T.C. Memo. 2003-278
UNITED STATES TAX COURT
MICHAEL W. BETHEA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7957-02L. Filed September 24, 2003.
Michael W. Bethea, pro se.
Linda J. Wise and Robert W. West, for respondent.
MEMORANDUM OPINION
WHERRY, Judge: This case is before the Court on
respondent’s motion for summary judgment pursuant to Rule 121 and
to impose a penalty under section 6673. The instant proceeding
arises from a petition for judicial review filed in response to a
Notice of Determination Concerning Collection Actions(s) Under
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Section 6320 and/or 6330.1 The issues for decision are:
(1) Whether respondent may proceed with collection action as so
determined, and (2) whether the Court should impose a penalty
under section 6673.
Background
Petitioner filed a Form 1040, U.S. Individual Income Tax
Return, for the 1997 taxable year. On the return, petitioner
reported $9,254 of wage income, as reflected in an attached Form
W-2, Wage and Tax Statement. He then entered “0” on all other
lines of the return with the exception of showing $902.11 in
Federal income tax withheld, $18,850 in 1997 estimated tax
payments, and a corresponding $19,752.11 as the total payments,
amount overpaid, and amount to be refunded to him. Petitioner
also enclosed with the 1997 return a typed statement challenging
his duty to file returns and to pay tax.
Respondent computed petitioner’s tax liability on the basis
of the Form W-2 income and assessed the resultant $476.2
1
Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended, and Rule references are to the
Tax Court Rules of Practice and Procedure.
2
Given that petitioner’s return reported his wages and
attached the supporting Form W-2 but showed zero in tax,
respondent apparently calculated and assessed the tax pursuant to
sec. 6213(b)(1) as arising from a mathematical or clerical error.
The record does not reflect that petitioner ever requested an
abatement of this assessment, see sec. 6213(b)(2), or otherwise
disputed the assessment either before the Office of Appeals or in
the instant judicial proceeding. Accordingly, the propriety of
(continued...)
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Respondent then applied the reported $19,752.11 in estimated tax
and withholding credits as follows:
1997 income tax liability $476.00
Credited to unpaid balance on 1988 income tax 8,564.17
Credited to unpaid balance on 1989 income tax 7,417.17
Refunded to petitioner 3,294.77
Thereafter, on November 19, 1999, respondent issued to
petitioner a notice of deficiency for the 1997 year. The notice
reflected a deficiency of $23,909, stemming from $65,245 in
unreported income shown on Forms 1099, and an accuracy-related
penalty under section 6662(a) of $4,782. In response, petitioner
mailed to respondent a letter dated January 28, 2000,
acknowledging his right to file a petition with the Tax Court but
stating, among other things: “Before I file, pay, or do anything
with respect to this ‘Notices’ I must first establish whether or
not it was sent pursuant to law, whether [sic] not is [sic] has
the ‘force and effect or [sic] law,’ and whether (GWEN A. KRAUSS)
Director of the IRS Service Center had any authority to send me
the Notice in the first place.”
Petitioner did not file with the Court a petition contesting
the deficiency notice. On April 17, 2000, respondent assessed
the $23,909 deficiency and the $4,782 penalty, as well as
$4,920.09 of interest, and sent to petitioner a notice of the
2
(...continued)
the $476 assessment is not before us. We therefore construe
petitioner’s arguments as pertaining solely to the subsequent
assessment discussed hereafter.
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balance due. An additional notice of balance due was sent on
May 22, 2000.
On July 29, 2000, respondent issued to petitioner a Final
Notice--Notice of Intent to Levy and Notice of Your Right to a
Hearing with respect to the unpaid liabilities for 1997.
Petitioner returned to respondent a completed and signed Form
12153, Request for a Collection Due Process Hearing, with an
attachment in which he disputed, among other things, his receipt
and/or the validity of the underlying tax liability, the notice
of deficiency, the assessment, and the notice and demand for
payment.
A hearing was conducted on March 19, 2002. Both prior to
and at the hearing, petitioner was provided with copies of Form
4340, Certificate of Assessments, Payments, and Other Specified
Matters. Petitioner’s arguments at the hearing challenged the
collection action on grounds of liability, claiming a lack of
authority on the part of the Internal Revenue Service to assess
and collect the tax. Following the hearing, on March 29, 2002,
respondent issued to petitioner the Notice of Determination
Concerning Collection Actions(s) Under Section 6320 and/or 6330
sustaining the proposed levy.
Petitioner’s petition disputing respondent’s notice of
determination was filed on April 29, 2002, and reflected an
address in Fort Walton Beach, Florida. The petition raises
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contentions regarding: (1) The underlying tax liability and,
more specifically, the validity of the notice of deficiency and
authority of the issuing agent; (2) the validity of the
assessment; (3) petitioner’s receipt of a statutory notice and
demand for payment; and (4) the requisite “verification from the
Secretary that the requirements of any applicable law or
administrative procedure have been met”. Respondent prepared and
filed an answer to the petition and subsequently filed the
subject motion for summary judgment and to impose a section 6673
penalty.
Discussion
Rule 121(a) allows a party to move “for a summary
adjudication in the moving party’s favor upon all or any part of
the legal issues in controversy.” Rule 121(b) directs that a
decision on such a motion shall be rendered “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.”
The moving party bears the burden of demonstrating that no
genuine issue of material fact exists and that he or she is
entitled to judgment as a matter of law. Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994). Facts are viewed in the light most favorable to the
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nonmoving party. Id. However, where a motion for summary
judgment has been properly made and supported by the moving
party, the opposing party may not rest upon mere allegations or
denials contained in that party’s pleadings but must by
affidavits or otherwise set forth specific facts showing that
there is a genuine issue for trial. Rule 121(d). The Court has
considered the pleadings and other materials in the record and
concludes that there is no genuine justiciable issue of material
fact in this case.
I. Collection Action
Section 6331(a) authorizes the Commissioner to levy upon all
property and rights to property of a taxpayer where there exists
a failure to pay any tax liability within 10 days after notice
and demand for payment. Sections 6331(d) and 6330 then set forth
procedures generally applicable to afford protections for
taxpayers in such levy situations. Section 6331(d) establishes
the requirement that a person be provided with at least 30 days’
prior written notice of the Commissioner’s intent to levy before
collection may proceed. Section 6331(d) also indicates that this
notification should include a statement of available
administrative appeals. Section 6330(a) expands in several
respects upon the premise of section 6331(d), forbidding
collection by levy until the taxpayer has received notice of the
opportunity for administrative review of the matter in the form
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of an Appeals Office hearing. Section 6330(b) grants a taxpayer
who so requests the right to a fair hearing before an impartial
Appeals officer.
Section 6330(c) addresses the matters to be considered at
the hearing:
SEC. 6330(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.
(B) Underlying liability.--The person
may also raise at the hearing challenges to
the existence or amount of the underlying
tax liability for any tax period if the
person did not receive any statutory notice
of deficiency for such tax liability or did
not otherwise have an opportunity to
dispute such tax liability.
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Once the Appeals officer has issued a determination
regarding the disputed collection action, section 6330(d) allows
the taxpayer to seek judicial review in the Tax Court or a
District Court. In considering whether taxpayers are entitled to
any relief from the Commissioner’s determination, this Court has
established the following standard of review:
where the validity of the underlying tax liability is
properly at issue, the Court will review the matter on
a de novo basis. However, where the validity of the
underlying tax liability is not properly at issue, the
Court will review the Commissioner’s administrative
determination for abuse of discretion. [Sego v.
Commissioner, 114 T.C. 604, 610 (2000).]
A. Review of Underlying Liability
Petitioner apparently seeks to challenge in this case the
existence of his underlying liability on grounds that the notice
of deficiency he received was invalid due to lack of a delegation
of authority from the Secretary to the Director of the Service
Center who issued the notice. This contention, however is
without merit. As this Court has explained:
The Secretary or his delegate may issue notices of
deficiency. Secs. 6212(a), 7701(a)(11)(B) and
(12)(A)(i). The Secretary’s authority to issue notices
of deficiency was delegated to the District Director
and also to the Director of the Service Center * * *. *
* * secs. 301.6212-1(a), 301.7701-9(b), Proced. &
Admin. Regs. * * * [Nestor v. Commissioner, 118 T.C.
162, 165 (2002).]
Accordingly, because petitioner received a valid notice of
deficiency and did not timely petition for redetermination, he is
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precluded under section 6330(c)(2)(B) from disputing his
underlying tax liability in this proceeding.
B. Review for Abuse of Discretion
Petitioner also makes various arguments relating to aspects
of the assessment and collection procedures that we review for
abuse of discretion. Petitioner claims that no valid assessment
supports the proposed levy and asserts that he should have been
provided with a copy of Form 23C, Summary Record of Assessment,
and with proof of the “filed return” from which the assessment
emanated. Again, these arguments have been repudiated.
Federal tax assessments are formally recorded on a record of
assessment in accordance with section 6203. Upon request, the
Secretary is directed to furnish to the taxpayer a copy of
pertinent parts of the record of assessment setting forth the
taxpayer’s name, the date of assessment, the character of the
liability assessed, the taxable period, if applicable, and the
amounts assessed. Id.; sec. 301.6203-1, Proced. & Admin. Regs.
A Form 4340 constitutes presumptive evidence that a tax has been
validly assessed pursuant to section 6203. Davis v.
Commissioner, 115 T.C. 35, 40 (2000) (and cases cited thereat).
Absent a showing by the taxpayer of some irregularity in the
assessment procedure that would raise a question about the
validity of the assessments, a Form 4340 reflecting that tax
liabilities were assessed and remain unpaid is sufficient to
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support collection action under section 6330. Id. at 40-41. Nor
is the Commissioner required to use Form 23C in making an
assessment. Roberts v. Commissioner, 118 T.C. 365, 369-371
(2002), affd. 329 F.3d 1224 (11th Cir. 2003). Furthermore, a
taxpayer receiving a copy of Form 4340 has been provided with all
the documentation to which he or she is entitled under section
6203 and section 301.6203-1, Proced. & Admin. Regs. Roberts v.
Commissioner, supra at 370 n.7.
Here, petitioner has cited no irregularities that would cast
doubt on the information recorded in the Form 4340, and he was
furnished with copies of this document both prior to and at the
hearing. Additionally, arguments substantially identical to his
statements concerning “filed returns” have been summarily
rejected. See, e.g., Fink v. Commissioner, T.C. Memo. 2003-61.
We conclude that petitioner’s complaints regarding the assessment
are meritless.
Petitioner also alleges not to have received the notice and
demand for payment that section 6303(a) establishes should be
given within 60 days of the making of an assessment. However, a
notice of balance due constitutes a notice and demand for payment
within the meaning of section 6303(a). Craig v. Commissioner,
119 T.C. 252, 262-263 (2002). The Form 4340 indicates that
petitioner was sent at least two such notices of balance due, on
April 17 and May 22, 2000.
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Finally, petitioner advances several contentions phrased in
terms of the prescribed verification that the requirements of any
applicable law or administrative procedure were met. These
claims are to a certain degree interrelated with his arguments
couched in terms of the assessment. To the extent that there
exists a different emphasis, suffice it to say that section
6330(c)(1) mandates neither that the Appeals officer rely on a
particular document in satisfying the verification requirement
nor that the Appeals officer actually give the taxpayer a copy of
the verification upon which he or she relied. Craig v.
Commissioner, supra at 262; Nestor v. Commissioner, supra at 166.
Moreover, we have specifically held that it is not an abuse of
discretion for an Appeals officer to rely on Form 4340 to comply
with section 6330(c)(1). Nestor v. Commissioner, supra at 166;
Davis v. Commissioner, supra at 41.
Thus, with respect to those issues enumerated in section
6330(c)(2)(A) and subject to review in collection proceedings for
abuse of discretion, petitioner has not raised any spousal
defenses, valid challenges to the appropriateness of the
collection action, or collection alternatives. As this Court has
noted in earlier cases, Rule 331(b)(4) states that a petition for
review of a collection action shall contain clear and concise
assignments of each and every error alleged to have been
committed in the notice of determination and that any issue not
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raised in the assignments of error shall be deemed conceded. See
Lunsford v. Commissioner, 117 T.C. 183, 185-186 (2001); Goza v.
Commissioner, 114 T.C. 176, 183 (2000). Accordingly, the Court
concludes that respondent’s determination to proceed with
collection of petitioner’s tax liabilities was not an abuse of
discretion.
II. Section 6673 Penalty
Section 6673(a)(1) authorizes the Court to require the
taxpayer to pay a penalty not in excess of $25,000 when it
appears to the Court that, inter alia, 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. In Pierson v Commissioner, 115 T.C. 576, 581 (2000),
we warned that taxpayers abusing the protections afforded by
sections 6320 and 6330 through the bringing of dilatory or
frivolous lien or levy actions will face sanctions under section
6673. We have since repeatedly disposed of cases premised on
arguments akin to those raised herein summarily and with
imposition of the section 6673 penalty. See, e.g., Craig v.
Commissioner, supra at 264-265 (and cases cited thereat).
With respect to the instant matter, we are convinced that
petitioner instituted this proceeding primarily for delay by
advancing contentions previously and consistently rejected by
this and other courts. We note that during petitioner’s hearing
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before Appeals, the officer provided petitioner with a copy of
Davis v. Commissioner, supra, and Thompson v. IRS, 57 AFTR 2d 86-
1450, 86-1 USTC par. 9420 (E.D. Cal. 1986), and explained how
those cases reflected a rejection of positions similar to
petitioner’s. Hence, petitioner received fair warning but has
persisted in disputing respondent’s determination. The Court
concludes that a penalty of $2,000 should be awarded to the
United States in this case. We will grant respondent’s motion.
To reflect the foregoing,
An appropriate order
granting respondent’s motion
and decision for respondent
will be entered.