PERRY v. COMMISSIONER

T.C. Memo. 2002-165

UNITED STATES TAX COURT

HARVEY DOYNE PERRY, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 12936-01L. Filed July 2, 2002.

Harvey Doyne Perry, Jr., pro se.

Wendy S. Harris and Scott A. Hovey, for respondent.

MEMORANDUM OPINION

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

on respondent’s Motion For Summary Judgment And To Impose A

Penalty Under I.R.C. Section 6673, filed pursuant to Rule 121.1

Respondent contends that there is no dispute as to any material

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 -

fact with respect to this levy action and that respondent’s

determination to proceed with collection of petitioner’s

outstanding tax liability 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

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

summary judgment.

Background

A. Petitioner’s Form 1040 for 1997

On or about April 15, 1998, Harvey Doyne Perry, Jr.

(petitioner), and his wife DeAnna H. Perry2 submitted to

respondent a joint Form 1040, U.S. Individual Income Tax Return,

for the taxable year 1997. On the Form 1040, petitioner listed

his occupation as “R.N.”.

Petitioner entered zeros on applicable lines of the income

portion of the Form 1040, specifically including line 7 for

wages, line 22 for total income, lines 32 and 33 for adjusted

gross income, and line 38 for taxable income. Petitioner made no

entry on line 39 for tax, but he did enter a zero on line 53 for

total tax. Petitioner then claimed a refund in the amount of

$10,523.92, which was equal to the amount of Federal income tax

that had been withheld from his wages.

Petitioner attached to his Form 1040 four Forms W-2, Wage

and Tax Statement, disclosing the payment of wages to him during

the taxable year in issue. The first Form W-2 was from AAA Home

Health Care of Las Vegas, Nevada; it disclosed the payment of

wages to petitioner in the amount of $59,318 and the withholding

of Federal income tax in the amount of $9,275.40. The second

2
DeAnna H. Perry did not file with the Court a petition
for lien or levy action. See infra “F”. Accordingly, she is not
a party to the present proceeding.
 - 4 -

Form W-2 was also from AAA Home Health Care of Las Vegas, Nevada;

it disclosed the payment of additional wages to petitioner in the

amount of $19,949.44 and the withholding of no Federal income

tax. The third Form W-2 was from Desert Springs Hospital of Las

Vegas, Nevada; it disclosed the payment of wages to petitioner in

the amount of $17,874 and the withholding of Federal income tax

in the amount of $1,248.52. The fourth Form W-2 was from United

Home Care, L.C. of Las Vegas, Nevada; it disclosed the payment of

wages to petitioner in the amount of $14,039 and the withholding

of no Federal income tax. Together, the four Forms W-2 disclosed

the payment of wages to petitioner in the amount of $111,180.44

and the withholding of Federal income tax in the amount of

$10,523.92.

Petitioner also attached to his Form 1040 a two-page

typewritten statement that stated, in part, as follows:

I, Harvey Doyne Perry Jr. am submitting this as part of
my 1997 income tax return

Even though I know that no section of the Internal
Revenue Code:

1) establishes an income tax “liability” * * * ;

2) provides that income taxes “have to be paid on
the basis of a return” * * * ;

3) In addition to the above, I am filing even
though the “Privacy Act Notice” as contained in a 1040
booklet clearly informs me that I am not required to
file. It does so in at least two places.

a) In one place, it states that I need only file a
return for “any tax” I may be “liable” for. Since no
 - 5 -

Code Section makes me “liable” for income taxes, this
provision notifies me that I do not have to file an
income tax return;

* * * * * * *

7) It should also be noted that I had “zero”
income according to The Supreme Court’s definition of
income * * * .

8) Please note that my 1997 return also
constitutes a claim for refund pursuant to Code Section
6402.

9) I am also putting the IRS on notice that my
1997 tax return and claim or [sic] refund does not
constitute a “frivolous” return pursuant to Code
Section 6702. * * *

* * * * * * *

11) In addition, don’t notify me [t]hat the IRS is
“changing” my return, since there is no statute that
allows the IRS to do that. You might prepare a return
(pursuant to Code Section 6020(b)) where no return is
filed, but where, as in this case, a return has been
filed, no statute authorizes IRS personnel to “change”
that return.

* * * * * * *

* * * The word “income” is not defined in the Internal
Revenue Code. * * * But, as stated above, it can only
be a derivative of corporate activity. * * *

B. Respondent’s Deficiency Notice and Petitioner’s Response

On February 4, 2000, respondent (acting through the Director

of the Service Center in Ogden, Utah) issued a joint notice of

deficiency to petitioner and his wife for the taxable year 1997.

In the notice, respondent determined a deficiency in Federal

income tax in the amount of $32,564 and an accuracy-related

penalty under section 6662(a) and (b)(1) for negligence or
 - 6 -

disregard of rules or regulations in the amount of $4,408.02.3

The deficiency in income tax was based on respondent’s

determination that petitioner failed to report income in the

aggregate amount of $144,161, determined as follows:

Income Amount
Wages $111,180
Interest 160
Capital gain 22,591
Dividends 1,626
Social Security 8,604
144,161

By registered letter dated February 23, 2000, petitioner

wrote to respondent’s Service Center in Ogden, Utah,

acknowledging receipt of the notice of deficiency dated February

4, 2000, but challenging respondent’s authority “to send me the

Notice in the first place.” Petitioner sent copies of his letter

by registered mail to the Secretary of the Treasury and the

Commissioner of Internal Revenue.

Petitioner knew that he had the right to contest

respondent’s deficiency determination by filing a petition for

redetermination with this Court.4 However, petitioner chose not

3
Insofar as their ultimate tax liability was concerned,
respondent gave petitioner and his wife credit for the amounts
withheld from petitioner’s wages. However, we note that the
determination of a statutory deficiency does not take such
withheld amounts into account. See sec. 6211(b)(1).
4
In this regard, petitioner’s letter dated Feb. 23, 2000,
stated as follows:
(continued...)
 - 7 -

to do so. Accordingly, on August 14, 2000, respondent assessed

the determined deficiency and accuracy-related penalty, as well

as statutory interest. On that same day, respondent sent

petitioner and his wife a notice of balance due, informing them

that they had a liability for 1997 and requesting that they pay

it. Petitioner and his wife failed to pay the amount owing.

Respondent sent petitioner and his wife a second notice of

balance due for 1997. Again, they failed to pay the amount

owing.

C. Respondent’s Final Notice and Petitioner’s Response

On February 8, 2001, respondent mailed to petitioner and his

wife a Final Notice--Notice of Intent to Levy and Notice of Your

Right to a Hearing in respect of their outstanding tax liability

for 1997.

On March 11, 2001, petitioner filed with respondent Form

12153, Request for a Collection Due Process Hearing.5 The

request, which was accompanied by a cover letter dated March 6,

2001, included, inter alia, a challenge to the existence of the

4
(...continued)
According to your “Deficiency Notice”, listed above,
there is an alleged deficiency with respect to my 1997
income tax of $32,564.00 * * *, and if I wanted to
“contest this deficiency before making payment, “I
must” [sic] file a petition with the United States Tax
Court.”
5
The request was not executed by petitioner’s wife, nor
did it purport to be filed on her behalf.
 - 8 -

underlying tax liability for 1997, as well as allegations that

petitioner was never provided with a valid notice of deficiency

or notice and demand for payment and that the Appeals officer had

failed “to identify the statute that makes me ‘liable to pay’ the

taxes at issue”. Petitioner also requested verification from the

Secretary that all applicable laws and administrative procedures

were followed with regard to the assessment and collection of the

tax liability in question.

D. The Appeals Office Hearing

On July 26, 2001, petitioner attended an administrative

hearing in Las Vegas, Nevada conducted by Appeals Officer Douglas

DeSoto (the Appeals officer). Prior to the hearing, the Appeals

officer obtained and reviewed Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, pertaining to

petitioner’s account for the taxable year 1997. At the hearing,

the Appeals officer provided petitioner with a copy of that

document, as well as copies of several court cases, including

Pierson v. Commissioner, 115 T.C. 576 (2000).

During the hearing, petitioner requested that the Appeals

officer identify the statutory provisions establishing

petitioner’s liability for Federal income tax and provide

verification that all applicable laws and administrative

procedures had been followed in the assessment and collection

process. Petitioner was informed that Form 4340 was sufficient
 - 9 -

to satisfy the verification requirement of section 6330(c)(1).

The Appeals officer terminated the hearing after petitioner

declined to discuss collection alternatives and instead persisted

in attempting to challenge the underlying tax liability.6

E. Respondent’s Notice of Determination

On September 13, 2001, respondent’s Appeals Office issued

to petitioner a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 with regard to his tax

liability for 1997. In the notice, the Appeals Office concluded

that respondent’s determination to proceed with collection by way

of levy should be sustained.

F. Petitioner’s Petition

On October 15, 2001, petitioner filed with the Court a

Petition for Lien or Levy Action seeking review of respondent’s

notice of determination.7 The petition includes the following

6
The following colloquy between petitioner and the Appeals
officer exemplifies the administrative hearing:

PETITIONER: * * * I’m going to go and tell you
that I cannot find anyplace in here [the Internal
Revenue Code] a law that requires me to pay income tax.

* * * * * * *

APPEALS OFFICER: Okay. So it’s your position
that there’s nothing in there that says you have to pay
income taxes?

PETITIONER: Absolutely.
7
At the time that the petition was filed, petitioner
(continued...)
 - 10 -

allegations: (1) 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); (2) the Appeals officer failed to

identify the statutes making petitioner liable for Federal income

tax; and (3) 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.

Petitioner attached to his petition several documents,

including a copy of the Form 4340 that had been furnished to him

at the administrative hearing on July 26, 2001.

G. Respondent’s Motion for Summary Judgment

As stated, respondent filed a Motion For Summary Judgment

And To Impose A Penalty Under I.R.C. Section 6673. Respondent

contends that petitioner is barred under section 6330(c)(2)(B)

from challenging the existence or amount of his underlying tax

liability in this collection review proceeding because petitioner

received a notice of deficiency for the tax in question.

Respondent also contends that the Appeals officer’s review of

Form 4340 for petitioner’s account for the taxable year 1997

satisfied the verification requirement of section 6330(c)(1).

Finally, respondent contends that petitioner’s behavior warrants

7
(...continued)
resided in Henderson, Nevada.
 - 11 -

the imposition of a penalty under section 6673.

Petitioner 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.

Although petitioner did not attend the hearing, he filed a

written statement pursuant to Rule 50(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

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
 - 12 -

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 only if the person did not receive a

notice of deficiency for the tax in question or did not otherwise

have an earlier opportunity to dispute the tax liability. See

Sego v. 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.

A. Summary Judgment

Petitioner challenges the assessment made against him on the

ground that the notice of deficiency dated February 4, 2000, is

invalid. However, the record shows that petitioner received the

notice of deficiency and disregarded the opportunity to file a

petition for redetermination with this Court. See sec. 6213(a).

It follows that section 6330(c)(2)(B) bars petitioner from

challenging the existence or amount of his underlying tax

liability in this collection review proceeding.
 - 13 -

Even if petitioner were permitted to challenge the validity

of the notice of deficiency, petitioner’s argument that the

notice is invalid because respondent’s Service Center director is

not properly authorized to issue notices of deficiency is

frivolous and groundless. See Nestor v. Commissioner, 118 T.C.

162, 165 (2002); Goza v. Commissioner, supra. Further, 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). Suffice it to say that

petitioner is a taxpayer subject to the Federal income tax, see

secs. 1(a)(1), 7701(a)(1), (14), and that compensation for labor

or services rendered constitutes income subject to the Federal

income tax, sec. 61(a)(1); United States v. Romero, 640 F.2d

1014, 1016 (9th Cir. 1981); see also sec. 61(a)(3), (4), (7);

sec. 86.

We likewise reject petitioner’s 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 and reviewed Form 4340 for

petitioner’s taxable year 1997.

Federal tax assessments are formally recorded on a record of
 - 14 -

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. Roberts v. Commissioner, 118 T.C. 365, 371 n.10

(2002); 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. Commissioner, supra;

Duffield v. Commissioner, supra; Kuglin v. Commissioner, supra.8

Petitioner has not alleged any irregularity in the

assessment procedure that would raise a question about the

8
To the extent that petitioner may still be arguing that
the Appeals officer failed to provide him with a copy of the
verification, we note that sec. 6330(c)(1) does not require that
the Appeals officer provide the taxpayer with a copy of the
verification at the administrative hearing. Nestor v.
Commissioner, 118 T.C. 162, 166 (2002). In any event, the
Appeals officer provided petitioner with a copy of Form 4340 for
the taxable year 1997. Indeed, petitioner attached a copy of
this form as an exhibit to his petition.
 - 15 -

validity of the assessment or the information contained in the

Form 4340. See Davis v. Commissioner, 115 T.C. at 41; 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 also contends that he never received a notice and

demand for payment of his tax liability 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.
* * *

In particular, the Form 4340 on which the Appeals officer relied

during the administrative process shows that respondent sent

petitioner a notice of balance due on the same date that

respondent made assessments against petitioner for the tax and

accuracy-related penalty determined in the notice of deficiency.

A notice of balance due constitutes 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); Weishan v.

Commissioner, supra; see also Hansen v. United States, 7 F.3d
 - 16 -

137, 138 (9th Cir. 1993).

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.9

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 September 13, 2001.

B. Imposition of a Penalty Under Section 6673

We turn now to that part of respondent’s motion that moves

for the imposition of a penalty on petitioner under section 6673.

As relevant herein, 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

9
In his Objection to respondent’s motion, petitioner
states, in part, as follows:

respondent claims that petitioner had no “interest in
discussing alternatives to respondent’s proposed
collection of the tax.” That is a fabrication.
Petitioner made a collection alternative. That was if
the appeals officer would have simply identified a
section in the internal revenue code that required the
payment of the income tax or establishes a liability
for the income tax, petitioner offered to pay in full
the amounts allegedly owed.

The section references sought by petitioner are identified supra
p. 13 of this opinion.
 - 17 -

delay or that the taxpayer's position in such proceeding is

frivolous or groundless. The Court has indicated its willingness

to impose such penalty in lien and levy cases, Pierson v.

Commissioner, 115 T.C. at 580-581, and has in fact imposed a

penalty in several such cases, Roberts v. Commissioner, supra;

Crow v. Commissioner, T.C. Memo. 2002-149 (imposing a penalty in

the amount of $1,500); Smeton v. Commissioner, T.C. Memo. 2002-

140 (imposing a penalty in the amount of $1,000); Newman v.

Commissioner, T.C. Memo. 2002-135 (imposing a penalty in the

amount of $1,000); Yacksyzn v. Commissioner, T.C. Memo. 2002-99

(imposing a penalty in the amount of $1,000); Watson v.

Commissioner, T.C. Memo. 2001-213 (imposing a penalty in the

amount of $1,500); Davis v. Commissioner, T.C. Memo. 2001-87

(imposing a penalty in the amount of $4,000).

We are convinced that petitioner instituted the present

proceeding primarily for delay. In this regard, it is clear that

petitioner regards this proceeding as nothing but a vehicle to

protest the tax laws of this country and to espouse his own

misguided views, which we regard as frivolous and groundless. In

short, having to deal with this matter wasted the Court's time,

as well as respondent's, and taxpayers with genuine controversies

may have been delayed.

Also relevant is the fact that petitioner is well aware of

the provisions of section 6673 as applicable to collection review
 - 18 -

proceedings such as the present one. In this regard, petitioner

was provided at the administrative hearing on July 26, 2001, with

a copy of this Court’s opinion in Pierson v. Commissioner, supra,

in which the Court indicated its willingness to impose the

section 6673 penalty in lien and levy cases.

Under the circumstances, we shall grant that part of

respondent’s motion that moves for the imposition of a penalty in

that we shall impose a penalty on petitioner pursuant to section

6673(a)(1) in the amount of $2,500.

In order to give effect to the foregoing,

An appropriate order granting

respondent's motion and decision

for respondent will be entered.