertinent part:
(continued...)
 - 12 -

question was filed on Form 668(Y) and bears a facsimile

signature.

Petitioner’s reliance on Nevada State law in this matter is

misplaced. It is well settled that the form and content of a

Notice of Federal Tax Lien is controlled by Federal law. United

States v. Union Cent. Life Ins. Co., 368 U.S. 291, 294 (1961).

In this regard, section 6323(f)(3) provides:

(3) Form.–-The form and content of the notice
referred to in subsection (a) shall be prescribed by
the Secretary. Such notice shall be valid
notwithstanding any other provision of law regarding
the form or content of a notice of lien.

Consistent with section 6323(f)(3), section 301.6323(f)-

1(d)(1), Proced. & Admin. Regs., provides:

(d) Form--(1) In general. The notice referred to
in §301.6323(a)-(1) shall be filed on Form 668, “Notice
of Federal Tax Lien under Internal Revenue Laws”. Such
notice is valid notwithstanding any other provision of
law regarding the form or content of a notice of lien.
For example, omission from the notice of lien of a
description of the property subject to the lien does
not affect the validity thereof even though State law
may require that the notice contain a description of
the property subject to the lien.

Based upon the plain language of section 6323(f)(3) and the

underlying regulation (quoted above), we hold that the Notice of

4
(...continued)
Certification of notices of liens, certificates or
other notices affecting federal liens by the Secretary
of the Treasury of the United States or his delegate
* * * entitles them to be filed and no other
attestation, certification or acknowledgment is
necessary.
 - 13 -

Federal Tax Lien in question is valid notwithstanding any

additional provision that may exist under Nevada State law.

We also reject petitioner’s assertions that the Appeals

officer was not impartial and/or conducted a sham hearing. Such

assertions are belied by the record. See sec. 6330(b)(3).

Petitioner next contends that the Appeals officer failed to

obtain verification from the Secretary that the requirements of

all applicable laws and administrative procedures were met as

required by section 6330(c)(1). We reject petitioner’s

contention inasmuch as the record establishes that the Appeals

officer obtained and reviewed transcripts of account with regard

to petitioner’s taxable year 1995. The record also includes a

Form 4340 that substantiates the information contained in the

transcripts of account. See Davis v. Commissioner, 115 T.C. 35,

40-41 (2000) (Form 4340 is presumptive evidence that an

assessment was made against the taxpayer).

Federal tax assessments are formally recorded on a summary

record of assessment. Sec. 6203. The summary must “provide

identification of the taxpayer, the 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

on a particular document to satisfy the verification requirement

imposed therein. Kuglin v. Commissioner, T.C. Memo. 2002-51. In
 - 14 -

this regard, we note that the transcripts of account on which the

Appeals officer relied in this case contained all the information

prescribed in section 301.6203-1, Proced. & Admin. Regs. Id.

Moreover, the Form 4340 substantiates the information contained

in the transcripts of account.

Petitioner has not alleged any irregularity in the

assessment procedure that would raise a question about the

validity of the assessments or the information contained in the

transcripts of account or the Form 4340. Id.; Mann v.

Commissioner, T.C. Memo. 2002-48. Accordingly, we hold that the

Appeals officer satisfied the verification requirement of section

6330(c)(1). Cf. Nicklaus v. Commissioner, 117 T.C. 117, 120-121

(2001).

Petitioner has 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, we conclude that respondent

is entitled to judgment as a matter of law sustaining the notice

of determination dated February 16, 2001.

Finally, we mention section 6673(a)(1), which 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
 - 15 -

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 on petitioner pursuant to section

6673(a)(1) in the present case, we admonish petitioner that the

Court will consider imposing such a penalty should he return to

the Court in the future and advance arguments similar to those

that we have identified as frivolous.

To reflect the foregoing,

An order granting respondent’s

motion for summary judgment, as

supplemented, and decision will

be entered.