T.C. Memo. 2005-268
UNITED STATES TAX COURT
WESLEY SHERWOOD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21913-04L. Filed November 21, 2005.
Wesley Sherwood, pro se.
S. Mark Barnes, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COLVIN, Judge: On October 14, 2004, respondent sent
petitioner a Notice of Determination Concerning Collection
Action(s) Under Sections 6320 and/or 6330,1 in which respondent
determined that it was appropriate to file a notice of lien with
1
Unless otherwise stated, section references are to the
Internal Revenue Code.
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respect to petitioner’s unpaid income taxes, penalties, and
interest for 1997-2002.
The issues for decision are:
1. Whether we have jurisdiction to review respondent’s
determination to proceed with collection of penalties under
section 6682 for 2002 and under section 6702 for 1997-2001. We
hold that we do not.
2. Whether petitioner may dispute his income tax liability
for 1998 in this proceeding. We hold that he may not.
3. Whether petitioner is liable for tax in the amount
respondent contends for 2001 and 2002. We hold that he is.
4. Whether respondent’s determination that it was
appropriate to file a notice of lien with respect to petitioner’s
income taxes, additions to tax, and penalties (other than those
under sections 6682 and 6702) for 1998, 2001, and 2002 was an
abuse of discretion. We hold that it was not.
FINDINGS OF FACT
A. Petitioner
Petitioner resided in Salt Lake City, Utah, when the
petition was filed. He was a driver for Viking Freight, Inc.
(Viking) in 1998, for which he received wages of $50,361.82 in
that year.
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B. Petitioner’s 1998 Return
On April 14, 1999, petitioner signed and filed a Form 1040,
U.S. Individual Income Tax Return, for 1998, in which he reported
only zeros. Petitioner attached to his 1998 return a Form W-2,
Wage and Tax Statement, from Viking which stated that he had been
paid $50,361.82 in wages and had no Federal income tax withheld,
$3,122.43 of Social Security tax withheld, and $730.25 Medicare
tax withheld. Petitioner also attached several pages of
arguments, including: (1) No section of the Internal Revenue
Code establishes an income tax liability, or requires that he pay
taxes on the basis of a return; (2) he did not file his return
voluntarily, he filed it to avoid prosecution; (3) the Privacy
Act provides that he is not required to file a return; (4) a Form
1040 with zeros is a valid return; (5) he had no income under the
definition of income in Merchant’s Loan & Trust Co. v. Smietanka,
255 U.S. 509 (1921); (6) income must be defined as in the
Corporation Excise Tax Act of 1909; (7) he would commit perjury
if he said that he had any income in 1998; (8) no IRS employee
has been delegated authority to impose a frivolous return
penalty; (9) the frivolous return penalty may not be applied to
him because no legislative regulation implements it; (10)
respondent has not assessed income taxes for 1998 as provided in
Chapter 63 of the Internal Revenue Code; (11) respondent lacks
authority to change his return; and (12) petitioner is entitled
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to an office or field audit as required by the Administrative
Procedure Act and Treasury regulations.
C. Respondent’s Examination of Petitioner’s 1997 and 1998
Returns
On June 1, 1999, respondent sent petitioner a 30-day letter
and an examination report in which respondent proposed changes
for petitioner’s 1997 return. In the letter, respondent stated
that the U.S. Supreme Court has consistently held that Federal
income tax laws are constitutional and that persons who do not
timely file correct tax returns are subject to penalties in
addition to their tax liabilities. On March 24, 2000, respondent
sent petitioner a 30-day letter and an examination report in
which respondent proposed changes for petitioner’s 1998 return
and reiterated that Federal income tax laws are constitutional
and that penalties may apply.
On April 4, 2000, petitioner signed a power of attorney
giving John B. Kotmair, Jr. (Kotmair), the fiduciary of the Save-
A-Patriot Fellowship, the authority to represent him before
respondent. On April 19, 2000, Kotmair wrote to the Director of
the Internal Revenue Service Center at Ogden, Utah (Ogden Service
Center), to protest respondent’s proposed adjustments for 1997
and 1998. In the letter, Kotmair said that petitioner denies
that he is required to file a tax return because he did not have
foreign earned income and is not a nonresident alien, officer of
a foreign corporation, or involved with a foreign tax exempt
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organization. Kotmair asked respondent to identify the statutory
authority to assess Federal income tax for 1997 and 1998.
D. Notice of Deficiency
On May 19, 2000, respondent issued a notice of deficiency
for 1998 based on the Form W-2 attached to petitioner’s 1998
return. In a letter to the Director of the Ogden Service Center
dated June 14, 2000, Kotmair said that the notice of deficiency
was invalid because it did not have a declaration under penalties
of perjury or meet the requirements of sections 6211 and 6212.
Kotmair attached to his letter the notice of deficiency and
copies of affidavits that he had drafted to be signed by the
Director of the Ogden Service Center and Commissioner of the
Internal Revenue Service and notarized.
Petitioner wrote to respondent on June 16, 2000, and
attached a copy of the notice of deficiency for 1998. In a
letter to the Director of the Ogden Service Center dated June 28,
2000, Kotmair asked the Appeals Office to consider petitioner’s
tax liability for 1997. The letter included seven pages of tax
protestor rhetoric. On July 3, 2000, respondent assessed
frivolous return penalties in the amount of $500 under section
6702 for 1997 and 1998.
E. Respondent’s Levy
On December 18, 2000, respondent sent petitioner a notice of
intent to levy with respect to his 1998 tax year. The notice
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stated that he owed $12,251, including $188.32 of interest, and
asked him to pay that amount immediately. On January 10, 2001,
Kotmair responded to the notice of intent to levy by sending 5
pages of frivolous arguments to the Director of the Ogden Service
Center.
F. Petitioner’s Tax Returns for 1999, 2000, and 2001
On March 5, 2002, petitioner filed returns on which he
reported tax liabilities of $9,050 for 1999 and $11,211 for 2000.
Petitioner had no Federal income tax withheld and paid no Federal
income tax for 1999 or 2000.
Petitioner filed a 2001 return before April 8, 2002. In it,
he reported that he owed $9,787 in tax, had no Federal income tax
withheld, and paid no Federal income tax for 2001. Respondent
assessed petitioner’s Federal income tax for 2001 in the amount
of $10,1862 on April 8, 2002. On May 13, 2002, respondent issued
a notice and demand for payment of petitioner’s Federal income
tax for 2001.
G. Petitioner’s 2002 Tax Year
On June 9, 2003, respondent assessed against petitioner a
penalty in the amount of $500 under section 6682 for submitting
2
Respondent assessed the tax that petitioner reported and
did not pay and an additional amount not explained in the record.
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false information with respect to petitioner’s Federal income tax
withholding for 2002.3
Petitioner filed a Federal income tax return for 2002 on
August 15, 2003. He reported that he: (1) Had an unpaid Federal
income tax liability of $9,313 for 2002; (2) had no Federal
income tax withheld for 2002; and (3) paid no Federal income tax
for 2002.
On September 8, 2003, respondent assessed frivolous return
penalties in the amounts of $500 under section 6702 for each of
petitioner’s tax years 1999-2001. On September 22, 2003,
respondent assessed petitioner’s Federal income tax for 2002 in
the amount of $10,109.97.4 On October 13, 2003, respondent sent
a notice and demand for payment of petitioner’s Federal income
tax for 2002.
H. Notice of Tax Lien, Request for Hearing, and Later Events
By letter dated March 19, 2004, respondent told petitioner
that a notice of lien had been filed with respect to assessments
for unpaid tax, additions to tax, and interest for 1998, 2001,
and 2002, and civil penalties under section 6682 for 2002, and
3
Sec. 6682(a) generally provides that an individual shall
be liable for a civil penalty if the individual is found to have
made a false statement regarding the correct amount of income tax
withholding on wages and/or backup withholding and there was no
reasonable basis for the statement.
4
Respondent assessed the amount of tax that petitioner
reported but did not pay and additional amounts not explained in
the record.
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under section 6702 for 1997-2001. A Notice of Federal Tax Lien
was recorded in Salt Lake County, Utah.
On April 22, 2004, petitioner requested a hearing under
section 6330. In the hearing request, petitioner contended:
(1) No lien may be imposed because no valid assessment was made;
(2) he did not receive a statutory notice and demand as required;
(3) the Appeals officer must, but did not, give him the Treasury
directive or regulation that identifies the statutory notice and
demand for payment; (4) he may challenge the underlying tax
liabilities for 1998, 2001, and 2002, because he did not receive
a valid notice of deficiency for any of those years; (5) he is
entitled to, but did not, receive a copy of Form 23C; (6)
respondent must prove that respondent mailed a notice of
deficiency to him for each year in issue; and (7) the Appeals
officer must have at the hearing verification signed by the
Secretary showing that the requirements of any applicable law or
administrative procedure have been met.
Appeals Officer Bruce Skidmore (Skidmore) was assigned to
petitioner’s case. On June 18, 2004, Skidmore obtained computer
transcripts (transcripts) of petitioner’s accounts. In a letter
to petitioner dated August 30, 2004, Skidmore said: (1) He had
received petitioner’s request for a hearing; (2) the issues that
petitioner had raised in his request for a hearing were
frivolous, and he might be subject to sanctions; (3) petitioner
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could have a face-to-face hearing if, within 15 days, he
identified in writing relevant issues, such as appropriate
spousal defenses, challenges to the appropriateness of collection
actions or alternatives to collection; and (4) petitioner could
dispute the amount of his tax liabilities only if he did not
receive a notice of deficiency or otherwise have an opportunity
to dispute the liabilities. Skidmore offered to discuss the case
by telephone with petitioner at 10 a.m. on September 21, 2004, or
2 p.m. on September 28, 2004. On August 30, 2004, Skidmore
obtained more transcripts of petitioner’s accounts.
On September 8, 2004, petitioner wrote Skidmore to request a
face-to-face hearing. Petitioner said that he intended to raise
the following issues at the hearing: (1) He did not receive any
notices from the Secretary; (2) no lien may be imposed because
there were no statutory notices and demands for payment and no
valid assessments were made; (3) persons who signed notices
lacked proper delegation of authority; and (4) the Secretary did
not verify that requirements of any applicable law or
administrative procedure were met. In his September 8, 2004
letter, petitioner asked Skidmore for copies of: (1) Delegations
of authority signed by the Secretary authorizing appropriate
individuals to send deficiency notices; (2) records of assessment
from the office of the Secretary; (3) the Code section and
regulations that make petitioner liable for tax; (4) notices and
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demands for payment; (5) documents showing that notices of
deficiency were sent to petitioner; and (6) verification from the
Secretary that the requirements of any applicable law or
administrative procedure have been met.
In a letter to petitioner dated September 10, 2004, Skidmore
said that he was no longer available for a telephone conference
on September 21, 2004, and that the Secretary need not personally
verify that requirements of any applicable law or administrative
procedure were met because the Secretary delegates that
responsibility.
In a letter to petitioner dated September 13, 2004,
Skidmore said that there is evidence that petitioner had received
the notice of deficiency and notice of lien. Skidmore also said
that petitioner challenged the underlying tax liabilities on the
grounds that he had not received a proper notice of deficiency
and that petitioner had requested but not received written
verification. Skidmore said petitioner had not raised any proper
issues. Skidmore offered to speak to petitioner by telephone
about the case on September 27 or 28, 2004. Skidmore asked
petitioner to respond by 2:30 p.m. on September 28, 2004.
On September 20, 2004, petitioner wrote Skidmore to say that
a telephone conference is not acceptable, and that respondent
must provide petitioner with: (1) A notice of deficiency and
notice and demand for payment; (2) delegation orders from the
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Secretary to the individuals who sign notices of deficiency and
demand for payment; (3) copies of the verification from the
Secretary that the requirements of any applicable law or
administrative procedure have been met; and (4) copies of the
record of assessment from the office of the Secretary.
Petitioner also asked Skidmore to identify any Internal Revenue
Code sections and regulations that create his tax liabilities.
Petitioner never spoke to Skidmore by telephone about the case.
On October 14, 2004, respondent determined that it was
appropriate to file a lien with respect to petitioner’s unpaid
income taxes, penalties, and interest for 1997-2002 and that
petitioner must file a petition in this Court within 30 days if
he wanted to dispute the determination in the Tax Court.
OPINION
A. Penalties for Providing False Withholding Information and
for Filing a Frivolous Return
The Court can, sua sponte, question its jurisdiction. Smith
v. Commissioner, 124 T.C. 36, 40 (2005); Urbano v. Commissioner,
122 T.C. 384, 389 (2004); Raymond v. Commissioner, 119 T.C. 191,
193 (2002). This Court lacks jurisdiction to review the penalty
for providing false withholding information under section 6682,
Weber v. Commissioner, 122 T.C. 258, 264 (2004); Castillo v.
Commissioner, 84 T.C. 405, 411 (1985); and the frivolous return
penalty under section 6702, Johnson v. Commissioner, 117 T.C.
204, 209 (2001), Van Es v. Commissioner, 115 T.C. 324, 328-329
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(2000), and Moore v. Commissioner, 114 T.C. 171, 175 (2000).
Thus, we lack jurisdiction to review respondent’s determination
relating to the penalties under section 6682 for 2002 and section
6702 for 1997-2001, and we dismiss for lack of jurisdiction the
portion of this case that pertains to those penalties.
B. Whether Respondent’s Determination Relating to the Lien
Imposed on Petitioner for 1998, 2001, and 2002 Was Correct
Petitioner contends that respondent’s determination relating
to the lien imposed on petitioner for 1998, 2001, and 2002 was
incorrect because: (1) Respondent did not give him a copy of
Form 23C; (2) there was no valid assessment of tax for 1998,
2001, and 2002; (3) he did not receive a notice and demand for
payment for 1998, 2001, and 2002; (4) respondent did not produce
verification from the Secretary that requirements of applicable
law and administrative procedures have been met or that
respondent’s employees had authority from the Secretary to
collect tax from petitioner; (5) he is not liable for the tax for
1998, 2001, and 2002 that respondent contends he owes; and (6)
respondent improperly failed to give petitioner the opportunity
to have a face-to-face hearing. We disagree. Petitioner’s
contentions are frivolous for reasons stated next.
1. Whether Respondent Was Required To Provide Form 23C for
1998, 2001, and 2002
Section 6330(c)(1) requires the Appeals officer to verify
that the requirements of any applicable law or administrative
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procedure have been met. However, section 6330(c)(1) does not
specify which documents the Commissioner must use to meet the
verification requirement. See, e.g., Kuglin v. Commissioner,
T.C. Memo. 2002-51. It was not an abuse of discretion for
respondent not to give petitioner the Forms 23C that he had
requested. See Hughes v. United States, 953 F.2d 531, 535-536
(9th Cir. 1992); Roberts v. Commissioner, 118 T.C. 365, 371
(2002), affd. 329 F.3d 1224 (11th Cir. 2003); Nestor v.
Commissioner, 118 T.C. 162, 166 (2002).
2. Whether Respondent Properly Assessed Petitioner’s Tax
for 1998, 2001, and 2002
Petitioner contends that respondent did not properly assess
petitioner’s tax for 1998, 2001, and 2002 because he did not
receive copies of Form 23C. We disagree. Respondent makes an
assessment of Federal tax on a record of assessment. Sec. 6203.
The Commissioner is not required to use Form 23C in making an
assessment. Roberts v. Commissioner, supra at 369-371. The
record of assessment must identify the taxpayer, the taxable
period, and the character and amount of the liability assessed.
Sec. 301.6203-1, Proced. & Admin. Regs. Skidmore reviewed
transcripts that appeared to him to show that petitioner’s tax
for 1998, 2001, and 2002 had been validly assessed. Petitioner
has not shown that there was any irregularity in the assessment
procedure. We hold that the assessments are valid.
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3. Whether Respondent Issued a Notice and Demand for
Payment of Petitioner’s Tax for 1998, 2001, and 2002
Petitioner contends that respondent did not issue the notice
and demand for payment that section 6303(a) requires to be issued
within 60 days of assessment. We disagree. The notices of
demand for payment and of intent to levy that respondent sent to
petitioner fulfill the notice and demand for payment requirement
of section 6303(a). See Henderson v. Commissioner, T.C. Memo.
2004-157; Tornichio v. Commissioner, T.C. Memo. 2002-291;
Standifird v. Commissioner, T.C. Memo. 2002-245, affd. 72 Fed.
Appx. 729 (9th Cir. 2003). Respondent assessed tax for
petitioner and issued a notice and demand for payment to
petitioner as follows:
Year Assessment Notice and Demand
1998 Nov. 27, 2000 Dec. 18, 2000
2001 Apr. 8, 2002 May 13, 2002
2002 Sep. 22, 2003 Oct. 13, 2003
4. Whether Respondent Verified That Requirements of
Applicable Law and Administrative Procedures Had Been
Met and That Respondent’s Employees Had Authority From
the Secretary To Collect Tax
The Appeals officer must obtain verification that respondent
met requirements of applicable law and administrative procedures
before issuing the determination. Sec. 301.6320-1(e)(1), Proced.
& Admin. Regs. Internal revenue laws and regulations do not
require the Appeals officer to give the taxpayer a copy of the
delegation of authority from the Secretary to the person (other
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than the Secretary) who signed the verification required under
section 6330(c)(1). Nestor v. Commissioner, supra at 166-167.
Section 6330(c)(1) does not require the Appeals officer to give
the taxpayer a copy of the verification that the requirements of
any applicable law or administrative procedure have been met.
Id. at 166.
An Appeals officer may use computer transcripts of account
for a taxpayer to verify that requirements of applicable law and
administrative procedure have been met. Keene v. Commissioner,
T.C. Memo. 2002-277 n.10; Hack v. Commissioner, T.C. Memo.
2002-243; Hauck v. Commissioner, T.C. Memo. 2002-184, affd. 64
Fed. Appx. 492 (6th Cir. 2003). Skidmore reviewed transcripts of
account for petitioner for 1998, 2001, and 2002, and concluded
that the requirements of applicable law and administrative
procedure had been met.
5. Whether Petitioner May Dispute Respondent’s Conclusion
Regarding His Tax Liability for 1998 in This Proceeding
Petitioner contends that he may dispute respondent’s
conclusion regarding his tax liability for 1998 in this
proceeding. We disagree. Petitioner gave the notice of
deficiency for 1998 to Kotmair; thus, it is clear that petitioner
had received it. A taxpayer may dispute respondent’s conclusion
regarding his or her tax liability at the section 6330 hearing if
he or she did not receive a notice of deficiency or otherwise
have an opportunity to dispute the tax liability. Sec.
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6330(c)(2)(B). Thus, petitioner may not challenge his underlying
tax liability for 1998.
6. Whether Petitioner Is Liable for Tax for 2001 and 2002
in the Amounts Respondent Contends
Respondent does not contend, and the record does not show,
that petitioner received a notice of deficiency for 2001 or 2002.
Thus, petitioner may dispute respondent’s conclusions regarding
his tax liabilities for those years. Id. At trial, petitioner
testified that the issues he would have raised at a face-to-face
hearing are the issues that he described in his letters to
respondent and in the petition. We conclude that petitioner is
liable for the taxes that were the subject of the Federal tax
lien for 2001 and 2002.
7. Whether To Remand This Case to Appeals for a Face-to-
Face Hearing
Petitioner cites Treasury regulations which state that if a
taxpayer wants a face-to-face hearing, the taxpayer must be
offered an opportunity for a hearing at the Appeals Office
closest to the taxpayer’s residence. Sec. 301.6320-1(d)(2),
Q&A-D7, Proced. & Admin. Regs. Petitioner contends he was
entitled to have a face-to-face hearing. We disagree.
In Lunsford v. Commissioner, 117 T.C. 183, 189 (2001), the
Court declined to remand the case to the Appeals Office for a
hearing because the taxpayer could not prevail on any of the
issues he had raised in the proceeding. We held that it was
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neither necessary nor productive to remand the case to the
Appeals Office. Id.; see Kemper v. Commissioner, T.C. Memo.
2003-195 (remand to record face-to-face hearing denied); see also
Keene v. Commissioner, 121 T.C. 8, 19-20 (2003). The same
reasoning applies here because petitioner is liable for the
underlying income tax and his other arguments are frivolous.
During trial, petitioner was given the opportunity to raise
the arguments that he would have made at a face-to-face hearing.
Petitioner stated that the issues that he would have raised were
included in his letters to respondent and in the petition.
During the trial, petitioner stated that his only arguments for
overturning respondent’s determination, other than seeking a
face-to-face hearing, were included in his correspondence to
respondent and in the petition. Those arguments were frivolous.
Thus, it is neither necessary nor productive to remand the case
to the Appeals Office.
8. Conclusion
We sustain respondent’s determination to proceed with
collection of income taxes, additions to tax, and penalties other
than those under sections 6682 and 6702, and interest by lien
from petitioner for 1998, 2001, and 2002.
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To reflect the foregoing,
An appropriate order will be
issued, and decision will be
entered.