T.C. Memo. 2003-74
UNITED STATES TAX COURT
STAN D. KAYE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7069-02L. Filed March 13, 2003.
Stan D. Kaye, pro se.
Hieu C. Nguyen, for respondent.
MEMORANDUM OPINION
GERBER, Judge: Respondent, in a motion filed on November
12, 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 petitioner. Respondent alleges
that all section 6330 prerequisites have been met and that he
should be allowed to proceed with collection of petitioner’s
assessed and outstanding tax liability. With respect to the
penalty, respondent contends that petitioner instituted this
proceeding primarily for delay and that his position in the
proceeding is frivolous and groundless.
Petitioner’s objection to respondent’s motion for summary
judgment was filed on December 23, 2002. In essence, petitioner
contends that, although respondent has sent certain documents to
him, those documents are not acceptable because they do not meet
the standards that petitioner contends exist. In particular,
petitioner contends that the Secretary of the Treasury must
personally sign notices or that respondent must prove that the
person who did sign notices sent to him was properly authorized
to sign. Petitioner also contends that he will not treat
decisions of the Tax Court as law by which he is bound unless it
is shown that “the Congress of the United States passed a law
stating that the U.S. Citizen is bound by Tax Court decisions.”
Background
Petitioner resided in Moreno Valley, California, at the time
his petition was filed. Petitioner’s 1995 Federal income tax
return was filed on April 15, 1996, and reflected $46,294 in
taxable income and an $11,767 income tax liability. The tax
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liability for the unpaid 1995 tax balance was assessed and on
June 10, 1996, respondent made notice and demand on petitioner to
pay his outstanding 1995 income tax liability. On April 15,
1997, and April 15, 1998, petitioner filed his 1996 and 1997
income tax returns on each of which he entered zeros in all
pertinent boxes for the reporting of income.
On April 22, 1998, respondent mailed a Notice of Deficiency
to petitioner determining a $16,402 income tax deficiency for
1996, based on petitioner’s Form W-2, Wage and Tax Statement, and
Form 1099-R, Distributions from Pensions, Annuities, Retirement
or Profit Sharing Plans, IRAs, Insurance Contracts, etc.,
reflecting income from third-party sources. Respondent also
determined a $3,280.40 penalty under section 6662(a) for
petitioner’s 1996 tax year. Petitioner acknowledged receipt of
the deficiency notice in a July 18, 1998, letter to respondent
and, among other similar protester statements, indicated, as
follows:
I have attached to this letter an excerpt from the
Supreme Court decision FEDERAL CROP INSURANCE CORP. v
A.A. MERRILL, 332 U.S. 380. Note that the Court held
in that case that:
Anyone entering into an arrangement with the
government takes a risk of having accurately
ascertained that he who purports to act for
the government stays within the bounds of his
authority, even though the agent himself may
be unaware of the limitations upon his
authority. (emphasis added)
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Note that the Supreme Court in this decision warns the
public that those who pay attention to what federal
employees say “take the risk” that such employees may not be
acting “within the bounds of (their) authority” and that
such employees may even be “unaware of the limitations of
(their) authority.”
Well, I am not prepared to take that risk.
Petitioner did not petition this Court with respect to the Notice
of Deficiency for his 1996 taxable year. Thereafter, the 1996
tax deficiency and penalty was assessed and on October 12, 1998,
notice and demand for payment of the assessed 1996 income tax
liability was made on petitioner.
On November 20, 1998, respondent mailed a Notice of
Deficiency to petitioner determining, for petitioner’s 1997 tax
year, a $23,004 income tax deficiency and a $684.33 addition to
tax under section 6651(a)(2). Again, petitioner acknowledged
receipt of the notice in a January 31, 1999, letter and raised
various protester arguments, but he did not file a petition with
this Court regarding his 1997 income tax deficiency. Thereafter,
respondent assessed the 1997 tax deficiency and notice and demand
was made on petitioner by means of a June 28, 1999, notice.
On September 6, 2000, respondent issued two Form Letters
1058, Final Notice--Notice of Intent to Levy and Notice of Your
Right to a Hearing, one for 1995 and 1996 and the other for 1997
and 1998.2
2
The 1998 liability was for a sec. 6702 civil penalty. In
(continued...)
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On October 12, 2000, respondent received petitioner’s Form
12153, Request for a Collection Due Process Hearing. On February
13, 2002, a face-to-face hearing was held between an Appeals
officer and petitioner. During the hearing, petitioner was
provided with a Form 4340, Certificate of Assessments, Payments,
and Other Specified Matters for his 1995, 1996, and 1997 tax
years. The Appeals officer also informed petitioner that the
arguments he made at the hearing were considered to be frivolous.
The hearing was recorded and transcribed.
On March 8, 2002, respondent issued two Notice(s) of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 advising that respondent determined to proceed with
collection. Attached to the notices were the Appeals officer’s
report, denominated as a “Summary of Issue and Recommendation”,
which included advice to petitioner that the Tax Court is
authorized “to impose monetary sanctions up to $25,000 for
instituting or maintaining an action before it primarily of [sic]
delay or for a [sic] taking a position that is frivolous or
groundless.”
Discussion
Respondent seeks summary judgment with respect to whether he
may proceed to collect certain outstanding tax liabilities
2
(...continued)
his petition to this Court, petitioner did not challenge
respondent’s actions with respect to the 1998 liability.
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against petitioner and whether petitioner 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, seeks to levy on petitioner’s property. In accord
with section 6330(a), 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
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 the opportunity
for judicial review of the administrative determination. Davis
v. Commissioner, 115 T.C. 35, 37 (2000).
Petitioner did not file a petition with respect to the
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Notices of Deficiency,3 so the validity of the underlying tax
liabilities for 1996 and 1997 was not properly at issue in the
administrative hearing, and is not at issue here. With respect
to his 1995 tax liability, which petitioner reported but did not
pay, he has not argued or shown that the amount reported by him
is in error. Accordingly we review here whether respondent’s
administrative determination to proceed with collection is an
abuse of discretion. Sec. 6330(c)(2)(B); Sego v. Commissioner,
114 T.C. 604, 610 (2000).
At his administrative hearing, petitioner 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). Petitioner also
questioned whether respondent met various statutory requirements
which petitioner contended were a prerequisite to collection.
Petitioner contends that the forms used by respondent were
improper and did not constitute notice and demand. Petitioner
also contends that the lack of personal verification by the
Secretary or a person shown to be authorized to exercise the
Secretary’s authority was a flaw that should preclude respondent
from proceeding with collection.
At the Appeals hearing, petitioner was provided with
transcripts of his accounts, which included detailed information
3
Petitioner acknowledged receipt of the notices.
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underlying the assessments of the tax in question. However,
petitioner does not question whether all of the steps had been
taken or performed. Instead, he argues that documents used by
respondent to provide petitioner with notice were not genuine or
authentic, and accordingly, do not meet the statutory
requirements.
Petitioner contends that the Form 4340 is insufficient to
prove that proper notice was given and that the assessments were
valid. 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. Petitioner has raised superficial questions and made
conclusory allegations regarding the assessment (such as whether
respondent used the proper form), but he has not shown any
substantive or meaningful irregularity in the assessment process.
See Nicklaus v. Commissioner, 117 T.C. 117, 121 (2001); Berkey v.
IRS, 88 AFTR 2d 2001-6530, 2001-2 USTC par. 50,708 (E.D. Mich.
2001).
Petitioner also complains that he did not receive a notice
and demand. This contention, however, is similar to the others
made by petitioner; i.e., he does not question whether he
actually received various documents from respondent, but he
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questions whether respondent used the particular form that
petitioner argues 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 “‘[t]he 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 * * * [section 6303].’” Hughes v.
United States, 953 F.2d 531, 536 (9th Cir. 1992) (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
petitioner of notice and demand, but need only show that the
notices and demand were sent to petitioner’s last known address.
United States v. Chila, 871 F.2d 1015, 1019 (11th Cir. 1989);
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
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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 that respondent did
not abuse his discretion with respect to the determination to
proceed with collection.
Respondent has also moved that petitioner be held liable for
a penalty under section 6673 on the ground that his arguments are
frivolous and that he 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).
In addition to questioning the authenticity of respondent’s
documentation, petitioner has interposed other protester
arguments which have, on numerous occasions, been rejected by the
courts. In order to support his arguments, petitioner has
selectively picked phrases out of context from statutes and/or
opinions. In so doing, petitioner has chosen to ignore more
current or complete statements of the law. Petitioner has
ignored the rules and regulations and contends that he is not
required to comply with or pay attention to respondent’s letters
and determinations. Petitioners’ arguments are superficial and
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without substance.
Under these circumstances, we hold that petitioner’s
position in this proceeding is frivolous and that it 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 $4,000 penalty under
section 6673(a)(1).
To reflect the foregoing,
An Order and Decision will be
entered granting respondent’s
motion for summary judgment.