T.C. Memo. 2003-16
UNITED STATES TAX COURT
BENJAMIN B. AND CAROLYN M. HAINES, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8296-02L. Filed January 21, 2003.
Benjamin B. and Carolyn M. Haines, pro sese.
Hieu C. Nguyen, for respondent.
MEMORANDUM OPINION
GERBER, Judge: Respondent, in a motion filed on November
20, 2002, moved for summary judgment on the questions of whether
he may proceed with collection and whether a section 66731
1
All section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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penalty should be imposed against petitioners. Respondent
alleges that the section 6330 prerequisites have been met and
that he should be allowed to proceed with collection of
petitioners’ assessed and outstanding tax liability. With
respect to the penalty, respondent contends that petitioners
instituted this proceeding primarily for delay and that their
position in the proceeding is frivolous and groundless.
Petitioners’ objection to respondent’s motion for summary
judgment was filed on December 10, 2002. In essence, petitioners
contend that, although respondent has sent certain documents to
them, those documents are not acceptable because they do not meet
the standards that petitioners contend exist.
Background
Petitioners resided in Lakewood, California, at the time
their petition was filed. Petitioners’ 1998 Federal income tax
return was filed on April 15, 1999. Petitioners filed an income
tax return on which they entered zeros in all pertinent boxes for
the reporting of income, and they claimed a standard deduction
and two exemptions. They also reported $7,726 of income tax
withholding and, because they reported zero income, claimed an
overpayment in the amount of the withheld tax. On that same
return, petitioners reflected their occupations as “Graphic
Artist” and “Dialysis”. Attached to petitioners’ return is a
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typical protester explanation of why they were not required to
report income or pay Federal tax.
On March 17, 2000, respondent mailed a notice of deficiency
to petitioners determining a $9,608 income tax deficiency for
1998, based on petitioners’ income (ostensibly wages) reported to
respondent by several third-party sources, including Gambro
Healthcare, Inc.; Kevin Keep; Mohan Dialysis Center; and Screen
Art, Inc. Respondent also determined an addition to tax under
section 6651(a)(2) and a penalty under section 6662(a) for
petitioners’ 1998 tax year. Petitioners acknowledged receipt of
the deficiency notice in a March 30, 2000, letter to respondent
and, among other similar protester statements, indicated that
“Nothing in the Privacy Act or in the above statutes informs me
that I have to ‘comply’ with, or pay attention to, letters and/or
alleged ‘determinations’ sent to me by various and sundry
employees of the IRS.”
Petitioners, however, failed to petition this Court with
respect to the notice of deficiency. Respondent assessed the
income tax deficiency, addition to tax, and penalty; provided
petitioners with notice and demand; and because petitioners
failed to pay, on April 26, 2001, issued a Form Letter 1058,
Final Notice--Final Notice of Intent to Levy and Notice of Your
Right to a Hearing. On May 30, 2001, respondent received a Form
12153, Request for a Collection Due Process Hearing, from
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petitioners. On April 3, 2001, a face-to-face hearing was held
with two Appeals officers and petitioners. During the hearing,
petitioners were provided with a Form 4340, Certificate of
Assessments and Payment, for their 1998 tax year.
At the hearing, which was recorded and transcribed,
petitioners asked the Appeals officers whether they had obtained
verification from the Secretary of the Treasury that the
requirements of the applicable laws and procedures had been met.
The Appeals officers explained that the requested information was
on the Form 4340 provided to petitioners. The Appeals officers
also provided petitioners with audit documents reflecting the
details underlying the deficiency determination and assessment
for 1998. Petitioners then engaged the Appeals officers in a
discussion of the assessment and the information contained on
Form 4340. Petitioners’ comments during that discussion focused
on whether the Commissioner could assess tax if taxpayers did not
consent or report the amounts in their returns. Petitioners also
questioned the validity of the various notifications they
received on the grounds that they were not signed by the
Secretary or by some person who it was shown was authorized to do
so. They also made the argument that respondent was required to
use certain forms and that respondent’s failure to do so rendered
notifications to them without effect. Finally, petitioners
questioned whether the Appeals officers could “point to” anything
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in the Internal Revenue Code that required petitioners to pay
Federal tax. Petitioners did not discuss any collection
alternatives or raise any of the other subjects set forth in
section 6330(c)(2) regarding the issues that may be raised at a
section 6330 hearing.
On April 23, 2002, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330.
Discussion
Respondent seeks summary judgment with respect to whether he
may proceed to collect certain outstanding tax liabilities
against petitioners and whether petitioners should be held liable
for a penalty under section 6673. Rule 121 provides for summary
judgment for part or all of the legal issues in controversy if
there is no genuine issue as to any material fact. Sundstrand
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 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. The matters raised in the pleadings are susceptible to
resolution by means of summary judgment. Respondent, pursuant to
section 6331(a), seeks to levy on petitioners’ property. In
accord with section 6331(d), respondent provided petitioners with
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a final notice of intent to levy, which also included notice of
petitioners’ right to an administrative appeal of respondent’s
determination to collect the tax. In that regard, the
Commissioner cannot collect unpaid tax 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).
Petitioners did not file a petition following their receipt
of the notice of deficiency, so the validity of the underlying
liability was not properly at issue in the administrative
hearing, and is not at issue here. Accordingly the Court will
review the administrative determination for abuse of discretion.
Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 610
(2000).
Because petitioners were not entitled to question the
underlying tax liability, their administrative hearing was
limited to collection issues, including spousal defenses, the
appropriateness of respondent’s intended collection action, and a
possible alternative to collection. Petitioners disputed the
appropriateness of respondent’s proposed collection action by
questioning whether the Appeals officer had satisfied the
verification requirement of section 6330(c)(1). Petitioners also
raised questions about whether respondent met various statutory
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requirements prerequisite to collection. Petitioners contend
that respondent used incorrect forms for the notice and demand
and otherwise failed to meet the requirements because of the lack
of personal verification by the Secretary or a person shown to be
authorized to exercise the Secretary’s authority.
At the Appeals hearing, petitioners were provided with a
transcript of their account, which detailed information
underlying the assessment of the tax in question. Petitioners do
not question whether all of the steps had been taken or
performed. In effect, they dispute the genuineness or
authenticity of the documents respondent used to meet the
statutory requirements.
Petitioners contend that the Form 4340 is insufficient to
prove the validity of the assessment that was made against them
for their 1998 tax year. Form 4340 has been generally accepted
by courts to show that a valid assessment has been made within
the meaning of section 6203. Hefti v. IRS, 8 F.3d 1169 (7th Cir.
1993); Farr v. United States, 990 F.2d 451, 454 (9th Cir. 1993);
Geiselman v. United States, 961 F.2d 1 (1st Cir. 1992); Davis v.
Commissioner, supra. Petitioners have raised superficial
questions and made conclusory allegations regarding the
assessment (such as whether respondent used the proper form), but
they have shown no actual irregularity in the assessment process.
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See Nicklaus v. Commissioner, 117 T.C. 117, 121 (2001); Berkey v.
IRS, 88 AFTR 2d 01-6530, 2001-2 USTC par. 50,708 (E.D. Mich.
2001).
Petitioners also complain that they did not receive notice
and demand. This contention is similar to others by petitioners;
they question not whether they actually received the various
notifications from respondent, but whether respondent used the
particular form that petitioners argue must be used for the
notice and demand to be valid. In that regard, 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 “‘the 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.
1991) (quoting Elias v. Connett, 908 F.2d 521, 525 (9th Cir.
1990)); Planned Invs., Inc. v. United States, 881 F.2d 340, 344
(6th Cir. 1989).
In addition, respondent is not required to prove receipt by
petitioners of notice and demand, but need only show that the
notice and demand was sent to petitioners’ last known address.
United States v. Chila, 871 F.2d 1015, 1019 (11th Cir. 1989);
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Pursifull v. United States, 849 F. Supp. 597, 601 (S.D. Ohio
1993), affd. 19 F.3d 19 (6th Cir. 1994).
Finally, Form 4340 may be relied upon to show that notice
and demand was mailed to a taxpayer. Hansen v. United States, 7
F.3d 137, 138 (9th Cir. 1993); United States v. Chila, supra.
Respondent’s failure to produce a copy of the notice and demand
document is not conclusive, “because the notices are computer
generated and do not exist in hard copy.” Pursifull v. United
States, supra at 601; Bassett v. United States, 782 F. Supp. 113,
117 (M.D. Ga. 1992). Accordingly, we hold respondent did not
abuse his discretion with respect to the determination to proceed
with collection, and we will grant so much of respondent’s motion
as moves for summary judgment on that issue.
Respondent has also moved for summary judgment on whether
petitioners are liable for a penalty under section 6673 on the
ground that their arguments are frivolous and that they
instituted and maintained this proceeding primarily for delay.
Section 6773 provides that this Court may impose a penalty, not
to exceed $25,000, where it is found 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).
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In addition to questioning the authenticity of respondent’s
documentation, petitioners have interposed protester arguments
which have, on numerous occasions, been rejected by the courts.
In order to support their arguments, petitioners have selectively
picked phrases out of context from statutes and/or rulings. In
so doing, petitioners have chosen to ignore more current or
complete statements of the law. Petitioners have ignored the
rules and regulations and contend that they are not required to
comply with or pay attention to respondent’s letters and
determinations. Petitioners’ arguments are superficial and
without substance.
Under these circumstances we are convinced and hold that
petitioners’ 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 petitioners are liable for a $2,000 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.