Howard v. Comm'r

T.C. Memo. 2005-100

UNITED STATES TAX COURT

RANDAL W. HOWARD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8719-03L. Filed May 9, 2005.

P filed a petition for judicial review pursuant to
sec. 6330, I.R.C., in response to a determination by R
that levy action was appropriate.

Held: Because P has advanced groundless
complaints in dispute of the notice of intent to levy,
R’s determination to proceed with collection action is
sustained.

Held, further, because the underlying tax
liability is not at issue and R has shown good cause,
suspension on levy action is lifted pursuant to sec.
6330(e)(2), I.R.C.

Held, further, a penalty under sec. 6673, I.R.C.,
is due from P and is awarded to the United States in
the amount of $10,000.

Randal W. Howard, pro se.

Cameron M. McKesson and Robin M. Ferguson, for respondent.
 - 2 -

MEMORANDUM OPINION

WHERRY, Judge: Petitioner invoked the Court's jurisdiction

under section 6330 in response to a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330

regarding his unpaid Federal income taxes for 1983 and 1993 to

1995.1 Respondent's Office of Appeals (Appeals Office) had

determined that it was appropriate to collect petitioner's unpaid

taxes pursuant to a proposed levy. After the case was docketed,

respondent on September 20, 2004, filed a motion for summary

judgment, and petitioner filed a declaration in opposition to

respondent's motion on October 18, 2004. The Court held a

hearing on the motion for summary judgment on October 18, 2004,

and took the matter under advisement. Thereafter, on March 10,

2005, respondent filed a motion to permit levy pursuant to

section 6330(e)(2).

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,

1
Unless otherwise indicated, section references are to the
Internal Revenue Code. Rule references are to the Tax Court
Rules of Practice and Procedure.
 - 3 -

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); 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, 820-821 (1985); Jacklin v.

Commissioner, 79 T.C. 340, 344 (1982).

Based upon our review of the record, we conclude that there

is no genuine issue as to any material fact and that respondent

is entitled to judgment as a matter of law. As discussed in

greater detail below, we shall grant respondent's motion for

summary judgment, enter a decision sustaining the notice of

determination upon which this case is based, and impose a penalty

on petitioner pursuant to section 6673. In addition, respondent

has shown good cause for lifting the suspension of the proposed

levy, and we shall grant respondent's motion to permit levy.
 - 4 -

Background2

Petitioner has filed several petitions for redetermination

with the Court in a long-running protest against the Federal

income tax.

Taxable Years 1983 and 1984

On January 2, 1990, the Court dismissed petitioner's case at

docket No. 27411-88 for lack of prosecution and entered a

decision sustaining deficiencies and additions to tax (including

additions to tax under section 6651(a)(1) for failure to file a

tax return) that respondent determined against petitioner for the

taxable years 1983 and 1984.

Taxable Years 1987 and 1988

On February 13, 1998, the Court entered a decision at docket

No. 20474-90 sustaining deficiencies and additions to tax that

respondent determined against petitioner for the taxable years

1987 and 1988. The Court concluded that petitioner had raised

nothing but "classic protester arguments". Howard v.

Commissioner, T.C. Memo. 1998-57.3

2
The record reflects and/or the parties do not dispute the
following background facts.
3
With respect to the taxable years 1989, 1990, and 1991, a
case filed by petitioner with this Court and assigned docket No.
18627-97 was dismissed because it was not timely filed. Howard
v. Commissioner, T.C. Memo. 1998-300.
 - 5 -

Taxable Years 1993, 1994, and 1995

On October 24, 2000, the Court entered a decision at docket

No. 18627-97 sustaining deficiencies and additions to tax

(including additions to tax under section 6651(a)(1) for failure

to file a tax return) that respondent determined against

petitioner for the taxable years 1993, 1994, and 1995. The

Court's decision included an increased deficiency for 1993.4 The

Court also imposed a penalty upon petitioner pursuant to section

6673(a) after concluding that petitioner "knowingly and

repeatedly advocated frivolous and groundless positions." Howard

v. Commissioner, T.C. Memo. 2000-222.

Taxable Year 1996

On April 5, 2002, the Court entered a decision at docket No.

6546-00 sustaining the deficiency and additions to tax that

respondent determined against petitioner for the taxable year

1996. Citing the Court's two earlier Memorandum Opinions

(referred to above) and characterizing petitioner’s arguments as

“frivolous and wholly without merit”, the Court imposed a penalty

4
In Howard v. Commissioner, T.C. Memo. 2000-222, we held
that a tax return that petitioner had submitted to respondent for
1993 was invalid because it was not properly executed. Although
respondent conceded that he improperly entered an assessment of
$2,696 against petitioner based upon such return, respondent
proved at trial that petitioner was liable for a total deficiency
of $5,832, including the $2,696 amount, and a total sec.
6651(a)(1) addition to tax of $1,458.
 - 6 -

upon petitioner pursuant to section 6673(a). Howard v.

Commissioner, T.C. Memo. 2002-85.

Petitioner did not file an appeal in respect of any of the

Court's decisions cited above. Each of those decisions is now

final. Sec. 7481(a).

Petitioner's Bankruptcy Proceedings

On June 14, 1991, petitioner filed a bankruptcy petition

under chapter 13 of the Bankruptcy Code with the U.S. Bankruptcy

Court for the District of Arizona. On July 24, 1996, the

bankruptcy court issued an order dismissing petitioner's case.

This order was affirmed on appeal to the U.S. District Court for

the District of Arizona on September 9, 1997.

On December 6, 1996, petitioner filed a bankruptcy petition

under chapter 7 of the Bankruptcy Code with the U.S. Bankruptcy

Court for the District of Arizona. On April 7, 1997, the

bankruptcy court entered an order of discharge in petitioner's

case.

On April 16, 1999, petitioner filed a bankruptcy petition

under chapter 13 of the Bankruptcy Code with the U.S. Bankruptcy

Court for the District of Arizona. On April 20, 1999, the

bankruptcy court entered an order granting the Commissioner's

motion for relief from the automatic stay, see 11 U.S.C. sec.

362(a) (2000), regarding petitioner's tax liabilities for 1993,
 - 7 -

1994, and 1995. On April 27, 1999, the bankruptcy court

dismissed petitioner's case.

Assessments/Collection Actions for 1983 and 1993 to 1995

On May 10, 1990, respondent entered assessments against

petitioner for the income tax and additions to tax for the

taxable year 1983 as set forth in the Court's decision at docket

No. 27411-88, as well as statutory interest. On May 10, 1990,

and June 11, 1990, respondent issued to petitioner notices of

balance due for the year 1983.5 Petitioner failed to remit to

respondent the amount due.

On April 30, 2001, respondent entered assessments against

petitioner for the income taxes and additions to tax for the

years 1993, 1994, and 1995 as set forth in the Court's decision

at docket No. 18627-97, as well as statutory interest. On April

30, 2001, respondent issued to petitioner notices of balance due

for the years 1993, 1994, and 1995. Petitioner failed to remit

to respondent the amounts due.

On December 17, 2001, respondent issued to petitioner a

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

Hearing requesting that petitioner pay his outstanding income

taxes for the years 1983 and 1993 to 1995. On January 9, 2002,

5
The record reflects that respondent subsequently abated
all of the originally assessed additions to tax for 1983. The
record also shows that in 1991 respondent collected a small
portion of the amount due from petitioner for 1983 by levy.
 - 8 -

petitioner submitted to respondent a Form 12153, Request for

Collection Due Process Hearing, challenging the validity of the

assessments for the years in issue. With regard to the taxable

year 1983, petitioner asserted that his liability for that year

was either paid in full or discharged in bankruptcy.

On May 1, 2003, petitioner appeared at respondent's Appeals

Office for an administrative hearing under section 6330. The

administrative hearing was aborted when petitioner was informed

that he would not be permitted to make an audio recording of the

hearing.

On May 6, 2003, the Appeals Office issued to petitioner a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 which stated that the Appeals Office

determined that the proposed levy action was appropriate. The

notice of determination stated that the Appeals Office rejected

petitioner's claim that his tax liability for 1983 was discharged

in bankruptcy on the ground that such taxes were not subject to

discharge because petitioner failed to file a valid tax return

for 1983. The notice of determination further stated that

petitioner was provided with transcripts of account for the years

1983 and 1993 to 1995, that petitioner's remaining arguments were

frivolous, and that petitioner was not eligible to offer an

alternative collection method because he was not current in

filing his tax returns for later years.
 - 9 -

Petitioner filed with the Court on June 9, 2003, a timely

petition for lien and levy action.6 In the petition, petitioner

alleged that the notice of determination should be overturned on

the grounds that (1) the Appeals Office failed to verify that all

applicable laws and administrative procedures were satisfied, and

(2) petitioner's tax liabilities for the years in issue were

discharged in bankruptcy.

After filing an answer to the petition, respondent filed a

motion for summary judgment. Respondent asserted that the

Appeals Office properly verified that all applicable laws and

administrative procedures were met with regard to the assessments

and proposed collection actions in dispute. In support of this

assertion, respondent attached to his motion Forms 4340,

Certificate of Assessments, Payments, and Other Specified

Matters, for the taxable years 1983 and 1993 to 1995. Respondent

also asserted that petitioner's tax liabilities were not

discharged by the bankruptcy court.

This case was called for Hearing at the Court’s October 18,

2004, trial session in Phoenix, Arizona. At the start of the

hearing, petitioner filed a declaration in opposition to

respondent's motion, which stated in pertinent part that

petitioner was not permitted to make an audio recording of his

6
At the time the petition was filed, petitioner resided in
Tucson, Arizona.
 - 10 -

administrative hearing (the recording issue). In response to

petitioner's Declaration, counsel for respondent asserted that

petitioner failed to inform the Appeals Office in advance of the

administrative hearing that he intended to make an audio

recording7 and that petitioner failed to raise the recording

issue in his petition.

Petitioner countered that the Court's holding in Keene v.

Commissioner, 121 T.C. 8, 19-20 (2003), controls with regard to

the recording issue and the matter should be remanded to the

Appeals Office for further proceedings. Petitioner also asserted

that the Court should reject respondent's argument that

petitioner's tax liabilities were not discharged by the

bankruptcy court on the ground that respondent failed to prove

that petitioner did not file tax returns for the years in issue.

At the close of the hearing, the Court took the motion under

advisement and indicated to the parties that if the motion for

summary judgment were not granted the case would be rescheduled

for a later trial.

Following the hearing, on March 10, 2005, respondent filed

with the Court a motion to permit levy pursuant to section

6330(e)(2).

7
See sec. 7521(a), which provides that an officer or
employee of the Internal Revenue Service “shall, upon advance
request of such taxpayer, allow the taxpayer to make an audio
recording of * * * [an in-person] interview at the taxpayer’s own
expense and with the taxpayer’s own equipment.”
 - 11 -

Discussion

I. Collection Actions

A. Lien and Levy

Sections 6320 (pertaining to Federal tax liens) and 6330

(pertaining to levies) establish procedures for administrative

and judicial review of certain collection actions. As an initial

matter, the Commissioner is required to provide a taxpayer with

written notice that a Federal tax lien has been filed and/or that

the Commissioner intends to levy; the Commissioner is also

required to explain to the taxpayer that such collection actions

may be challenged on various grounds at an administrative

hearing. See Davis v. Commissioner, 115 T.C. 35, 37 (2000); Goza

v. Commissioner, 114 T.C. 176, 179 (2000).

Section 6330(c)(1) imposes on the Appeals Office an

obligation to obtain verification that “the requirements of any

applicable law or administrative procedure have been met.”

Section 6330(c)(2) prescribes the matters that a person may raise

at an administrative hearing. Section 6330(c)(2)(A) provides

that a person may raise issues such as spousal defenses, the

appropriateness of the Commissioner's intended collection action,

and possible alternative means of collection. See Sego v.

Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,

supra. In addition, section 6330(c)(2)(B) establishes the

circumstances under which a person may challenge the existence or
 - 12 -

amount of his or her underlying tax liability. Section

6330(c)(2)(B) provides:

Issues at hearing.--

* * * * * * *

(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.

When the Appeals Office issues a Notice Of Determination

Concerning Collection Action(s) to a taxpayer following an

administrative hearing, section 6330(d)(1) provides that the

taxpayer has 30 days following the issuance of such notice to

file a petition for review with the Tax Court or, if the Tax

Court does not have jurisdiction over the underlying tax

liability, with a Federal District Court. See Offiler v.

Commissioner, 114 T.C. 492, 497-498 (2000).

Petitioner received notices of deficiency for the taxable

years 1983 and 1993 to 1995 and filed petitions for

redetermination with the Court challenging those notices. It

follows that petitioner is barred under section 6330(c)(2)(B)

from challenging the existence or amount of his underlying tax
 - 13 -

liabilities for 1983 and 1993 to 1995 in this proceeding.8 See

Goza v. Commissioner, supra at 180-181.

Petitioner's conduct in his earlier deficiency cases at

docket Nos. 27411-88, 20474-90, 18627-97, and 6546-00, coupled

with his actions in this proceeding, clearly demonstrates that

petitioner exploited the collection review procedures primarily

for the purpose of delay. As discussed below, petitioner’s

arguments have absolutely no merit.9

Petitioner contends that the Appeals Office failed to verify

that all applicable laws and administrative procedures were met.

However, the Forms 4340 attached to respondent’s Motion for

Summary Judgment show that respondent (1) properly assessed the

tax liabilities that respondent intends to collect from

petitioner, and (2) properly notified petitioner of those

assessments by way of notices of balance due. See, e.g., Hughes

v. United States, 953 F.2d 531, 535-536 (9th Cir. 1992).

Numerous cases establish that no particular form of

verification of an assessment is required, that no particular

8
The Court further notes that res judicata would appear to
provide an alternative basis for our holding on this point.
9
Under the circumstances, petitioner has given us no
reason to believe that remanding this matter to respondent's
Appeals Office would be productive or otherwise advance the
policies underlying sec. 6330. Consistent with our reasoning in
Keene v. Commissioner, 121 T.C. 8, 19-20 (2003), and in Kemper v.
Commissioner, T.C. Memo. 2003-195, we conclude that a remand is
unwarranted.
 - 14 -

document need be provided to a taxpayer at an administrative

hearing conducted under section 6330, and that a Form 4340 (such

as those included in this record) and other transcripts of

account satisfy the verification requirements of section

6330(c)(1). See Roberts v. Commissioner, 118 T.C. 365, 371 n.10

(2002), affd. 329 F.3d 1224 (11th Cir. 2003); Nestor v.

Commissioner, 118 T.C. 162, 166 (2002); Lunsford v. Commissioner,

117 T.C. 183 (2001).

Petitioner also asserted that his tax liabilities for 1983

and 1993 to 1995 were discharged by the bankruptcy court. The

Court has jurisdiction in a collection review proceeding to

determine whether the unpaid tax liabilities in dispute were

discharged in a bankruptcy proceeding. Washington v.

Commissioner, 120 T.C. 114, 120-121 (2003).

The record reflects that, on December 6, 1996, petitioner

voluntarily filed a bankruptcy petition under chapter 7 of the

Bankruptcy Code. Although the bankruptcy court issued an order

of discharge in that case, petitioner’s unpaid tax liabilities

for 1983 and 1993 to 1995 were not discharged because petitioner

failed to file tax returns for those years. See 11 U.S.C. sec.

523(a)(1)(B)(i) (2000); Swanson v. Commissioner, 121 T.C. 111,

124-125 (2003).

Petitioner's assertion that respondent's motion should be

denied on the ground respondent failed to demonstrate that
 - 15 -

petitioner did not file tax returns for the years in issue is

wholly misguided. In particular, at docket No. 27411-88, the

Court entered a decision sustaining respondent's determination

that petitioner was liable for the addition to tax under section

6651(a)(1) (failure to file a tax return) for 1983. In

conjunction with the Court’s decision at docket No. 27411-88, we

observe that petitioner's Form 4340 for 1983 reflects that the

notice of deficiency that respondent issued to petitioner for

that year was predicated upon respondent’s preparation of a

substitute for return. We have held that a substitute for return

does not constitute a return of the taxpayer for purposes of 11

U.S.C. sec. 523(a)(1)(B). See Swanson v. Commissioner, supra at

123-124.

In addition, at docket No. 18627-97, the Court entered a

decision sustaining respondent's determination that petitioner

was liable for additions to tax under section 6651(a)(1) (failure

to file a tax return) for the taxable years 1993, 1994, and 1995.

Specifically, we held that (1) the tax return that petitioner

submitted to respondent for 1993 was invalid, and (2) petitioner

failed to submit to respondent a tax return for 1994 or 1995.

Howard v. Commissioner, T.C. Memo. 2000-222. Our decisions at

docket Nos. 27411-88 and 18627-97 are final and may not be

challenged in this proceeding. Sec. 7481(a).
 - 16 -

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

Forms 4340. Moreover, petitioner has 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).

The record reflects that the Appeals Office properly

verified that all applicable laws and administrative procedures

governing the assessment and collection of petitioner’s unpaid

tax liabilities were met. Accordingly, we hold that the Appeals

Office did not abuse its discretion in determining to proceed

with collection against petitioner.

B. Levy Upon Appeal

We turn now to respondent’s Motion to Permit Levy. As

recently discussed in Burke v. Commissioner, 124 T.C. __, __

(2005) (slip op. at 11-13), section 6330(e)(1) sets forth the

general rule that respondent may not proceed with collection by

levy if an administrative hearing is timely requested under

section 6330(a)(3)(B) and while any appeals from such

administrative hearing are pending. Section 6330(e)(2) provides

an exception to the suspension of the levy imposed under

subsection (e)(1) if the person’s underlying tax liability is not
 - 17 -

at issue in the appeal and the Court determines that good cause

is shown not to suspend the levy.

We have already concluded that petitioner is barred under

section 6330(c)(2)(B) from challenging the existence or amount of

his underlying tax liabilities for 1983 and 1993 to 1995 in this

proceeding. See Goza v. Commissioner, 114 T.C. at 180. In

addition, respondent has shown good cause why the levy should no

longer be suspended. In short, as was the case in Burke v.

Commissioner, supra, petitioner has used the collection review

procedure primarily as a device to needlessly delay collection.

Petitioner is no stranger to the Court. As outlined above, he

abused the Court’s procedures in the deficiency cases at docket

Nos. 20474-90, 18627-97, and 6546-00. Petitioner’s arguments in

this case lacked any merit. Considering all the circumstances,

we see no justification for further delaying the collection

process. Accordingly, we shall grant respondent’s Motion to

Permit Levy.

II. Section 6673 Penalty

Section 6673(a)(1) 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. We warned taxpayers in Pierson v. Commissioner, 115
 - 18 -

T.C. 576, 581 (2000), that abusing the procedural protections

afforded by sections 6320 and 6330 by pursuing frivolous lien or

levy actions for purposes of delaying the tax payment process

would result in sanctions under section 6673(a). As previously

mentioned, the Court has imposed penalties on petitioner under

section 6673(a) in the prior deficiency proceedings.

As discussed above, petitioner prosecuted this case

primarily to delay collection of his unpaid tax liabilities.

Petitioner’s arguments were devoid of any merit and caused a

needless waste of judicial resources. Taxpayers who promptly pay

their taxes should not have to bear the cost of Government and

tax collection associated with citizens who are unwilling to obey

the law or shoulder their assigned share of the Government’s

cost. This is the third case for this petitioner to result in a

section 6673 penalty, the most recent of which, at docket No.

6546-00, imposed a penalty of $7,500. It is appropriate that the

amount of such penalty increase where petitioner continues to

abuse the judicial process. Accordingly, the Court concludes a

section 6673 penalty of $10,000 shall be awarded to the United

States in this case.

To reflect the foregoing,

An order and decision will

be entered granting respondent's

motion to permit levy and motion
 - 19 -

for summary judgment, and a decision

will be entered for respondent which

includes the imposition of a penalty

under section 6673(a).