GAVIGAN v. COMMISSIONER

T.C. Summary Opinion 2004-155

UNITED STATES TAX COURT

LAURA A. GAVIGAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13779-03S. Filed November 10, 2004.

Laura A. Gavigan, pro se.

Luanne S. Di Mauro, for respondent.

WOLFE, Special Trial Judge: This matter is before the Court

on respondent’s motion for summary judgment and to impose a

penalty under section 6673 (motion).1 It was heard pursuant to

the provisions of section 7463. The decision to be entered is

1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect at relevant times, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
 - 2 -

not reviewable by any other court, and this opinion should not be

cited as authority.

Petitioner filed a petition for judicial review of

respondent’s determination to proceed with a proposed levy

following a collection due process hearing (CDP hearing) under

section 6330(d). The issues for decision are: (1) Whether

respondent’s determination to proceed with collection action was

an abuse of discretion, and (2) whether the Court should impose a

penalty under section 6673.

Background

When she filed her petition, petitioner was a resident of

Middletown, Connecticut.

Petitioner submitted a document purporting to be a joint

Federal income tax return for 1996 with her husband, Dennis

Gavigan (Mr. Gavigan). On this document they reported no taxable

income and an income tax liability of zero.2 Following an

examination of the purported tax return for 1996, and information

submitted by other persons, respondent determined that petitioner

and Mr. Gavigan earned taxable wages of $33,880 and received

taxable interest payments of $57.50.

2
Petitioner’s purported joint 1996 Federal income tax
return was not introduced as part of the record in this case.
Petitioner does not dispute that she submitted a return showing
no income and no tax liability.
 - 3 -

On August 22, 2001, respondent issued to petitioner a notice

of deficiency for 1996. Petitioner did not file a petition for

judicial review with this Court.3

On July 12, 2002, respondent issued to petitioner a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing (final notice). On August 6, 2002, petitioner responded

to the final notice by filing a Form 12153, Request for a

Collection Due Process Hearing.

Petitioner attached a nine-page memorandum to the Form

12153, in which she sets forth frivolous and groundless arguments

regarding the Federal income tax system: E.g., “it is my

contention that no law authorizes the Secretary (let alone any

IRS agent) to determine that I owe more in income taxes than the

‘zero’ I reported on any income tax return”; “In addition, * * *

I am not disputing the ‘amount’ of the alleged tax ‘liability’,

but the very ‘existence’ of an income tax ‘liability’ as a matter

of law”.4 Petitioner also requested that respondent produce

3
Petitioner wrote letters to several officials of the
Internal Revenue Service and the Department of Treasury, claiming
that the Government was engaged in an “illegal enforcement
action” because income taxes were “totally voluntary, and not
mandatory” and that her notice of deficiency was invalid because
it was not sent directly by the Secretary of the Treasury.
4
Petitioner’s shop-worn and universally rejected frivolous
arguments regarding the legitimacy of the Federal income tax
system warrant no further comment. See Crain v. Commissioner,
737 F.2d 1417, 1417 (5th Cir. 1984) (“We perceive no need to
refute these arguments with somber reasoning and copious citation
(continued...)
 - 4 -

various documents including “verification from the Secretary that

the requirements of applicable law or administrative procedure

have been met”.

Petitioner’s case was assigned to a settlement officer (the

settlement officer) with respondent’s Appeals Office in New

Haven, Connecticut. By correspondence dated December 22, 2002,

petitioner notified respondent that she wanted to audio record

her upcoming CDP hearing. By letter dated April 23, 2003, the

settlement officer informed petitioner that she would not be

allowed to make an audio or stenographic recording of her CDP

hearing and warned petitioner that “sanctions can and have been

imposed by the courts for frivolous arguments (Ref: Peirson v.

Commissioner and Davis v. Commissioner)”. The settlement officer

attached to the letter a copy of petitioner’s Form 4340,

Certificate of Assessments, Payments, and Other Specified

Matters, and informed petitioner that the other documents she

requested could be obtained under the Freedom of Information Act,

5 U.S.C. sec. 552 (2000).

The settlement officer asked petitioner to submit a Form

433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals, for purposes of evaluating her

financial condition and eligibility for collection alternatives.

4
(...continued)
of precedent; to do so might suggest that these arguments have
some colorable merit.”)
 - 5 -

Petitioner did not submit financial information on a Form 433-A,

stating: “With regard to Appeals considering collection

alternatives, this will not be necessary. I elect to make

payment in full if a determination which is based upon

requirements of law and administrative procedure shows that an

amount is due and owed”.

On May 13, 2003, petitioner attended a scheduled face-to-

face meeting with the settlement officer. At the hearing,

petitioner requested that she be permitted to audio record her

hearing. Her request was denied.

On July 9, 2003, respondent issued to petitioner a Notice of

Determination Concerning Collection Action(s) under Section 6320

and/or 6330 (notice of determination). In the notice of

determination, the settlement officer determined that it was

appropriate for respondent to proceed with the proposed levy to

collect petitioner’s tax liability. In regard to issues

discussed at the hearing, the settlement officer wrote:

You stated, at the hearing, that you know of no section
of the Internal Revenue Code, which requires you to pay
the tax. You also state that, despite admitted gross
income in 1996 no authority is authorized to assess
you. A discussion of Internal Revenue Code Sections 1,
61 and 63 took place at the hearing. * * *

* * * * * * *

No valid issues were raised. Throughout this
proceeding you disputed the legal basis and procedures
relating to the 1996 obligation. You have not taken a
significant or positive step to resolve the 1996
delinquency. Your issues are without foundation. No
 - 6 -

alternatives to the Levy action have been proposed. No
other issues concerning this matter have been raised.

Respondent further noted that petitioner was not in compliance

with her return filing requirements for subsequent years and

therefore would not be eligible for a collection alternative even

had she proposed one.

Upon receiving the notice of determination, petitioner filed

a petition with this Court pursuant to section 6330(d). In her

petition she claimed that she was not provided with a fair CDP

hearing because: (1) She was not permitted to audio record her

CDP hearing; (2) the officer was not impartial; (3) the officer

did not provide verification that the requirements of applicable

law or administrative procedure were met; and (4) she was denied

her right to raise “any relevant issue relating to the proposed

levy.”

Discussion

Summary judgment is intended to expedite litigation and

avoid unnecessary 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 in

controversy “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(b); see Sundstrand Corp.
 - 7 -

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);

Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

For reasons set forth below, we conclude that as to all the

issues presented in respondent’s motion, there are no issues of

material fact, and a decision may be rendered as a matter of law.

Section 6330 - Due Process for Collections

A. General Rules

Section 6330 entitles a taxpayer to notice and an

opportunity for a hearing before certain lien and levy actions

are taken by the Commissioner in the process of collecting unpaid

Federal taxes. Upon request, a taxpayer is entitled to a “fair

hearing” conducted by an impartial officer from the Office of

Appeals. Sec. 6330(b)(1), (3). At the hearing, the officer is

required to: (1) Obtain verification from the Secretary that the

requirements of applicable law and administrative procedure have

been met; (2) consider any relevant issue raised by the taxpayer

related to the unpaid tax or proposed levy, including appropriate

spousal defenses, challenges to the appropriateness of collection

actions, and offers of collection alternatives; and (3) consider

whether any proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the

taxpayer that any collection action be no more intrusive than

necessary. Sec. 6330(c). If a taxpayer received a statutory
 - 8 -

notice of deficiency for the year in issue or otherwise had an

opportunity to dispute the underlying tax liability, he or she is

precluded from challenging the existence or amount of the

underlying tax liability at the hearing. Sec. 6330(c)(2)(B).

This Court has jurisdiction to review the Commissioner’s

administrative determination under section 6330(d). If the

underlying tax liability is properly at issue, we review that

issue de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000);

Goza v. Commissioner, 114 T.C. 176, 181 (2000). If the validity

of the underlying tax liability is not at issue, we review the

determination for abuse of discretion. Sego v. Commissioner,

supra at 610. An abuse of discretion occurs when an officer

takes action that is arbitrary, capricious, or without sound

basis in fact or law. See Woodral v. Commissioner, 112 T.C. 19,

23 (1999).

Since petitioner received a statutory notice of deficiency

for 1996, the underlying tax liability is not at issue in this

case, and we review respondent’s determination to proceed with

the proposed levy for an abuse of discretion as to matters raised

in the petition.

B. Petitioner’s Right To Audio Record Her CDP Hearing

Following this Court’s opinion in Keene v. Commissioner, 121

T.C. 8, 19 (2003), decided on July 8, 2003, a taxpayer has the

right under section 7521(a)(1) to audio record his or her CDP
 - 9 -

hearing. Sec. 7521(a)(1). In situations where an administrative

hearing took place prior to our opinion in Keene v. Commissioner,

supra, we remand a case to the Appeals Office for further review

only if it is necessary and productive to do so. Keene v.

Commissioner, supra at 19; Frey v. Commissioner, T.C. Memo. 2004-

87; Durrenberger v. Commissioner, T.C. Memo. 2004-44; Brashear v.

Commissioner, T.C. Memo. 2003-196; Kemper v. Commissioner, T.C.

Memo. 2003-195. We have consistently held that a taxpayer’s

reliance on frivolous or groundless arguments falls short of the

necessary or productive standard for remand. See, e.g., Johnston

v. Commissioner, T.C. Memo. 2004-224; Frey v. Commissioner,

supra; Kemper v. Commissioner, supra.

The administrative record in the present case indicates that

although petitioner was provided with an opportunity to discuss

relevant issues relating to the collection of her unpaid tax

liability, she declined to do so. She did not propose any

collection alternatives or challenge the appropriateness of the

proposed levy, and she continued to advance frivolous and

groundless arguments about the Federal income tax system.

At no point in her dealings with respondent’s Appeals Office

or with this Court did petitioner raise any legitimate issue

involving the collection of her tax liability. The record in

this case shows that no necessary or productive purpose would be
 - 10 -

served by remanding this case for further hearing, and we so

hold.

C. Impartial Officer

Section 6330(b)(3) provides that a taxpayer is entitled to a

CDP hearing conducted by an officer who has had no prior

involvement with respect to the taxpayer’s unpaid tax liability.

Prior involvement includes participation or involvement in an

Appeals hearing (other than a CDP hearing) that the taxpayer may

have had with respect to the tax and tax periods shown on the CDP

notice. Sec. 301.6330-1(d)(2), Q&A-D4, Proced. & Admin. Regs.

Petitioner’s claim that the settlement officer was not an

impartial officer was summarized in the notice of determination

as follows: “Despite requests for additional financial

information to construct alternatives to the proposed collection

action the data has not been supplied. You indicated that by

making such a request in the correspondence of April 23, 2003,

the settlement officer was not impartial”. Petitioner’s argument

is completely baseless. The administrative record clearly shows

that the settlement officer was not involved with petitioner’s

1996 tax liability until he was assigned to her CDP hearing. His

April 23, 2003, letter to petitioner is part of the

administrative record from petitioner’s CDP hearing and does not

represent a prior involvement with the taxpayer’s unpaid tax

liability.
 - 11 -

D. Verification That Requirements of Applicable Law or
Administrative Procedure Have Been Met

At the CDP hearing, the officer must obtain verification

from the Secretary that the “requirements of any applicable law

or administrative procedure have been met”. Sec. 6330(c)(1).

This verification requirement may be satisfied through Forms 4340

or transcripts of account. Nestor v. Commissioner, 118 T.C. 162,

166 (2002); Davis v. Commissioner, 115 T.C. 35, 41 (2000). The

officer is required only to obtain such verification before

issuing a determination and is not required to provide a copy to

a taxpayer. Nestor v. Commissioner, supra at 166-167.

In the present case, the settlement officer not only

obtained a copy of petitioner’s Form 4340, but provided a copy of

the Form 4340 to petitioner both prior to and at their face-to-

face meeting. Accordingly, there was no abuse of discretion in

regard to whether the settlement officer verified that the

requirements of any applicable law or administrative procedure

were met prior to issuing a determination in petitioner’s case.

E. Relevant Issues at a CDP Hearing

A taxpayer may generally raise any relevant issue relating

to his or her unpaid tax liability or to the proposed levy,

including appropriate spousal defenses, challenges to the

appropriateness of collection actions, and offers of collection

alternatives. Sec. 6330(c)(2)(A). Where a taxpayer received a

statutory notice of deficiency, he or she is precluded from
 - 12 -

raising the underlying tax liability as an issue. Sec.

6330(c)(2)(B).

Petitioner claims that she was denied her right to raise

relevant issues. The administrative record does not support her

claims. Although petitioner received a statutory notice of

deficiency for 1996, she was permitted to discuss her underlying

liability at her CDP hearing. She continued to make frivolous

arguments about the legality of Federal income taxes, and she

refused to discuss alternatives to the collection of her unpaid

tax liability. Accordingly, there was no abuse of discretion in

regard to whether petitioner was allowed to raise relevant issues

at her CDP hearing.

Section 6673 Penalty

Section 6673(a)(1) authorizes the Court to require a

taxpayer to pay a penalty not to exceed $25,000 if the taxpayer

took frivolous positions in the proceedings or instituted the

proceedings primarily for delay. A position maintained by the

taxpayer is “frivolous” where it is “contrary to established law

and unsupported by a reasoned, colorable argument for change in

the law.” Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.

1986); Gilligan v. Commissioner, T.C. Memo. 2004-194. We have

consistently imposed section 6673 penalties in lien and levy

review cases where the taxpayer has raised frivolous and

groundless arguments as to the validity of our Federal income tax
 - 13 -

system. See Hamzik v. Commissioner, T.C. Memo. 2004-223;

Gilligan v. Commissioner, T.C. Memo. 2004-194.

In the present case, respondent requested that the Court

impose a penalty pursuant to section 6673(a)(1). By taking

frivolous and groundless positions regarding the Federal income

tax system, some of which have been summarized above, petitioner

abused the protections afforded under section 6330. Petitioner

was warned by the Appeals Office that sanctions could result if

she continued to make frivolous and groundless arguments.

Petitioner continued to do so, and in petitioning this Court for

review, she has wasted the limited resources of this Court.

Accordingly, we shall impose a penalty pursuant to section

6673(a)(1) in the amount of $2,000.

On the record before us, we shall grant respondent’s motion.

Reviewed and adopted as the report of the Small Tax Case

Division.

To reflect the foregoing,

An order granting

respondent’s motion and

decision for respondent

will be entered.