COLEMAN v. COMMISSIONER

T.C. Memo. 2002-132

UNITED STATES TAX COURT

SHADE D. COLEMAN III AND MARIA M. COLEMAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5995-01L. Filed May 30, 2002.

Shade D. Coleman III and Maria M. Coleman, pro sese.

Karen Baker and Rollin G. Thorley, for respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This matter is before

the Court on respondent’s motion for summary judgment pursuant to

Rule 121.1 Respondent contends that there is no dispute as to

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

any material fact with respect to this levy action, and that

respondent’s determination to proceed with collection of

petitioners’ outstanding tax liabilities for 1997 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
 - 3 -

of law. Accordingly, we shall grant respondent’s motion for

summary judgment.

Background

On July 8, 1998, petitioners submitted to respondent a joint

Form 1040, U.S. Individual Income Tax Return, for 1997.

Petitioners entered zeros on every line of the income section of

the Form 1040, specifically including line 7 for wages, line 22

for total income, and line 32 for adjusted gross income.

On October 15, 1999, respondent issued a joint notice of

deficiency to petitioners determining a deficiency of $3,838.20

in their Federal income tax for 1997, an addition to tax under

section 6651(a) of $249.90, and an accuracy-related penalty of

$333.21. The deficiency was based principally on respondent’s

determination that petitioners failed to report wage income and a

taxable distribution from a retirement account.

On January 11, 2000, petitioners wrote a letter to

respondent acknowledging receipt of the notice of deficiency

dated October 15, 1999, and challenging its validity.

Petitioners did not file a petition for redetermination with the

Court challenging the notice of deficiency.

On March 20, 2000, respondent entered assessments against

petitioners for the deficiency, addition to tax, and accuracy-

related penalty determined in the notice of deficiency described

above. Respondent also entered an assessment against petitioners
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for statutory interest. On the day the assessments were entered,

respondent issued to petitioners a notice of balance due

informing petitioners that they owed tax for 1997 and requesting

that they pay such amount. On April 24, 2000, respondent issued

a second notice of balance due to petitioners for 1997.

Petitioners failed to pay the amount owing.

On September 18, 2000, respondent mailed petitioners a Final

Notice-–Notice of Intent to Levy and Notice of Your Right to a

Hearing with regard to their tax liabilities for 1997. On

October 16, 2000, petitioners filed with respondent a Form 12153,

Request for a Collection Due Process Hearing. Petitioners’

request included a challenge to the validity of the assessments

and assertions that respondent failed to serve petitioners with a

valid notice and demand for payment or valid notice of

deficiency.

On February 26, 2001, Appeals Officer Tony Aegir conducted

an Appeals Office hearing in this matter that petitioners

attended. Petitioners were provided with a Form 4340,

Certificate of Assessments, Payments, and Other Specified

Matters, with regard to the taxable year 1997.

On April 4, 2001, respondent issued petitioners separate

Notices of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330. The notices stated that the Appeals

Office determined that it was appropriate to proceed with the
 - 5 -

collection of petitioners’ outstanding tax liabilities. On

May 7, 2001, petitioners filed with the Court a joint petition

for lien or levy action seeking review of respondent’s notices of

determination.2

As indicated, 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 petitioners

acknowledge that they received the notice of deficiency dated

October 15, 1999, they cannot challenge the existence or amount

of their underlying tax liability for 1997 in this proceeding.

Respondent further asserts that the Appeals officer’s review of

Form 4340 with regard to petitioners’ account for 1997 satisfied

the verification requirement imposed under section 6330(c)(1) and

demonstrates that petitioners were issued a notice and demand for

payment.

Petitioners filed an objection to respondent’s motion.

Thereafter, pursuant to notice, respondent’s motion was called

for hearing at the Court’s motions session in Washington, D.C.

Discussion

Section 6331(a) provides that if any person liable to pay

any tax neglects or refuses to pay such tax within 10 days after

2
At the time that the petition was filed, petitioners
resided in Las Vegas, Nev.
 - 6 -

notice and demand for payment, the Secretary is authorized to

collect such tax by levy on the person’s property. Section

6331(d) provides that at least 30 days before enforcing

collection by levy on the person’s property, the Secretary is

obliged to provide the person with a final notice of intent to

levy, including notice of the administrative appeals available to

the person.

Section 6330 generally provides that the Commissioner cannot

proceed with collection by levy until the person has been given

notice and the opportunity for an administrative review of the

matter (in the form of an Appeals Office hearing) and, if

dissatisfied, with judicial review of the administrative

determination. See Davis v. Commissioner, 115 T.C. 35, 37

(2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).

Section 6330(c) prescribes the matters that a person may

raise at an Appeals Office hearing. In sum, section 6330(c)

provides that a person may raise collection issues such as

spousal defenses, the appropriateness of the Commissioner’s

intended collection action, and possible alternative means of

collection. Section 6330(c)(2)(B) provides that the existence

and amount of the underlying tax liability can be contested at an

Appeals Office hearing if the person did not receive a notice of

deficiency for the taxes in question or did not otherwise have an

earlier opportunity to dispute the tax liability. See Sego v.
 - 7 -

Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,

supra. Section 6330(d) provides for judicial review of the

administrative determination in the Tax Court or a Federal

District Court, as may be appropriate.

Petitioners challenge the assessments entered against them

on the ground that the notice of deficiency dated October 15,

1999, is invalid. However, the record shows that petitioners

received the notice of deficiency and disregarded the opportunity

to file a 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 the validity

of the notice of deficiency, petitioners’ argument that the

notice is invalid because respondent’s District Director is not

properly authorized to issue notices of deficiency is frivolous

and groundless. See Nestor v. Commissioner, 118 T.C. 162, 167

(2002); Goza v. Commissioner, supra. 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).
 - 8 -

We likewise reject petitioners’ argument 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). The record shows

that the Appeals officer obtained, reviewed, and provided to

petitioners a copy of, a transcript of account (Form 4340) with

regard to petitioners’ taxable year 1997.

Federal tax assessments are formally recorded on a record of

assessment. Sec. 6203. “The summary record, through supporting

records, shall 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. Weishan v. Commissioner, T.C. Memo. 2002-88;

Lindsey v. Commissioner, T.C. Memo. 2002-87; Tolotti v.

Commissioner, T.C. Memo. 2002-86; Duffield v. Commissioner, T.C.

Memo. 2002-53; Kuglin v. Commissioner, T.C. Memo. 2002-51. In

this regard, we observe that the Form 4340 on which the Appeals

officer relied contained all the information prescribed in

section 301.6203-1, Proced. & Admin. Regs. See Weishan v.

Commissioner, supra; Lindsey v. Commissioner, supra; Tolotti v.
 - 9 -

Commissioner, supra; Duffield v. Commissioner, supra; Kuglin v.

Commissioner, supra.

Petitioners have 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

transcript of account. See Nestor v. Commissioner, supra; 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).

Petitioners also contend that they never received a notice

and demand for payment for 1997. The requirement that the

Secretary issue a notice and demand for payment is set forth in

section 6303(a), which provides in pertinent part:

SEC. 6303(a). General Rule.-–Where it is not
otherwise provided by this title, the Secretary shall,
as soon as practicable, and within 60 days, after the
making of an assessment of a tax pursuant to section
6203, give notice to each person liable for the unpaid
tax, stating the amount and demanding payment thereof.

The Form 4340 that was provided to petitioners during the

administrative process shows that respondent issued to

petitioners a notice of balance due on the same date that

respondent entered assessments against petitioners for the tax,

addition to tax, and accuracy-related penalty set forth in the

notice of deficiency. We hold that a notice of balance due

constitutes a notice and demand for payment within the meaning of
 - 10 -

section 6303(a). See, e.g., Hughes v. United States, 953 F.2d

531, 536 (9th Cir. 1992); Weishan v. Commissioner, supra.

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, we conclude that respondent

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

of determination dated April 4, 2001.

As a final matter, 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 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 petitioners pursuant to

section 6673(a)(1) in the present case, we admonish petitioners

that the Court will consider imposing such a penalty should they

return to the Court in the future and advance similar arguments.

To reflect the foregoing,

An order and decision will

be entered granting respondent’s

motion for summary judgment.