T.C. Memo. 2006-100
UNITED STATES TAX COURT
NORMAN P. SCHNELLER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7578-05L. Filed May 11, 2006.
Norman P. Schneller, pro se.
John W. Sheffield, for respondent.
MEMORANDUM OPINION
GOEKE, Judge: The petition in this case was filed in
response to a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 (notice of
determination).1 At issue is (1) whether respondent abused his
1
Unless otherwise indicated, all section references are to
(continued...)
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discretion in allowing the collection action to proceed, and (2)
whether frivolous arguments advanced by petitioner warrant the
imposition by this Court of a section 6673(a) penalty. We hold
that respondent did not abuse his discretion and that a penalty
under section 6673 is not warranted at this time.
Background
At the time the petition in this case was filed, petitioner
resided in McDonough, Georgia.
In the taxable year 2001, the year at issue, petitioner
earned income of approximately $200,000, mostly consisting of
wages he earned as director of sales of the Caribbean of Block
Drug, Company, Inc. Petitioner stipulated receiving this income.
Petitioner did not file a Form 1040, U.S. Individual Income Tax
Return, for the taxable year 2001. Respondent prepared a
substitute for return (SFR). The SFR reflected a taxable income
to petitioner of $205,593. On January 14, 2004, respondent
issued a notice of deficiency to petitioner for 2001. Petitioner
concedes that he received the notice of deficiency. In response
to a notice of intent to levy, petitioner filed Form 12153,
Request for a Collection Due Process Hearing. On the Form 12153,
petitioner listed his reason for disagreeing with the proposed
levy action as “SFR Program--Math error.” Attached to the Form
1
(...continued)
the Internal Revenue Code, as amended.
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12153 was a letter requesting “early referral to appeals.”
Petitioner did not offer any collection alternatives nor any
spousal defenses. An Appeals officer contacted petitioner to
schedule a conference via telephone. The Appeals officer spoke
with petitioner at the appointed time, and petitioner was given
an opportunity to discuss the issues. Petitioner stated that he
did not want to discuss the issues and wanted a response by mail.
On March 21, 2005, petitioner received a notice of determination
upholding the proposed levy action.
Petitioner filed a timely petition in this Court and was
cooperative throughout the stipulation and hearing process.
Discussion
Petitioner advances a plethora of tax protester arguments
that attack the underlying tax liability rather than respondent’s
collection actions. In particular, petitioner argues that the
exemption amount, pursuant to section 6012(a)(1)(A), is not
defined by statute, and that a lack of a valid control number
from the Office of Management and Budget (OMB), as required by
the Paperwork Reduction Act of 1980 (PRA), 44 U.S.C. secs. 3501-
3520 (2000), excuses a failure to file returns.
Where the validity of the underlying tax liability is
properly at issue, the Court will review the matter de novo.
However, where the validity of the underlying tax liability is
not properly at issue, the Court will review the Commissioner’s
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administrative determination for an abuse of discretion. Sego v.
Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114
TC 176, 181-182 (2000).
Although petitioner received a statutory notice of
deficiency for the taxable year 2001, he did not avail himself of
the opportunity to file a petition for redetermination of the
deficiency with this Court pursuant to section 6213(a).
Consistent with section 6330(c)(2)(B), petitioner therefore was
precluded from contesting his liability for the underlying taxes
before the Appeals Office. Goza v. Commissioner, supra at 182-
183. Therefore, the validity of petitioner's underlying tax
liability is not properly at issue in this proceeding. Id. at
183.
Nevertheless, petitioner continues to assert frivolous
claims. See, e.g., Pond v. Commissioner, T.C. Memo. 2005-255
(rejecting taxpayer’s argument that exemption amount is not
defined by statute); Saxon v. Commissioner, T.C. Memo. 2006-52
(taxpayer’s contention that OMB control No. 1545-0074, on the
Form 1040 is invalid and does not comply with the requirements of
the PRA is groundless (citing James v. United States, 970 F.2d
750, 753 n.6 (10th Cir. 1992); United States v. Neff, 954 F.2d
698, 699 (11th Cir. 1992)). Petitioner does not challenge the
appropriateness nor the intended method of collection. Nor does
petitioner offer any alternative means of collection or raise any
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spousal defenses. Petitioner’s only argument relating to
respondent’s collection actions is that respondent abused his
discretion in relying on the Form 4340, Certificates of
Assessments, Payments, and Other Specified Matters, to verify the
assessment, an argument we have previously rejected. Davis v.
Commissioner, 115 T.C. 35, 40 (2000).2 Petitioner has not
presented any evidence or arguments to convince us that
respondent abused his discretion. As a result, we hold
respondent’s determination was not an abuse of discretion, and
respondent may proceed with the proposed collection action. See
Sego v. Commissioner, supra at 612.
Respondent urges us to impose a section 6673 penalty.
Although petitioner’s arguments are frivolous, we find that
petitioner’s cooperation in the stipulation process mitigated the
delay, and therefore we choose not to impose the penalty at this
time. However, petitioner is warned that we may do so in the
future if he continues to assert such frivolous claims before
this Court.
To reflect the foregoing,
Decision will be entered
for respondent.
2
Petitioner stated this argument in his Motion For
Production of Summary Record of Assessment, which this Court
denied on Apr. 18, 2006.