T.C. Memo. 2006-254
UNITED STATES TAX COURT
DENIS J. FARIS AND CAROLYN M. FARIS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9542-05L. Filed November 27, 2006.
Denis J. Faris and Carolyn M. Faris, pro sese.
Kelley A. Blaine, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: Pursuant to section 6330(d),1 petitioners
seek review of respondent’s determination to proceed with
collection of their 1997 and 1998 income tax liabilities. The
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
- 2 -
issues for decision are: (1) Whether respondent may proceed with
collection of petitioners’ 1997 and 1998 income tax liabilities;
and (2) whether petitioners are liable for a penalty pursuant to
section 6673.
FINDINGS OF FACT
None of the facts have been stipulated. At the time they
filed the petition, petitioners resided in Portland, Oregon.
Petitioners timely filed Federal income tax returns for 1997
and 1998.
Respondent sent notices of deficiency for 1997 and 1998 to
petitioners.2 Petitioners did not petition the Court for a
redetermination of the 1997 or 1998 deficiencies.
On January 1 and July 23, 2001, respondent assessed the 1997
and 1998 deficiencies, respectively.
On September 1, 2004, respondent sent petitioners a Final
Notice of Intent to Levy and Notice of Your Right to a Hearing
(collection notice) with respect to petitioners’ 1997 and 1998
taxable years. The collection notice showed unpaid taxes,
interest, and penalties for 1997 and 1998 of $9,696.48.
On September 20, 2004, petitioners timely filed a Form
12153, Request for a Collection Due Process Hearing.
2
The notice of deficiency for 1998 was issued on Dec. 22,
2000. At trial, respondent was unable to produce a copy of the
notice of deficiency for 1997. However, petitioners admitted
that they received “a document entitled ‘Notice of Deficiency’”
from the Internal Revenue Service regarding 1997.
- 3 -
Petitioners attached to their Form 12153 an “Affidavit of
Material Facts” containing frivolous and groundless arguments,
questions and statements regarding, inter alia, their underlying
liability for income taxes, the legality of imposing income taxes
on individuals, and respondent’s authority to collect income
taxes.
Settlement Officer John Malone was assigned to petitioners’
case. In a letter dated February 4, 2005, the settlement officer
acknowledged receipt of petitioners’ Form 12153 and other
materials. In that letter, the settlement officer informed
petitioners that the arguments they advanced were frivolous,
groundless, or arguments that Appeals Office employees may not
consider. The letter also informed petitioners of the Appeals
Office policy of not granting face-to-face hearings if the only
items a taxpayer wishes to discuss are frivolous, groundless, or
arguments that Appeals Office employees may not consider. In the
letter, the settlement officer scheduled a phone conference with
petitioners for March 10, 2005.
On February 16, 2005, petitioners mailed a letter to the
settlement officer again requesting a face-to-face hearing and
stating that they would not be available for a phone conference
on March 10, 2005. On the same day and on February 18, 2005,
petitioners submitted several “Freedom of Information Request[s]”
- 4 -
asking for extensive (and, in many cases, irrelevant)
documentation relating to their 1997 and 1998 tax years.
On February 20, 2005, petitioners mailed another letter to
the settlement officer. In that letter, petitioners again
advanced frivolous and groundless arguments. Petitioners argued,
inter alia, that they are not required to file a tax return
without having been personally served with notice of such
requirement by the Secretary of the Treasury, that “there is no
statute that makes [us] liable for income tax”, that the income
tax applies only to Federal Government employees, and that
respondent lacks authority to assess or collect income taxes.
On March 11, 2005, the settlement officer mailed a letter to
petitioners. He noted that petitioners had not called him for
the March 10, 2005, hearing and that petitioners, at that point,
still had failed to raise an issue that could be considered by
the Appeals Office. The letter advised petitioners to contact
the settlement officer by March 28, 2005, if they wished to
submit additional materials for his consideration or to
reschedule the phone conference. The letter informed petitioners
that if the Appeals Office did not receive any further
information from petitioners, their case would be reviewed based
on the information in petitioners’ file.
Petitioners replied in a letter dated March 19, 2005. In
this letter, petitioners made several demands. They demanded
- 5 -
that the settlement officer grant them a face-to-face hearing,
that, at the hearing, the settlement officer produce a multitude
of documents (many of which were, once again, irrelevant to the
section 6330 hearing), and that the settlement officer be
prepared to discuss at the hearing petitioners’ frivolous and
groundless arguments. Petitioners did not offer a collection
alternative at any point in their correspondence with the
settlement officer.
On April 21, 2005, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Sections 6320
and/or 6330 (notice of determination) regarding petitioners’
unpaid 1997 and 1998 income tax liabilities. In the notice of
determination, respondent determined that the proposed levy
should be sustained because petitioners had “failed to provide
[respondent] with an alternative collection that satisfies
[petitioners’] liabilities.”
On May 23, 2005, petitioners timely filed a petition for
lien or levy action under section 6320(c) or 6330(d) appealing
respondent’s determination to proceed with collection of
petitioners’ 1997 and 1998 tax liabilities. Petitioners asserted
that they had been denied a section 6330 hearing and repeated
several frivolous and groundless arguments they had raised in
their correspondence with the settlement officer.
- 6 -
OPINION
I. Determination To Proceed With Collection
Section 6330(a) provides that the Secretary shall furnish
taxpayers with written notice of their right to a hearing before
any property is levied upon. Section 6330 further provides that
the taxpayer may request administrative review of the matter (in
the form of a hearing) within a prescribed 30-day period. Sec.
6330(a) and (b).
Pursuant to section 6330(c)(2)(A), a taxpayer may raise at
the section 6330 hearing any relevant issue with regard to the
Commissioner’s collection activities, including spousal defenses,
challenges to the appropriateness of the Commissioner’s intended
collection action, and alternative means of collection. Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114
T.C. 176, 180 (2000). If a taxpayer received a statutory notice
of deficiency for the year in issue or otherwise had the
opportunity to dispute the underlying tax liability, the taxpayer
is precluded from challenging the existence or amount of the
underlying tax liability. Sec. 6330(c)(2)(B); Sego v.
Commissioner, supra at 610-611; Goza v. Commissioner, supra at
182-183.
Aside from raising frivolous arguments regarding the
validity of the notices they received, petitioners admit that
they received notices of deficiency for 1997 and 1998. Thus,
- 7 -
petitioners are precluded from challenging the existence or
amount of the underlying tax liabilities for 1997 and 1998. See
sec. 6330(c)(2)(B); Sego v. Commissioner, supra; Goza v.
Commissioner, supra. We review respondent’s determination for
abuse of discretion. See Sego v. Commissioner, supra at 610.
Petitioners state in their petition that they were denied
their right to a face-to-face hearing as provided in section
6330. We have held that it would be unproductive and thus
unnecessary to remand a case for a face-to-face hearing if
petitioners merely want to advance frivolous arguments. See
Lunsford v. Commissioner, 117 T.C. 183, 189 (2001); Stephens v.
Commissioner, T.C. Memo. 2005-183; Balice v. Commissioner, T.C.
Memo. 2005-161.
In numerous letters to respondent, in their petition and in
their briefs, petitioners advanced shopworn arguments
characteristic of tax-protester rhetoric that has been
universally rejected by this and other courts. Wilcox v.
Commissioner, 848 F.2d 1007 (9th Cir. 1988), affg. T.C. Memo.
1987-225; Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir.
1986); Charczuk v. Commissioner, 771 F.2d 471 (10th Cir. 1985),
affg. T.C. Memo. 1983-433; Michael v. Commissioner, T.C. Memo.
2003-26; Knelman v. Commissioner, T.C. Memo. 2000-268, affd. 33
Fed. Appx. 346 (9th Cir. 2002). We shall not painstakingly
address petitioners’ assertions “with somber reasoning and
- 8 -
copious citation of precedent; to do so might suggest that these
arguments have some colorable merit.” Crain v. Commissioner, 737
F.2d 1417, 1417 (5th Cir. 1984).
Petitioners have failed to make a valid challenge to the
appropriateness of respondent’s intended collection action, offer
alternative means of collection, or offer any spousal defenses.
These issues are now deemed conceded. Rule 331(b)(4).
Accordingly, we conclude that respondent did not abuse his
discretion, and we sustain respondent’s determination to proceed
with collection for 1997 and 1998.
II. Section 6673(a)
Section 6673(a)(1) authorizes this Court to require a
taxpayer to pay to the United States a penalty not to exceed
$25,000 if the taxpayer took frivolous positions in the
proceedings or instituted the proceedings primarily for delay. A
position maintained by the taxpayer is “frivolous” if it is
“contrary to established law and unsupported by a reasoned,
colorable argument for change in the law.” Coleman v.
Commissioner, 791 F.2d 68, 71 (7th Cir. 1986).
In his correspondence with petitioners, the settlement
officer advised petitioners to read an IRS publication entitled
“The Truth About Frivolous Tax Arguments”, which explains the
defects in several of petitioners’ arguments. The settlement
officer also sent petitioners a copy of Pierson v. Commissioner,
- 9 -
115 T.C. 576 (2000), in which this Court issued an unequivocal
warning to taxpayers concerning the imposition of penalties
pursuant to section 6673(a) on those taxpayers who abuse the
protections afforded by sections 6320 and 6330 by instituting or
maintaining actions under those sections primarily for delay or
by taking frivolous or groundless positions in such actions. At
trial, the Court advised petitioners that the arguments they were
advancing had been universally rejected by the courts that have
considered them. Petitioners’ positions, based on stale and
meritless contentions, are manifestly frivolous and groundless.
This has caused the Court to waste limited resources.
Accordingly, we shall impose a penalty of $2,500 pursuant to
section 6673.
To reflect the foregoing,
Decision will be entered
for respondent.