T.C. Memo. 2004-192
UNITED STATES TAX COURT
ROBERT & POLLY A. GATLOS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15827-03L. Filed August 26, 2004.
Robert and Polly A. Gatlos, pro sese.
Jeffrey C. Venzie, for respondent.
MEMORANDUM OPINION
MARVEL, Judge: This matter is before the Court on
respondent’s motion for summary judgment, filed pursuant to Rule
121,1 and to impose a penalty under section 6673.
Summary judgment is a procedure designed to expedite
1
All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code in effect for the years at issue.
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litigation and avoid unnecessary, time-consuming, and expensive
trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681
(1988). Summary judgment may be granted with respect to all or
any part of the legal issues presented “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.” Rule 121(a) and
(b); see Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v.
Commissioner, 90 T.C. 753, 754 (1988). The moving party bears
the burden of proving that there is no genuine issue of material
fact, and factual inferences will be read in a manner most
favorable to the party opposing summary judgment. Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985). The facts material to the
Court’s disposition of the motion for summary judgment are stated
solely for purposes of deciding the motion and are not findings
of fact for this case. See Sundstrand Corp. v. Commissioner,
supra at 520.
Background
This is an appeal from respondent’s determination upholding
the proposed use of a levy to collect petitioners’ unpaid Federal
income tax liabilities for 1996 and 1999. When the petition in
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this case was filed, petitioners resided in Nottingham,
Pennsylvania.
Petitioners timely filed joint Federal income tax returns
for 1996 and 1999 showing balances due. Respondent assessed the
income tax liabilities shown on the returns as well as interest
and the additions to tax for failure to pay tax under section
6651(a)(2).
Petitioners made some payments that were applied to their
1996 and 1999 tax liabilities but did not pay the liabilities in
full. Following the receipt of a communication from petitioners
in which petitioners claimed that they were not liable for any
income tax, respondent sent petitioners a Letter 1058, Final
Notice - Notice of Intent To Levy and Notice of Your Right to a
Hearing, dated July 2, 2002, with respect to their unpaid 1996
and 1999 tax liabilities. The final notice was issued and signed
by Michael C. Sutton, a revenue officer, who was a GS-11 employee
of the Internal Revenue Service on the date the final notice was
issued.
On July 30, 2002, respondent received a “Claim for Relief
From Alleged Notice of Lien or Levy” from petitioners in which
petitioners asserted various frivolous arguments. Because of the
frivolous nature of petitioners’ arguments, respondent initially
refused to treat the claim as a timely request for a hearing
under section 6330 and initiated a levy action against
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petitioners. However, respondent subsequently determined that
petitioners’ claim was a timely request for a section 6330
hearing and released the levy.
By letter dated May 19, 2003, Appeals Officer Paula Stanton
advised petitioners that she had scheduled the requested hearing
for June 3, 2003, at 10 a.m. In that letter, Appeals Officer
Stanton warned petitioners that “I cannot consider issues
concerning the constitutionality of tax laws.”
Petitioners did not attend the hearing scheduled for June 3,
2003, and did not contact Appeals Officer Stanton to schedule a
new hearing. By letter dated June 3, 2003, and labeled “FINAL
OPPORTUNITY”, Appeals Officer Stanton warned petitioners that if
she did not hear from them on or before June 13, 2003, she would
issue a determination letter based on current information.
By letter dated June 30, 2003, Appeals Officer Stanton
rescheduled the hearing requested by petitioners for July 8,
2003. On July 8, 2003, the hearing was held. Petitioner Polly
Gatlos participated in the hearing. At the hearing, Mrs. Gatlos
challenged the constitutionality of the Internal Revenue Code and
refused to discuss collection alternatives. Petitioners raised
no relevant issue at the July 8 hearing.
On August 11, 2003, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 (the notice of determination). In the notice of
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determination, respondent determined, in pertinent part, as
follows:
1. The presiding appeals officer had had no prior
involvement with respect to the unpaid liabilities.
2. Respondent sent the notices required by sections 6330
and 6331(d).
3. Petitioners did not raise any spousal defenses or
request a collection alternative. The only argument raised by
petitioners at the hearing was that the Internal Revenue Code is
unconstitutional.
4. The proposed levy balances respondent’s need for
efficient tax collection with the taxpayers’ legitimate concern
that any collection be no more intrusive than necessary.
On September 15, 2003,2 this Court filed petitioners’
petition in which petitioners contested the determination made by
respondent in the notice of determination dated August 11, 2003.
In their petition, petitioners gave the following reasons for
seeking relief:
Section 7608(a) of the Internal Revenue Code only
provides Revenue Officers with the authority to enforce
subtitle E taxes, (liquor, tobacco and fire arms,)
while the “Enforcement of laws relating to internal
revenue other than subtitle E” taxes are delegated (in
7608(b)) to “Any criminal investagator [sic] of the
Intelligence Division or of the Internal Security
Division. Since the person executing the Notice of
2
The envelope in which the petition was mailed was
postmarked Sept. 8, 2003.
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Lien does not fall into the category of IRS agent as
defined in 26 U.S.C. 7608(b), he can have no delegated
authouity [sic] to issue Notices of Liens with the
respect to income taxes. Revenue Code Sec. 6331(a)
“AUTHORITY OF THE SECRETARY” “levy may be made upon the
accrued salary and wages of any officer, employee or
elected official of the United States” We are not one
of the person(s) listed in the code. (No Commissioner
signature).
On June 15, 2004, “RESPONDENT’S MOTION FOR SUMMARY JUDGMENT
AND TO IMPOSE A PENALTY UNDER I.R.C. § 6673" was filed. By order
dated June 29, 2004, we required petitioners to file a response
to respondent’s motion by July 20, 2004. Petitioners failed to
file a response.
Discussion
A. Section 6330
Section 6330(a) provides that no levy may be made on any
property or right to property of any person unless the Secretary3
has notified such person in writing of the right to a hearing
3
Sec. 7701(a)(11)(B) provides: “The term ‘Secretary’ means
the Secretary of the Treasury or his delegate.” Sec.
7701(a)(12)(A) provides:
(A) In general.--The term “or his delegate”--
(i) when used with reference to the
Secretary of the Treasury, means any officer,
employee, or agency of the Treasury
Department duly authorized by the Secretary
of the Treasury directly, or indirectly by
one or more redelegations of authority, to
perform the function mentioned or described
in the context; and
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before the levy is made. If the person makes a request for a
hearing, a hearing shall be held before an impartial officer or
employee of the Internal Revenue Service Office of Appeals. Sec.
6330(b)(1). At the hearing, a taxpayer may raise any relevant
issue, including appropriate spousal defenses, challenges to the
appropriateness of the collection action, and collection
alternatives. Sec. 6330(c)(2)(A). Additionally, at the hearing,
a taxpayer may contest the existence or amount of the underlying
tax liability if the taxpayer did not receive a notice of
deficiency for the tax in question or did not otherwise have an
earlier opportunity to dispute the tax liability. Sec.
6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609
(2000).
Following a hearing, the Appeals Office must make a
determination whether the proposed levy action may proceed. In
so doing, the Appeals Office is required to take into
consideration the verification presented by the Secretary, the
issues raised by the taxpayer, and whether the proposed levy
action appropriately balances the need for efficient collection
of taxes with a taxpayer’s concerns regarding the intrusiveness
of the proposed levy action. Sec. 6330(c)(3). The determination
of the Appeals officer under section 6330, except a determination
regarding the underlying tax liability that is made pursuant to
section 6330(c)(2)(B), is reviewed for abuse of discretion. Sego
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v. Commissioner, supra at 610. Where the underlying tax
liability is properly at issue, the Court reviews any
determination regarding the underlying tax liability de novo.
Id.
A hearing officer may rely on a computer transcript or Form
4340, Certificate of Assessments, Payments and Other Specified
Matters, to verify that a valid assessment was made and that a
notice and demand for payment was sent to the taxpayer in
accordance with section 6303. Nestor v. Commissioner, 118 T.C.
162, 166 (2002). Absent a showing of irregularity, a transcript
that shows such information is sufficient to establish that the
procedural requirements of section 6330 have been met. Id. at
166-167.
In this case, the undisputed facts set forth in respondent’s
motion, declarations in support of the motion, and attached
exhibits establish that respondent has satisfied the requirements
of section 6330. Appeals Officer Stanton, who had had no prior
involvement with respect to the unpaid tax liabilities before the
section 6330 hearing as required by section 6330(b)(3), verified
that proper assessments were made as reflected on computer
transcripts attached to the motion for summary judgment and in
the notice of determination, and that the requisite notices had
been sent to the petitioners. Appeals Officer Stanton also
considered petitioners’ argument and rejected it as not relevant
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and frivolous. Following the hearing, Appeals Officer Stanton
made a determination upholding the proposed levy action after
concluding that the proposed levy action appropriately balanced
the need for efficient collection of taxes with petitioners’
concerns regarding the intrusiveness of the proposed levy action.
Sec. 6330(c)(3).
In their petition, petitioners asserted three less-than-
clear arguments in support of their contention that respondent’s
determination was erroneous:
(1) The revenue officer who executed a related notice of
lien was not delegated authority to issue a notice of lien with
respect to income taxes under section 7608(b).
(2) Petitioners were not subject to levy under section
6331(a).
(3) The Commissioner of Internal Revenue did not sign a
document the identity of which petitioners did not specify.
We address these arguments briefly below.
Authority To Issue Final Notice of Intent To Levy
Petitioners’ argument has no merit for several reasons.
First, the relevant notice is the final notice of intent to levy,
not a notice of lien that was not the subject of the notice of
determination. Second, the Secretary or his delegate (including
the Commissioner) is authorized to issue a final notice of intent
to levy. Craig v. Commissioner, 119 T.C. 252, 263 (2002) (citing
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sections 7701(a)(11)(B) and (12)(A)(i), 7803(a)(2)). The
Commissioner’s authority to issue a final notice of intent to
levy has been delegated to GS-9 and above revenue officers.
Everman v. Commissioner, T.C. Memo. 2003-137 (citing Delegation
Order No. 191 (Rev. 2; Oct. 1, 1999) (Rev.3; June 11, 2001)).
Michael C. Sutton, the revenue officer who issued the final
notice of intent to levy to petitioners on July 2, 2002, was
classified as a GS-11 at the time he issued the notice. The
notice of intent to levy in this case was valid as it was issued
to petitioners by a revenue officer with delegated authority to
do so.
Petitioners Are Persons Subject to Levy
Petitioners’ argument that they are not persons subject to
levy under section 6331(a) is also without merit. Section
6331(a) specifically authorizes the Secretary to collect unpaid
taxes from any person by levy upon all property and rights to
property belonging to such person. Section 7701(a)(1) defines
“person” to include an individual. Petitioners are individuals
under section 7701(a)(1) and, therefore, are subject to levy
under section 6331(a).
No Signature by Commissioner
Although petitioners’ argument is unclear, we shall
interpret the cryptic reference, “no Commissioner signature”, to
mean that the final notice of intent to levy was invalid because
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it was not signed by the Commissioner. Again, petitioners’
argument has no merit.
This Court has repeatedly rejected the argument that the
Commissioner is required to sign a final notice. See, e.g.,
Craig v. Commissioner, 119 T.C. at 263. There is no statutory
requirement that a final notice of intent to levy must be signed.
Everman v. Commissioner, supra. Moreover, even though there is
no statutory requirement that the notice be signed, the final
notice of intent to levy in this case was issued and executed by
Revenue Officer Michael Sutton to whom the Commissioner had
delegated the requisite authority.
The petition does not set forth any other assignments of
error with respect to the notice of determination. Any other
argument made by petitioners before or during the hearing was
frivolous, was not raised in the petition, and/or is deemed to be
conceded. Rule 331(b)(4). We conclude, therefore, that there
are no genuine issues of material fact and that respondent is
entitled to the entry of a decision in this case as a matter of
law.
B. Section 6673 Penalty
Section 6673(a)(1) authorizes this Court to require a
taxpayer to pay to the United States a penalty, not to exceed
$25,000, if it appears that the taxpayer has instituted or
maintained a proceeding primarily for delay, or that the
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taxpayer’s position is frivolous or groundless. Section
6673(a)(1) applies to proceedings under section 6330. Pierson v.
Commissioner, 115 T.C. 576, 581 (2000). In proceedings under
section 6330, we have imposed the penalty on taxpayers who have
raised frivolous and groundless arguments with respect to the
legality of the Federal tax laws. See, e.g., Roberts v.
Commissioner, 118 T.C. 365, 372-373 (2002), affd. 329 F.3d 1224
(11th Cir. 2003); Eiselstein v. Commissioner, T.C. Memo. 2003-22;
Yacksyzn v. Commissioner, T.C. Memo. 2002-99.
In this case, the record for purposes of respondent’s motion
clearly establishes that the only arguments made by petitioners
during the administrative processing of this case were frivolous
and/or groundless. In their “Claim for Relief From Alleged
Notice of Lien or Levy”, petitioners argued, among other things,
that they are not liable for income tax, and they challenged the
Secretary’s delegation of authority to IRS employees to collect
unpaid taxes. In their letter to respondent dated December 28,
2002, petitioners again raised several frivolous arguments
including an argument that their tax liabilities were invalid
because the Sixteenth Amendment does not authorize a direct,
nonapportioned income tax on citizens. At the hearing, Mrs.
Gatlos again raised frivolous arguments regarding the
constitutionality of the income tax. In their petition,
petitioners continued to assert frivolous and/or groundless
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arguments. After respondent filed his motion for summary
judgment and we issued an order requiring petitioners to respond,
petitioners did not comply with our order and did not file the
required response.
Petitioners’ conduct as summarized in this opinion
demonstrates that this proceeding was instituted and maintained
primarily for delay. Moreover, every argument made by
petitioners during the administrative appeal and in this Court
was frivolous and/or groundless. Consequently, a penalty under
section 6673(a)(1) is warranted. We shall require petitioners to
pay to the United States a penalty under section 6673(a)(1) of
$2,000.
An appropriate order and
decision will be entered.