T.C. Memo. 2005-81
UNITED STATES TAX COURT
WILLIAM B. AND DIANE S. MEYER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6901-03L. Filed April 11, 2005.
William B. and Diane S. Meyer, pro sese.
Ann M. Welhaf, Nancy C. Carver, and Warren P. Simonsen, for
respondent.
MEMORANDUM OPINION
WELLS, Judge: This matter is before the Court on
respondent’s motion for summary judgment, pursuant to Rule 121.
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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Background1
Petitioners are husband and wife. At the time of the filing
of the petition, petitioners resided in Las Vegas, Nevada.
On or about May 12, 1998, petitioners filed a 1997 Form
1040, U.S. Individual Income Tax Return (tax return), reporting
zero gross income for the 1997 tax year. With the tax return,
petitioners submitted a 1997 Form 1099-R, Distributions from
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc., and a 1997 Form W-2, Wage and Tax
Statement. The Form 1099-R reported a gross distribution from
E.I. Dupont Pension Fund of $27,504, and the Form W-2 reported
compensation from E.I. Dupont De Nemours and Co. of $342.
Petitioners also submitted with the tax return a document making
the following assertions: (1) The Internal Revenue Code does not
establish an income tax liability; (2) the tax return is not
1
Stipulations of fact signed by petitioners’ former counsel
on Feb. 13, 2004, were submitted by respondent as an exhibit to
the instant motion for summary judgment. In their response to
the motion, petitioners stated:
Due to the uncompleted process regarding the
stipulations, and since there are inadvertent errors in
the list that has been signed by both counsels,
petitioners respectfully request permission to withdraw
all stipulations attached to respondent’s motion for
summary judgment.
Because the foregoing stipulations of fact have not been filed
with this Court pursuant to Rule 91, we do not consider
petitioners’ request for withdrawal and we do not consider the
stipulations of fact contained in the exhibit.
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being filed voluntarily but out of fear of illegal governmental
prosecution; (3) the “Privacy Act Notice” contained in the Form
1040 booklet informed petitioners that they are not required to
file a return; (4) laws requiring taxpayers to provide
information to the Federal Government violate taxpayers’ Fifth
Amendment rights; (5) courts have held that a Form 1040 with
zeros inserted in the spaces provided qualifies as a tax return;
(6) petitioners had zero income according to the Supreme Court’s
definition of income; (7) petitioners’ 1997 tax return does not
constitute a “frivolous” return for purposes of section 6702; and
(8) no statute allows the IRS to change petitioners’ tax return.
On August 13, 1998, respondent mailed a statutory notice of
deficiency to petitioners. In the notice, respondent determined
a corrected taxable income of $1,088,854, a deficiency of
$408,247, a section 6651(a)(1) failure-to-file addition to tax of
$40,824.70, and a section 6662 accuracy-related penalty of
$81,649. Petitioners received the notice but did not file a
petition with this Court for a redetermination of the deficiency
pursuant to section 6213. Consequently, respondent issued a
Final Notice--Notice of Intent to Levy and Notice of Your Right
to a Hearing, informing petitioners of respondent’s intent to
levy and of petitioners’ right to a hearing before respondent’s
Appeals Office pursuant to section 6330. In response,
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petitioners timely filed a Form 12153, Request for a Collection
Due Process Hearing.
On March 19, 2003, petitioners attended a section 6330
hearing with Appeals Officer Michael A. Freitag, who had no prior
involvement with respect to petitioners’ unpaid tax for 1997.
Respondent had denied petitioners’ request to record the hearing.
Appeals Officer Freitag provided petitioners with a Form 2866,
Certificate of Official Record, and a Form 4340, Certificate of
Assessments, Payments, and Other Specified Matters. The Form
4340 certified a deficiency of $408,247, a section 6651(a)(1)
failure-to-file addition to tax of $40,824.70, and a section 6662
accuracy-related penalty of $81,649. The Form 4340 certified
that respondent assessed the foregoing amounts and issued a
“statutory notice of balance due” on February 7, 2000. The Form
4340 further certified that respondent issued a “notice of
balance due” on May 21, 2001 and a “statutory notice of intent to
levy” on June 25, 2001. Respondent’s Supervisory Investigative
Analyst Lee Hansen signed the Form 4340 on February 7, 2003.
Appeals Officer Freitag also provided petitioners with the
following documents:
(1) A memorandum issued by respondent on May 2, 2002,
stating that respondent will not permit audio and stenographic
recordings of hearings before respondent’s Appeals Office;
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(2) a copy of Pierson v. Commissioner, 115 T.C. 576 (2000);
(3) respondent’s publication entitled “Why I Have to Pay
Taxes”;
(4) respondent’s publication entitled “The Truth About
Frivolous Tax Arguments”;
(5) a list of Internal Revenue Code sections; and
(6) a copy of a news release from the Justice Department
asking the court to stop promoters of abusive tax schemes.
Petitioners submitted a joint affidavit that contained a record
of their contacts with respondent and made various contentions.2
At the hearing, petitioners were provided an opportunity to but
did not submit a viable collection alternative, such as an
installment agreement or an offer in compromise.
On April 8, 2003, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330, determining that the proposed levy action was
appropriate. Before issuing the notice of determination, Appeals
Officer Freitag reviewed respondent’s records for petitioners’
1997 tax year, including the Form 4340.
Petitioners timely filed in this Court a petition for lien
or levy action, contending, inter alia, that (1) the Appeals
Office did not consider petitioners’ allegations of
2
The foregoing contentions include the following: “To the
best of my knowledge, I am not, nor have I ever been, statutorily
liable or made liable for any tax pursuant to 26 USC.”
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irregularities in the assessment procedure, (2) the Form 4340
relied upon by the Appeals Office is contradicted by respondent’s
records and was not prepared in accordance with Internal Revenue
Manual instructions, (3) respondent did not issue a notice and
demand in compliance with section 6303, and (4) respondent
improperly denied petitioners’ request to record the section 6330
hearing. Respondent filed a motion for summary judgment on April
1, 2004.
Discussion
The purpose of summary judgment is to expedite litigation
and avoid the expense of unnecessary trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). A motion for summary
judgment may be granted where there is no dispute as to a
material fact and a decision may be rendered as a matter of law.
See Rule 121(a) and (b).3 The moving party bears the burden of
proving that there is no genuine issue of material fact, and
factual inferences are viewed in a light most favorable to the
nonmoving party. Craig v. Commissioner, 119 T.C. 252, 260
(2002); Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985);
3
Rule 121(b) provides:
A decision shall thereafter be rendered 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. * * *
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Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). The party
opposing summary judgment must set forth specific facts which
show that a question of genuine material fact exists and may not
rely merely on allegations or denials in the pleadings. See
Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325
(1988); Casanova Co. v. Commissioner, 87 T.C. 214, 217 (1986).
Section 6330 provides that no levy may be made on any
property or right to property of a person unless the Secretary
first notifies the person in writing of the right to a hearing
before the Appeals Office.4 Section 6330(c)(1) provides that the
Appeals officer must verify at the hearing that applicable laws
and administrative procedures have been followed.5 The Appeals
4
SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.
(a) Requirement of Notice Before Levy.--
(1) In general.--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 their
right to a hearing under this section before such levy
is made. * * *
* * * * * * *
(b) Right to Fair Hearing.--
(1) In general.--If the person requests a hearing
* * *, such hearing shall be held by the Internal
Revenue Service Office of Appeals.
5
Sec. 6330(c)(1) provides:
(1) Requirement of investigation.--The appeals
officer shall at the hearing obtain verification from
(continued...)
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Officer may rely on a Form 4340 for purposes of complying with
section 6330(c)(1). Nestor v. Commissioner, 118 T.C. 162, 166
(2002). At the hearing, the person may raise any relevant issue
relating to the unpaid tax or the proposed levy, including
appropriate spousal defenses, challenges to the appropriateness
of collection actions, and collection alternatives. Sec.
6330(c)(2)(A). However, the person may challenge the existence
or amount of the underlying tax liability only if the person did
not receive any statutory notice of deficiency for the tax
liability or did not otherwise have an opportunity to dispute the
tax liability. Sec. 6330(c)(2)(B);6 Sego v. Commissioner, 114
T.C. 604, 610 (2000).
Petitioners received a statutory notice of deficiency.
Consequently, section 6330(c)(2)(B) precluded petitioners from
challenging the underlying tax liability at the section 6330
hearing. Accordingly, we review the administrative determination
5
(...continued)
the Secretary that the requirements of any applicable
law or administrative procedure have been met.
6
Sec. 6330(c)(2)(B) provides:
(B) Underlying liability.--The person may also raise at
the hearing challenges to the existence or amount of the
underlying tax liability for any tax period if the person
did not receive any statutory notice of deficiency for such
tax liability or did not otherwise have an opportunity to
dispute such tax liability.
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for abuse of discretion. See Goza v. Commissioner, 114 T.C. 176,
181-182 (2000); Sego v. Commissioner, 114 T.C. 604, 610 (2000).
The record establishes that the Appeals Office properly
verified that all applicable laws and administrative procedures
were followed. Appeals Officer Freitag had no prior involvement
with respect to the unpaid tax liabilities before the section
6330 hearing. The Form 4340 shows that proper assessments were
made and that requisite notices had been sent to petitioners.
Petitioners raised no viable claims of procedural irregularities,7
and respondent properly relied on the Form 4340 during the
administrative process. See Nestor v. Commissioner, supra.
Petitioners were given the opportunity to but did not discuss
collection alternatives at the sec. 6330 hearing.
Petitioners’ contentions are frivolous and groundless and
will not be refuted with copious citation and extended
discussion.8 See Williams v. Commissioner, 114 T.C. 136, 138-139
7
Petitioners’ request to record the sec. 6330 hearing is
discussed below.
8
Petitioners’ contentions are substantially similar to
contentions raised by the taxpayer in Hiland v. Commissioner,
T.C. Memo. 2004-225 (“Taxpayer’s complaints with respect to the
administrative proceedings included the following: No legitimate
hearing under sec. 6330 ever took place; taxpayer was denied the
opportunity to raise issues he deemed “relevant” (e.g., the
“existence” of the underlying tax liability); and cited
documentation had not been produced and/or addressed (e.g.,
record of the assessments, statutory notice and demand for
payment, any “valid notice of deficiency”, and verification from
the Secretary that all applicable requirements were met))”. In
(continued...)
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(2000) (citing Crain v. Commissioner, 737 F.2d 1417, 1417 (5th
Cir. 1984)). Consequently, although respondent improperly
denied petitioners’ request to record the section 6330 hearing,
see sec. 7521(a)(1), we conclude that (1) it is unnecessary and
would not be productive to remand the instant case to the Appeals
Office for another section 6330 hearing in order to allow
petitioners to make an audio recording and (2) it is unnecessary
and inappropriate under the circumstances of the instant case to
reject respondent’s determination, see Keene v. Commissioner, 121
T.C. 8, 19-20 (2003); Lunsford v. Commissioner, 117 T.C. 183, 189
(2001); Kemper v. Commissioner, T.C. Memo 2003-195.
Section 6673(a)(1) authorizes this Court to require a
taxpayer to pay a penalty not in excess of $25,000 whenever the
taxpayer’s position is frivolous or groundless or the taxpayer
has instituted or pursued the proceeding primarily for delay.
SEC. 6673. SANCTIONS AND COSTS AWARDED BY COURTS.
(a) Tax Court Proceedings.--
(1) Procedures instituted primarily for
delay, etc.--Whenever it appears to the Tax Court
that–-
(A) proceedings before it have been
instituted or maintained by the taxpayer
primarily for delay,
8
(...continued)
Hiland, we held that the contentions raised by the taxpayer were
frivolous and/or groundless, and we imposed a penalty pursuant to
sec. 6673.
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(B) the taxpayer’s position in such
proceeding is frivolous or groundless, or
(C) the taxpayer unreasonably failed to
pursue available administrative remedies,
the Tax Court, in its decision, may require the
taxpayer to pay to the United States a penalty not in
excess of $25,000.
The record demonstrates that petitioners’ contentions are
frivolous and groundless, and we are convinced that petitioners
instituted and maintained the instant proceeding primarily, if
not exclusively, for purposes of delay.9 Petitioners were
provided with a copy of Pierson v. Commissioner, 115 T.C. at 581,
in which we stated:
we regard this case as fair warning to those taxpayers who,
in the future, institute or maintain a lien or levy action
primarily for delay or whose position in such a proceeding
is frivolous or groundless. See White v. Commissioner, 72
T.C. 1126, 1135-1136 (1979) (providing fair warning to
taxpayers in deficiency actions who bring frivolous case
merely for purposes of delay).
Consequently, pursuant to section 6673(a)(1), we shall require
petitioners to pay to the United States a penalty of $15,000.
To reflect the foregoing,
An appropriate order and
decision for respondent will
be entered.
9
Petitioners have made the same frivolous and groundless
contentions in a separate proceeding before this Court, docket
No. 13514-03L, with respect to their 1996 tax year.