T.C. Memo. 2002-296
UNITED STATES TAX COURT
STEVEN JOHN RENNIE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2539-02L. Filed December 2, 2002.
Steven John Rennie, pro se.
John W. Strate, for respondent.
MEMORANDUM OPINION
GERBER, Judge: Respondent, in a motion filed on August 26,
2002, moved for summary judgment on the questions of whether
respondent may proceed with collection and whether a section
66731 penalty should be imposed against petitioner. With respect
1
All section references are to the Internal Revenue Code,
and all Rule references are to the Tax Court Rules of Practice
and Procedure, unless otherwise indicated.
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to the penalty, respondent contends that petitioner instituted
these proceedings primarily for purposes of delay. Petitioner’s
objection to respondent’s motion for summary judgment was filed
on September 23, 2002. On that same date, a hearing was held at
the San Francisco, California, trial session of the Court at
which time the parties’ positions were heard.
Petitioner’s primary position is that respondent did not
meet the requirements of section 6330; that in any event,
petitioner is not obligated to pay any Federal tax; and because
he is not obligated to pay tax, he did not bring this proceeding
for purposes of delay.
Background
On April 15, 1999, petitioner’s 1998 Federal individual
income tax return was filed. The tax form petitioner submitted
contained zeros in all pertinent places provided for the
reporting of income. In the box for reporting withholding tax
petitioner reported $7,086.90, which was evidenced by an attached
Form W-2, Wage and Tax Statement. The Form W-2 also reflected
that $65,674.74 in wages was paid to petitioner by the Desert
Palace, Inc., d.b.a. Caesar’s Palace, Las Vegas, Nevada. Also
attached to the return was a two-page pro forma document that
states numerous reasons why petitioner should not be obligated to
pay any Federal income tax. Included in the reasons are the
contentions that: (1) No section of the Internal Revenue Code
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establishes an income tax liability; (2) taxes are voluntary; (3)
the Privacy Act Notice contained in an Internal Revenue Service
booklet on tax returns “informs * * * [petitioner] that * * * [he
is] not required to file”; (4) no assessment had been made
against petitioner for 1998 tax; (5) the word “income” is not
defined in the Internal Revenue Code. Petitioner also cited
several cases that he contended supported his position. The
propositions he advances have been rejected on numerous occasions
and labeled “frivolous” and “well-worn protester arguments”.
Nothing would be served by cataloging and addressing petitioner’s
contentions and case citations. See Fox v. Commissioner, T.C.
Memo. 1996-79; Nieman v. Commissioner, T.C. Memo. 1993-533;
Solomon v. Commissioner, T.C. Memo. 1993-509, affd. without
published opinion 42 F.3d 1391 (7th Cir. 1994). See also Crain
v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984), where in
similar circumstances, the court 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.”
Respondent examined petitioner’s 1998 return and determined
that petitioner had $22,200 in gambling winnings which were not
reported, in addition to the $65,674.74 in wages reflected on his
Form W-2 but not reported as wages on the 1998 return. On March
3, 2000, respondent mailed a statutory notice of deficiency to
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petitioner, and in a May 8, 2000, letter, responding to the
notice, petitioner acknowledged receipt of it and raised numerous
objections to it. Petitioner, however, did not petition this
Court with respect to the notice. In the notice, respondent had
determined a $19,949 income tax deficiency and a $2,572.42
penalty under section 6662(a) and (b)(1).
On March 1, 2001, respondent issued a Final Notice--Notice
of Intent to Levy and Notice of Your Right to a Hearing to
petitioner with respect to his 1998 tax liability. In a March
15, 2001, letter, petitioner requested a hearing. The Appeals
officer contacted petitioner and a date was set for a hearing.
The hearing was held on November 19, 2001, and petitioner and the
Appeals officer each made a tape recording of the conversation.
Petitioner contended that all of the administrative procedures
had not been met, and he also sought to challenge the underlying
tax liability. The Appeals officer provided petitioner with a
literal transcript of his tax account for the 1998 tax year which
reflected the steps taken by respondent before and after
assessment and up until the time of the hearing.
After the transcript was presented, petitioner contended
that the presentment was not in accord with the law, because the
statute required 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.”
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Apparently, petitioner argued that the Secretary must personally
meet the verification requirement. Petitioner also contended
that, although he is required to comply with the statutes and
regulations, he does not have to comply with caselaw. Petitioner
admitted that he did not read any of the cases interpreting the
statutes and regulations. Petitioner also argued that respondent
had not shown him the particular laws that expressly state that
income is taxable to individuals or that define the term
“income”.
There was also a discussion of the statutory notice of
deficiency. Petitioner admitted that he had received the
document that the Appeals officer described as the Statutory
Notice of Deficiency, but petitioner contended that it was not a
“legal notice of deficiency” because it was not signed by the
Secretary or an authorized designee. Petitioner also made the
same argument with respect to whether the notice for payment was
a proper notice and demand for payment.
Accordingly, although petitioner received all of the
documents that respondent is required to provide before pursuing
collection, petitioner generally contended that the documents are
defective for lack of the Secretary’s signature or that they are
on the wrong form. In that regard, petitioner argued that
respondent was required to use a particular form in order to
satisfy the notice and demand requirement of the statute.
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Petitioner referenced procedural guidelines, issued by the
Department of the Treasury more than 50 years ago, that
referenced the form that petitioner argued must be used by
respondent.
In his petition filed with this Court, petitioner alleged
that the November 19, 2001, hearing with Appeals was “lawless and
erroneous”. He also contended that collection was not
appropriate and that respondent had not made a “valid
assessment”.
At the Appeals hearing, petitioner did not raise any of the
categories for relief set forth in section 6330(c)(2)(A), which
include spousal defenses, challenges to collection actions, and
collection alternatives.
Discussion
Respondent seeks summary judgment with respect to whether he
may proceed to collect certain outstanding tax liabilities of
petitioner and whether petitioner should be held liable for a
penalty under section 6673. Rule 121 provides for summary
judgment to be granted with respect to part or all of the legal
issues in controversy if there is no genuine issue as to any
material fact. See Sunstrand Corp. v. Commissioner, 98 T.C. 518,
520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). In that regard,
summary judgment is intended to expedite litigation and avoid
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unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988).
There is no genuine issue as to any material fact in this
case. Respondent, pursuant to section 6331(a), was seeking to
levy on petitioner’s property. In accord with sections 6330(a)
and 6331(d), respondent provided petitioner with a final notice
of intent to levy, which also included notice of petitioner’s
right to an administrative appeal of respondent’s decision to
collect the tax. In that regard, the Commissioner cannot collect
by levy without the opportunity for a taxpayer to seek an
administrative review of the determination to proceed with
collection and/or the opportunity for judicial review of the
administrative determination. Davis v. Commissioner, 115 T.C.
35, 37 (2000).
Petitioner opted for an administrative appeal, and after
respondent’s decision to go forward with collection, he sought
review by this Court. Petitioner did not file a petition upon
the issuance of the notice of deficiency, so he is afforded
review solely on the question of abuse of respondent’s discretion
because the validity of the underlying liability is not at issue.
Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 610
(2000).
Because petitioner is not entitled to question the
underlying tax liability, his administrative hearing is limited
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to collection issues, including spousal defenses, the
appropriateness of respondent’s intended collection action, and a
possible alternative to collection. Petitioner questioned the
appropriateness of respondent’s proposed collection action by
questioning whether the Appeals officer had satisfied the
verification requirement of section 6330(c)(1). Petitioner
contends that respondent used incorrect forms for the notice and
demand and otherwise failed to meet the requirement because the
Secretary did not personally verify the liability.
At the Appeals conference, petitioner was provided with a
literal transcript of his account which detailed information
underlying the assessment of the tax in question. Petitioner
does not question whether all of the steps had been taken or
performed. In effect, he questions the genuineness or
authenticity of the documents respondent used to meet the
statutory requirements. Section 6330(c)(1) does not require the
Commissioner to rely on a particular document to satisfy the
verification requirement. Wagner v. Commissioner, T.C. Memo.
2002-180; see also Roberts v. Commissioner, 118 T.C. 365, 371
(2002). In addition, it has been held that “‘[t]he form on which
a notice and assessment and demand for payment is made is
irrelevant as long as it provides the taxpayer with all the
information required under * * * [section 6303].’” Hughes v.
United States, 953 F.2d 531, 536 (9th Cir. 1992) (quoting Elias
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v. Connett, 908 F.2d 521, 525 (9th Cir. 1990). Accordingly, we
find petitioner’s arguments to be specious and without merit.
From the transcript of petitioner’s Appeals conference, it
is clear that respondent’s Appeals officer met the letter and
spirit of the statutory requirement to provide a full and fair
hearing. In addition, petitioner was provided with documents
that satisfied respondent’s verification requirement.
Accordingly, we hold that respondent has not abused his
discretion in determining to proceed with collection as set forth
in the March 1, 2001, Final Notice--Notice of Intent to Levy and
Notice of Your Right to a Hearing, sent to petitioner with
respect to the 1998 tax liability.
Finally, respondent has moved for a penalty under section
6673 on the ground that petitioner’s arguments are frivolous and
that he instituted and maintained this proceeding merely for
delay. Section 6673 provides that this Court may impose a
penalty, not to exceed $25,000, where it finds that a taxpayer’s
position in the proceeding is frivolous and/or that the
proceeding was instituted and maintained primarily for delay.
Section 6673 penalties may be imposed in a lien and levy case.
Pierson v. Commissioner, 115 T.C. 576, 580-581 (2000).
In addition to questioning the authenticity of respondent’s
documentation, petitioner has interposed protester arguments
which have, on numerous occasions, been rejected by the courts.
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In order to support his arguments, petitioner has selectively
picked phrases out of context from statutes and rulings. In so
doing, petitioner has chosen to ignore more current or complete
statements of the law. In that same vein, petitioner has chosen
to ignore and/or not follow case precedent and interpretation of
the statutory law.
Under these circumstances we are convinced and hold that
petitioner’s position in this proceeding is frivolous and has
been interposed primarily to protest the tax laws of this country
and/or to delay collection activity by respondent. Accordingly,
we hold that petitioner is liable for a $1,500 penalty under
section 6673(a)(1).
To reflect the foregoing,
An appropriate order and
decision will be entered granting
respondent’s motion for summary
judgment.