T.C. Memo. 2007-160
UNITED STATES TAX COURT
CHESTER E. DAVIS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4284-06L. Filed June 20, 2007.
Chester E. Davis, pro se.
Kelley A. Blaine, for respondent.
MEMORANDUM OPINION
GERBER, Judge: On June 2, 2005, respondent advised
petitioner that a Notice of Federal Tax Lien (NFTL) had been
filed and of petitioner’s right to a hearing. Petitioner sought
a hearing and, ultimately, petitioned this Court on February 28,
2006, contesting respondent’s February 3, 2006, Notice of
Determination Concerning Collection Action(s) Under Section 6320
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and/or 6330 (Notice of Determination), advising that the filing
of the NFTL and proposed levy action for petitioner’s 2001 tax
liability was sustained. The parties filed cross-motions for
summary judgment and the issues presented for our consideration
are: (1) Whether there was an abuse of discretion in
respondent’s determination to sustain the filing of an NFTL
relating to petitioner’s 2001 tax liability and to proceed with
collection or levy action; and, (2) whether a penalty under
section 66731 should be imposed against petitioner for advancing
frivolous positions in this case.
Background
Petitioner failed to file a 2001 Federal income tax return,
and respondent sent petitioner a notice of deficiency determining
an income tax deficiency and additions to tax. Petitioner
received the deficiency notice but took no action in response to
respondent’s determination, and respondent assessed the income
tax deficiency and additions to tax. Thereafter, respondent sent
petitioner an NFTL on June 2, 2005. In response, petitioner
submitted a Form 12153, Request for a Collection Due Process
Hearing (hearing request), dated June 27, 2005.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the period under
consideration, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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In his June 27, 2005, hearing request, petitioner stated
that he did not receive a valid notice of deficiency, but he did
not specifically explain why what he did receive was invalid.
Petitioner also advanced queries normally posed by “tax
protesters”, such as that the Appeals Officer did not “identify
the statute that makes * * * [him] ‘liable to pay’”. Petitioner
did not accept respondent’s certification of assessment and
payment and, instead, wished to see the original assessment
records and related documents. In addition to his response,
petitioner also sent the Appeals officer a package of materials,
including income tax forms on which zeros were placed in the
income and tax “boxes”.
Respondent’s Appeals officer declined to work or meet with
Jeffrey Hubacek, petitioner’s representative, because Mr. Hubacek
had been barred from practicing before the Internal Revenue
Service (IRS). The Appeals officer advised petitioner that she
would not offer him a face-to-face hearing because she found that
his arguments were either frivolous or involved issues which
could not be considered by the Appeals Office, such as objections
on moral or political grounds.
Instead of a face-to-face meeting, petitioner and the
Appeals officer engaged in a telephone conference on January 25,
2006. Prior to that conference, petitioner was sent a copy of a
Form 4340, Certificate of Assessments, Payments, and Other
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Specified Matters, for his 2001 tax year. During the conference,
petitioner renewed his requests for the underlying assessment
documents and that the Appeals officer provide petitioner with a
copy of the statute that made him liable to pay any income taxes.
On February 3, 2006, the Appeals Office issued the Notice of
Determination from which petitioner petitioned to this Court.
In petitioner’s hearing request, and in addition to his 2001
tax year, petitioner included numerous taxable years that were
not the subject of timely requests for a hearing. In that
regard, petitioner requested a hearing with respect to his 1999
and 2000 tax years, but the notices of intent to levy and Federal
tax lien filing for those years were sent to petitioner in 2004
(more than 1 year prior to petitioner’s hearing request).
Petitioner also requested a hearing with respect to his 1996,
1997, and 1998 tax years, but there was no balance of tax then
due and no pending collection or proposed collection action.
With respect to the 1999 and 2000 tax years, the Appeals officer
advised petitioner that they would be handled as “Equivalent
Hearings” (hearings without a right of appeal or review by this
Court).
Discussion
Issues for Consideration
The Petition and Amended Petition in this case, in essence,
contain the following allegations/issues: (1) Respondent’s
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determination should be declared invalid; (2) the Appeals officer
did not conduct a hearing that was in accord with the statute;
(3) petitioner was not provided with information and
documentation that he is entitled to as a matter of law; and (4)
the Appeals officer was not authorized to represent the Secretary
of the Treasury.
The specifics underlying these allegations/issues, as far as
the Court is able to follow petitioner’s logic and explanations,
are: (1) The Appeals officer wrongfully refused to allow
petitioner’s representative to represent his interests; (2) the
Appeals officer wrongfully refused petitioner a face-to-face
meeting; (3) the Appeals officer did not show petitioner a
delegation order from the Secretary of the Treasury entitling the
Appeals officer to act on the Secretary’s behalf; (4) the Appeals
officer did not show petitioner the underlying assessment
documents with respect to the Form 4340 provided to petitioner;
and (5) the Appeals officer did not provide petitioner with the
statute or law that would make petitioner subject to and/or
liable for Federal income tax.
These, in essence, are the matters raised by petitioner in
his pleadings and, accordingly, are the matters that we must
address. Lunsford v. Commissioner, 117 T.C. 183, 189 (2001);
Goza v. Commissioner, 114 T.C. 176 (2000).
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Summary Judgment
Both parties have filed motions for summary judgment so that
each ostensibly believes that this matter is ripe for resolution
as a matter of law. Summary judgment is appropriate if there is
no genuine issue of a material fact and a decision may be
rendered as a matter of law. Rule 121(b); Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). In this case there is no
apparent disagreement about the material facts and circumstances
in the controversy. Accordingly, this case is ripe for
resolution by means of summary judgment.
Petitioner’s Representative
Petitioner complains that his representative, Mr. Hubacek,
was not allowed to represent petitioner before the IRS or to
receive copies of any correspondence from respondent to
petitioner. In that regard, respondent’s representative, in her
affidavit attached to the summary judgment motion, stated that
Mr. Hubacek had been permanently barred from providing tax
services and/or representing taxpayers before the IRS. In that
regard, petitioner was not prevented from either finding another
representative or representing himself, as he did. Under these
circumstances, it was not an abuse of discretion to exclude Mr.
Hubacek from representing petitioner or receiving copies or
correspondence under a proffered power of attorney.
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Face-to-Face Meeting
Section 6320(a)(1) requires the Secretary to give persons
liable to pay taxes a written notice of the filing of an NFTL.
Section 6320(a)(3)(B) and (b)(1) provides that the notice shall
inform such persons of the right to request a hearing in
respondent's Appeals Office. Section 6320(c) provides that an
Appeals Office hearing generally shall be conducted consistently
with the procedures set forth in section 6330(c), (d), and (e).
The Appeals officer must verify at the hearing that the
applicable laws and administrative procedures have been followed.
Sec. 6330(c)(1). At the hearing, the person against whom the
lien is filed may raise any relevant issues relating to the
unpaid tax or the lien, including appropriate spousal defenses,
challenges to the appropriateness of collection actions, and
collection alternatives. Sec. 6330(c)(2)(A). The person may
challenge the existence or amount of the underlying tax, however,
only if he did not receive any statutory notice of deficiency for
the tax liability or did not otherwise have an opportunity to
dispute the tax liability. Sec. 6330(c)(2)(B).
In the instant case, the record indicates that the only
issues petitioner raised throughout the section 6320
administrative process and in his petition to this Court were
frivolous and/or tax protester type arguments. We do not address
petitioner's frivolous arguments with somber reasoning and
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copious citations of precedent, as to do so might suggest that
these arguments possess some degree of colorable merit. See
Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984).
For example, petitioner contended that the NFTLs are
“counterfeited securities”. Likewise, he contended that the
Notice of Determination was fraudulent because it does not carry
a proper number from the Office of Management and Budget.
Amongst others, he has also raised the well-worn argument that he
is not subject to or required to pay any income tax unless the
Commissioner or his agents can show him a statute that expressly
states that he is subject to tax.
To the extent petitioner complains that he did not receive a
face-to-face hearing, this Court has held that it is neither
necessary nor productive to remand cases to an Appeals Office for
face-to-face hearings when a taxpayer raises only frivolous
arguments. Lunsford v. Commissioner, supra at 189.
The arguments or information expressed by petitioner in the
telephonic conference were, at best, superficial and did not go
to the merits of the underlying 2001 tax liability. Instead and
true to form, petitioner posed the well-worn protester sophistry
that he would gladly pay the tax if someone could identify the
statute that makes him liable to pay. The only other matter
raised by petitioner was his request that the Appeals officer
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provide him with the underlying assessment document(s) referenced
in the Form 4340 certification that had been sent to him.
The Court has also reviewed all of the materials forwarded
to respondent by petitioner in connection with the administrative
proceeding and, likewise, found them to contain “protester type”
and frivolous arguments.
Petitioner did not make any justiciable arguments or present
any information that properly addressed the merits of the
underlying tax liability,2 the validity of the assessment, or the
conduct of the proceeding or compliance with section 6330
requirements. Accordingly, the fact that petitioner was not
offered a face-to-face hearing was, in this instance, not an
abuse of discretion.
Appeals Officer’s Authority
There is little need to dwell on petitioner’s argument that
the administrative proceeding was flawed because respondent’s
representatives did not show that they were properly authorized
to represent the interests of the Secretary of the Treasury. To
the extent that petitioner’s argument implies that only the
Secretary of the Treasury could conduct a proper proceeding it is
frivolous. In the context of whether there was an abuse of
2
With respect to the 2001 tax year, petitioner supplied the
Appeals officer with an income tax return that had zeros in all
pertinent boxes. He did not show or explain why respondent’s
determination with respect to that year (for which petitioner had
not previously filed a return) was in error.
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discretion or any meaningful procedural flaw attributable to any
failure of respondent’s representative to prove to petitioner
that they were authorized, we find that factor to be irrelevant.
See Nestor v. Commissioner, 118 T.C. 162, 166 (2002). This is
especially true in this case where petitioner’s arguments are
without substance and where he failed to present any meaningful
arguments or information bearing on the merits of the underlying
tax liability or respondent’s collection efforts.
Form 4340
Petitioner argues that under section 6330 he is entitled to
the underlying assessment documents and, ostensibly, that the
Form 4340 certification does not meet the statutory requirements.
The Appeals officer used Forms 4340, to verify the assessments.
We have held that “it was not an abuse of discretion for the
Appeals officer to use Forms 4340 for purposes of complying with
section 6330(c)(1).” Nestor v. Commissioner, supra at 166; see
also Davis v. Commissioner, 115 T.C. 35, 41 (2000); Lindsay v.
Commissioner, T.C. Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th
Cir. 2003).
Section 6330(c)(1) does not require the Appeals officer to
provide taxpayers with a copy of a document verifying that the
requirements of any applicable law or administrative procedure
have been met. Section 301.6330-1(e)(1), Proced. & Admin. Regs.,
requires that the Appeals officer obtain verification before
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issuing the determination, not that he or she provide it to the
taxpayer. Further, there is no legal requirement that the
Appeals officer provide a taxpayer with copies of the delegations
of authority, assessment records, or other underlying documents
maintained by respondent with respect to a taxpayer’s account.
Nestor v. Commissioner, supra at 166. Accordingly, the Appeals
officer in this case sufficiently verified the 2001 tax
assessments and was not required to provide more.
The 2001 Tax Liability
A taxpayer may challenge the existence or amount of the
underlying tax, however, only if he did not receive any statutory
notice of deficiency for the tax liability or did not otherwise
have an opportunity to dispute the tax liability. Sec.
6330(c)(2)(B). Where the validity of the underlying tax
liability is properly in issue, the Court will review the matter
de novo. Where the validity of the underlying tax is not
properly in issue, however, the Court will review the
Commissioner's administrative determination for abuse of
discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza
v. Commissioner, 114 T.C. at 181-182.
In this case petitioner was not entitled to contest the
underlying tax liability for 2001, the only year that this Court
has jurisdiction to consider. Even if petitioner had been
entitled to contest the underlying tax liability, other than
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protester arguments, he presented nothing more than an income tax
return with a zero in each pertinent box. Accordingly,
respondent’s motion for summary judgment will be granted, and
petitioner’s cross-motion for summary judgment will be denied.
Section 6673 Penalty
Respondent has requested that the Court impose a penalty
under section 6673 on the ground that the arguments advanced by
petitioner to respondent and the Court are frivolous. Section
6673(a)(1) authorizes the Court to impose a penalty not in excess
of $25,000 when it appears to the Court that, inter alia,
proceedings have been instituted or maintained by the taxpayer
primarily for delay or that the position of the taxpayer in such
proceeding is frivolous or groundless. In Pierson v.
Commissioner, 115 T.C. 576, 581 (2000), we issued a warning
concerning the imposition of a penalty under section 6673(a)(1)
on those taxpayers abusing the protections afforded by sections
6320 and 6330 through the bringing of dilatory or frivolous lien
or levy actions. The Court has since repeatedly disposed of
cases premised on arguments akin to those raised herein summarily
and with imposition of the section 6673 penalty. See, e.g.,
Craig v. Commissioner, 119 T.C. 252, 264-265 (2002) (and cases
cited therein).
Petitioner’s arguments in this case are frivolous and
without substance. He has taken numerous unrelated legal
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concepts, most of which have been rejected by the courts, and
posed them as reasons why he is not compelled to report or pay
Federal income tax. He has wasted the time and tied up the
resources of the Government with matters that are without
substance or merit. Accordingly, a $2,000 penalty under section
6673 will be imposed against petitioner.3
To reflect the foregoing,
An appropriate order and
decision will be entered.
3
Petitioner is also involved in some manner in two other
cases, now pending before this Court. He is admonished not to
continue presenting the same frivolous arguments in those cases
or he may subject himself to additional penalties under sec.
6673.