T.C. Memo. 2003-61
UNITED STATES TAX COURT
DANIEL A. FINK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7282-02L. Filed March 4, 2003.
Daniel A. Fink, pro se.
Alan J. Tomsic, for respondent.
MEMORANDUM OPINION
CHIECHI, Judge: This case is before the Court on respon-
dent’s motion for summary judgment and to impose a penalty under
section 66731 (respondent’s motion). We shall grant respondent’s
1
All section references are to the Internal Revenue Code in
effect at all relevant times. All Rule references are to the Tax
Court Rules of Practice and Procedure.
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motion.
Background
The record establishes and/or the parties do not dispute the
following.
Petitioner resided in Henderson, Nevada, at the time he
filed the petition in this case.
On or about August 15, 1999, petitioner filed a Federal
income tax (tax) return for his taxable year 1998 (1998 return).
In his 1998 return, petitioner reported total income of $0, total
tax of $0, and claimed a refund of $5,946 of tax withheld.
Petitioner attached a two-page document to his 1998 return
(petitioner’s attachment to his 1998 return). That document
stated in pertinent part:
I, Daniel A. Fink, am submitting this as part of my
1998 income tax return, even though I know that no
section of the Internal Revenue Code:
1) Establishes an income tax “liability” as, for exam-
ple, Code Sections 4401, 5005, and 5703 do with respect
to wagering, alcohol, and tobacco taxes;
2) Provides that income taxes “have to be paid on the
basis of a return: - as, for example, Code Sections
4374, 4401(c), 5061(a) and 5703(b) do with respect to
other taxes; I am filing anyway because I know the
government has prosecuted other [sic] for failing to
file income tax returns by (erroneously) invoking Code
Sections 7201 and 7203. Therefore, this return is not
being filed voluntarily but is being filed out of fear
that if I did not file this return I could also be
(illegally) prosecuted for failing to file an income
tax return for the year 1998.
3) In addition to the above, I am filing even though
the “Privacy Act Notice” as contained in a 1040 booklet
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clearly informs me that I am not required to file. It
does so in at least two places.
a) In one place, it 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.
b) In another place, it directs me to Code
Section 6001. This section provides, in
relevant part, that “Whenever in the judgment
of the Secretary it is necessary, he may
require any person by notice served on such
person; or by regulations, to make such re-
turns, render such statements, or keep such
records, as the Secretary deems sufficient to
show whether or not such person is liable for
the tax under this title.” Since the Secre-
tary of the Treasury did not “serve” me with
any such “notice” and since no legislative
regulation exists requiring anyone to file an
income tax return, I am again informed by the
“Privacy Act Notice” that I am not required
to file an income tax return.
* * * * * * *
6) It should also be noted that I had “zero” income
according to the Supreme Court’s definition of income
* * * since in Merchant’s Loan & Trust C. V. Smietanka,
255 U.S. 509,(at pages 518 & 519) that court held that
“The word (income) must be given the same meaning in
all of the Income Tax Acts of Congress that was given
to it in the Corporation Excise Tax Act of 1909.”
Therefore since I had no earnings in 1998, that would
have been taxable as “income” under the Corporation
Excise Tax Act of 1909, I can only swear to having
“zero” income in 1998. Obviously, since I know the
legal definition of “income,” if I were to swear to
having received any other amount of “income,” I would
be committing perjury * * *. Therefore, not wishing to
commit perjury * * *, I can only swear to having “zero”
income for 1998.
On February 18, 2000, respondent issued to petitioner a
notice of deficiency (notice) with respect to his taxable year
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1998, which he received. In that notice, respondent determined a
deficiency in, an addition to tax under section 6651(a)(1) on,
and an accuracy-related penalty under section 6662(a) on, peti-
tioner’s tax for his taxable year 1998 in the respective amounts
of $8,836, $722.50, and $578.
Petitioner did not file a petition in the Court with respect
to the notice relating to his taxable year 1998. Instead, on
March 6, 2000, in response to the notice, petitioner sent a
letter (petitioner’s March 6, 2000 letter) to the Internal
Revenue Service. That letter stated in pertinent part:
According to your “Deficiency Notice” of February 18,
2000 (cover sheet attached), there is an alleged defi-
ciency with respect to my 1998 income tax of $8,836,
and if I wanted to “contest this deficiency before
making payment,” I must “file a petition with the
United States Tax Court.” Before I file, pay, or do
anything with respect to your “Notice” I must first
establish whether or not it was sent pursuant to law,
whether or not it has the “force and effect of law,”
and whether you had any authority to send me the Notice
in the first place.
* * * * * * *
Let me further point out the IRS Code Sections 6001 and
6011(as identified in the 1040 Privacy Act) notifies me
that I need only “comply with regulations.” Nothing in
the Privacy Act Notice 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.
Please note that Section 6212 states that “If the
Secretary determines that there is a deficiency in
respect of any tax...he is authorized to send notice of
such deficiency etc., etc., etc.” However, the “no-
tice” I received was not sent by the Secretary, but by
Dennis L. Paiz who is identified as being Chief, Ser-
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vice Center Examination Branch in Ogden, Utah, and I
have no way of knowing whether he has been delegated by
the Secretary to send out of [sic] such notices on the
Secretary’s behalf. So, before I do anything at all
with respect to your “Notice,” I would have to see a
Delegation Order from the Secretary of the Treasury
delegating to Dennis L. Paiz the authority to send out
Deficiency Notices.
In addition, I would also like you to send me (or
identify for me) the legislative regulations that you
claim implement Code Sections 6212 and 6213. I have
also attached an excerpt from the IRS Procedures Manual
* * * which points out that the IRS is required to
“make available to all taxpayers comprehensive, accu-
rate, and timely information on the requirements of tax
law and regulations.” So, pursuant to this provision
from your Procedures Manual, I am asking that you
identify (make available) for me the legislative regu-
lations that you claim implement both Code Sections
6212 and 6213 - since I have not been able to locate
them.
Without your furnishing me with these documents and
information, I will be unable to “ascertain” * * *
whether the individual who sent me the Deficiency
Notice was authorized to do so, and whether I am le-
gally required to take any notice of it. * * *
On August 7, 2000, respondent assessed petitioner’s tax, as
well as any penalties and interest as provided by law, for his
taxable year 1998. (We shall refer to those assessed amounts, as
well as interest as provided by law accrued after August 7, 2000,
as petitioner’s unpaid liability for 1998.)
On August 7, 2000, respondent issued to petitioner a notice
of balance due with respect to petitioner’s unpaid liability for
1998.
On August 6, 2001, respondent issued to petitioner a final
notice of intent to levy and notice of your right to a hearing
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(notice of intent to levy) with respect to his taxable year 1998.
On or about August 22, 2001, in response to the notice of intent
to levy, petitioner filed Form 12153, Request for a Collection
Due Process Hearing (Form 12153), and requested a hearing with
respondent’s Appeals Office (Appeals Office). A document that
petitioner attached to his Form 12153 (petitioner’s attachment to
Form 12153) stated in pertinent part:
I am requesting for [sic] a Collection Due Process
Hearing as provided for in Code sections 6320 and 6330.
* * * Thus, if any IRS employee attempts to deny me
the “Due Process Hearing” guaranteed to me by law, or
recommends that seizure action be taken without produc-
ing the documentation required by Sections 6320 and
6330 or without addressing the issues provided for in
these Code Sections, I will seek damages * * * and seek
that employee’s termination * * *.
* * * * * * *
It is clear before any Appeals officer can recommend
the seizure of any property pursuant to Code Section
6331 certain elements have to be present. For one
thing, pursuant to the statute, that person has to be
statutory [sic] “liable to pay” the taxes at issue, and
only after he “neglects or refuses to pay the same
within 10 days after notice and demand,” can his prop-
erty be subject to seizure. Therefore, apart from the
Appeals officer having to identify the statute that
makes me “liable to pay” the taxes at issue, he needs
to have a copy of the “notice and demand” which I
“neglected” and “refused” to pay. In addition, I
cannot be “liable” to pay an income tax, if the tax in
question has never been assessed against me as required
by Code Sections 6201 and 6203. So, I will need to see
a copy of the record of my assessments. As provided by
Code Section 6201(a)(1) and IRS Transaction Code 150,
all assessments have to be based on filed returns, I
will have to see a copy of the return upon which any
claimed assessment is based. In lieu of producing
these specific documents “verification from the Secre-
tary of the Treasury that the requirements of any
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applicable law or administrative procedure have been
met,” will be acceptable. But, the Appeals officer
better have either the specific documents as identified
above, or “verification from the Secretary.” If the
Appeals officer can produce neither, then no Due Pro-
cess Hearing should have been scheduled. * * *
On February 5, 2002, respondent’s Appeals officer held an
Appeals Office hearing with petitioner with respect to the notice
of intent to levy. Prior to the Appeals Office hearing, the
Appeals officer provided petitioner with a literal transcript of
account with respect to petitioner’s taxable year 1998. After
the Appeals Office hearing, respondent’s representative provided
petitioner with Form 4340, Certificate of Assessments, Payments,
and Other Specified Matters (Form 4340), with respect to peti-
tioner’s taxable year 1998.
On March 19, 2002, the Appeals Office issued to petitioner a
notice of determination concerning collection action(s) under
section 6320 and/or 6330 (notice of determination). An attach-
ment to the notice of determination stated in pertinent part:
What issue is being appealed?
On August 30, 2001, the taxpayer submitted a timely
request, under Section 6330 of the Internal Revenue
Code (IRC), for a collection due process hearing. The
request relates to a Notice of Intent to Levy dated
August 6, 2001 that was issued for balances due on his
1998 individual income tax liability * * *.
Verification of Legal and Procedural Requirements
The Secretary has provided sufficient verification that
the requirements of applicable law and administrative
requirements have been met. I have reviewed tran-
scripts of the accounts, the taxpayer’s original 1998
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Individual Income Tax Return, and the related defi-
ciency assessment file.
The statutory notice of deficiency was correctly sent
for the 1998 income tax assessment on February 18,
2000. The taxpayer received and responded to it with
frivolous arguments but did not petition the Tax Court.
The “notice and demand”, required by IRC 6303, was
properly sent to the taxpayers [sic] last known address
on August 7, 2000. The taxpayer has had an opportunity
for judicial review of the income tax assessment and is
now precluded, under IRC 6330(c)(2)(B) from raising
challenges “to the existence or amount of the underly-
ing tax liability”.
* * * * * * *
The Settlement Officer assigned to this hearing has had
no previous involvement with the taxpayer. * * * The
notice required by IRC 6330 was correctly sent and
resulted in this hearing request.
Relevant Issues Raised by Taxpayer
The hearing was conducted with the taxpayer on February
5, 2001 [sic]. The taxpayer’s hearing request pre-
sented only frivolous arguments and no relevant argu-
ments were presented at the hearing. The taxpayer
denied receipt of a Statutory Notice of Deficiency for
his 1998 liability, but he received and responded to it
and referenced in his letter dated March 6, 2000. That
letter also presented frivolous arguments and stated,
in part: “Nothing in the Privacy Act Notice or in the
above statutes informs me that I have to ‘comply’ with,
or pay attention to, letters and/or alleged ‘determina-
tions’ sent to me by various and sundry employees of
the IRS.” Only arguments of this vein were presented
at the hearing.
* * * * * * *
The taxpayer was specifically asked if he wished to
propose collection alternatives to levy on his assets
but he presented none. He was advised of his right to
judicial review of this determination. He was also
given a copy of Pierson v. Commissioner, 2000 U.S. Tax
Ct. LEXIS 93; 115 T.C. No.39 and was warned that the
courts have been imposing sanctions upon litigation of
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frivolous arguments.
Balancing Efficient Collection with Intrusiveness
It is determined that the Notice of Intent to Levy was
properly issued. Given the taxpayer’s compliance
history and continuing non-compliance, levy on assets
of the taxpayer is an appropriate next action for the
Internal Revenue Service to take. The taxpayer offers
no collection alternative. Levy on assets of the
taxpayer balances the taxpayer’s legitimate concern for
the intrusiveness of the action with the need to effi-
ciently administer the tax laws.
Discussion
The Court may grant summary judgment where there is no
genuine issue of material fact and a decision may be rendered as
a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner,
98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). We
conclude that there is no genuine issue of material fact regard-
ing the questions raised in respondent’s motion.
With respect to petitioner’s taxable year 1998, petitioner
received a notice of deficiency, but he did not file a petition
with respect to that notice. In petitioner’s response to respon-
dent’s motion (petitioner’s response), petitioner contends that
he “only admitted to having received an “INVALID” Deficiency
Notice”. That is because, according to petitioner, the employee
who signed the notice of deficiency “did not have any delegated
authority to send out the Deficiency Notice at issue”. The Court
finds petitioner’s contention about the notice relating to his
taxable year 1998 to be frivolous and groundless. On the instant
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record, we find that petitioner may not challenge the existence
or the amount of petitioner’s unpaid liability for 1998. See
sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 610-611
(2000); Goza v. Commissioner, 114 T.C. 176, 182-183 (2000).
Where, as is the case here, the validity of the underlying
tax liability is not properly placed at issue, the Court will
review the determination of the Commissioner of Internal Revenue
for abuse of discretion. Sego v. Commissioner, supra at 610;
Goza v. Commissioner, supra at 181-182.
As was true of petitioner’s attachment to his 1998 return,
petitioner’s March 6, 2000 letter, and petitioner’s attachment to
Form 12153, petitioner’s response contains contentions, argu-
ments, and requests that the Court finds to be frivolous and/or
groundless. To illustrate, petitioner contends that respondent
failed to issue petitioner the “statutory Notice and Demand for
payment”. We reject that contention. Form 4340 with respect to
petitioner’s taxable year 1998 shows that respondent sent peti-
tioner a notice of balance due on August 7, 2000, the same day on
which respondent assessed petitioner’s tax, as well as any
penalties and interest as provided by law, for his taxable year
1998. A notice of balance due constitutes the notice and demand
for payment under section 6303(a). Craig v. Commissioner, 119
T.C. 252, 262-263 (2002).
As a further illustration of the frivolous and/or groundless
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nature of petitioner’s position in this case, petitioner contends
in petitioner’s response that the Appeals officer failed to
obtain and to produce verification that the requirements of any
applicable law or administrative procedure have been met, as
required by section 6330(c)(1). The record establishes that the
Appeals officer obtained verification from the Secretary that the
requirements of any applicable law or administrative procedure
were met, and we reject petitioner’s contention to the contrary.
Prior to the Appeals Office hearing, the Appeals officer reviewed
complete computer transcripts of petitioner’s account and pro-
vided petitioner with a literal transcript of account with
respect to petitioner’s taxable year 1998. At the Appeals Office
hearing, the Appeals officer relied on transcripts of peti-
tioner’s account with respect to petitioner’s taxable year 1998.
After the Appeals office hearing, respondent’s representative
provided petitioner with Form 4340 with respect to petitioner’s
taxable year 1998. See Nestor v. Commissioner, 118 T.C. 162, 167
(2002).
Section 6330(c)(1) does not require the Appeals officer to
rely on a particular document to satisfy the verification re-
quirement imposed by that section. Craig v. Commissioner, supra
at 261-262. Nor does section 6330(c)(1) require the Appeals
officer to provide petitioner with a copy of the verification
upon which the Appeals officer relied. Id. at 262. Transcripts
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of account constitute valid verification that the requirements of
any applicable law or administrative procedure have been met, see
Roberts v. Commissioner, 118 T.C. 365, 371-372 n.10 (2002), as
does Form 4340, Craig v. Commissioner, supra at 262. Petitioner
has not shown any irregularity in respondent’s assessment proce-
dure that would raise a question about the validity of the
assessment or the information contained in the transcripts of
account or Form 4340 with respect to petitioner’s taxable year
1998. We hold that the assessment with respect to petitioner’s
taxable year 1998 was valid and that the Appeals officer satis-
fied the verification requirement of section 6330(c)(1). See
id.; Roberts v. Commissioner, supra.2
Based upon our examination of the entire record before us,
we find that respondent did not abuse respondent’s discretion in
determining to proceed with the collection action as determined
in the notice of determination with respect to petitioner’s
taxable year 1998.
2
We shall not specifically address any additional matters,
such as the following, which petitioner asserts in petitioner’s
response, all of which, as indicated above, the Court finds to be
frivolous and/or groundless:
d. Since all valid assessments must emanate from
a filed return, proof that such a “filed return” exists
is another “relevant” issue that taxpayers can raise.
If this issue is raised, then, obviously, it is incum-
bent upon the appeals officer to produce the return
from which the claimed assessment was made - if this
“relevant” issue is raised by the taxpayer - especially
if it was raised on his request for a CDP hearing.
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In respondent’s motion, respondent requests that the Court
require petitioner to pay a penalty to the United States pursuant
to section 6673(a)(1). Section 6673(a)(1) authorizes the Court
to require a taxpayer to pay to the United States a penalty in an
amount not to exceed $25,000 whenever it appears to the Court,
inter alia, that a proceeding before it was instituted or main-
tained primarily for delay, sec. 6673(a)(1)(A), or that the
taxpayer’s position in such a proceeding is frivolous or ground-
less, sec. 6673(a)(1)(B).
In Pierson v. Commissioner, 115 T.C. 576, 581 (2000), we
issued an unequivocal warning to taxpayers concerning the imposi-
tion of a penalty under section 6673(a) on those taxpayers who
abuse the protections afforded by sections 6320 and 6330 by
instituting or maintaining actions under those sections primarily
for delay or by taking frivolous or groundless positions in such
actions.3
In the instant case, petitioner advances, we believe primar-
ily for delay, frivolous and/or groundless contentions, argu-
ments, and requests, thereby causing the Court to waste its
limited resources. We shall impose a penalty on petitioner
pursuant to section 6673(a)(1) in the amount of $2,000.
3
The record in this case reflects that the Appeals officer
gave petitioner a copy of the Court’s opinion in Pierson v.
Commissioner, 115 T.C. 576 (2000), and warned petitioner that the
Court could impose penalties on petitioner for making frivolous
arguments to the Court.
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We have considered all of petitioner’s contentions, argu-
ments, and requests that are not discussed herein, and we find
them to be without merit and/or irrelevant.
On the record before us, we shall grant respondent’s motion.
To reflect the foregoing,
An appropriate order granting
respondent’s motion and decision
will be entered for respondent.