T.C. Memo. 2007-225
UNITED STATES TAX COURT
JAMES BENJAMIN WOOD III, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5508-06L. Filed August 13, 2007.
James Benjamin Wood III, pro se.
Jeffrey S. Luechtefeld, for respondent.
MEMORANDUM OPINION
VASQUEZ, Judge: This case was commenced in response to a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330.1 The issues for decision are: (1)
Whether respondent may proceed with collection of petitioner’s
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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1992 and 1993 income tax liabilities; and (2) whether petitioner
is liable for a penalty pursuant to section 6673.
Background
At the time he filed the petition, petitioner resided in
Florida.
Petitioner failed to file Federal income tax returns for
1992 and 1993. On March 13, 1995, respondent prepared
substitutes for return for 1992 and 1993. On August 26, 1996,
respondent assessed $15,343 of tax for 1992, $1,626 of tax for
1993, and interest and additions to tax for 1992 and 1993. On
August 1, 2005, respondent issued to petitioner a Final Notice--
Notice of Intent to Levy and Notice of Your Right to a Hearing
regarding petitioner’s outstanding 1992 and 1993 income tax
liabilities.
On August 8, 2005, petitioner sent respondent a Form 12153,
Request for a Collection Due Process Hearing (section 6330
hearing request). Petitioner attached to the Form 12153 several
documents containing frivolous and groundless arguments,
questions, and statements regarding his liability for income
taxes, the legality of imposing income taxes on individuals, and
respondent’s authority to collect income taxes.
Settlement Officer James Feist was assigned to petitioner’s
case. In a letter dated January 20, 2006, Settlement Officer
Feist acknowledged receipt of petitioner’s Form 12153 and other
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materials (January 2006 letter). In the January 2006 letter,
Settlement Officer Feist: (1) Informed petitioner that the
arguments he advanced were frivolous, groundless, or arguments
that Appeals Office employees may not consider; (2) requested
petitioner submit relevant, nonfrivolous information (such as
petitioner’s signed tax returns for 1992 and 1993, challenges to
the appropriateness of collection actions, or proposals of
collection alternatives); (3) scheduled a phone conference with
petitioner for February 9, 2006; and (4) attached a copy of an
IRS document entitled “The Truth About Frivolous Tax Arguments”,
which detailed several of the frivolous and groundless arguments
that petitioner asserted in the materials he sent to respondent.
On January 25, 2006, and numerous other dates, petitioner
sent to respondent additional materials containing frivolous and
groundless arguments, questions, and statements (additional
frivolous materials). Settlement Officer Feist responded to
petitioner’s additional frivolous materials and requested
petitioner submit relevant, nonfrivolous information regarding
the years in issue. Settlement Officer Feist: (1) Informed
petitioner, again, that the arguments he advanced were frivolous,
groundless, or arguments that Appeals Office employees may not
consider; (2) advised petitioner to contact him by February 7,
2006, if petitioner wished to submit relevant, nonfrivolous
information for Settlement Officer Feist’s consideration or to
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reschedule the phone conference; and (3) informed petitioner that
if the Appeals Office did not receive any additional information
from petitioner, Appeals would review petitioner’s case based on
the information in petitioner’s file.
On February 9, 2006, Settlement Officer Feist called
petitioner at the phone number petitioner had provided. No one
answered Settlement Officer Feist’s call. Settlement Officer
Feist left a voice message stating (1) that he could not
determine that the assessments or proposed collection actions
were incorrect based on the information petitioner had provided,
and (2) that respondent would issue a notice of determination in
petitioner’s case.
Respondent issued to petitioner a Notice of Determination
Concerning Collection Action(s) under Section 6320 and/or 6330
(notice of determination) with respect to petitioner’s income tax
liabilities for 1992 and 1993. In the notice of determination,
respondent determined that the proposed levy should be sustained
and that petitioner “failed to file outstanding U.S. Individual
Income Tax Returns, failed to make payments on the amounts
assessed, and failed to submit a viable collection alternative”.
Petitioner timely filed a petition for lien or levy action
under section 6320(c) or 6330(d) regarding his 1992 and 1993 tax
liabilities. In the petition, petitioner raised several
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frivolous and groundless arguments that he previously had raised
in his section 6330 hearing.
Discussion
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials and may be granted where
there is no genuine issue of material fact and a decision may be
rendered as a matter of law. Rule 121(a) and (b); Fla. Peach
Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The moving party
bears the burden of proving that there is no genuine issue of
material fact, and factual inferences are viewed in a light most
favorable to the nonmoving party. Craig v. Commissioner, 119
T.C. 252, 260 (2002); Dahlstrom v. Commissioner, 85 T.C. 812, 821
(1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). The
party opposing summary judgment must set forth specific facts
that show a genuine question of material fact exists and may not
rely merely on allegations or denials in the pleadings. Grant
Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988);
Casanova Co. v. Commissioner, 87 T.C. 214, 217 (1986).
Section 6330 provides that no levy may be made on any
property or right to property of a person unless the Secretary
first notifies him or her in writing of the right to a hearing
before the Appeals Office. 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,
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a taxpayer may raise any relevant issues relating to the unpaid
tax or the proposed levy, 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 or she 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 at issue, the Court will review the matter de novo.
Where the validity of the underlying tax is not properly at
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. 176, 181-182 (2000).
Settlement Officer Feist could not determine whether
petitioner received notices of deficiency for 1992 and 1993.
Accordingly, Settlement Officer Feist allowed petitioner to
challenge the validity of the underlying tax liability for 1992
and 1993 as part of the section 6330 hearing. Petitioner,
however, failed to raise a nonfrivolous challenge to his
underlying tax liability. Instead, petitioner chose to advance
frivolous and groundless arguments.
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Throughout his section 6330 hearing, the petition, and
several pounds of spurious materials that petitioner filed in
this case2 petitioner advanced shopworn arguments characteristic
of tax-protester rhetoric that has been universally rejected by
this and other courts. See 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 petitioner’s
assertions “with somber reasoning and 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) (per curiam).
Petitioner has failed to make a valid challenge of his
underlying tax liabilities or to the appropriateness of
respondent’s intended collection action, offer alternative means
2
For example, among other things, petitioner filed “Sworn
Suggestions of Intentional Policies and Practices of Jural Deceit
Evidenced by Consistent and Repeated Use of Unverified Process in
Response to Petitioner’s Verified Challenge” and “Notice of
Corrections to Sworn Motion to Vacate Order Dated May 31, 2006
For Failure to Prove the Indispensable Prerequisite
Jurisdictional Fact Following Petitioner’s Repeatedly Set Forth
Undisputedly Relevant and Verifiable Challenge”.
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of collection, or offer any spousal defenses. These issues are
now deemed conceded. Rule 331(b)(4).
Accordingly, we sustain respondent’s determination to
proceed with collection for 1992 and 1993.
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).
Settlement Officer Feist repeatedly informed petitioner that
petitioner’s arguments were frivolous and groundless and provided
petitioner “The Truth About Frivolous Tax Arguments”, which
explains the defects in several of petitioner’s arguments.
Settlement Officer Feist also prepared and sent petitioner
several documents addressing petitioner’s frivolous and
groundless arguments with citations to the Constitution, the
Internal Revenue Code, and cases from the Supreme Court of the
United States, the U.S. Courts of Appeals, and the Court. At
trial, the Court informed petitioner that the arguments he was
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advancing had been universally rejected by the courts that have
considered them.
Petitioner’s 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 $5,000 pursuant to section 6673.
To reflect the foregoing,
An appropriate order and
decision will be entered.