T.C. Memo. 2005-7
UNITED STATES TAX COURT
JOHN F. DALTON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16780-03L. Filed January 24, 2005.
John F. Dalton, pro se.
A. Gary Begun, for respondent.
MEMORANDUM OPINION
KROUPA, Judge: This matter is before the Court on
respondent’s Motion for Summary Judgment, filed pursuant to Rule
121(a).1 Respondent contends that there is no dispute as to any
1
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, as amended, unless
otherwise indicated.
- 2 -
material fact with respect to this collection review matter and
that respondent’s Notice of Determination Concerning Collection
Actions, upon which this case is based, should be sustained as a
matter of law.
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(a) and (b); 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);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). 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); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
As explained in detail below, there is no genuine issue as
to any material fact in this case and a decision may be rendered
- 3 -
as a matter of law. Accordingly, we shall grant respondent’s
Motion for Summary Judgment.
Background
Petitioner submitted to respondent Federal income tax
returns for 1998 and 1999 in which he entered zeros on all lines
requesting information regarding his income. Petitioner attached
to his tax return for 1998 a Form W-2, Wage and Tax Statement, in
which Smith Security Corp. reported that it paid petitioner wages
of $8,901.12 during 1998. Petitioner also attached to his tax
return for 1998 a two-page statement raising frivolous and
groundless challenges to the Federal income tax.
Respondent issued separate notices of deficiency to
petitioner for the taxable years 1998 and 1999 on February 16,
2001 (deficiency notices). In the notice for 1998, respondent
determined a deficiency in income tax of $433 and an addition to
tax of $108.25 under section 6651(a)(1) for failure to file
timely. The deficiency for 1998 was based on respondent’s
determination that petitioner failed to report $8,901 of wages
received from Smith Security Corp., $925 of a taxable
distribution received from Textron, Inc., and $18 of interest
received from NBD Bank. In the notice for 1999, respondent
determined a deficiency in income tax of $2,254 and an addition
to tax of $563.50 under section 6651(a)(1). The deficiency for
1999 was based on respondent's determination that petitioner
- 4 -
failed to report $9,587 of wages received from American
Protective, $4,523 of wages received from Smith Security Corp.,
$6,191 of a taxable distribution from John Hancock, $925 of a
taxable distribution received from BT Svcs. Tenn., $18 of
interest received from NBD Bank, and $843 of Social Security
payments.
By separate letters to respondent dated February 20, 2001,
petitioner acknowledged receiving the deficiency notices and
questioned respondent’s authority to issue these notices.
Petitioner did not file a petition for redetermination with the
Court contesting the deficiency notices, however.
Respondent mailed to petitioner a Final Notice - Notice of
Intent to Levy and Notice of Your Right to a Hearing Under
Section 6330 (final notice) on July 12, 2002, with regard to
petitioner’s unpaid Federal income taxes for 1998 and 1999. A
schedule attached to the final notice stated that petitioner owed
an assessed balance of $717.45 plus statutory additions of $69.95
for 1998 and an assessed balance of $3,402.77 for 1999.
Petitioner timely filed with respondent a Request for a
Collection Due Process Hearing, which included frivolous
allegations that the proposed levy should be barred for several
reasons. First, petitioner alleged that respondent purportedly
failed to issue to petitioner “valid” notices of deficiency
because the Internal Revenue Service (IRS) does not have the
- 5 -
authority to assess tax. Petitioner also alleged that respondent
purportedly failed to enter valid assessments or produce a
“Summary Record of Assessment”. In addition, petitioner alleged
that respondent failed to issue to petitioner a “statutory”
notice and demand for payment of the taxes in question.
Petitioner attended an administrative hearing conducted by
Appeals Officer Kathleen Clark (Officer Clark) on March 18, 2003.
During the hearing, Officer Clark provided petitioner with copies
of Forms 4340, Certificate of Assessment, Payments, and Other
Specified Matters, regarding petitioner’s accounts for 1998 and
1999. The Forms 4340 showed that respondent had timely assessed
the taxes and additions to tax determined in the deficiency
notices for 1998 and 1999, and statutory interest and penalties
for failure to pay the taxes due. In addition, the Forms 4340
established that respondent had issued to petitioner a notice and
demand for payment of the assessed amounts for 1998 and 1999.
Both of the Forms 4340 included orthographic or numerical errors,
however, that had the effect of multiplying by one hundredfold
the total amounts due from petitioner for 1998 and 1999.
Specifically, although the line item entries in Forms 4340
included assessments that matched the total amounts listed as due
in the schedule attached to the final notice, the Forms 4340
erroneously stated that petitioner owed $71,745.45 and
$340,277.77 for 1998 and 1999, respectively.
- 6 -
Respondent mailed to petitioner a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330
(determination notice) dated August 28, 2003. The determination
notice recited that petitioner did not raise any issue of merit
during the administrative proceeding and the Appeals Office
determined that it was appropriate to proceed with the proposed
levy for 1998 and 1999.
Petitioner timely filed with the Court a Petition for Lien
or Levy Action.2 In addition to challenging the determination
notice pertaining to the proposed levy for 1998 and 1999, the
petition included a challenge to the notice pertaining to the
collection of civil penalties imposed under section 6703
(frivolous return penalties) for 1997 and 1998.3
Upon respondent’s notifying the Court that the Forms 4340
upon which the determination notice was issued contained errors,
we granted respondent’s motion to remand the case to respondent’s
Appeals Office for further consideration. In particular,
respondent suggested that a remand would allow the Appeals Office
2
The petition was timely mailed to the Court on Sept. 25,
2003. At the time that the petition was filed, petitioner
resided in Taylor, Michigan.
3
Petitioner attempted to invoke the Court’s jurisdiction
with regard to a notice of determination pertaining to frivolous
return penalties even though the notice expressly stated that any
challenge to such notice should be filed in Federal District
Court. By Order dated Dec. 10, 2003, the Court granted
respondent’s motion to dismiss for lack of jurisdiction and to
strike as to the frivolous return penalties for 1997 and 1998.
- 7 -
to evaluate and correct the errors in the Forms 4340 that were
provided to petitioner during the administrative hearing and
provide petitioner a further opportunity to offer collection
alternatives.
During the remand, petitioner’s case was reassigned (at
petitioner’s request) from Officer Clark to Appeals Officer Linda
Kramer (Officer Kramer). On October 12, 2004, Officer Kramer met
with petitioner for the purpose of conducting an administrative
hearing. The hearing was terminated, however, when petitioner
informed Officer Kramer that he desired to obtain legal counsel.
In a letter to Officer Kramer dated October 22, 2004, petitioner
stated that he was relying on section 7521(b)(2) and Keene v.
Commissioner, 121 T.C. 8 (2003), to argue that the Appeals Office
was obliged to terminate his administrative hearing when
petitioner stated that he wished to consult with an attorney.
The Appeals Office issued to petitioner a supplemental
determination notice on November 17, 2004. In the supplemental
notice, the Appeals Office concluded that it was appropriate to
proceed with the proposed levy for 1998 and 1999.
Respondent filed with the Court a status report on November
23, 2004, describing the various actions that were taken while
the matter was on remand. Respondent filed a Motion for Summary
Judgment on November 24, 2004. Respondent’s motion included as
exhibits Forms 4340 for 1998 and 1999, dated September 20, 2004.
- 8 -
The Forms 4340 show that respondent assessed (and petitioner
failed to pay) taxes, additions to tax, penalties, and statutory
interest for 1998 and 1999 in amounts that match those set forth
in the deficiency notices and in the final notice.
The Court directed petitioner to file an objection to
respondent’s Motion for Summary Judgment by Order dated December
3, 2004. The Court also directed petitioner by Order dated
December 7, 2004, to file a report with the Court describing his
efforts to retain counsel in this case. Petitioner failed to
respond to either of these Orders.
Discussion
Section 6331(a) provides that if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by levy on the person's property. Section
6331(d) provides that at least 30 days before enforcing
collection by levy on the person's property, the Secretary is
obliged to provide the person with a final notice of intent to
levy, including notice of the administrative appeals available to
the person.
Section 6330 generally provides that the Commissioner cannot
proceed with collection by levy until the person has been given
notice and the opportunity for an administrative review of the
matter (in the form of an administrative hearing with the Office
- 9 -
of Appeals) and, if dissatisfied, with judicial review of the
administrative determination. See Davis v. Commissioner, 115
T.C. 35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179
(2000).
Section 6330(c)(1) imposes an obligation on the Appeals
Office to obtain verification that the requirements of any
applicable law or administrative procedure have been met in each
case. Section 6330(c)(2) prescribes the matters that a person
may raise during the administrative process. In sum, section
6330(c)(2) provides that a person may raise collection issues
such as spousal defenses, the appropriateness of the
Commissioner's intended collection action, and possible
alternative means of collection. Section 6330(c)(2)(B) provides
that the existence and amount of the underlying tax liability can
be contested only if the person did not receive a notice of
deficiency for the taxes in question or did not otherwise have an
earlier opportunity to dispute the tax liability. See Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,
supra.
The record reflects that petitioner received the deficiency
notices for 1998 and 1999 yet petitioner consciously decided not
to file a petition for redetermination with the Court.
Consistent with section 6330(c)(2)(B), petitioner is barred from
challenging the existence or amount of his underlying tax
- 10 -
liabilities for 1998 and 1999 in this collection review
proceeding. See Goza v. Commissioner, supra. In conjunction
with this point, we note that petitioner’s assertion that he did
not receive “valid” notices of deficiency is frivolous and
groundless. See, e.g., Nestor v. Commissioner, 118 T.C. 162, 166
(2002). As the Appeals Court for the Fifth Circuit has remarked:
“We perceive no need to refute these arguments with somber
reasoning and copious citation of precedent; to do so might
suggest that these arguments have some colorable merit.” Crain
v. Commissioner, 737 F.2d 1417 (5th Cir. 1984).
The record demonstrates that the Appeals Office properly
verified that all applicable laws and administrative procedures
were followed in this matter. It is well settled that section
6330(c)(1) does not require the Appeals Office to rely on a
particular form to satisfy the verification requirement, nor does
it require the Appeals Office to provide a taxpayer with a copy
of such verification. Roberts v. Commissioner, 118 T.C. 365 n.10
(2002), affd. 329 F.3d 1224 (11th Cir. 2003); Nestor v.
Commissioner, supra at 166. We have found that the Appeals
Office may verify an assessment by means of a transcript of
account such as the Forms 4340 attached to respondent’s motion.
Davis v. Commissioner, supra (Form 4340 is presumptive evidence
that an assessment was made against the taxpayer).
- 11 -
The Forms 4340 attached to respondent’s Motion for Summary
Judgment contain all the information necessary to record an
assessment including identification of the taxpayer, the
character of the liability assessed, the taxable period, and the
amount of the assessment. See sec. 301.6203-1, Proced. & Admin.
Regs. Thus, the Appeals Office properly verified for purposes of
section 6330(c)(1) that all applicable laws and administrative
procedures have been met in this matter.4
As noted earlier, petitioner failed to respond to the
Court’s Orders that directed him to file an objection to
respondent’s motion, and a report describing his efforts to
retain counsel in this case. Considering all the circumstances,
including the “zero” returns that petitioner submitted to
respondent for the years in issue, the protest statement that
petitioner attached to his return for 1998, and the frivolous and
groundless arguments that petitioner raised in his request for an
administrative hearing, we are persuaded that petitioner’s sudden
desire to retain counsel while this matter was on remand amounted
to nothing more than a ploy to further delay collection of his
tax liabilities for 1998 and 1999. In any event, based on
4
We conclude that any confusion arising from the
typographical errors in the Forms 4340 that were provided to
petitioner during his initial administrative hearing was obviated
by the corrected Forms 4340 attached to respondent’s Motion for
Summary Judgment.
- 12 -
petitioner’s failure to respond to the Court’s Orders, we
conclude that petitioner has abandoned the issue.
Petitioner failed to raise a spousal defense, make a valid
challenge to the appropriateness of respondent's intended
collection action, or offer alternative means of collection.
These issues are now deemed conceded. Rule 331(b)(4). From the
entire record in this case, we conclude that the Appeals Office
did not abuse its discretion in determining that it was
appropriate to proceed with collection of petitioner's tax
liabilities for 1998 and 1999.
As a final matter, we mention section 6673(a)(1), which
authorizes the Tax Court to require a taxpayer to pay to the
United States a penalty not in excess of $25,000 whenever it
appears that 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. The Court has
indicated its willingness to impose such penalties in collection
review cases. Pierson v. Commissioner, 115 T.C. 576 (2000).
Although we do not impose a penalty on petitioner pursuant to
section 6673(a)(1) at this time, we admonish petitioner that the
Court will consider imposing such a penalty should he return to
the Court in the future and advance arguments similar to those
that we have identified as frivolous.
- 13 -
To reflect the foregoing,
An appropriate order and
decision will be entered for
respondent.