Michael Craig v. Commissioner v. Commissioner

119 T.C. No. 15

UNITED STATES TAX COURT

MICHAEL CRAIG, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 14649-01L. Filed November 14, 2002.

On Feb. 22, 2001, R mailed to P a final notice of
intent to levy (final notice) for 1990, 1991, and 1992.
On the same day, R mailed to P a final notice for 1995.
On March 17, 2001, P timely requested a hearing under
sec. 6330, I.R.C. (Hearing), as to both final notices.
Subsequently, R’s Appeals officer (A) held with P an
“equivalent hearing” under sec. 301.6330-1(i), Proced.
& Admin. Regs. A informed P at the equivalent hearing
that P was not allowed a Hearing because, A mistakenly
believed, P’s request for a Hearing was untimely. A
later issued to P a decision letter sustaining the
proposed levy.
Held: The determination reflected in the decision
letter, coupled with P’s timely petition to this Court
with respect thereto, serves to invoke this Court’s
jurisdiction under sec. 6330(d)(1), I.R.C.
 -2-

Michael Craig, pro se.

Anne W. Durning, for respondent.

OPINION

LARO, Judge: Petitioner, while residing in Scottsdale,

Arizona, petitioned the Court under section 6330(d)(1) to review

respondent’s determination as to his proposed levy upon

petitioner’s property. Respondent proposed the levy to collect

Federal income taxes of approximately $10,656.55 for 1990,

$12,192.27 for 1991, $18,437.01 for 1992, and $307.63 for 1995.1

Currently, the case is before the Court on respondent’s motion

for summary judgment under Rule 121 and to impose a penalty

against petitioner under section 6673(a). Petitioner has filed

with the Court a response to respondent’s motion.

We decide as a matter of first impression whether the Court

has jurisdiction under section 6330(d)(1), given that respondent

has never issued to petitioner a notice of determination with

respect to a hearing described in section 6330 (Hearing2).

1
We use the term “approximately” because these amounts were
computed before the present proceeding and have since increased
on account of interest.
2
The parties and the Treasury regulations refer to the
hearing described in sec. 6330 as a “collection due process
hearing” (or a “CDP hearing” for short). That term is not used
in either sec. 6330 or the legislative history underlying the
promulgation of that section. The legislative history refers to
the hearing as a “pre-levy hearing”. H. Conf. Rept. 105-599, at
(continued...)
 -3-

Respondent acknowledges that petitioner was entitled to and

should have been given a Hearing. All the same, respondent

argues, the Court has jurisdiction to decide this case.

Respondent argues that respondent’s failure to grant petitioner’s

timely request for a Hearing was harmless error because

petitioner was offered and attended an “equivalent hearing” under

section 301.6330-1(i), Proced. & Admin. Regs. (equivalent

hearing), and received a decision letter (decision letter) as to

the equivalent hearing.

We hold that we have jurisdiction. Also, we shall grant

respondent’s motion for summary judgment, and we shall impose a

$2,500 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

A. Income Tax Returns for 1990, 1991, and 1992

Petitioner and his wife, Lorraine Craig (Ms. Craig), did not

file timely Federal income tax returns for 1990 and 1991. On

February 18, 1993, respondent prepared and filed substitutes for

returns for those years under section 6020. In preparing the

substitutes for returns, respondent relied on information

2
(...continued)
266 (1998); 1998-3 C.B. 747, 1020. We refer to it as a
“Hearing”.
 -4-

received from the Bureau of Labor Statistics. On October 27,

1994, and on December 14, 1994, petitioner and Ms. Craig filed

joint 1990 and 1991 Federal income tax returns, respectively.

Those returns were treated by respondent as amended returns. On

February 3, 1995, petitioner and Ms. Craig filed a joint 1992

Federal income tax return.

On October 5, 1995, respondent issued a notice of deficiency

to petitioner and Ms. Craig. The notice determined that

petitioner and Ms. Craig were liable for deficiencies in their

1990, 1991, and 1992 Federal income taxes as follows:

Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654
1990 $6,700 $1,675 $441
1991 50,686 12,672 2,913
1992 6,814 1,704 294

Petitioner and Ms. Craig petitioned the Court with respect

to the notice on December 21, 1995. On February 24, 1997,

petitioner and Ms. Craig signed a stipulated decision. This

decision listed the deficiencies in Federal income tax due from

petitioner and Ms. Craig in accordance with the notice of

deficiency and provided that “effective upon the entry of the

decision by the Court, petitioners [petitioner and Ms. Craig]

waive the restriction contained in Internal Revenue Code §

6213(a) prohibiting assessment and collection of the deficiencies

and additions to the tax (plus statutory interest) until the
 -5-

decision of the Tax Court has become final.” That stipulated

decision was entered by the Court on February 27, 1997.

On May 5, 1997, on the basis of the stipulated decision,

respondent assessed the 1990, 1991, and 1992 Federal income tax

liabilities of petitioner and Ms. Craig.

B. Income Tax Return for 1995

On December 4, 1997, petitioner filed a 1995 Federal income

tax return. On the basis of this return, respondent assessed

petitioner’s tax liability for 1995 on January 12, 1998.

C. Request for a Hearing

On February 22, 2001, respondent mailed to petitioner and

Ms. Craig a letter, “Final Notice - Notice of Intent to Levy and

Notice of Your Right to a Hearing” (final notice), for 1990,

1991, and 1992. On the same day, respondent mailed to petitioner

a final notice for 1995. Both final notices were signed by a

chief of the IRS Automated Collection Branch in Ogden, Utah.

These notices informed petitioner and Ms. Craig of (1)

respondent’s intent to levy upon their property pursuant to

section 6331 and (2) their right under section 6330 to a Hearing

with respondent’s Office of Appeals (Appeals). Enclosed with the

final notices were copies of Forms 12153, Request for a

Collection Due Process Hearing. On March 17, 2001, petitioner

requested timely the referenced Hearing for 1990, 1991, 1992, and

1995 by mailing to respondent a letter accompanied by two Forms
 -6-

12153, the first for 1990, 1991, and 1992, and the second for

1995. Petitioner signed the letter, but he did not sign the

Forms 12153. In that letter, petitioner requested a Hearing and

stated the following disagreement with the proposed levy:

this letter constitutes my request for a Collection Due
Process Hearing, as provided for in Code Sections 6320
and 6330, with regards to the Final Notice - Notice of
Intent to Levy at issue * * *

Since Section 6330 (c) (1) requires that “The
appeals officer shall at the hearing obtain
verification from the Secretary that the requirements
of any applicable law or administrative procedure have
been met,” I am requesting that the appeals officer
have such verification with him at the Collection Due
Process Hearing and that he send me a copy such
verification within 30 days from the date of this
letter. In the absence of any such hearing, and if you
fail to send me the requested Treasury Department
Regulations and Delegation Orders within 30 days from
the date of this letter, then I will consider this
entire matter closed. If you do attempt to take any
enforcement action against me without according me the
hearing requested, and without sending me the
documentation requested, you will be violating numerous
laws which I will identify in a 7433 lawsuit against
you and the government.

On April 12, 2001, the Ogden Service Center returned the

requests to petitioner and Ms. Craig because the Forms 12153 were

not signed. Two identical letters with respect to 1990, 1991,

1992, and with respect to 1995, sent to petitioner with Forms

12153 stated:

We are returning your Form 12153, Request for a
Collection Due Process Hearing, because you did not
sign it. If you have not been able to work out a
solution to your tax liability and still want to
request a hearing with the IRS Office of Appeals, you
need to complete and sign the Form 12153.
 -7-

If we do not hear from you by May 3, 2001, we may
take enforcement action without notifying you further.

On May 6, 2001, the Ogden Service Center received from

petitioner two signed Forms 12153 for 1990, 1991, and 1992, and

for 1995, respectively, which stated:

This Form 12153 WAS NOT SIGNED VOLUNTARILY, but
UNDER DURESS, not wishing to give the I.R.S. or it’s
agents any cause to deny or delay the Due Process
Hearing guaranteed to me by law as per I.R.C. Section
6330. My signature on this document DOES NOT give even
TACIT AGREEMENT that the “statutory period of
limitations for collection be suspended during the
Collection Due Process Hearing and any subsequent
judicial review”.

On September 28, 2001, the Appeals officer held with

petitioner an equivalent hearing. At the equivalent hearing, the

Appeals officer explained to petitioner that it was an equivalent

hearing and not a Hearing. The Appeals officer then reviewed and

showed to petitioner Forms 4340, Certificate of Assessments,

Payments and Other Specified Matters. The Forms 4340 were dated

July 17, 2001, and were for 1990, 1991, 1992, and 1995. On

September 28, 2001, after the equivalent hearing, the Appeals

officer sent the Forms 4340 to petitioner.

On October 27, 2001, the Appeals officer issued to

petitioner a “Decision Letter Concerning Equivalent Hearing Under

Section 6320 and/or 6330" (i.e., the decision letter) for 1990,

1991, 1992, and 1995. The decision letter sustained the proposed

collection action against petitioner. The decision letter stated

that petitioner did not have the right to judicial review of the
 -8-

decision set forth in the decision letter. The decision letter

stated:

Your due process hearing request was not filed
within the time prescribed under Section 6320 and/or
6330. However, you received a hearing equivalent to a
due process hearing except that there is no right to
dispute a decision by the Appeals Office in court under
IRC Sections 6320 and/or 6330.

Discussion

A. Jurisdiction Under Section 6330(d)(1)

We decide for the first time whether we have jurisdiction

under section 6330(d)(1) in the setting at hand. We conclude

that we do. We set forth the relevant text of section 6330 in an

appendix.

Section 6330(d)(1) is the specific provision that governs

our jurisdiction to review a proposed collection action. Our

jurisdiction under that section depends upon the issuance of a

valid notice of determination and a timely petition for review.

E.g., Goza v. Commissioner, 114 T.C. 176, 182 (2000); see also

Lunsford v. Commissioner, 117 T.C. 159, 161 (2001). See

generally Offiler v. Commissioner, 114 T.C. 492, 498 (2000) (“The

notice of determination provided for in section 6330 is, from a

jurisdictional perspective, the equivalent of a notice of

deficiency.”). Here, petitioner has timely filed a petition with

this Court.3 Thus, we are left to decide whether respondent has

3
The decision letter was sent to petitioner on Oct. 27,
(continued...)
 -9-

made a “determination” within the meaning of section 6330(d)(1)

which we have jurisdiction to review.

Respondent acknowledges that petitioner did not have the

Hearing described in section 6330. All the same, respondent

argues, the decision letter issued to petitioner as to the

equivalent hearing reflects a “determination” sufficient to

invoke the Court’s jurisdiction under section 6330(d)(1). We

agree. The Treasury Department regulations interpreting section

6330 recognize specifically that there are two types of hearings

which may be conducted by Appeals in connection with section

6330; i.e., Hearings and equivalent hearings. As explained

below, the Treasury Department regulations state that an Appeals

officer will consider at an equivalent hearing the same issues as

at a Hearing, and that the contents of the decision letter that

results from an equivalent hearing will generally be the same as

in the notice of determination that results from a Hearing.

As to a Hearing, the statute provides that a taxpayer has a

right to a Hearing with an Appeals officer before a levy may be

made upon his or her property, if the Hearing is timely requested

by the taxpayer. Sec. 6330(a)(1), (a)(2), (a)(3)(B), and (b)(1).

3
(...continued)
2001, and the petition was postmarked Nov. 21, 2001. Whereas the
petition was actually filed by the Court when received on Dec.
28, 2001, the approximately 6-week delivery time was attributable
to delays in the receipt of mail experienced by the Court because
of anthrax.
 -10-

The statute provides further that at the Hearing the taxpayer may

raise any relevant matter set forth in section 6330(c) and that

the Appeals officer shall make a “determination” as to those

matters. Sec. 6330(c) and (d)(1); see also sec. 301.6330-1(f),

Proced. & Admin. Regs. (regulations interpreting section 6330

provide that the Appeals officer must issue a “Notice of

Determination” to any taxpayer who timely requests a Hearing).4

The statute gives a taxpayer the right to contest the Appeals

officer’s determination in the appropriate judicial forum, sec.

6330(d)(1), and precludes respondent from proceeding with the

proposed levy that is the subject of the Hearing while the

Hearing and any appeals thereof are pending, sec. 6330(e)(1).

The statute provides that the applicable periods of limitation

4
The regulations provide further that, in general, the
notice of determination must set forth the Appeals officer’s
findings and decisions. Sec. 301.6330-1(e)(3), Q&A-E8, Proced. &
Admin. Regs. More specifically, the notice of determination
must: (1) State whether respondent met the requirements of any
applicable law or administrative procedure; (2) resolve any issue
appropriately raised by the taxpayer relating to the unpaid tax;
(3) decide any appropriate spousal defenses raised by the
taxpayer; (4) decide any challenge made by the taxpayer to the
appropriateness of the collection action; (5) respond to any
offers by the taxpayer for collection alternatives; (6) address
whether the proposed collection action represents a balance
between the need for the efficient collection of taxes and the
legitimate concern of the taxpayer that any collection action be
no more intrusive than necessary; (7) set forth any agreements
that Appeals reached with the taxpayer, any relief given the
taxpayer, and any actions which the taxpayer or respondent are
required to take; and (8) advise the taxpayer of the right to
seek judicial review within 30 days of the date of the notice of
determination. Id.
 -11-

under sections 6502, 6531, or 6532 are suspended for the same

period. Sec. 6330(e)(1).

Whereas the above-stated rules for a Hearing are provided

explicitly in the statute, the rules for an equivalent hearing

have their genesis in the statute’s legislative history and the

regulations implementing Congressional intent as gleaned from

that history. See H. Conf. Rept. 105-599, at 266 (1998); 1998-3

C.B. 1020 (in the event that a taxpayer does not timely request a

Hearing, “The Secretary must provide a hearing equivalent to the

hearing if later requested by the taxpayer”); cf. Johnson v.

Commissioner, 86 AFTR 2d 2000-5225, 2000-2 USTC par. 50,591 (D.

Or. 2000) (“‘equivalent hearing’ is provided for only by

regulation and is not mandated by Section 6330 itself”). The

scheme of the regulations as they apply to equivalent hearings

generally follows the statutory scheme for Hearings.

Under the regulations, any taxpayer who fails to timely

request a Hearing may receive an equivalent hearing. Sec.

301.6330-1(i)(1), Proced. & Admin. Regs. The equivalent hearing

(like the Hearing) is held with Appeals, and the Appeals officer

considers the same issues which he or she would have considered

had the equivalent hearing been a Hearing. Id. The Appeals

officer also generally follows the same procedures at an

equivalent hearing which he or she would have followed had the

equivalent hearing been a Hearing. Id. Although the Appeals
 -12-

officer concludes an equivalent hearing by issuing a decision

letter, as opposed to a notice of determination, the different

names which are assigned to these documents are merely a

distinction without a difference when it comes to our

jurisdiction over this case, where a Hearing was timely

requested. The decision letter contains all of the information

required by section 301.6330-1(e)(3), Q&A-E8, Proced. & Admin.

Regs., to be included in a notice of determination but for the

fact that the decision letter ordinarily states in regard to most

issues that a taxpayer may not (as opposed to may) seek judicial

review of the decision.5 Id.; cf. sec. 301.6330-1(i)(2), Q&A-I5,

Proced. & Admin. Regs. (taxpayer may in certain cases contest in

court the Appeals officer’s decision in an equivalent hearing to

deny a claim for relief from joint liability under section 6015).

Under the facts herein, where Appeals issued the decision

letter to petitioner in response to his timely request for a

Hearing, we conclude that the “decision” reflected in the

decision letter issued to petitioner is a “determination” for

purposes of section 6330(d)(1). Cf. Moorhous v. Commissioner,

116 T.C. 263, 270 (2001) (decision reflected in a decision letter

5
Nor do we find a distinction for purposes of our
jurisdiction in the fact that the Treasury Department’s
regulations provide that a taxpayer’s request for an equivalent
hearing neither automatically suspends the levy actions which are
subject of the Hearing nor the running of any period of
limitations under secs. 6502, 6531, or 6532. Sec. 301.6330-
1(i)(2), Q&A-I1 and 2, Proced. & Admin. Regs.
 -13-

was not a “determination” under section 6330(d)(1) where the

taxpayer’s request for a Hearing was untimely); Nelson v.

Commissioner, T.C. Memo. 2002-264 (same); Lopez v. Commissioner,

T.C. Memo. 2001-228 (same). The fact that respondent held with

petitioner a hearing labeled as an equivalent hearing, rather

than a hearing labeled as a Hearing, and that respondent issued

to petitioner a document labeled as a decision letter, rather

than a document labeled as a notice of determination, does not

erase the fact that petitioner received a “determination” within

the meaning of section 6330(d)(1). We hold that we have

jurisdiction to decide this case.

B. Respondent’s Motion for Summary Judgment

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). The moving party bears the burden of proving

that there is no genuine issue of material fact, and factual
 -14-

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).

Petitioner has raised no genuine issue as to any material

fact. Accordingly, we conclude that this case is ripe for

summary judgment.

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

provided with notice and the opportunity for an administrative

review of the matter (in the form of a Hearing before Appeals)

and, if dissatisfied, with judicial review of the administrative

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

Goza v. Commissioner, 114 T.C. at 179. In the event of such a

judicial review, the Court’s standard of review depends on

whether the underlying tax liability is at issue. The Court
 -15-

reviews a taxpayer’s liability under the de novo standard where

the validity of the underlying tax liability is at issue. The

Court reviews the other administrative determinations for abuse

of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000).

A taxpayer’s underlying tax liability may be at issue only if he

or she “did not receive any statutory notice of deficiency for

such tax liability or did not otherwise have an opportunity to

dispute such tax liability.” Sec. 6330(c)(2)(B).

With respect to 1990, 1991, and 1992, petitioner received a

notice of deficiency and petitioned the Court with respect

thereto. It follows that petitioner’s underlying tax liability

for 1990, 1991, and 1992 is not at issue. Accordingly, we review

respondent’s determination for these years for abuse of

discretion.

With respect to 1995, petitioner neither received a notice

of deficiency nor had an opportunity to dispute the underlying

tax liability. Whereas the Appeals officer did not allow

petitioner to raise at the equivalent hearing the underlying tax

liability for that year, respondent now recognizes that it was

error to do so (i.e., to not allow petitioner to dispute the

underlying tax liability for 1995). See Hoffman v. Commissioner,

119 T.C. 140 (2002). We review petitioner’s underlying tax

liability for 1995 on a de novo basis.
 -16-

Petitioner asserts in his petition the following allegations

of error as to 1990, 1991, 1992, and 1995:

a) * * * the appeals officer violated the law by
not “presenting” petitioner with the “verification from
the Secretary” as required by Code Sections 6330(c)(1)
and 6330(c)(3)(A).

b) No statutory Notice and Demand for payment was
ever sent to petitioner in accordance with the
provisions and requirements of Code Sections 6303,
6321, and 6331.

c) No Regulation exists, as referred to in Code
Sections 6001 and 6011, that requires petitioner to pay
the tax at issue.

d) No valid statutory notice of deficiency was
sent to petitioner.

e) No valid assessment showing an amount due could
have been assessed from petitioner’s returns.

f) No other returns exist from which an assessment
could have complied with the provisions of section 26
USC 6201(a)(1).

g) No statute in the Internal Revenue Code
establishes the “existence * * * of the underlying
liability” as referred to in 6330(c)(2)(B), and the
United States will not be able to identify for this
Court any statute that refers to any such tax liability
as for example Code sections 4401(c), 5005(a), and
5703(a) do with respect to Wagering, Distilled spirits,
and Tobacco taxes.

h) No statute in the Internal Revenue code
establishes a requirement “to pay” the income tax at
issue, as for example code sections 4401(c), 5007(a)
and 5703(b) do with respect to Federal Wagering,
Alcohol, and Tobacco taxes.

i) The notice received by petitioner notifying him
of his right to a hearing was not signed by the
Secretary or his delegate as required by 26 USC
6330(a)(1).
 -17-

We turn to address these allegations.

First, petitioner alleges 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). We disagree. 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 4340,6 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

6
Federal tax assessments are formally recorded on a record
of assessment. Sec. 6203. The summary record of assessment must
“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. The record shows that in addition to Forms 4340,
petitioner received IMF MCC transcripts of account for 1990,
1991, 1992, and 1995. Those transcripts of petitioner’s account
for respective years also contained all the information required
under section 301.6203-1, Proced. & Admin. Regs.
 -18-

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

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.

Second, petitioner alleges that no statutory notice and

demand for payment was sent to him. We disagree. “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 on the same dates that

respondent made assessments against petitioner for the subject

years. A notice of balance due constitutes a notice and demand

for payment under section 6303(a). Schaper v. Commissioner, T.C.

Memo. 2002-203. In addition, petitioner received numerous final
 -19-

notices (notices of intention to levy), as well as notices of

deficiency, 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

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

521, 525 (9th Cir. 1990).

Third, petitioner alleges that the final notice is invalid

because it was not signed by the Secretary or his delegate as

required by section 6330(a)(1). We disagree. For purposes of

section 6330(a), either the Secretary or his delegate (e.g., the

Commissioner) may issue a final notice of intent to levy. Secs.

7701(a)(11)(B) and (12)(A)(i), 7803(a)(2); see also sec.

301.6330-1(a)(1), Proced. & Admin. Regs. Here, the authority to

levy on petitioner’s property was delegated to the “Automated

Collection Branch Chiefs pursuant to Delegation Order No. 191

(Rev. 2), effective October 1, 1999. Internal Revenue Manual,

sec. 1.2.104, 102 (Nov. 24, 1999).” Wilson v. Commissioner, T.C.

Memo. 2002-242. Consistent with this delegation of authority,

the final notice on intent to levy in this case, which was
 -20-

executed by the chief of the Automated Collection Branch in

Ogden, Utah, was valid.

As to petitioner’s remaining allegations, each allegation is

a shop-worn, frivolous contention which “We perceive no need to

refute * * * 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:

1. the Internal Revenue Code establishes the existence of

his underlying tax liability and requires him to pay income tax,

Tolotti v. Commissioner, T.C. Memo. 2002-86;

2. petitioner is a taxpayer subject to the Federal income

tax, see secs. 1(c), 7701(a)(1), (14);

3. 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);

4. petitioner is required to file an income tax return,

sec. 6012(a)(1); and

5. petitioner’s failure to report tax on a return does not

prevent the Commissioner from determining a deficiency in his

Federal income tax, secs. 6211(a), 6212(a); see Monaco v.

Commissioner, T.C. Memo. 1998-284.

Petitioner has failed to raise a spousal defense, make a

valid challenge to the appropriateness of respondent’s intended
 -21-

collection action, or offer alternative means of collection.

These issues are now deemed conceded. Rule 331(b)(4).

For the foregoing reasons, we sustain respondent’s

determination as to the proposed levy as a permissible exercise

of discretion.

C. Respondent’s Motion To Impose a Penalty Against Petitioner

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 lien and levy review proceedings.

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

Commissioner, T.C. Memo. 2000-198. 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, T.C. Memo. 2002-99;

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

Commissioner, T.C. Memo. 2001-87.

In accordance with the firmly established law set forth

above, we conclude that petitioner’s positions in this proceeding
 -22-

are frivolous and/or groundless.7 We also conclude from the

record that petitioner has instituted and maintained this

proceeding primarily for delay. Accordingly, pursuant to section

6673, we require him to pay to the United States a penalty of

$2,500.

We have considered all arguments 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.

7
The Appeals officer directed petitioner’s attention to our
decision in Pierson v. Commissioner, 115 T.C. 576 (2000), wherein
taxpayers advancing frivolous and groundless claims and
instituting proceedings under sec. 6330(d) for the purpose of
delay were given an unequivocal warning that the Court would
impose penalties. In addition, petitioner received a copy of our
opinion in that case; that opinion was sent to him by the Appeals
officer after the equivalent hearing.
 -23-

APPENDIX

SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING
BEFORE LEVY.

(a) Requirement of Notice Before Levy.--

(1) In general.--No levy may be made on
any property or right to property of any
person unless the Secretary has notified such
person in writing of their right to a hearing
under this section before such levy is made.
Such notice shall be required only once for
the taxable period to which the unpaid tax
specified in paragraph (3)(A) relates.

(2) Time and Method for Notice.--The
notice required under paragraph (1) shall
be--

(A) given in person;

(B) left at the dwelling or
usual place of business of such
person; or

(C) sent by certified or
registered mail, return receipt
requested, to such person’s last
known address,

not less than 30 days before the day of the
first levy with respect to the amount of the
unpaid tax for the taxable period.

(3) Information Included With Notice.--
The notice required under paragraph (1) shall
include in simple and nontechnical terms--

* * * * * * *

(B) the right of the person to
request a hearing during the 30-day
period under paragraph (2) * * *

* * * * * * *
 -24-

(b) Right to Fair Hearing.--

(1) In general.--If the person requests
a hearing under subsection (a)(3)(B), such
hearing shall be held by the Internal Revenue
Service Office of Appeals.

* * * * * * *

(c) Matters Considered at Hearing.--In the case of
any hearing conducted under this section--

(1) Requirement of investigation.--The
appeals officer shall at the hearing obtain
verification from the Secretary that the
requirements of any applicable law or
administrative procedure have been met.

(2) Issues at hearing.--

(A) In general.--The person
may raise at the hearing any
relevant issue relating to the
unpaid tax or the proposed levy,
including--

(i) appropriate
spousal defenses;

(ii) challenges to
the appropriateness of
collection actions; and

(iii) offers of
collection alternatives,
which may include the
posting of a bond, the
substitution of other
assets, an installment
agreement, or an offer-
in-compromise.--

* * * * * * *

(3) Basis for the determination.--The
determination by an appeals officer under
this subsection shall take into
consideration--
 -25-

(A) the verification presented
under paragraph (1);

(B) the issues raised under
paragraph (2); and

(C) whether any proposed
collection action balances the need
for the efficient collection of
taxes with the legitimate concern
of the person that any collection
action be no more intrusive than
necessary.

(4) Certain issues precluded.--An issue
may not be raised at the hearing if--

(A) the issue was raised and
considered at a previous hearing
under section 6320 or in any other
previous administrative or judicial
proceeding; and

(B) the person seeking to
raise the issue participated
meaningfully in such hearing or
proceeding.

* * * * * * *

(d) Proceeding After Hearing.--

(1) Judicial review of determination.--
The person may, within 30 days of a
determination under this section, appeal such
determination--

(A) to the Tax Court (and the
Tax Court shall have jurisdiction
with respect to such matter); or

(B) if the Tax Court does not
have jurisdiction of the underlying
tax liability, to a district court
of the United States.

If a court determines that the appeal
was to an incorrect court, a person shall
 -26-

have 30 days after the court determination to
file such appeal with the correct court.

* * * * * * *

(e) Suspension of Collections and Statute of
Limitations.--

(1) In general.--* * * if a hearing is
requested * * *, the levy actions which are
the subject of the requested hearing and the
running of any period of limitations under
section 6502 (relating to collection after
assessment), section 6531 (relating to
criminal prosecutions), or section 6532
(relating to the suits) shall be suspended
for the period during which such hearing, and
appeals therein, are pending. In no event
shall any such period expire before the 90th
day after the day on which there is a final
determination in such hearing. * * *