T.C. Memo. 2007-298
UNITED STATES TAX COURT
JAMES KERR SCHLOSSER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23356-06L. Filed October 1, 2007.
James Kerr Schlosser, pro se.
Kristina L. Rico, for respondent.
MEMORANDUM OPINION
RUWE, Judge: This case is before the Court on respondent’s
motion for summary judgment and to impose a penalty under section
6673.1
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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Background
Respondent sent to petitioner a Final Notice - Notice of
Intent to Levy and Notice of Your Right to a Hearing and a Notice
of Federal Tax Lien Filing and Your Right to a Hearing Under IRC
6320 with respect to unpaid tax that had previously been assessed
for the 1994 tax year. Petitioner timely requested a hearing
with respect to each notice.
In a letter dated August 17, 2006, acknowledging
petitioner’s hearing requests, respondent’s Appeals officer
advised petitioner that a telephonic hearing was scheduled for
September 21, 2006, at 12:30 p.m. The letter advised petitioner
that the issues raised in his hearing requests are those that
courts have determined are frivolous. However, the Appeals
officer advised petitioner that he would be allowed a face-to-
face hearing on any relevant, nonfrivolous issue, or a hearing
via correspondence, if petitioner appropriately requested such a
hearing within 14 days. The letter also advised petitioner that
if he desired to pursue alternative collection methods, he should
provide a Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, and a signed tax return
for the 2005 tax period. Petitioner did not call respondent at
the scheduled time for the hearing, nor did he indicate in a
timely fashion that such date and/or time was inconvenient.
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On October 13, 2006, respondent’s Appeals Office issued to
petitioner a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 (notice of
determination) sustaining the proposed levy and lien filing.
Petitioner timely filed a petition with this Court to dispute the
notice of determination relying on the following alleged facts:
a) The Federal Income Tax system for individual
tax purposes is based upon a self-assessed system and
is 100%voluntary [sic].
b) After self-assessment, the Petitioner had found
that he had no federal tax liability for the calendar
year 1994.
c) The Petitioner did file a Statement in lieu of
a Federal Income Tax Form 1040.
d) The Petitioner is not required by Law to file a
Tax Form 1040.
e) The Petitioner is an Inhabitant of Pennsylvania
state/commonwealth, a Republic, one of the Fifty States
of the Union, also known as, the united states of
America.
f) The Petitioner is not self-employed or
gainfully employed for that matter.
g) The Petitioner is not an agent, servant,
officer, director, or employee of the government, nor
is he subject to the Public Salary Tax Act of 1939.
h) The Petitioner is not required by Law to file
any tax forms, as he has no income form [sic] ‘any
source derived therefrom’ by legal definition indicated
in the Code.
i) The Petitioner is not in the military.
j) The Petitioner is not subject to the
jurisdiction of the United States a foreign corporation
to the Fifty States of the Union, as evidenced in 28
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U.S.C.A. §§3002(2) and (15)(A) and the Clearfield Doctrine.
The Clearfield Doctrine. Wherein the United States
Supreme Court held:
“Governments descend to the level of a mere
private corporation, and take on the
characteristics of a mere private citizen....
Where private corporate commercial paper
[Federal Reserve Bank Notes*, from a private
Banking Corporation, known as the Fed] and
securities [checks] is concerned....for
purposes of suit, such corporations are
regarded as entities entirely separate from
government.” Clearfield, supra. (Emphasis
added).
*Federal Reserve Bank Notes are ‘obligations of the
United States’ (a foreign corporation to the Fifty
States of the Union), see 18 U.S.C.A. §8. These
Federal Reserve Bank Notes are not money, they merely
circulate as a medium of exchange, they are deemed fiat
money or flat money, ‘worthless pieces of paper’, as
indicated in H.J.R. 192, June 5, 1933, this statement
was made by Congressman McFadden from the state of
Pennsylvania.
In another U.S. Supreme Court case, United States
vs. Burr, 309 U.S. 242, the Court held:
“When governments enter the world of
commerce, they are subject to the same
burdens as any private firm or corporation.”
k) The Petitioner has at all times acted in good
faith in connection with his duties and obligations
concerning tax matters. Therefore, the claim for
penalties under the Code referenced above is misplaced.
l) The Petitioner has relied on his interpretation
of the Law, the Tax Codes, and United States Supreme
Court Decisions to form the basis of his decision
making, therefore, there is no deliberate willfulness
on his part to evade any tax or fail to file any tax
alleged due and owing.
m) The Petitioner denies any claim that the
Commissioner asserts that he owes any tax or penalty
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for the calendar year ending December 31, 1994, or any
year for that matter.
n) The Petitioner has been irreparably harmed and
injured in his reputation and good name by these false
and erroneously [sic] accusations and his [sic] has
incurred out-of-pocket expenses to dispute these claims
asserted by the Commissioner.
Respondent has filed a motion for summary judgment in which
he alleges that petitioner’s position is based on frivolous
allegations and arguments. In his motion, respondent also moves
that this Court impose a penalty under section 6673 because
petitioner has instituted these proceedings primarily for the
purpose of delay and petitioner’s position is frivolous and
groundless. In response to respondent’s motion for summary
judgment, petitioner relies on the same type of allegations and
positions that were contained in his above-quoted petition.
Discussion
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted where there is no genuine issue of any material fact, and
a decision may be rendered as a matter of law. Rule 121(a) and
(b). The moving party bears the burden of proving that there is
no genuine issue of material fact. Dahlstrom v. Commissioner, 85
T.C. 812, 821 (1985); Naftel v. Commissioner, 85 T.C. 527, 529
(1985). When a motion for summary judgment is made and properly
supported, the adverse party may not rest upon mere allegations
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or denials of the pleadings but must set forth specific facts
showing that there is a genuine issue for trial. Rule 121(d).
Section 6330(a) provides that no levy may be made on any
property or right to property of any person unless the Secretary
first notifies him or her in writing of the right to a hearing
before the Appeals Office.2 At the hearing, a taxpayer may raise
any relevant issues including appropriate spousal defenses,
challenges to the appropriateness of collection actions, and
offers of collection alternatives. Sec. 6330(c)(2)(A). Under
certain circumstances, the person may also challenge the
existence or amount of the underlying tax liability. Sec.
6330(c)(2)(B).
In Lunsford v. Commissioner, 117 T.C. 183, 185-186 (2001),
we stated:
Our Rules require petitioners to specify the facts
upon which they rely for relief under section 6330. A
petition filed under section 6330 must contain “Clear
and concise lettered statements of the facts on which
the petitioner bases each assignment of error”. Rule
331(b)(5). * * *
In the petition and the response to respondent’s motion for
summary judgment, petitioner has advanced nothing but frivolous
and meritless arguments with respect to his underlying tax
liability for 1994. We shall not painstakingly address
petitioner’s assertions “with somber reasoning and copious
2
Similar hearing rights are provided to contest the filing
of a Federal tax lien under sec. 6320.
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citation of precedent; to do so might suggest that these
arguments have some colorable merit.” Crain v. Commissioner, 737
F.2d 1417 (5th Cir. 1984).
On the basis of our review of the record, we conclude that
there is no genuine issue as to a material fact. In the absence
of a valid issue for review, we conclude that respondent is
entitled to judgment as a matter of law and sustain respondent’s
collection actions.
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 proceedings have been instituted or maintained by
the taxpayer primarily for delay or the taxpayer’s position is
frivolous or groundless. Petitioner’s position is frivolous and
groundless and has caused this Court to waste limited resources.
Accordingly, we hold that petitioner is liable for a $1,000
penalty pursuant to section 6673(a).
To reflect the foregoing,
An appropriate order and
decision will be entered.