T.C. Memo. 2005-71
UNITED STATES TAX COURT
W. JAMES KUBON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1795-04L. Filed April 4, 2005.
W. James Kubon, pro se.
Gavin L. Greene, for respondent.
MEMORANDUM OPINION
HAINES, Judge: This case is before the Court on
respondent’s motion for summary judgment filed pursuant to Rule
121 and to impose a penalty under section 6673.1
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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Background
At the time of the filing of the petition, petitioner
resided in San Jose, California.
On his 1999 tax return, petitioner reported zero income and
requested a full refund of all taxes withheld. Petitioner
attached to his tax return two pages of tax-protester boilerplate
which asserted that no section of the Internal Revenue Code made
him liable for income taxes. Petitioner’s Form W-2, Wage and Tax
Statement, reported that petitioner received wages of $163,908.87
from Web TV Networks, Inc., in 1999.
On July 12, 2002, respondent sent petitioner a notice of
deficiency for 1999 to 560 Hobie Lane, San Jose, California
95127. Petitioner resided at this address from July 12, 2002 to
January 30, 2004. Petitioner failed to petition the Court to
review the notice of deficiency.
On April 7, 2003, respondent issued to petitioner a Final
Notice--Notice of Intent to Levy and Notice of Your Right to a
Hearing. On April 14, 2003, petitioner mailed respondent a Form
12153, Request for a CDP Hearing, and attached a page of tax-
protester arguments, which disputed the validity of and requested
that the Appeals officer have at the hearing copies of documents
pertaining to, among other things, the underlying tax liability,
the assessment, the notice and demand for payment, and the
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verification from the Secretary that the requirements of any
applicable law or procedure had been met.
On September 12, 2003, respondent sent petitioner a letter
to request that petitioner complete a Form 433A, Collection
Information Statement for Individuals, to assist in considering
collection alternatives. Petitioner did not complete and return
the Form 433A to respondent.
On October 6, 2003, respondent sent petitioner a letter
outlining respondent’s policy at the time of not granting face-
to-face hearings to individuals raising only frivolous arguments.
A telephonic interview was offered and scheduled for November 5,
2003. On October 22, 2003, petitioner responded to the October
6, 2003, letter by stating: “to summarize your position you are
NOT going to allow me to have a hearing that I can record and you
will NOT permit me to bring up relevant issues that I covered in
my CDP request”. Petitioner refused to participate in a
telephonic interview with respondent.
On December 31, 2003, respondent issued to petitioner a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 (notice of determination) with regard to
1999. The notice of determination stated:
Appeals considered whether the collection action taken
or proposed balances the need for the efficient collection
of the taxes with the legitimate concern of the taxpayer
that any collection action be no more intrusive than
necessary. We find that enforced collection action is not
more intrusive than necessary because the Automated
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Collection System and Appeals attempted to solicit Mr.
Kubon’s cooperation in proposing an alternative to enforced
collection actions. Mr. Kubon has not voluntarily filed
income tax returns for 2000, 2001 or 2002. Mr. Kubon failed
to provide any financial information, and did not propose an
acceptable collection alternative. The Internal Revenue
Service may proceed with enforced collection actions.
On January 30, 2004, petitioner filed with the Court a Petition
for Lien or Levy Action Under Code Section 6320(c) or 6330(d), in
which petitioner disputes the notice of determination because he
was allegedly denied a section 6330 hearing.
On September 1, 2004, respondent filed a Motion for Summary
Judgment and To Impose Penalty Under Section 6673, in which
respondent moves for summary adjudication in respondent’s favor
in this case for all of the legal issues in controversy and
requests that the Court impose a penalty pursuant to section 6673
because petitioner instituted these proceedings solely for the
purpose of delay and advanced only frivolous arguments.
Accompanying the motion for summary judgment, respondent filed a
declaration of Settlement Officer Colleen Cahill (Ms. Cahill),
which states that she reviewed petitioner’s TXMODA transcript for
1999 as part of her verification that all legal and
administrative requirements for levy had been met. Respondent
attached to Ms. Cahill’s declaration the TXMODA transcript that
Ms. Cahill reviewed and the Form 4340, Certificate of
Assessments, Payments, and Other Specified Matters, for
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petitioner’s 1999 tax year. Petitioner filed an objection to the
motion for summary judgment.
On September 7, 2004, petitioner filed with the Court a
motion for remand, in which petitioner requested that we remand
the case to the Appeals Office for a section 6330 hearing to be
held. Respondent filed a response to petitioner’s motion for
remand requesting that the Court deny petitioner’s motion for
remand because the failure to allow an audio recording at the
scheduled section 6330 hearing was harmless error.
On November 3, 2004, we issued an Order granting
petitioner’s motion for remand and remanding the case to
respondent’s Appeals Office for the purpose of affording
petitioner a section 6330 hearing that might be recorded by
either or both parties pursuant to our holding in Keene v.
Commissioner, 121 T.C. 8 (2003). We also ordered the parties to
file status reports with the Court on or before January 18, 2005,
and ordered that respondent’s motion for summary judgment be held
in abeyance. The Order also warned petitioner:
As in Keene v. Commissioner, supra at 19, we admonish
petitioner that if he persists in making frivolous and
groundless tax-protester arguments in any further
proceedings with respect to this case, rather than raising
relevant issues, as specified in section 6330(c)(2), the
Court will consider granting respondent’s motion for summary
judgment. In such an instance, the Court would also be in a
position to impose a penalty under section 6673(a)(1).
On December 30, 2004, respondent filed with the Court a
status report, which stated that an Appeals officer had a face-
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to-face meeting with petitioner on December 3, 2004, and
petitioner continued to raise only frivolous arguments.
Respondent reported that petitioner raised the following
arguments: (1) Whether respondent had issued a valid notice of
deficiency; (2) whether wages are taxable income; (3) whether
respondent is required to show that the requirements of any
applicable law or administrative procedure had been met; (4)
whether respondent is required to provide documentation of
delegation orders from the Secretary; (5) whether the underlying
assessment is valid; and (6) whether petitioner received a valid
notice and demand. The Court also filed petitioner’s status
report that confirmed that a section 6330 hearing was held on
December 3, 2004. In the status report, petitioner argued that
the hearing was not impartial, that petitioner’s arguments are
not frivolous, and that respondent has not addressed “apparent
irregularities in the Irs’ [sic] assessment procedures.”
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). The Court may grant
summary judgment when there is no genuine issue of material fact
and a decision may be rendered as matter of law. Rule 121(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,
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754 (1988). We conclude that there are no genuine issues of
material fact regarding the questions raised in respondent’s
motion for summary judgment, and a decision may be rendered as a
matter of law.
Section 6331(a) provides that, if any person liable to pay
any tax neglects or refuses to do so within 10 days after notice
and demand, the Secretary can collect such tax by levy upon
property belonging to such person. Pursuant to section 6331(d),
the Secretary is required to give the taxpayer notice of his
intent to levy and within that notice must describe the
administrative review available to the taxpayer before proceeding
with the levy. See also sec. 6330(a).
Section 6330(b) describes the administrative review process,
providing that a taxpayer can request a hearing with the Appeals
Office with regard to a levy notice. At the section 6330
hearing, the taxpayer may raise certain matters set forth in
section 6330(c)(2), which include appropriate spousal defenses,
challenges to the appropriateness of collection actions, and
offers of collection alternatives. Further, a taxpayer may
dispute the underlying tax liability for any tax period if the
taxpayer did not receive a notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability. Sec. 6330(c)(2)(B).
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Pursuant to section 6330(d)(1), within 30 days of the
issuance of the notice of determination, the taxpayer may appeal
that determination to this Court if we have jurisdiction over the
underlying tax liability. Van Es v. Commissioner, 115 T.C. 324,
328-329 (2000).
Although section 6330 does not prescribe the standard of
review that the Court is to apply in reviewing the Commissioner’s
administrative determinations, we have stated that, where the
validity of the underlying tax liability is properly at issue,
the Court will review the matter de novo. Where the validity of
the underlying tax liability is not properly at issue, however,
the Court will review the Commissioner’s administrative
determination for abuse of discretion. Sego v. Commissioner, 114
T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181
(2000).
1. Challenges to Underlying Tax Liability
Petitioner presents a challenge to the underlying tax
liability with regard to the validity of the notice of
deficiency. Respondent provided a Form 3877, Certified Mailing
List, which reports that respondent sent petitioner by certified
mail a notice of deficiency for 1999 on July 12, 2002, to 560
Hobie Lane, San Jose, California 95127. The parties stipulated
that petitioner resided at this address from July 12, 2002 to
January 30, 2004. We conclude that petitioner received a notice
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of deficiency at his last known address for 1999. See sec.
6212(a) and (b).
Accordingly, because petitioner received a notice of
deficiency for 1999 and did not petition this Court for a
redetermination, petitioner is precluded from challenging his
underlying tax liability for 1999 in this collection action.
Sec. 6330(c)(2)(B).
2. Wages Are Not Income
Petitioner argues that his wages are not taxable income.
His arguments are indistinguishable from those that have been
uniformly rejected, and no further discussion of them is
warranted. See United States v. Connor, 898 F.2d 942, 943 (3d
Cir. 1990); Coleman v. Commissioner, 791 F.2d 68, 70 (7th Cir.
1986); Sauers v. Commissioner, 771 F.2d 64, 66 (3d Cir. 1985),
affg. T.C. Memo. 1984-367; Connor v. Commissioner, 770 F.2d 17,
20 (2d Cir. 1985); Biermann v. Commissioner, 769 F.2d 707, 708
(11th Cir. 1985); Waters v. Commissioner, 764 F.2d 1389, 1389
(11th Cir. 1985); Perkins v. Commissioner, 746 F.2d 1187, 1188
(6th Cir. 1984), affg. T.C. Memo. 1983-474; Knighten v.
Commissioner, 702 F.2d 59, 60 (5th Cir. 1983); Funk v.
Commissioner, 687 F.2d 264, 264 (8th Cir. 1982), affg. T.C. Memo.
1981-506.
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3. Verification of Assessment Procedure
We conclude that Ms. Cahill obtained verification from the
Secretary that the requirements of all applicable laws and
administrative procedures were met as required by section
6330(c)(1). Ms. Cahill obtained and reviewed a TXMODA transcript
of account for petitioner’s 1999 taxable year before the
scheduled hearing.
Federal tax assessments are formally recorded on a record of
assessment. Sec. 6203. “The summary record, through supporting
records, shall provide identification of the taxpayer, the
character of the liability assessed, the taxable period, if
applicable, and the amount of the assessment.” Sec. 301.6203-1,
Proced. & Admin. Regs.
Section 6330(c)(1) does not require the Commissioner to rely
on a particular document to satisfy the verification requirement.
Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), affd. 329
F.3d 1224 (11th Cir. 2003); Kaeckell v. Commissioner, T.C. Memo.
2002-114. In this regard, the TXMODA transcript of account on
which Ms. Cahill relied contained all of the information
prescribed in section 301.6203-1, Proced. & Admin. Regs. See
Schroeder v. Commissioner, T.C. Memo. 2002-190; Weishan v.
Commissioner, T.C. Memo. 2002-88, affd. 66 Fed. Appx. 113 (7th
Cir. 2003); Lindsey v. Commissioner, T.C. Memo. 2002-87, affd. 56
Fed. Appx. 802 (9th Cir. 2003); Tolotti v. Commissioner, T.C.
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Memo. 2002-86, affd. 70 Fed. Appx. 971 (9th Cir. 2003); Duffield
v. Commissioner, T.C. Memo. 2002-53; Kuglin v. Commissioner, T.C.
Memo. 2002-51.
Petitioner has not alleged any irregularity in the
assessment procedure that would raise a question about the
validity of the assessments or the information contained in the
transcript of account relied on by Ms. Cahill. See Davis v.
Commissioner, 115 T.C. 35, 41 (2000); Mann v. Commissioner, T.C.
Memo. 2002-48. Accordingly, we conclude that there is no
question that the Appeals officer satisfied the verification
requirement of section 6330(c)(1).
4. Delegation Order
Petitioner's allegations regarding the authority of the
individual issuing the notice of intent to levy are meritless.
The Secretary or his delegate (including the Commissioner) may
issue collection notices, and authority to issue notices
regarding liens and to levy upon property has in turn been
delegated to specified collection and compliance personnel.
Secs. 6320(a), 6330(a), 7701(a)(11)(B) and 12(A)(i), 7803(a)(2);
secs. 301.6320-1(a)(1), 301.6330-1(a)(1), Proced. & Admin. Regs.;
Delegation Order No. 191 (Rev. 3, June 11, 2001); Delegation
Order No. 196 (Rev. 4, Oct. 4, 2000); see also Craig v.
Commissioner, 119 T.C. 252, 263 (2002); Everman v. Commissioner,
T.C. Memo. 2003-137.
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5. Receipt of Notice and Demand
Petitioner also argues that respondent failed to send
petitioner a statutory notice and demand for the unpaid tax. As
shown in the record of the case, a notice and demand was sent to
petitioner. The transcripts, i.e., TXMODA and Form 4340, report
that the first notice and demand was sent on December 9, 2002.
The transcripts also report that another notice and demand was
sent on February 24, 2003. There is no question that respondent
sent a notice and demand to petitioner; therefore, petitioner’s
argument must fail.
Petitioner makes no other arguments against the validity of
the notice of determination. In particular, petitioner fails to
make a valid challenge to the appropriateness of respondent’s
intended collection action, raise a spousal defense, or offer
alternative means of collection. We conclude that respondent did
not abuse his discretion in determining that collection should
proceed and that respondent is entitled to judgment as a matter
of law.
6. Section 6673 Penalty
Section 6673(a)(1) authorizes the Court to require a
taxpayer to pay to the United States a penalty in an amount not
to exceed $25,000 whenever it appears to the Court that the
taxpayer’s position in the proceeding is frivolous or groundless.
Sec. 6673(a)(1)(B).
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The parties stipulated that petitioner has been provided
with a copy of an IRS Notice which outlines common frivolous
arguments and has been advised by respondent that the Court may
require a taxpayer to pay a penalty up to $25,000 pursuant to
section 6673 if it appears to the Court that proceedings have
been instituted or maintained by the taxpayer primarily for delay
or that the taxpayer’s position is frivolous or groundless.
In our November 3, 2004, Order, we gave petitioner the
opportunity to present proper issues, as specified in section
6330(c)(2), during his section 6330 hearing. We warned
petitioner, however, that if he persisted in making frivolous and
groundless arguments, with respect to this case, the Court would
be in a position to impose a penalty under section 6673(a)(1).
Petitioner ignored the Court’s warning and simply pursued his
arguments, which the Court has held to be frivolous, groundless,
and meritless in numerous cases. Under the circumstances, we
shall grant respondent’s motion and impose a penalty on
petitioner pursuant to section 6673(a)(1) in the amount of
$10,000.
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We have considered all of petitioner’s contentions,
arguments, and requests that are not discussed herein, and we
conclude that they are without merit or irrelevant.
To reflect the foregoing,
An appropriate order and
decision will be entered.