Oropeza v. Comm'r

T.C. Memo. 2008-94

UNITED STATES TAX COURT

ANTHONY OROPEZA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 3707-05L. Filed April 14, 2008.

Anthony Oropeza, pro se.

Gavin L. Greene, for respondent.

MEMORANDUM OPINION

THORNTON, Judge: Pursuant to section 6330(d), petitioner

seeks review of respondent’s determination to proceed with a

levy. 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.
 - 2 -

Background

The parties have stipulated a few facts; other facts have

been deemed stipulated pursuant to Rule 91(f). The stipulations,

with accompanying exhibits, are incorporated herein by this

reference. When he petitioned this Court, petitioner resided in

California.

For tax years 1999, 2000, and 2001, petitioner filed Forms

1040A, U.S. Individual Income Tax Return, reporting zero adjusted

gross income, zero taxable income, and zero tax. On August 9,

2002, October 2, 2002, and June 13, 2003, respondent mailed to

petitioner notices of deficiency for tax years 1999, 2000, and

2001, respectively, determining deficiencies totaling about

$21,877, as well as additions to tax pursuant to sections

6651(a)(1) and 6654. Petitioner did not petition the Court with

respect to these notices of deficiency.

On April 5, 2004, respondent sent petitioner two final

notices of intent to levy and of the right to a hearing (the

notices). One of the notices covered tax years 1997, 1998, and

1999; the other notice covered tax years 2000, 2001, and 2002.1

In response, petitioner timely submitted to respondent two Forms

12153, Request for a Collection Due Process Hearing (the hearing

1
The notices of intent to levy and of the right to a
hearing showed amounts due that included $500 frivolous return
penalties assessed with respect to each of petitioner’s 2001 and
2002 tax years, in addition to deficiencies in tax, additions to
tax, accrued interest, and late payment penalties.
 - 3 -

requests). One of the hearing requests covered tax years 1997,

1998, and 1999; the other hearing request covered tax years 2000

and 2001. In these hearing requests, petitioner contended,

correctly, that proposed collection actions for 1997 and 1998 had

been overruled in a previous Tax Court proceeding at docket No.

10268-01L. In the hearing requests, petitioner made numerous

frivolous or irrelevant information requests, such as for “Pocket

Commissions” of IRS personnel, and demanded responses to various

inquiries, typical of tax protesters, such as:

Since I “determined” my “income” for 2000 and 2001 was
“zero” (since I concluded that I received no “income”
in the “constitutional sense” in that year) and filed
my returns accordingly, what statute authorized you to
make a different “determination” that [sic] the one I
made?

By letter dated September 21, 2004, respondent’s Appeals

officer indicated that, with respect to tax years 1997 and 1998,

petitioner’s liabilities had been abated and collection

activities stopped. With respect to tax years 1999, 2000, 2001,

and 2002, the Appeals officer requested that by October 5, 2004,

petitioner let him know whether he wished to raise issues in

addition to those contained in his hearing requests. The Appeals

officer also warned petitioner of the Tax Court’s authority to

impose a penalty of up to $25,000 where proceedings are

instituted or maintained primarily for delay or the taxpayer’s

position is frivolous or groundless.
 - 4 -

By letter dated October 1, 2004, and addressed to the

Appeals officer, petitioner summarized and enumerated the issues

that he wished to raise at his collection hearing as follows:

To reiterate, the material issues of fact in this
case before you are: 1.) that I never received the
Written Determination related to assessment pursuant to
section 6201 or 6751, 2.) That I never received the
entitled public’s inspection of any determination
pursuant to Section 6110, 3.) I never received the
Delegation of Authority from the Secretary, 4.) I never
received the Pocket Commissions of the agents at issue,
5.) I never received the Treasury Regulation
authorizing the imposition and payment of any penalty
at issue, 6.) I never received the underlying Internal
Revenue Code Section making me liable for taxes, 7.) I
never received the statutory Notice and Demand for
Payment pursuant to sections 6303, 6321 and 6331, 8.) I
never received the Verification from the Secretary
pursuant to 6330(c)(1) and 9.) I never received the
requisite Written Notice from the Secretary informing
me of my right to said hearing before levy pursuant to
Code Section 6330(a)(1). In addition, as previously
mentioned, in the case file at hand: 10.) my “Final
Notice of Intent to Levy and Notice of Your Right to
Hearing” was not signed by anyone!

Petitioner’s letter also indicated that he intended to record his

collection hearing.

By letters dated November 8 and 10, 2004, the Appeals

officer advised petitioner: “Administrative appeal procedures do

not extend to issues involving the failure or refusal to comply

with the tax laws because of moral, religious, political,

constitutional, conscientious, or similar grounds.” The letters

advised petitioner he qualified for a collection hearing by

telephone, scheduled for November 22, 2004. The letters stated

that failure to participate in the telephone hearing might result
 - 5 -

in a determination based on the information contained in the

file. The letters indicated that petitioner would not be

permitted to record the telephone hearing.

By letter to the Appeals officer dated November 15, 2004,

petitioner indicated that he refused to participate in a

collection hearing, either in person or by telephone, that he

could not record. Petitioner denied having made any frivolous or

groundless arguments, stating: “Also, be advised that on my

Requests for a CDPH (Forms 12153) I have not made any legal

arguments and have only asked for documents pertaining to my

assertion that the IRS has failed to fulfill the requirements of

applicable law and administrative procedures.”

By notice of determination dated January 20, 2005, the

Appeals Office sustained the proposed collection action for 1999,

2000, and 2001.2 The notice of determination states that because

petitioner refused to participate in a hearing by telephone, the

hearing was conducted by correspondence, that the determination

was based on information contained in the file, and that this

information was sufficient to make a determination. The notice

of determination states that petitioner had been sent certified

transcripts showing the requisite assessments and notices. The

notice of determination states that the Appeals officer had

2
The notice of determination did not address 2002, which
had not been included in petitioner’s hearing requests.
 - 6 -

verified or received verification that all applicable laws and

administrative procedures had been followed and had balanced the

proposed collection action with the concern that such action be

no more intrusive than necessary.

In his petition and amended petition, petitioner challenged

the validity of the notice of determination. Respondent filed

motions to permit levy and to impose sanctions under section

6673. On April 17, 2006, a hearing was held on both motions.

By order dated April 24, 2006, the Court granted respondent’s

motion to permit levy. The Court found that the requirements of

section 6330(e)(2), permitting the levy to proceed during appeal,

had been met because: (1) Petitioner’s underlying liability was

not at issue, in that petitioner had previously received notices

of deficiency for the years at issue; and (2) the Secretary had

shown good cause not to suspend the levy, inasmuch as during his

appeal petitioner had raised only frivolous arguments and had

never proposed any collection alternatives. See Burke v.

Commissioner, 124 T.C. 189, 195-197 (2005). The Court denied

respondent’s motion to impose sanctions pursuant to section 6673

but warned petitioner that his continued pursuit of frivolous

legal positions might result in future sanctions. The case was

subsequently calendared for trial.

On September 20, 2006, pursuant to Rule 91(f) respondent

filed a motion to show cause why proposed facts in evidence
 - 7 -

should not be accepted as established. In his response,

petitioner objected to respondent’s Rule 91(f) motion on the

ground that “judicial review of the agency’s decision i.e. notice

of determination, should be limited to the administrative record

developed at the CDPH hearing level as presented before the

Appeals Officer.” In support of his position petitioner relied

upon Robinette v. Commissioner, 439 F.3d 455 (8th Cir. 2006),

revg. 123 T.C. 85 (2004). By order dated October 20, 2006, the

Court granted respondent’s Rule 91(f) motion and ordered that the

matters set forth in respondent’s motion were deemed stipulated

for purposes of the pending case.

At trial petitioner objected to a “trial de novo”, again

relying upon Robinette and renewing his contention that review

should be limited to the documents that he contends constitute

the administrative record. On this ground petitioner objected to

the receipt into evidence of the matters deemed stipulated

pursuant to Rule 91(f). The Court overruled petitioner’s

objections. Notwithstanding renewed warnings about the

possibility of sanctions pursuant to section 6673, petitioner’s

testimony consisted largely of his rehashing of frivolous or

groundless arguments.
 - 8 -

Discussion

A. Legal Framework

Section 6330 provides for notice and opportunity for a

hearing before the IRS may levy upon the property of any person.

At the hearing, the person may raise any relevant issue relating

to the unpaid tax or proposed levy, including spousal defenses,

challenges to the appropriateness of the collection action, and

offers of collection alternatives. The person may challenge the

existence or amount of the underlying tax liability for any

period only if the person did not receive a notice of deficiency

or did not otherwise have an opportunity to dispute the

liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C.

604, 609 (2000). Once the Commissioner’s Appeals Office issues a

notice of determination, the person may seek judicial review in

this Court. Sec. 6330(d)(1). If the validity of the underlying

tax liability is properly at issue, we review that issue de novo.

Sego v. Commissioner, supra at 609-610. Other issues we review

for abuse of discretion. Id.

B. Evidentiary Issue

On brief, as at trial and in pretrial proceedings,

petitioner relies on the decision of the U.S. Court of Appeals

for the Eighth Circuit in Robinette v. Commissioner, supra, to

support his contention that our judicial review should be limited

to the “administrative record”, which he seems to believe
 - 9 -

consists exclusively of these materials: The two notices that

respondent sent to petitioner on April 5, 2004; petitioner’s two

requests for a collection hearing; respondent’s notice of

determination, dated January 20, 2005; and correspondence between

petitioner and respondent’s Appeals officer between September 21

and November 15, 2004. Apart from these just-described materials

and petitioner’s unenlightening testimony, the only other

evidence in the record consists of these additional matters that

were deemed stipulated pursuant to Rule 91(f): Copies of

petitioner’s “zero” Forms 1040 for tax years 1999, 2000, and

2001; copies of the statutory notices of deficiency that

respondent mailed to petitioner with respect to tax years 1999,

2000, and 2001; petitioner’s letters, dated September 30 and

October 9, 2002, in which petitioner acknowledged receipt of the

notices of deficiency for 1999 and 2000 and made frivolous

arguments with respect thereto; and a declaration of an employee

of Southern California Regional Rail Authority, dated July 27,

2006, certifying that in 2001 petitioner had been paid $49,224 in

wages (the declaration).

In seeking to limit judicial review to the few documents

that he claims constitute the administrative record, petitioner

appears to proceed from the premise that respondent bears the

burden of proof in this proceeding. The premise is incorrect.
 - 10 -

The burden of proof is upon petitioner. See Rule 142(a)(1).3

Limiting the record as petitioner urges would do nothing to

strengthen his hand.

In any event, petitioner’s reliance on Robinette v.

Commissioner, supra, is misplaced. In Robinette, the U.S. Court

of Appeals for the Eighth Circuit held that, in a case where the

underlying tax liability was not in issue, judicial review of

whether the Commissioner’s determination to proceed with a

collection action was an abuse of discretion should be limited to

the administrative record. Id. at 462.

In Vierow v. Commissioner, T.C. Memo. 2004-255, affd. 158

Fed. Appx. 926 (9th Cir. 2005), this Court permitted the

Commissioner to present at trial a certified mailing list that

was not part of the administrative file. In doing so, this Court

3
Petitioner makes passing claims that respondent bears the
burden of proof pursuant to sec. 7491(a). Sec. 7491(a) provides
generally that if a taxpayer introduces credible evidence with
respect to any factual issue relevant to ascertaining the
taxpayer’s tax liability and meets certain other prerequisites,
the Commissioner bears the burden of proof with respect to that
factual issue. See Rule 142(a)(2). As discussed infra,
petitioner’s underlying tax liability is not at issue in this
proceeding; consequently, sec. 7491(a) is inapplicable. See
Kansky v. Commissioner, T.C. Memo. 2007-40. But even if we were
to assume, for purposes of argument, that petitioner had
legitimately raised some factual issue as to which sec. 7491(a)
might be relevant, petitioner has failed to establish that he has
met the prerequisites for applying this provision. See Higbee v.
Commissioner, 116 T.C. 438 (2001) (taxpayers bear the burden of
proving that the requirements of sec. 7491(a) are met). In
particular, petitioner has failed to introduce credible evidence
with respect to any factual issue relevant to ascertaining his
tax liability.
 - 11 -

rejected the taxpayer’s argument, much like petitioner’s, that

the Tax Court is subject to the Administrative Procedure Act and

that its review is limited to the administrative record.

Affirming this Court’s decision, the U.S. Court of Appeals for

the Ninth Circuit stated: “All of the documents the appeals

officer reviewed during the collection due process hearing were

part of the administrative record before the tax court.” Vierow

v. Commissioner, 159 Fed. Appx. at 927. The Court of Appeals

cited Thompson v. U.S. Dept. of Labor, 885 F.2d 551, 555 (9th

Cir. 1989), which held that the administrative record includes

“all documents and materials directly or indirectly considered by

agency-decision makers”. See also Holliday v. Commissioner, T.C.

Memo. 2002-67 (permitting the Commissioner to present at trial

documents, records, and testimony that were not part of the

administrative record), affd. 57 Fed. Appx. 774 (9th Cir. 2003)

(stating that “the ‘record review’ provisions of the

Administrative Procedure Act (‘APA’) do not apply to the Tax

Court”).

Similarly, all the exhibits to which petitioner objects,

with the possible exception of the declaration, appear to be

documents that were before the Appeals officer in his review of

petitioner’s case file and hence part of the administrative

record subject to judicial review, even if the documents were not

specifically referenced in the notice of determination. See
 - 12 -

Bowman v. Commissioner, T.C. Memo. 2007-114 (holding that

Robinette did not preclude the Court from considering notices of

deficiency that were not referenced in the notice of

determination).

The declaration, which postdates the notice of determination

and appears to have been obtained by respondent in preparation

for trial, has relevance only insofar as petitioner’s underlying

tax liability is properly at issue. Because, as discussed infra,

petitioner’s underlying liability is not properly at issue, we

have not relied upon the declaration in reaching our decision.

C. Underlying Liability Not At Issue

In its April 24, 2006, order granting respondent’s motion to

permit the levy to proceed during appeal, this Court found that

petitioner’s underlying liability was not at issue because

petitioner had received notices of deficiency for each year at

issue. Without explicitly challenging or even alluding to this

Order, at trial petitioner contended that he never received any

notice of deficiency for 2001. On brief, however, petitioner

does not renew this contention; we deem him to have abandoned it.

In any event, neither in the administrative proceeding nor in

this judicial proceeding has petitioner raised any cognizable

challenge to his underlying tax liability.4

4
At trial and on brief respondent contended that if
petitioner’s 2001 underlying liability were deemed to be at
(continued...)
 - 13 -

D. Petitioner’s Claims of Abuse of Discretion

On brief, petitioner states that the primary issues to be

decided in this case are: (1) Whether respondent abused his

discretion by not granting petitioner a face-to-face collection

hearing; and (2) whether respondent abused his discretion by not

allowing petitioner to record his hearing. For the reasons

discussed below, we conclude that respondent did not abuse his

discretion.

Hearings conducted under section 6330 are informal

proceedings and do not invariably require a face-to-face meeting.

Sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. The

hearing may in certain circumstances be conducted by telephone or

correspondence. Katz v. Commissioner, 115 T.C. 329, 337-338

(2000). Once a taxpayer has been given a reasonable opportunity

for a hearing but has failed to avail himself of the opportunity,

the Appeals officer may proceed in making a determination by

4
(...continued)
issue, then the $49,224 of unreported income determined in the
2001 notice of deficiency is fully supported by the declaration,
which is included in the matters deemed stipulated. Petitioner
has offered no meaningful response to respondent’s contention,
other than as might arise indirectly from his ill-founded
reliance on Robinette v. Commissioner, 439 F.3d 455 (8th Cir.
2006), revg. 123 T.C. 85 (2004) and has offered no testimony or
documentation in this regard. Consequently, if we were to
assume, arguendo, that petitioner received no notice of
deficiency for 2001, and were to assume further that petitioner
had properly placed his 2001 underlying liability at issue, we
would conclude that he had nevertheless failed to support any
challenge to his 2001 underlying liability. See Smith v.
Commissioner, T.C. Memo. 2002-59.
 - 14 -

reviewing the case file. See, e.g., Ho v. Commissioner, T.C.

Memo. 2006-41; Taylor v. Commissioner, T.C. Memo. 2004-25, affd.

130 Fed. Appx. 934 (9th Cir. 2005); sec. 301.6330-1(d)(2), Q&A-

D7, Proced. & Admin. Regs.

The record reflects that after receiving petitioner’s

initial requests for a collection hearing, making frivolous or

irrelevant information requests, the Appeals officer provided

petitioner an opportunity to raise any additional issues.

Petitioner responded with a letter reiterating his frivolous and

irrelevant information requests and making further frivolous

arguments. Petitioner failed to identify any legitimate issues

to be addressed in the hearing and did not request consideration

of any collection alternatives.

At trial, petitioner testified that the issues he would

have wished to pursue at a collection hearing were the 10 issues

identified in his October 1, 2004, letter to the Appeals officer.

These 10 issues consist almost entirely of complaints that he had

not received various documents or information. For the most

part, these 10 issues are patently spurious; for instance,

petitioner complained that he had “never received the underlying

Internal Revenue Code Section making me liable for taxes” and

that he had “never received the Pocket Commissions of the agents

at issue”. Equally groundless is his claim, as stated in his

October 1, 2004, letter, that he “never received the requisite
 - 15 -

Written Notice from the Secretary informing me of my right to

said hearing before levy pursuant to Code Section 6330(a)(1).”

This claim is belied by petitioner’s own hearing requests, which

were in response to his receipt of the two final notices of

intent to levy and of the right to a hearing. In fact, in the

very next issue listed in his October 1, 2004, letter, petitioner

acknowledges having received these notices, complaining that they

were not signed by anyone. There is no statutory requirement,

however, that a final notice of intent to levy and notice of

right to a hearing be signed. See sec. 6331(d).

Petitioner’s October 1, 2004, letter also complained that he

“never received the Verification from the Secretary pursuant to

6330(c)(1)”. This argument is groundless, especially considering

that petitioner advanced it before the scheduling of the hearing

at which the Appeals officer was required to make his

verification that the requirements of applicable laws or

administrative procedures had been met, as required by section

6330(c)(1). In any event, the Appeals Office is not required to

provide a taxpayer with a copy of the verification upon which it

relied in satisfying the verification requirements of section

6330(c)(1). Craig v. Commissioner, 119 T.C. 252, 262 (2002);

Lindsey v. Commissioner, T.C. Memo. 2002-87, affd. 56 Fed. Appx.

802 (9th Cir. 2003). Nor is the Commissioner required to rely on

a particular document to satisfy the verification requirement of
 - 16 -

section 6330(c)(1). The verification requirement may be met

where the Appeals officer secures formal or informal transcripts

showing that the tax was properly assessed and that the taxpayer

had been properly notified of the assessment. See Roberts v.

Commissioner, 118 T.C. 365 (2002), affd. 329 F.3d 1224 (11th Cir.

2003); Haines v. Commissioner, T.C. Memo. 2003-16, affd. 72 Fed.

Appx. 730 (9th Cir. 2003).

The notice of determination indicates that the Appeals

officer relied on certified transcripts of petitioner’s account

to verify that the prerequisites of assessment and notice had

been met. The notice of determination indicates that copies of

these certified transcripts were provided to petitioner.

Petitioner has not demonstrated in this proceeding any

irregularity in the assessment procedure that would raise a

question about the validity of the assessment or any other aspect

of the notice of determination.

In his October 1, 2004, letter petitioner also complained

that he “never received the Written Determination related to

assessment pursuant to section 6201 or 6751”. Section 6201,

however, which establishes the Secretary’s assessment authority,

contains no requirement of a written determination. The deemed

stipulations establish that pursuant to section 6213(a),

respondent mailed petitioner notices of deficiency for each of

the years at issue before assessing the deficiencies and the
 - 17 -

section 6651 and 6654 additions to tax. The notices of

deficiency contained information about the section 6651 and 6654

additions to tax that satisfy the requirements of section 6751.5

Moreover, as previously discussed, we have concluded that

petitioner received the notices of deficiency, is precluded from

challenging his underlying liability in this proceeding, and in

fact has never raised any cognizable challenge to his underlying

tax liability.

Notwithstanding petitioner’s failure to identify legitimate

issues, the Appeals officer offered petitioner a telephone

hearing. Petitioner declined it on the ground that he would not

be permitted to record it. This Court has held that a taxpayer

is not entitled to record his telephone hearing. Calafati v.

5
Sec. 6751(a) provides that the Secretary shall include
with each notice of penalty (defined to include additions to tax,
see sec.6751(c)) “information with respect to the name of the
penalty, the section of this title under which the penalty is
imposed, and a computation of the penalty.”

Petitioner has not expressly raised any issue with respect
to respondent’s determination to proceed with collection of the
$500 frivolous return penalties. In any event, because the
determination that is the subject of this proceeding was made
before Oct. 17, 2006, this Court lacks jurisdiction in this case
to hear a challenge to the collection of frivolous return
penalties assessed pursuant to sec. 6702. See Johnson v.
Commissioner, 117 T.C. 204, 208 (2001); cf. Callahan v.
Commissioner, 130 T.C. ___ (2008) (holding that under sec.
6330(d)(1), as amended by the Pension Protection Act of 2006,
Pub. L. 109-280, sec. 855, 120 Stat. 1019, effective for
determinations made after Oct. 16, 2006, the Tax Court has
jurisdiction to review the Commissioner’s determination to
proceed with collection of a frivolous return penalty).
 - 18 -

Commissioner, 127 T.C. 219, 229 (2006). Accordingly, respondent

did not abuse his discretion in declining petitioner’s request to

record the proffered telephone hearing.

In any event, in the light of petitioner’s failure to

identify any legitimate issue, it is unnecessary and would be

unproductive to remand this case for further proceedings on

account of the lack of a face-to-face hearing or the lack of a

recording. See, e.g., Lunsford v. Commissioner, 117 T.C. 183,

189 (2001); Leggett v. Commissioner, T.C. Memo. 2006-277; Wright

v. Commissioner, T.C. Memo. 2005-291; Holliday v. Commissioner,

T.C. Memo. 2005-132.

Petitioner has offered no collection alternatives and

asserted no spousal defenses. He has demonstrated no

irregularity in the assessment procedures. On the basis of our

examination of the entire record before us, we conclude and hold

that respondent did not abuse his discretion in determining to

proceed with the collection action as determined in the notice of

determination.

E. Petitioner’s 1997 and 1998 Years

The amended petition requests the Court to order respondent

to “once again” abate the assessments and cease collection

activity for 1997 and 1998, in accordance with the stipulated

decision in docket No. 10268-01L. Inasmuch as the notice of

determination, upon which this case is predicated, does not cover
 - 19 -

1997 and 1998, those years are not properly before us in this

proceeding.6

F. Section 6673(a) Penalty

Section 6673(a)(1) authorizes the Tax Court to require a

taxpayer to pay to the United States a penalty not in excess of

$25,000 whenever it appears that proceedings have been instituted

or maintained by the taxpayer primarily for delay or that the

taxpayer’s position in such proceedings is frivolous or

groundless. Petitioner has been warned repeatedly that his

frivolous and groundless positions in this proceeding could

subject him to penalties pursuant to section 6673; he has chosen

to disregard these warnings. We conclude that petitioner’s

positions in this proceeding are frivolous and groundless. We

also conclude from the facts of this case that petitioner has

instituted and maintained this proceeding primarily for delay.

Accordingly, pursuant to section 6673, we shall require

petitioner to pay to the United States a penalty of $10,000.

An appropriate decision

will be entered for respondent.

6
In any event, as previously discussed, by letter dated
Sept. 21, 2004, the Appeals Office advised petitioner that his
liabilities for 1997 and 1998 had been abated and collection
activities stopped. Petitioner has alleged no facts and adduced
no evidence to call this representation into question.