T.C. Memo. 2009-14
UNITED STATES TAX COURT
THOMAS WANE MARETT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4048-06L. Filed January 22, 2009.
Thomas Wane Marett, pro se.
J. Craig Young, for respondent.
MEMORANDUM OPINION
WELLS, Judge: This matter is before the Court on
respondent’s motion for summary judgment pursuant to Rule 121,
filed February 27, 2008, and respondent’s motion for penalty
pursuant to section 6673, also filed February 27, 2008.1 The
1
Unless otherwise indicated, all Rule references are to the
(continued...)
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issues we must decide are: (1) Whether respondent’s Appeals
Office abused its discretion in determining to proceed with the
collection of petitioner’s tax liability for taxable year 2000,
and (2) whether the Court should impose a penalty under section
6673. For the reasons stated below, we shall grant respondent’s
motions.
Background
At the time of filing the petition, petitioner resided in
South Carolina. On May 17, 2004, respondent mailed a notice of
deficiency to petitioner for the taxable year 2000. In the
notice of deficiency, respondent determined a deficiency in
income tax attributable to petitioner’s failure to report
nonemployee compensation, an IRA distribution, and interest
income. Respondent also determined that petitioner was liable
for additions to tax under section 6651(a)(1) (failure to file a
return) and section 6654(a) (failure to pay estimated tax). On
October 12, 2004, petitioner filed a petition for redetermination
with the Court. On January 7, 2005, the Court entered an Order
of Dismissal for Lack of Jurisdiction on the ground that the
petition was not timely filed.2
1
(...continued)
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code, as amended.
2
Petitioner’s motion to vacate was subsequently denied by
this Court, and petitioner’s appeal to the Court of Appeals for
(continued...)
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On May 23, 2005, respondent mailed to petitioner a Final
Notice of Intent to Levy and Notice of Your Right to a Hearing
Under Section 6330 regarding his unpaid tax for 2000. On or
about June 14, 2005, petitioner timely submitted to respondent a
Form 12153, Request for a Collection Due Process Hearing.
Petitioner’s request stated: “I request collection alternatives
including OIC and payment schedule. Collection actions are
inappropriate. Procedural defects by the IRS exist.”
By letter dated September 12, 2005, respondent’s Appeals
Office in Charlotte, North Carolina, informed petitioner that his
case was assigned to that office for consideration and that the
review would proceed by telephone, mail, and/or personal
interview. By letter dated September 15, 2005, petitioner
informed the Appeals Office that “we request a personal
interview/hearing, and do not wish to conduct this
interview/hearing via telephone.” By letter dated October 24,
2005, Appeals Officer K. Keeley (Appeals Officer Keeley) informed
petitioner that she had received his request for a hearing, that
“items that you mentioned in your previous correspondences are
items that * * * are frivolous or groundless, or * * * are moral,
religious, political, constitutional, conscientious, or similar
grounds”. Appeals Officer Keeley advised petitioner that he was
2
(...continued)
the Fourth Circuit was ultimately dismissed for failure to
prosecute.
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not entitled to a face-to-face hearing on the basis of the items
set forth in his request for a section 6330 hearing. Appeals
Officer Keeley further informed petitioner that she was
scheduling a conference for him on November 21, 2005, and that
petitioner should submit a collection information statement and
demonstrate that he was current in all Federal tax return filings
and deposit requirements before the hearing.3
By letter dated November 2, 2005, petitioner again asserted
that he wanted to discuss collection alternatives and that he
wanted to bring all required documents to a face-to-face hearing.
The parties subsequently exchanged additional correspondence
debating whether petitioner was entitled to a face-to-face
hearing.
On January 27, 2006, respondent sent to petitioner a Notice
of Determination Concerning Collection Action(s) Under Section
6320 and/or 6330 determining that it was appropriate to proceed
with the proposed levy. On February 24, 2006, petitioner filed a
petition for lien or levy action with the Court. Petitioner
3
Appeals Officer Keeley repeatedly advised petitioner that
the Internal Revenue Manual (IRM) requires that he be in
compliance with current filing and paying obligations in order to
be eligible for any collection alternatives. See, e.g.,
McCorkle v. Commissioner, T.C. Memo. 2003-34 (the Commissioner
properly rejected a proposed installment agreement because, as of
the date of the notice of determination, the taxpayer had not
filed a 2001 return and had not fully paid her 2001 income
taxes). IRM pt. 5.8.3.4.1 (Sept. 1, 2005) (offer-in-compromise);
IRM pt. 5.14.1.5.1 (July 12, 2005) (installment agreement).
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stated that he was denied a proper administrative hearing under
section 6330. On May 10, 2006, respondent filed a motion for
summary judgment (the first motion for summary judgment) and a
separate motion for penalty pursuant to section 6673.
In denying respondent’s first motion for summary judgment,
we concluded that “Appeals Officer Keeley acted prematurely in
labeling as frivolous and groundless the issues raised in
petitioner’s hearing request”, given that a failure to pay
penalty of $805.77, assessed October 4, 2004, was not included in
the notice of deficiency dated May 17, 2004.4 We remanded the
instant case for further administrative proceedings before a new
Appeals officer who had no prior involvement with the matter and
ordered that petitioner be afforded a face-to-face hearing
pursuant to section 6330. Additionally, we ordered the new
Appeals officer to verify that respondent properly assessed an
addition to tax for failure to pay under section 6651(a)(2) for
2000. Petitioner was also warned of the potential for penalties:
In remanding this case, we add a strong word
of caution to petitioner who has been less
than revealing in his dealings with the Appeals
Office and the Court. We remind petitioner
that he must be current in his Federal tax
obligations, see, e.g., sec. 6012(a), in order
to make an offer-in-compromise or to qualify
for an installment agreement. In addition,
petitioner should be prepared to submit to the
Appeals Office complete and accurate financial
information in support of a collection
4
Respondent conceded this point at the hearing on that
summary judgment motion.
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alternative. Should the Court subsequently
determine that petitioner used these proceedings
primarily for purposes of delay and/or to advance
frivolous and groundless arguments, the Court
will strongly consider imposing a penalty on
petitioner pursuant to section 6673(a). See
Pierson v. Commissioner, 115 T.C. 576 (2000).
Upon remand, the case was assigned to Appeals Settlement
Officer Pat McCall (Settlement Officer McCall), an impartial
officer with no previous involvement with the unpaid taxes. On
September 6, 2006, Settlement Officer McCall held a face-to-face
hearing with petitioner. Petitioner appeared for the conference
with Robert Clarkson (Mr. Clarkson), his alleged
“representative”, and three other individuals (two alleged expert
witnesses who were “to testify and prove * * * [petitioner’s]
case” and an “assistant”). Mr. Clarkson insisted that all four
individuals be allowed in the hearing with petitioner but was
repeatedly advised that petitioner could bring only two
individuals into the conference.5 Ultimately, petitioner
selected Mr. Clarkson and a second unnamed individual who
5
Mr. Clarkson was also advised on several occasions that he
was not permitted to represent petitioner, but he continued to
speak, offering only frivolous taxpayer arguments. We note that
Settlement Officer McCall did not abuse her discretion in
refusing to allow Mr. Clarkson to represent petitioner, as Mr.
Clarkson offered no proof that he was an attorney in good
standing, a certified public accountant, or an enrolled agent in
good standing. See Young v. Commissioner, T.C. Memo. 2003-6
(third party was not entitled to represent taxpayer in a sec.
6330 hearing because of noncompliance with Circular No. 230).
Mr. Clarkson was removed from the courtroom during the Mar.
17, 2008, trial session of the Court in Columbia, South Carolina,
pursuant to an order of the Court.
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operated a tape recorder to accompany petitioner into the hearing
room.
During the face-to-face hearing, Settlement Officer McCall
informed petitioner as follows:
[A] procedural error was identified regarding
the Statutory Notice of Deficiency issued for
the 2000 1040: the Failure to Pay penalty in
the amount of $805.77, assessed on October 4,
2004, was not properly listed in the Statutory
Notice of Deficiency dated May 17, 2004, and
would be abated. No other procedural defects
were found.
During the hearing, Settlement Officer McCall provided
petitioner with the opportunity to produce evidence that he was
current with tax filings and to produce financial information in
support of any collection alternative that he wished to raise.
Although petitioner claimed to have relevant financial
information in his possession, petitioner refused to produce such
information without the assistance of his alleged expert
witnesses. Petitioner was then advised that a supplemental
determination letter would be issued, and the conference was
adjourned.
The supplemental notice dated September 15, 2006, stated as
follows:
Appeals determined to abate the failure to pay
penalty in the amount of $805.77, due to a pro-
cedural error that omitted the penalty on the
Statutory Notice of Deficiency. The [petitioner]
did not file tax returns for 1999, 2003, 2004,
and 2005, and, therefore, is not current with
required tax filings and does not qualify for a
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collection alternative. He also failed to submit
any financial information to the Service. The
proposed levy is sustained.
On February 27, 2008, respondent filed the motion for
summary judgment and the motion for penalties pursuant to section
6673.
Discussion
Petitioner contends that respondent’s Appeals Office abused
its discretion in determining to proceed with the collection of
petitioner’s income tax liabilities for taxable year 2000.
Specifically, petitioner argues that respondent’s motion for
summary judgment should be denied because respondent would not
allow petitioner’s expert witnesses to testify at the section
6330 hearing before Settlement Officer McCall.
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 material fact and a
decision may be rendered as a matter of law. Rule 121(b). 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). The party opposing
summary judgment must set forth specific facts that show that a
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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,
the person requesting a hearing 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 in issue, the Court will review the matter de novo.
Respondent argues, and the Court agrees, that section
6330(c)(2)(B) precludes petitioner from challenging the
underlying tax liabilities for taxable year 2000 because
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petitioner received a notice of deficiency for that year and
failed to timely petition this Court. Accordingly, the validity
of the underlying tax is not properly in issue, and the Court
will review respondent’s administrative determination for abuse
of discretion. See Sego v. Commissioner, 114 T.C. 604, 610
(2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).
As to petitioner’s claim that he is entitled to call
witnesses at a face-to-face hearing, this Court has noted on a
number of occasions that hearings conducted under section 6330
are informal proceedings, not formal adjudications. Katz v.
Commissioner, 115 T.C. 329, 337 (2000); Davis v. Commissioner,
115 T.C. 35, 41 (2000). There inheres no right to subpoena
witnesses and documents in connection with section 6330 hearings.
Nestor v. Commissioner, 118 T.C. 162, 166-167 (2002); Davis v.
Commissioner, supra at 41-42; see sec. 301.6330-1(d)(2), Q&A-D6,
Proced. & Admin. Regs.
Petitioner did not avail himself of the opportunity afforded
to him at the hearing to produce evidence that he was current
with tax filings, and he failed to produce any financial
information for consideration. Accordingly, we hold that no
genuine issue of material fact exists requiring trial and that
respondent is entitled to summary judgment. Consequently, we
conclude that respondent’s Appeals Office did not abuse its
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discretion in determining that respondent may proceed with the
collection of petitioner’s tax liabilities.
Respondent requests that the Court require petitioner to pay
a penalty pursuant to section 6673(a)(1). Section 6673(a)(1)
authorizes the Court to require a taxpayer to pay to the United
States a penalty in an amount not to exceed $25,000 whenever it
appears to the Court, inter alia, that a proceeding before it was
instituted or maintained primarily for delay, or that the
taxpayer’s position in such a proceeding is frivolous or
groundless. See sec. 6673(a)(1)(A) and (B).
In Pierson v. Commissioner, 115 T.C. 576, 581 (2000), we
issued an unequivocal warning to taxpayers concerning the
imposition of a penalty under section 6673(a) on those taxpayers
who abuse the protections afforded by sections 6320 and 6330 by
instituting or maintaining actions under those sections primarily
for delay or by taking frivolous or groundless positions in such
actions.6
We believe petitioner advances frivolous and/or groundless
contentions, arguments, and requests primarily for delay and in
direct contravention of the above-quoted warnings given to him by
the Court, thereby causing the Court to waste its limited
6
Respondent advised petitioner by letter dated Dec. 3, 2007,
that respondent intended to file a motion for penalty pursuant to
sec. 6673, and quoted therein our July 7, 2006, order cautioning
petitioner as to the possible imposition of a sec. 6673 penalty.
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resources. Consequently, we shall impose a penalty of $5,000 on
petitioner pursuant to section 6673(a)(1).
We have considered all of petitioner’s statements,
contentions, arguments, and requests that are not discussed
herein and find them unnecessary to reach, without merit, or
irrelevant.
On the basis of the record before us, we shall grant each of
respondent’s motions.
To reflect the foregoing,
An appropriate order and
decision will be entered.