MUDD v. COMMISSIONER

T.C. Memo. 2002-204

UNITED STATES TAX COURT

DENNIS M. MUDD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 743-02L. Filed August 14, 2002.

Dennis M. Mudd, pro se.

Laurence K. Williams and A. Gary Begun, 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 can be granted pursuant to Rule 40.1

1
Section references are to sections of the Internal
(continued...)
 - 2 -

Because respondent has presented matters outside of the

pleadings, we treat respondent’s motion as a motion for summary

judgment pursuant to Rule 121. See Rule 40. Respondent contends

that there is no dispute as to any material fact with respect to

this levy action, and that respondent’s determination to proceed

with collection of petitioner’s outstanding tax liabilities for

1992 to 1997 and 1999 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

1
(...continued)
Revenue Code, as amended, and Rule references are to the Tax
Court Rules of Practice and Procedure.
 - 3 -

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

summary judgment.

Background

Petitioner and his wife, Sheila Mudd, filed joint Forms

1040, U.S. Individual Income Tax Return, for the taxable years

1992 to 1997 and 1999. For each of these years, the Mudds

reported taxable income, partially offset by credits for

withholding taxes, leaving relatively modest amounts of taxes

due. However, the Mudds failed to remit the amounts due with the

returns.

Upon the filing of the tax returns described above,

respondent entered assessments against the Mudds for the taxes

reported to be due. See sec. 6201(a)(1). Respondent also

entered assessments against the Mudds for statutory interest for

each of the years in question.

On November 16, 2000, respondent mailed the Mudds a Final

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

Hearing with regard to their tax liabilities for 1992 to 1997 and

1999. On December 13, 2000, the Mudds filed with respondent a
 - 4 -

Form 12153, Request for a Collection Due Process Hearing, in

which they challenged the validity of the assessments and

asserted that respondent failed to serve them with a valid notice

and demand for payment.

On June 4, 2001, respondent issued to the Mudds separate

Notices CP 504, “Urgent!! We [respondent] intend to levy on

certain assets. Please respond NOW”, for 1992 to 1997 and 1999,

informing them they owed taxes for those years and requesting

payment within 10 days. The Mudds failed to pay the amounts

owing.

On July 23, 2001, Appeals Officer Tom Conger conducted an

Appeals Office hearing that the Mudds attended. During the

hearing, petitioner acknowledged that Appeals Officer Conger

provided him with transcripts of account for the years in

question.2 Petitioner also acknowledged that he had filed tax

returns for the years in question reporting taxable income and

taxes due.

On November 21, 2001, respondent issued to the Mudds

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

collection for 1992 to 1997 and 1999. On January 7, 2002,

2
The record includes copies of transcripts of account for
the years in question dated June 14, 2001.
 - 5 -

petitioner filed with the Court a petition for lien or levy

action seeking review of respondent’s notice of determination.3

At the time that the petition was filed, petitioner resided in

Allegan, Michigan. Sheila Mudd did not join in filing the

petition.

As indicated, respondent maintains 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 the

Appeals officer’s review of transcripts of account with regard to

petitioner’s account for 1992 to 1997 and 1999 satisfied the

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

demonstrates that petitioner was issued a notice and demand for

payment for each of those years.

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.

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

3
The petition was delivered to the Court in an envelope
bearing a timely U.S. Postal Service postmark dated Dec. 14,
2001. See sec. 6330(d). We attribute the delay in the delivery
of the petition to the Court to delays associated with the
anthrax contamination that occurred at the U.S. Postal Service’s
Brentwood facility in Oct. 2001.
 - 6 -

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 only 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. Commissioner, 114 T.C. 604, 609 (2000);
 - 7 -

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.

Petitioner first contends that he was denied the opportunity

to challenge the existence or amount of his tax liabilities for

the years in question. The record in this case shows otherwise.

Respondent summarily assessed the underlying taxes for 1992

to 1997 and 1999 inasmuch as petitioner reported such tax

liabilities on his tax returns. Sec. 6201(a)(1). Consequently,

respondent did not issue notices of deficiency to petitioner for

the years in question. However, during the administrative

hearing, the Appeals officer invited petitioner to show him “that

the underlying tax is incorrect”. Rather than offer proof

challenging the existence or amount of the tax liabilities,

petitioner responded by demanding that the Appeals officer cite

the statutory provision making petitioner liable for Federal

income taxes. The Appeals officer declined to do so.

The record also shows that petitioner’s position regarding

his liability for Federal income taxes is frivolous and

groundless. In particular, in his objection to respondent’s

motion, petitioner asserts: “Money that is earned while engaged

in my God given and Constitutional RIGHT to life liberty and the

pursuit of happiness is not a taxable source of income unless

apportioned by the States.” As the Court of Appeals for the
 - 8 -

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

who is subject to the Federal income tax on his wages and other

sources of income. See secs. 1(c), 61(a)(1), (11), 7701(a)(1),

(14); Nestor v. Commissioner, 118 T.C. 162, 165 (2002).

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 transcripts of

account with regard to petitioner’s taxable years 1992 to 1997

and 1999.

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;
 - 9 -

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 transcripts of account 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.

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. See Nestor v. Commissioner, supra at

167; 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 for the years in question. 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
 - 10 -

6203, give notice to each person liable for the unpaid
tax, stating the amount and demanding payment thereof.
* * *

The record in this case includes notices CP 504, dated

June 4, 2001, addressed to petitioner and his wife for each of

the years in question. Petitioner does not deny that he received

such notices. These notices informed petitioner that he owed

taxes for 1992 to 1997 and 1999, and included a demand for the

immediate payment of the amounts due. Such notices constitute

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.

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). Under the

circumstances, we conclude that respondent is entitled to

judgment as a matter of law sustaining the notice of

determination dated November 21, 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
 - 11 -

review cases. Roberts v. Commissioner, 118 T.C. 365 (2002);

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 similar arguments.

To reflect the foregoing,

An order and decision will

be entered granting respondent’s

motion for summary judgment.