VILLWOCK v. COMMISSIONER

T.C. Memo. 2002-235

UNITED STATES TAX COURT

ROBERT R. VILLWOCK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10245-01L. Filed September 19, 2002.

Robert R. Villwock, pro se.

Wendy S. Harris and Karen Lynne Baker, for respondent.

MEMORANDUM OPINION

PANUTHOS, Chief 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

1
Unless otherwise indicated all section references are to
the Internal Revenue Code, as amended, and all Rule references
(continued...)
 - 2 -

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).

1
(...continued)
are to the Tax Court Rules of Practice and Procedure.
 - 3 -

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

A. Petitioner’s Form 1040A for 1997

On or about May 7, 1998, petitioner submitted to respondent

a Form 1040A, U.S. Individual Income Tax Return, for the taxable

year 1997. On the Form 1040A, petitioner listed his occupation

as “Computer Programmer”.

Petitioner entered zeros on applicable lines of the income

portion of the Form 1040A, specifically including line 7 for

wages, line 11b for taxable pensions, and line 16 for adjusted

gross income. Petitioner also entered zero on line 28 for total

tax. Petitioner then claimed a refund of $9,618 equal to the

amount of Federal income tax that had been withheld from his

wages.

Petitioner attached to the Form 1040A: (1) A Form W-2, Wage

and Tax Statement, disclosing that he was paid wages of

$50,560.85 by Harrah’s-Las Vegas, and had withholding of Federal

income tax of $9,618.03, during the taxable year 1997, and (2) a

Form 1099-R, Distributions From Pensions, Annuities, Retirement

or Profit-Sharing Plans, IRA’s, Insurance Contracts, etc.,

disclosing that he received a distribution of $13,000 from the
 - 4 -

Thrift Plan for Employees of the Federal Reserve System, and had

withholding of $2,600, during the taxable year 1997.

Petitioner also attached to the Form 1040A a four-page

typewritten statement that stated, in part, as follows:

I, Robert R. Villwock, 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 1040 booklet informs me that I am not
required to file. It does so in at least two
places:

a) The “Privacy Act Notice” states that
I need only file a return for “any tax”
I may be liable for. Since no Code
Section makes me liable for income
taxes, this provision notifies me that I
do not have to file an income tax
return.

* * * * * * *

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

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

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

* * * * * * *
 - 5 -

10) In addition, please do not notify me that
the IRS is “changing” my return since there
is no statute that allows the IRS to do this.
You might prepare a return (pursuant to Code
Section 6020(b)) where no return is filed,
but in this case a return has been filed and
no statute authorizes IRS personnel to
“change” that return.

* * * * * * *

*Note #1: The word “income” is not defined in the
Internal Revenue Code * * *. However, as stated above,
it can only be a derivative of corporate activity.* * *

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

On October 15, 1999, respondent issued a notice of

deficiency to petitioner for the taxable year 1997. In the

notice, respondent determined a deficiency in Federal income tax

of $14,603 and an accuracy-related penalty under section 6662(a)

and (b)(1) for negligence or disregard of rules or regulations of

$477. The deficiency in income tax was based on respondent’s

determination that petitioner failed to report wages, a taxable

distribution from a retirement plan, and gambling winnings.

By letter dated December 27, 1999, petitioner wrote to the

Director of respondent’s Service Center in Ogden, Utah,

acknowledging receipt of the notice of deficiency dated October

15, 1999, but challenging the Director’s authority “to send me

the Notice in the first place.”
 - 6 -

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 March 6, 2000, respondent assessed the

determined deficiency and accuracy-related penalty, as well as

statutory interest. On that same day, respondent sent petitioner

a notice titled “WE CHANGED YOUR ACCOUNT”, informing him that he

had a liability for 1997 and requesting that he pay it. By

letter dated March 20, 2000, petitioner acknowledged receipt of

this notice but failed to pay the amount owing.

On April 10, 2000, respondent sent petitioner a second

notice of balance due for 1997. Petitioner failed to pay the

amount owing.

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

On August 3, 2000, respondent mailed to petitioner a Final

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

Hearing in respect of his outstanding tax liability for 1997.

On August 18, 2000, petitioner filed with respondent a Form

12153, Request for a Collection Due Process Hearing. Petitioner

requested verification from the Secretary that all applicable

2
In this regard, petitioner’s letter dated Dec. 27, 1999,
stated in pertinent part as follows: “The notice also tells me
that if I want to ‘contest this deficiency in court before making
any payment’, that I must ‘file a petition with the United States
Tax Court’.”
 - 7 -

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 April 11, 2001, petitioner attended an administrative

hearing in Las Vegas, Nevada, conducted by Appeals Officer Lavada

Harmon (the Appeals officer). Following the hearing, the Appeals

officer prepared an Appeals Office memorandum which recited that

petitioner did not raise any valid issue during the hearing and

that the Appeals officer informed petitioner of the Court’s

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

Appeals office memorandum also stated that the Appeals officer

concluded that all administrative and procedural requirements

were followed with regard to the assessment and collection of the

tax liability in question.

The record in this case includes a literal “plain English”

transcript of petitioner’s account for the taxable year 1997,

dated February 6, 2001, as well as a Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, dated

September 12, 2001. Both documents were attached to respondent’s

motion for summary judgment, which was served on petitioner.

E. Respondent’s Notice of Determination

On July 16, 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
 - 8 -

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 and Motion To Dismiss

On August 16, 2001, petitioner filed with the Court a

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

notice of determination.3 The petition includes the following

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

provide petitioner with a copy of the tax return from which the

assessments were made or a copy of Form 23C; and (3) the Appeals

officer failed to demonstrate that petitioner received a valid

notice of deficiency or notice and demand for payment.

Concurrently with the filing of his petition, petitioner

filed a motion to dismiss for lack of jurisdiction in which he

asked the Court to “declare as invalid the determination at

issue, since the appeals officer issued the determination without

providing, at the hearing, numerous documents and supporting

evidence”. Petitioner attached to his motion a Memorandum

3
At the time that the petition was filed, petitioner
resided in Las Vegas, Nevada.
 - 9 -

of Law in which he repeated many of the allegations in the

petition.

Petitioner’s motion to dismiss was called for hearing at the

Court’s motions session in Washington, D.C. Counsel for

respondent appeared and was heard. There was no appearance by or

on behalf of petitioner. By order dated November 21, 2001, the

Court denied petitioner’s motion.

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 proceeding because petitioner received a notice

of deficiency for the tax in question. Respondent also contends

that the Appeals officer’s review of transcripts from

respondent’s computer systems, including the literal transcript

dated February 6, 2001, and the Form 4340, dated September 12,

2001, satisfied the verification requirement of section

6330(c)(1). Finally, respondent contends that petitioner’s

behavior warrants the imposition of a penalty under section 6673.

By notice of filing dated April 4, 2002, the Court notified

petitioner of the filing of respondent’s motion for summary

judgment and directed petitioner to file an objection, if any, to

respondent’s motion on or before April 25, 2002. The Court did
 - 10 -

not receive an objection, or any other response, from petitioner.

Pursuant to a further order, respondent’s motion was called for

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

Counsel for respondent appeared and was heard. There was no

appearance by or on behalf of petitioner, nor did petitioner file

with the Court 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).
 - 11 -

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.

A. Summary Judgment

Petitioner challenges the assessment made against him on the

ground that the notice of deficiency dated October 15, 1999, 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) generally bars petitioner

from challenging the existence or amount of his underlying tax

liability in this collection review proceeding.
 - 12 -

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

that the Appeals officer obtained and reviewed transcripts of

account with regard to petitioner’s taxable year 1997.
 - 13 -

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 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.4

4
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 record
shows that petitioner received both a literal transcript and a
Form 4340 for the taxable year 1997.
 - 14 -

Petitioner has not alleged any irregularity in the

assessment procedure that would raise a question about the

validity of the assessment or the information contained in the

transcript. 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.
* * *

The transcript of account which the Appeals officer relied

upon in issuing the notice of determination shows that respondent

sent petitioner a notice that he owed taxes for 1997 on the same

date that respondent made assessments against petitioner for the

tax and accuracy-related penalty determined in the notice of

deficiency. Such a notice constitutes a notice and demand for

payment within the meaning of section 6303(a). See, e.g., Hughes
 - 15 -

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). Petitioner acknowledged receipt of

this notice in his letter to respondent dated March 20, 2000.

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 July 16, 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

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

frivolous or groundless. The Court has indicated its willingness

to impose such a 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

(imposing a penalty of $10,000); Smeton v. Commissioner, T.C.
 - 16 -

Memo. 2002-140 (imposing a penalty of $1,000); Newman v.

Commissioner, T.C. Memo. 2002-135 (imposing a penalty of $1,000);

Yacksyzn v. Commissioner, T.C. Memo. 2002-99 (imposing a penalty

of $1,000); Watson v. Commissioner, T.C. Memo. 2001-213 (imposing

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

(imposing a penalty of $4,000).

We are convinced that petitioner instituted the present

proceeding primarily for delay. We note that, during the

administrative process, the Appeals officer informed petitioner

of the Court’s opinion in Pierson v. Commissioner, supra.

Petitioner nevertheless continued to press his meritless

arguments. Under the circumstances, 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.

Under the circumstances, we shall grant that part of

respondent’s motion that moves for the imposition of a penalty in
 - 17 -

that we shall impose a penalty on petitioner pursuant to section

6673(a)(1) of $1,000.

In order to give effect to the foregoing,

An appropriate order granting

respondent’s motion and decision

for respondent will be entered.