Hill v. Comm'r

T.C. Memo. 2002-272

UNITED STATES TAX COURT

ROBERT D. HILL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 3782-02L. Filed October 29, 2002.

Robert D. Hill, pro se.

Erin K. Huss, for respondent.

MEMORANDUM OPINION

LARO, Judge: Petitioner, while residing in Sedona, Arizona,

petitioned the Court under section 6330(d) to review respondent’s

filing of a notice of lien under section 6323 and his

determination as to proposed levy upon petitioner’s property.

Respondent filed the lien and proposed the levy to collect

Federal income taxes (including accuracy-related penalties and
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interest) of approximately $2,874.95 for 1993, $7,557.50 for

1995, and $8,403.70 for 1996.1 Currently, the case is before the

Court on respondent’s motion for summary judgment under Rule 121

and to impose a penalty under section 6673. Petitioner responded

to respondent’s motion under Rule 121(b).2

We shall grant respondent’s motion for summary judgment and

shall impose a $3,500 penalty against petitioner. Unless

otherwise noted, section references are to the applicable

versions of the Internal Revenue Code. Rule references are to

the Tax Court Rules of Practice and Procedure.

Background

Petitioner filed a 1993, 1995, and 1996 Federal income tax

return on August 17, 1994, April 9, 1997, and October 27, 1997,

respectively. Each return showed a tax liability due.

Petitioner has never paid any of that tax reported as due.

On November 2, 2000, respondent mailed to petitioner a

“Notice of Federal Tax Lien Filing and Your Right to a Hearing”

(lien notice) with respect to 1993, 1995, and 1996. Enclosed

1
We use the term “approximately” because these amounts were
computed before the present proceeding and have since increased
on account of interest.
2
As part of his response, petitioner challenges as improper
a declaration of respondent’s counsel that accompanied
respondent’s motion for summary judgment. The declaration
describes certain documents contained in respondent’s
administrative file, all of which were submitted to the Court as
part of respondent’s motion for summary judgment. We find
petitioner’s challenge disingenuous.
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with the lien notice was a copy of Form 12153, Request for a

Collection Due Process Hearing. On November 30, 2000, respondent

received from petitioner the completed Form 12153 requesting the

hearing regarding the lien.

On December 14, 2000, petitioner filed an amended U.S.

individual income tax return for 1996. Petitioner reported that

he had zero income and zero taxes due, explaining the changes:

“Due to ignorance I reported as income sources of income as

income itself when in fact I had no statutory income tax to

report.” He attached to the amended return a declaration

stating in part that “this return is not being filed

voluntarily,” petitioner “had ‘zero’ income according to the

Supreme Court’s definition of income”, and petitioner “can only

swear to having ‘zero’ income for 1996.”

On March 28, 2001, respondent mailed to petitioner a “Final

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

Hearing” (final levy notice). The final levy notice pertained to

the subject years and informed petitioner of (1) respondent’s

intention to levy under section 6331 and (2) petitioner’s right

under section 6330 to a hearing with respondent’s Office of

Appeals (Appeals). Enclosed with the final levy notice was a

copy of Form 12153. On April 2, 2001, petitioner sent to

respondent the completed Form 12153 requesting the hearing

regarding the levy.
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On April 7, 2001, petitioner filed an amended U.S.

individual income tax return for 1995. Petitioner reported zero

income and zero taxes due, explaining the changes: “Due to

ignorance I reported as income sources of income as being income

itself, when in fact I had no statutory income to report.”

On October 12, 2001, Appeals Officer Julienne Peterson held

with petitioner a hearing under section 6330. At the hearing,

the Appeals officer provided petitioner with Forms 4340,

Certificates of Assessments, Payments and Other Specified

Matters. The Forms 4340 were dated August 29, 2001, and were for

1993, 1995, and 1996. The Appeals officer discussed with

petitioner the case of Pierson v. Commissioner, 115 T.C. 576

(2000), and provided petitioner with a copy of the Court’s

opinion in that case. The Appeals officer also gave petitioner a

copy of this Court’s opinion in Davis v. Commissioner, T.C. Memo.

2001-87.

On January 3, 2002, respondent issued to petitioner a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330 for 1993, 1995, and 1996. This notice reflected

the determination of Appeals to sustain the lien and proposed

levy.

Discussion

Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials. Fla. Peach Corp. v.
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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). The moving party bears the burden of proving

that there is no genuine issue of material fact, and factual

inferences are drawn 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 will be shown in the discussion that follows, petitioner

has raised no genuine issue as to any material fact.

Accordingly, we conclude that this case is ripe for summary

judgment.

Section 6321 imposes a lien in favor of the United States on

all of a person’s property and rights to property where such

person is liable to pay any tax and neglects or refuses to pay

the same after demand. Under section 6322 the lien arises at the

time the assessment is made and continues until the liability for

the amount so assessed is paid. Section 6323(a) requires the

Secretary to file a notice of Federal tax lien in order for the
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lien to be valid against any purchaser, holder of a security

interest, mechanic’s lienor, or judgment lien creditor. Lindsay

v. Commissioner, T.C. Memo. 2001-285.

Section 6320 provides that the Secretary shall furnish the

person described in section 6321 with written notice of the

filing of a notice of lien under section 6323. The notice

required by section 6320 must be provided not more than 5

business days after the day of the filing of the notice of lien.

Sec. 6320(a)(2). Section 6320 further provides that the person

may request administrative review of the matter (in the form of

an Appeals Office hearing) within 30 days beginning on the day

after the 5-day period. Section 6320(c) provides that the

Appeals Office hearing generally shall be conducted consistent

with the procedures set forth in section 6330(c), (d), and (e).

See, e.g., Goza v. Commissioner, 114 T.C. 176, 179 (2000).

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 may 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 must 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. Davis v. Commissioner, 115 T.C. 35, 37 (2000);

Goza v. Commissioner, supra. In the case of such judicial

review, the Court will review a taxpayer’s liability under the de

novo standard where the validity of the underlying tax liability

is at issue. The Court will review the Commissioner’s

administrative determination for abuse of discretion with respect

to other issues. Sego v. Commissioner, 114 T.C. 604, 610 (2000).

Here, respondent notified petitioner that respondent had

filed a notice of Federal income tax lien against petitioner’s

property and was proposing to levy upon that property in order to

collect unpaid income tax assessments. Following the

determination by Appeals that respondent’s lien and proposed levy

were proper, petitioner sought relief in this Court. Petitioner

alleges in his petition that “The determination was made without

verification that the law and procedures were complied with.”

Petitioner asserts that

neither of the transcripts [Forms 4340] showed that the
Petitioner had been sent the Notice of Assessment
pursuant to 26 U.S.C. §6303 or that the Commissioner
had transmitted the Certified Assessment list,
identifying the petitioner, to the Director or that the
assessment officer had in fact executed the summary
record of assessment on the dates the assessments were
alleged to have been made.
 -8-

We disagree with petitioner’s allegation that the Appeals

officer failed to obtain the verification from the Secretary

required by section 6330(c)(1). Section 6330(c)(1) does not

require the Appeals officer to rely upon a particular document

(e.g., the summary record itself rather than transcripts of

account) in order to satisfy this verification requirement.

Kuglin v. Commissioner, T.C. Memo. 2002-51; see also Weishan v.

Commissioner, T.C. Memo. 2002-88. Nor does it mandate that the

Appeals officer actually give a taxpayer a copy of the

verification upon which the Appeals officer relied. Sec.

6330(c)(1); sec. 301.6330-1(e)(1), Proced. & Admin. Regs.; see

also Nestor v. Commissioner, 118 T.C. 162 (2002). Given the

additional fact that petitioner was actually given copies of the

relevant Forms 4340, which are a valid verification that the

requirements of any applicable law or administrative procedure

have been met, Roberts v. Commissioner, 118 T.C. 365 (2002); Mudd

v. Commissioner, T.C. Memo. 2002-204; Howard v. Commissioner,

T.C. Memo. 2002-81; Mann v. Commissioner, T.C. Memo. 2002-48, we

hold that: (1) The assessments were valid, Kuglin v.

Commissioner, supra; see also Duffield v. Commissioner, T.C.

Memo. 2002-53, and (2) the Appeals officer satisfied the

verification requirement of section 6330(c)(1), Yacksyzn v.

Commissioner, T.C. Memo. 2002-99; cf. Nicklaus v. Commissioner,

117 T.C. 117, 120-121 (2001). Petitioner has not demonstrated in
 -9-

this proceeding any irregularity in the assessment procedure that

would raise a question about the validity of the assessment or

the information contained in Forms 4340. See Mann v.

Commissioner, supra.

Petitioner further contends that he had not been sent “the

Notice of Assessment.” The record shows otherwise. “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.” Sec. 6303(a).

If mailed, this notice and demand is required to be sent to the

taxpayer’s last known address. Id. Forms 4340 show that

respondent sent petitioner notices of balance due for 1993, 1995,

and 1996. A notice of balance due constitutes a notice and

demand for payment within the meaning of section 6303(a).

Schaper v. Commissioner, T.C. Memo. 2002-203. In addition,

petitioner received numerous final notices (notices of intention

to lien and levy), receipt of which petitioner does not dispute.

These numerous notices were sufficient and met the requirements

of section 6303(a). Hansen v. United States, 7 F.3d 137, 138

(9th Cir. 1993); Hughes v. United States, 953 F.2d 531, 536 (9th

Cir. 1992); Weishan v. Commissioner, supra. “The form on which a

notice of assessment and demand for payment is made is irrelevant

as long as it provides the taxpayer with all the information
 -10-

required under 26 U.S.C. § 6303(a).” Elias v. Connett, 908 F.2d

521, 525 (9th Cir. 1990).

For the foregoing reasons, we sustain respondent’s

determination as to the lien and proposed levy as a permissible

exercise of discretion. We now turn to the requested penalty

under section 6673.

Section 6673(a)(1) authorizes the 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. We have repeatedly indicated our willingness to

impose such penalties in a lien and levy review case. Roberts v.

Commissioner, supra. Moreover, we have imposed penalties in such

proceedings when the taxpayer has raised frivolous and groundless

arguments as to the legality of the Federal tax laws. Yacksyzn

v. Commissioner, supra; Watson v. Commissioner, T.C. Memo. 2001-

213; Davis v. Commissioner, T.C. Memo. 2001-87.

Petitioner, we believe, has instituted and maintained this

proceeding primarily for delay and has advanced only frivolous

and groundless shopworn arguments. He was informed of our

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

we stated unequivocally that we would not hesitate to impose

penalties under section 6673 against taxpayers who advance
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frivolous and groundless claims in a lien or levy proceeding, or

instituted that proceeding for the purpose of delay. Petitioner

also was advised of our decision in Davis v. Commissioner,

supra,3 wherein we imposed upon the taxpayer a $4,000 penalty

under section 6673, for advancing frivolous and groundless

claims. Pursuant to section 6673, we require petitioner to pay

to the United States a penalty of $3,500.

We have considered all arguments made by the parties and

have found those arguments not discussed herein to be irrelevant

and/or without merit. To reflect the foregoing,

An appropriate order and

decision will be entered for

respondent.

3
At the hearing the Appeals officer gave copies of above-
referenced cases to petitioner.