T.C. Summary Opinion 2006-193
UNITED STATES TAX COURT
DANIEL HUBBARD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8207-05S. Filed December 21, 2006.
Daniel Hubbard, pro se.
Steven Josephy, for respondent.
GOLDBERG, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
This matter is before the Court on respondent’s Motion for
Summary Judgment filed pursuant to Rule 121, Tax Court Rules of
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Practice and Procedure. Unless otherwise indicated, subsequent
section references are to the Internal Revenue Code in effect for
the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure. In his motion, respondent moves
for adjudication of all legal issues in controversy and argues,
pursuant to section 6330(c)(2)(B), that petitioner’s receipt of a
notice of deficiency should preclude him from challenging the
underlying income tax liability for the 2000 taxable year, the
only error assigned in the underlying petition. Petitioner has
not denied receiving a notice of deficiency but rather maintains
that he is not required by law to pay income taxes. The only
issue for determination, therefore, is whether petitioner can
contest the merits of the tax liability determined in the notice
of deficiency and subsequently assessed by respondent.
Background
The parties’ stipulation of facts is incorporated by this
reference. At the time that the underlying petition was filed in
this case, petitioner resided in Centennial, Colorado.
During the taxable year at issue, petitioner worked as a
school bus driver for the Denver Public Schools. Petitioner
submitted to respondent a Form 1040, U.S. Individual Income Tax
Return, for the taxable year 2000. On the return, petitioner
entered zeros on all lines requesting information regarding his
income (specifically, line 7), and claimed a refund of all of his
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Federal income tax withheld.
Petitioner attached to the return a 2-page typewritten
statement containing frivolous and groundless tax protester
arguments such as: (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) the Privacy Act provides that he is
not required to file a return; (3) a Form 1040 with zeros is a
valid return; (4) he has no income under the definition of income
in Merchants Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921);
(5) his return is not frivolous; (6) no Internal Revenue Service
employee has been delegated authority to determine whether a
return is frivolous or to impose a frivolous return penalty; (7)
the frivolous return penalty may not be applied to him because no
legislative regulation implements it; (8) no statute allows the
IRS to prepare a return for him because he has filed a “return”;
and (9) income, for purpose of the Federal income tax, “can only
be a derivative of corporate activity.”
In a letter dated August 13, 2002, respondent advised
petitioner that although he had received petitioner’s 2000
return, it could not be processed. Respondent informed
petitioner in this letter that his arguments were frivolous and
without merit. Respondent prepared a substitute return for
petitioner. On August 13, 2002, respondent sent petitioner a 30-
day letter, in which respondent adjusted petitioner’s income tax
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liability for 2000. Petitioner responded to this letter on
October 20, 2002, by filing a Form 1040X, Amended U.S. Individual
Income Tax Return. Across lines 1-10 of the Form 1040X,
petitioner wrote the words, “Not Liable.” He also wrote “Not
Liable” on line 19 of the Form 1040X. On line 23, the amount
that petitioner wanted as a refund, he wrote “$317.” In Part II
of the Form 1040X, petitioner wrote the following as an
explanation of the changes he made on the Form 1040X:
“Not Liable! (Explanation!) Not Liable!
Not Liable! I discovered after reading your 1040
instruction book that I’m not liable because line
#7 ask [sic] for my foreign source income; since I
had no foreign source income I’m not liable for
any tax you claim that I owe. Please refund my
overpayment in the amount of $317 that was
withheld.”
Respondent, by means of certified mail dated June 18,
2003, sent a notice of deficiency (the notice) to
petitioner, determining an income tax deficiency and
proposing additions to tax for the taxable year 2000 as
follows:
Deficiency Additions to tax
Sec. 6651(a)(1) Sec. 6654(a)
$6,419 $1,525.50 $324.07
The deficiency in income tax is based on respondent’s
determination that in 2000 petitioner received, but failed
to report on an income tax return for that year, income from
the following sources:
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Source Amount
Labor Ready Central, Inc. $36
The Denver Post 8,009
DPS Production 12,438
JC Penney Company, Inc. 1,045
State of Colorado 395
U.S. Office of Personnel Management 12,540
Colorado Lottery 657
The addition to tax under section 6651(a)(1) is based
on respondent’s determination that petitioner failed to file
a valid income tax return for 2000. The addition to tax
under section 6654(a) is based on respondent’s determination
that petitioner, having avoided the proper amount of
withholding of tax from his wages, failed to pay estimated
tax.
Respondent mailed the notice to petitioner’s last known
address, 20734 E. Dorado Place in Centennial, Colorado.
Petitioner lived at this address at the time that the notice
was sent by respondent up to and through the time that this
Court held a hearing on respondent’s present motion on
November 14, 2005.
Petitioner did not claim the notice from his local
United States Post Office. The envelope indicates that the
United States Postal Service attempted delivery on June 20,
2003, June 27, 2003, and July 5, 2003. Sometime after July
5, 2003, the notice was returned to respondent with the word
“unclaimed” stamped across the face of the envelope.
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Petitioner has neither admitted nor denied that he ever
received the notice. Petitioner did not file a petition for
redetermination with the Tax Court. See sec. 6213(a).
On November 17, 2005, respondent assessed the
determined deficiency of $6,419 “per default of 90 day
letter,” the addition to tax for failure to file under
section 6651(a)(1) in the lesser amount of $1,372.95, and
the addition to tax for failure to pay estimated tax under
section 6654(a) in the lesser amount of $976.
Respondent issued a Final Notice, Notice of Intent to
Levy and Notice of Your Right to a Hearing (which petitioner
admitted he did receive) on July 12, 2004. On July 26,
2004, petitioner sent to respondent a Form 12153, Request
for a Collection Due Process Hearing (CDP hearing). The CDP
hearing was held on March 21, 2005.
At the CDP hearing, petitioner restated all of his
previous arguments that his income was not taxable according
to his interpretation of the Internal Revenue Code and other
materials. No alternative collections options were
discussed at the hearing.
Respondent sent to petitioner a Notice of Determination
on April 27, 2005. Petitioner filed his petition with this
Court on May 5, 2005. Respondent filed his motion for
summary judgment, and the motion was heard at the Court’s
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Trial Session in Denver, Colorado. At the hearing,
petitioner filed a “PETITION TO WITHDRAWAL FOR LACK OF
JURISDICTION” that the Court filed as a Motion to Dismiss
for Lack of Jurisdiction.
Discussion
Section 6331(a) authorizes the Commissioner to levy all
property and property rights of a taxpayer liable for taxes
who fails to pay them within 10 days after notice and demand
for payment. Sections 6331(d) and 6330(a) require the
Secretary to send written notice to the taxpayer of the
intent to levy and to provide the taxpayer with a right to a
hearing prior to the collection activity.
Section 6330(c)(2)(A) provides that the taxpayer may
raise at the hearing “any relevant issue relating to the
unpaid tax or the proposed levy” including spousal defenses,
challenges to the appropriateness of collection actions, and
alternatives to collection. Section 6330(c)(1) further
requires that the Appeals officer obtain verification that
the requirements of any applicable law or administrative
procedure have been met.
Notably, however, a taxpayer may challenge the assessed
amount of the deficiency and any additions to unpaid tax
only if he did not receive a notice of deficiency or
otherwise have an opportunity to dispute that tax liability.
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Sec. 6330(c)(2)(B); Goza v. Commissioner, 114 T.C. 176, 180-
181 (2000). For purposes of section 6330(c)(2)(B), receipt
of a notice of deficiency means receipt in time to petition
this Court for redetermination of the deficiency determined
in such notice. Sec. 301.6330-1(e)(3), Q&A-E2, Proced. &
Admin. Regs.
The parties agree that respondent has the burden of
showing that petitioner either received the notice of
deficiency or otherwise had an opportunity to dispute the
tax liability.
We now consider respondent’s Motion for Summary
Judgment.
Respondent argues that the notice of deficiency was
sent to petitioner’s last known address by certified mail
and that petitioner refused to accept delivery for it at the
United States Postal Service branch where it was held. As
evidence of mailing and attempted delivery, respondent has
produced a photocopy of the original notice of deficiency,
including the envelope in which the notice was sent.
The envelope contains notations made by the United
States Postal Service showing that its employees attempted
delivery on no less than three separate occasions. Absent
clear evidence to the contrary, United States Postal Service
employees are presumed to properly discharge their official
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duties, which justifies the conclusion that the notice of
deficiency was sent and that attempts to deliver the notice
were made in the manner contended by respondent. Sego v.
Commissioner, 114 T.C. 604, 611 (2000).
The record in this case contains a copy of a notice of
deficiency dated June 18, 2003, addressed to petitioner; a
Form 3877 indicating that the notice was sent on the date it
bears; and notations made by the United States Postal
Service showing that it attempted delivery on 3 separate
occasions over a 4-week span of time. Accordingly, we
conclude that although petitioner did not accept delivery of
the notice of deficiency, his failure to receive the notice
actually stemmed from a deliberate effort to refuse such
delivery in furtherance of his ill-conceived line of
reasoning that he is exempt from any income tax liability.
It is well settled that a notice of deficiency mailed to the
taxpayer’s last known address in accordance with the
provisions of section 6212(b) is valid irrespective of
whether or not the taxpayer actually received it. See Pyo
v. Commissioner, 83 T.C. 626, 632 (1984); Frieling v.
Commissioner, 81 T.C. 42, 48 (1983); Zenco Engg. Corp. v.
Commissioner, 75 T.C. 318, 321 (1980), affd. without
published opinion 673 F.2d 1332 (7th Cir. 1981).
We find that petitioner’s conduct in this case
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constituted a deliberate refusal of delivery and repudiation
of his opportunity to contest the liability determined in
the notice of deficiency. The provisions in section
6330(c)(2)(B) limiting in collection due process cases the
right to contest the underlying tax liability are clearly
designed to prevent the creation of a prepayment remedy in
cases like this one. The validity of the underlying tax
liability therefore cannot be properly raised by petition in
this case.
We will not spend time discussing petitioner’s Cross-
Motion to Dismiss on the grounds that the Tax Court lacks
jurisdiction “to address the particular notice of deficiency
upon which this Docket is based.” In his motion, petitioner
continues on for pages making spurious and ridiculous
arguments in support of his motion. We will not waste our
time addressing them as they are meritless, timeworn
protester arguments that have been rejected and discredited
by this Court and the other Federal courts. For this
reason, petitioner’s motion will be denied.
Respondent’s Motion for Summary Judgment filed on
August 11, 2005, will be granted and respondent’s
administrative determination to proceed with collection
against petitioner will be sustained. Petitioner’s Motion
to Dismiss filed on November 14, 2005, will be denied.
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Reviewed and adopted as the report of the Small Tax
Case Division.
An appropriate order and
decision will be entered.