T.C. Memo. 2002-203
UNITED STATES TAX COURT
MICHAEL SCHAPER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3049-02L. Filed August 13, 2002.
Michael Schaper, pro se.
Alan J. Tomsic and Scott A. Hovey, for respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent’s Motion For Summary Judgment, filed
pursuant to Rule 121.1 Respondent contends that there is no
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.
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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 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
summary judgment.
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Background
A. Petitioner’s Form 1040 for 1997
On or about September 10, 1998, Michael Schaper (petitioner)
and his wife, Roberta Schaper, submitted to respondent a Form
1040, U.S. Individual Income Tax Return, for the taxable year
1997. On the Form 1040, the Schapers listed their filing status
as “Married filing joint return”.
The Schapers entered zeros on applicable lines of the income
portion of their Form 1040, specifically including line 7 for
wages, line 22 for total income, and lines 32 and 33 for adjusted
gross income. The Schapers also entered a zero on line 53 for
total tax. The Schapers claimed an overpayment in the amount of
$2,065 related to Federal income tax withholding. The Schapers
attached to their Form 1040 a Form W-2, Wage and Tax Statement,
issued to petitioner by Viking Freight, Inc., disclosing that
petitioner was paid wages in the amount of $46,359.33 and that
Federal income tax in the amount of $2,065.46 was withheld.
B. Respondent’s Deficiency Notice and Petitioner’s Response
On March 3, 2000, respondent issued a joint notice of
deficiency to the Schapers. In the notice, respondent determined
a deficiency in the amount of $4,736 in the Schapers’ Federal
income tax for 1997, an addition to tax under section 6651(a)(1)
in the amount of $667.75, and an accuracy-related penalty under
section 6662(a) for negligence or disregard of rules or
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regulations in the amount of $534.20. The deficiency was based
principally on respondent’s determination that petitioner failed
to report the wage income as reported to respondent by Viking
Freight, Inc., on Form W-2.
By registered letter dated May 19, 2000, petitioner wrote to
the Director of respondent’s Service Center in Ogden, Utah,
acknowledging receipt of the notice of deficiency dated March 3,
2000, but challenging the Director’s authority “to send me the
Notice in the first place.”
Petitioner knew that he had the right to contest
respondent’s deficiency determination by filing a petition for
redetermination with this Court.2 However, petitioner chose not
to do so. Accordingly, on August 7, 2000, respondent assessed
the determined deficiency, addition to tax, and accuracy-related
penalty, as well as statutory interest. On that same day,
respondent sent petitioner a notice of balance due, informing
petitioner that he had a liability for 1997 and requesting that
he pay it. Petitioner failed to do so.
2
In this regard, petitioner’s letter dated May 19, 2000,
stated in pertinent part:
According to your “Deficiency Notice” of above
date (cover sheet attached), there is an alleged
deficiency with respect to my 1997 income tax
* * * and if I wanted to “contest this deficiency
before making payment,” I must “file a petition with
the United States Tax Court.”
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C. Respondent’s Final Notice and Petitioner’s Response
On November 16, 2000, respondent sent the Schapers a Final
Notice-–Notice of Intent to Levy and Notice of Your Right to a
Hearing (the Final Notice). The Final Notice was issued in
respect of the Schapers’ outstanding tax liability for 1997.
On December 13, 2000, petitioner submitted to respondent a
Form 12153, Request for a Collection Due Process Hearing.
Petitioner’s request stated that he was challenging the validity
of the assessments for 1997 on the grounds there is no statute
imposing tax liability upon him and he was not served with a
valid notice and demand for payment.
D. The Appeals Office Hearing
By letter dated May 9, 2001, the Appeals Office provided
petitioner with a transcript of his account for the taxable year
1997. On June 14, 2001, Appeals Officer Wiley Davis conducted an
Appeals Office hearing that petitioner attended. According to a
purported transcript of the hearing prepared by petitioner,
petitioner declined to discuss collection alternatives. Rather,
petitioner stated that he wished to challenge his underlying tax
liability, and he requested that the Appeals officer provide
verification that all applicable laws and administrative
procedures were followed in the assessment and collection
process.
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E. Respondent’s Notice of Determination
On December 11, 2001, respondent sent petitioner a Notice
of Determination Concerning Collection Action(s) Under Section
6320 and/or 6330. The notice stated that the Appeals Office had
determined that it was appropriate for respondent to proceed with
the collection of petitioner’s outstanding tax liability for
1997.
F. Petitioner’s Petition
On February 7, 2002, petitioner filed with the Court a
petition for lien or levy action seeking review of respondent’s
notice of determination.3 The petition includes allegations
that: (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) petitioner never received a notice and demand for
payment or valid notice of deficiency; and (3) petitioner was
denied the opportunity to raise “relevant issues”.
G. Respondent’s Motion for Summary Judgment
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
3
At the time that the petition was filed, petitioner
resided in Las Vegas, Nevada. The envelope bearing the petition
contains a timely U.S. Postal Service postmark dated Jan. 9,
2002. See secs. 6330(d)(1), 7502.
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particular, respondent contends that because petitioner received
the notice of deficiency dated March 3, 2000, he cannot challenge
the existence or amount of his underlying tax liability for 1997
in this proceeding. Respondent further contends that the Appeals
officer’s review of a transcript of account with regard to
petitioner’s liability for 1997 satisfied the verification
requirement imposed under section 6330(c)(1) and demonstrates
that petitioner was issued a notice and demand for payment.
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
A. Statutory Framework
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
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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);
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.
B. Summary Judgment
Petitioner challenges the assessments made against him on
the ground that the notice of deficiency dated March 3, 2000, is
invalid. However, the record shows that petitioner received the
notice of deficiency and disregarded the opportunity to file a
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petition for redetermination with this Court. See sec. 6213(a).
It follows that section 6330(c)(2)(B) generally bars petitioner
from challenging the existence or amount of his underlying tax
liability in this collection review proceeding.
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).
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
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that the Appeals officer obtained and reviewed a transcript of
account with regard to petitioner’s 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. 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 a transcript of account such as the one relied upon
by the Appeals officer in this case contains 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
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transcript of account. See Davis v. Commissioner, supra 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 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 transcript of account that the Appeals officer relied on
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,
addition to 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 137, 138 (9th Cir. 1993).
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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 December 11, 2001.
In order to give effect to the foregoing,
An appropriate order granting
respondent's motion and decision
for respondent will be entered.