T.C. Memo. 2004-288
UNITED STATES TAX COURT
LIONEL D. KOLKER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5724-04L. Filed December 29, 2004.
Lionel D. Kolker, pro se.
Karen Nicholson Sommers, 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.
1
All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code.
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Summary judgment is a procedure designed to expedite
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 drawn in a manner most
favorable to the party opposing summary judgment. Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985).
Background
This is an appeal from respondent’s determination upholding
the proposed use of a levy to collect petitioner’s unpaid Federal
income tax liability for 1993 (the 1993 liability). When the
petition in this case was filed, petitioner resided in San Diego,
California.
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Petitioner and Cheryl Kolker filed a joint Federal income
tax return for 1993 showing a balance due. Respondent assessed
the income tax liability shown on the return as well as interest
and penalties/additions to tax.
Respondent sent petitioner a notice and demand for payment,
but petitioner did not pay the 1993 liability. Consequently,
respondent mailed to petitioner a Final Notice--Notice of Intent
to Levy and Notice of Your Right to a Hearing, dated September
11, 2000, that, among other things, informed petitioner that
respondent intended to levy to collect the 1993 liability and
that petitioner could request a hearing with respondent’s Appeals
Office. On September 19, 2000, petitioner submitted a Form
12153, Request for a Collection Due Process Hearing (hearing
request), but respondent has no record of having received it.
On May 21, 2003, petitioner sent respondent a copy of the
hearing request. Because respondent had no record of having
received the original request, respondent treated the May 21,
2003, correspondence as an equivalent hearing request.
Petitioner’s equivalent hearing request was assigned to
Settlement Officer Cynthia Chadwell (Ms. Chadwell). Ms. Chadwell
had had no prior involvement with respect to petitioner’s 1993
liability. By letter dated November 13, 2003, Ms. Chadwell
scheduled a telephone hearing for December 4, 2003, and advised
petitioner, among other things, as follows:
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(1) The Appeals Office would not offer a face-to-face
hearing if the only issues that petitioner wanted to address were
frivolous or groundless;
(2) the hearing request was not received within the 30-day
period provided in section 6330(a)(3)(B), but petitioner could
raise the issue of the timeliness of his request at the hearing;
(3) petitioner should complete and submit Form 433-A,
Collection Information Statement for Individuals, with the
documents required by the form; and
(4) petitioner should provide proof that he filed his 2001
and 2002 Federal income tax returns.
Petitioner responded to the November 13, 2003, letter by
letter dated November 20, 2003. In that letter, petitioner
requested a face-to-face hearing and stated that he had post
office receipts to prove that he had timely requested a hearing
under section 6330. By letter dated January 6, 2004, Ms.
Chadwell scheduled a face-to-face hearing for January 21, 2004.
The hearing date was subsequently changed to February 23, 2004,
at petitioner’s request.
Petitioner’s hearing under section 6330 was held on February
23, 2004. The hearing was audiotaped and transcribed. At the
hearing, Ms. Chadwell reminded petitioner of her prior requests
for information, including a completed Form 433-A, and of her
admonition that she would not consider frivolous or groundless
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arguments. Petitioner stated that he had not completed Form 433-
A but that he was interested in resolving the collection issue.
Although petitioner produced documentation to show that he had
timely requested a hearing pursuant to section 6330, petitioner
raised no other relevant issue and presented no evidence to prove
either that he did not owe the 1993 liability, that the 1993
liability had been paid, or that a collection alternative was
appropriate. Instead, petitioner and a “friend” whom he had
brought to the hearing pressed Ms. Chadwell to discuss whether
petitioner had an “obligation” to file a return and pay tax.
When petitioner and his friend refused to discuss collection
alternatives, Ms. Chadwell terminated the hearing.
Respondent subsequently issued a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330,
dated March 3, 2004, which sustained the proposed levy action.
In the notice of determination, respondent concluded that
petitioner had not raised any valid issue regarding the merits of
the underlying tax liability or the appropriateness of the
proposed levy action and determined that all of the requirements
imposed by section 6330 for a valid levy had been satisfied. In
the notice of determination, respondent concluded that the
proposed levy balanced the need for the efficient collection of
tax with the concern that the collection action be no more
intrusive than necessary, warned petitioner that this Court was
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authorized to impose “monetary sanctions of up to $25,000 for
instituting or maintaining an action before it primarily for
delay or for taking a position that is frivolous or groundless”,
and stated that petitioner’s positions in this case had no merit
and were groundless.
Petitioner submitted a timely petition appealing
respondent’s determination, which we filed on April 1, 2004. In
an addendum attached to the petition, petitioner asserted, inter
alia, that the Internal Revenue Service (IRS) had not established
that he was a taxpayer, that the hearing was a sham, that Ms.
Chadwell was biased, and that the law did not create the alleged
obligation.
On October 6, 2004, we received and filed respondent’s
summary judgment motion. By order dated October 6, 2004, we
ordered petitioner to file a response to respondent’s motion on
or before October 27, 2004. Petitioner did not do so.2 On
November 3, 2004, we received and filed petitioner’s motion to
strike respondent’s motion for summary judgment, which we denied
on November 4, 2004.
2
Petitioner submitted a response to respondent’s motion on
Dec. 1, 2004, but it was returned to petitioner as untimely. On
Dec. 17, 2004, petitioner submitted a document entitled
“Petitioner’s motion accept response as timely”, which we filed
as of that date and denied on Dec. 23, 2004. The response that
was attached repeated the arguments contained in the petition and
other submissions.
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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 Secretary
has notified such person in writing of the right to a hearing
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 IRS Office of Appeals. Sec. 6330(b)(1), (3). 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
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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
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. Ms. Chadwell, 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
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transcripts attached to the motion for summary judgment and in
the notice of determination, and that the requisite notices had
been sent to petitioner. Ms. Chadwell also considered
petitioner’s argument and rejected it as not relevant and
frivolous. Following the hearing, Ms. Chadwell 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 petitioner’s
concerns regarding the intrusiveness of the proposed levy action.
In an addendum to his petition, petitioner listed the
following reasons why the proposed levy should not be sustained:
(1) Respondent issued “arbitrary legal opinions” in that:
(a) Respondent determined that petitioner had not made
a timely hearing request under section 6330;
(b) despite repeated requests, respondent failed to
produce any facts to support his opinion that petitioner was a
taxpayer;
(c) petitioner was not permitted to inquire at the
hearing what in the Constitution created his alleged obligation
to file a return and pay tax;
(d) there is no evidence that the law created any
obligation to file a return and pay tax;
(2) respondent asserted the same arguments in motions to
dismiss filed in other cases;
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(3) respondent delayed 3 years in providing the “sham”
hearing in this case; and
(4) without facts, an assessment is arbitrary; an arbitrary
assessment presents a justiciable controversy that the Court must
decide.
With the exception of the argument regarding the timeliness
of his hearing request,3 all of petitioner’s arguments are
frivolous and groundless. See United States v. Studley, 783 F.2d
934, 937 (9th Cir. 1986) (taxpayer’s argument that he is not a
taxpayer is frivolous); Tolotti v. Commissioner, T.C. Memo. 2002-
86 (taxpayer’s argument that Commissioner must identify
constitutional and statutory provisions that make taxpayer liable
for Federal income tax is frivolous), affd. 70 Fed. Appx. 971
(9th Cir. 2003). It is well established that we need not refute
frivolous arguments with copious citation and extended
discussion. Williams v. Commissioner, 114 T.C. 136, 138-139
(2000) (citing Crain v. Commissioner, 737 F.2d 1417, 1417 (5th
Cir. 1984)).
Petitioner complains about the alleged bias of Ms. Chadwell
and describes the hearing as a sham because Ms. Chadwell would
not engage in a discussion of the legal basis for his
3
After reviewing petitioner’s mailing receipts at the
hearing, Settlement Officer Chadwell conceded at the hearing that
petitioner had filed a timely hearing request under sec. 6330 and
that petitioner is entitled to a hearing under sec. 6330 and to
appeal the determination that resulted therefrom.
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“obligation” to file a tax return and pay tax. The transcript of
the hearing amply demonstrates that Ms. Chadwell provided a
meaningful opportunity to present relevant, nonfrivolous
arguments why the levy should not be allowed to proceed, but
petitioner repeatedly refused to provide any such arguments and
the information necessary to support them. For example, despite
several requests for information regarding petitioner’s financial
condition made both before and during the hearing, petitioner
failed to provide it. When petitioner did not cooperate, Ms.
Chadwell justifiably terminated the hearing. Her decision to
terminate the hearing was not evidence of bias; rather, it
demonstrated that there is a limit to the tax system’s tolerance
for unproductive and frivolous exchanges regarding a taxpayer’s
obligations to file returns and pay tax.
On this record, we conclude that there is no genuine issue
of material fact requiring a trial in this case, and we hold that
respondent is entitled to the entry of a decision sustaining the
proposed levy 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
taxpayer’s position is frivolous or groundless. Section
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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.
This is not the first time that petitioner has wasted the
time of the Federal courts and the Commissioner with arguments
like the ones made in this case. Petitioner attached to his
petition a copy of a motion to dismiss for failure to state a
claim upon which relief can be granted, which was filed by
respondent in Kolker v. Commissioner, docket No. 567-03, another
case commenced by petitioner in this Court. In docket No. 567-
03, petitioner made arguments identical in most respects to those
raised in this case. We granted respondent’s motion to dismiss
and imposed a penalty of $10,000 under section 6673 because of
petitioner’s frivolous arguments. The U.S. Court of Appeals for
the Ninth Circuit affirmed our order in an unpublished opinion
and imposed an additional penalty of $1,500 under section 6673.
Kolker v. Commissioner, No. 03-74029 (9th Cir. July 26, 2004).
Petitioner has had plenty of warning that he risked
incurring a monetary penalty by making these arguments.
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Petitioner has repeatedly wasted the Federal tax system’s
resources, and his conduct deserves an appropriate and severe
sanction. We shall require petitioner to pay to the United
States a penalty under section 6673(a)(1) of $25,000.
An appropriate order and
decision will be entered.