T.C. Memo. 2010-50
UNITED STATES TAX COURT
SCOTT RAY HOLMES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21956-07L. Filed March 18, 2010.
Scott Ray Holmes, pro se.
Ann L. Darnold, for respondent.
MEMORANDUM OPINION
THORNTON, Judge: Pursuant to section 6330(d), petitioner
seeks review of respondent’s determination sustaining a proposed
levy with respect to his 2002 Federal income tax liability.1
1
Unless otherwise indicated, 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
Petitioner previously litigated his 2002 Federal income tax
deficiency, as well as additions to tax under sections 6651(a)(1)
and (2) and 6654(a). In Holmes v. Commissioner, T.C. Memo. 2006-
80 (Holmes I), this Court sustained the deficiency and additions
to tax under sections 6651(a)(1) and 6654(a) and imposed a $2,000
penalty under section 6673.2
Respondent assessed petitioner’s 2002 liability in
accordance with this Court’s decision in Holmes I. Respondent
subsequently sent petitioner Letter 1058, Final Notice of Intent
to Levy and Notice of Your Right to a Hearing, with respect to
his outstanding 2002 tax liability. In response petitioner
submitted Form 12153, Request for a Collection Due Process or
Equivalent Hearing, in which he asserted frivolous arguments.
Respondent’s Appeals Office (Appeals) responded by letter,
scheduling a telephone conference. The letter further advised
petitioner:
Before you decide whether to petition a notice of
determination, you should know that the Tax Court
is empowered to impose monetary sanctions up to
$25,000 for instituting or maintaining an action
before it primarily for delay or for taking a
position that is frivolous or groundless [Pierson
v. Commissioner, 115 T.C. 576 (2000); Forbes v.
Commissioner, T.C. Memo 2006-10 ($20,000 penalty
2
With respect to the addition to tax under sec. 6651(a)(2),
we held that respondent failed to carry his burden of production
under sec. 7491(c). Figures have been rounded to the nearest
dollar.
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imposed); Aston v. Commissioner, T.C. Memo 2003-
128 ($25,000 penalty imposed)].
Petitioner responded by letter, requesting a correspondence
hearing. Respondent granted the request by letter, reiterating
the warning about the possibility of sanctions if petitioner
continued to assert frivolous positions. Petitioner submitted
another letter to respondent, repeating the frivolous grounds
stated in the hearing request and making additional frivolous
arguments contesting his underlying liability. By notice of
determination Appeals sustained the proposed levy.
In his petition seeking judicial review of the final
determination, petitioner challenges his underlying liability on
frivolous grounds similar to those he relied upon throughout the
administrative process.
Discussion
Section 6330 requires the Secretary to furnish a person
notice and opportunity for a hearing before making a levy on the
person’s property. 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).
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Petitioner not only received a notice of deficiency for 2002
but also litigated the matter before this Court in Holmes I.
Consequently, in this collection proceeding he is precluded from
disputing his underlying liability not only by section
6330(c)(2)(B) but also by principles of res judicata. See
Sparkman v. Commissioner, T.C. Memo. 2009-308.
The record demonstrates that Appeals verified that all
applicable laws and administrative procedures were followed.
Petitioner has failed to raise a spousal defense, make a valid
challenge to the appropriateness of respondent’s intended
collection action, or offer a viable alternative means of
collection. These issues are now deemed conceded. See Rule
331(b)(4). Respondent did not abuse his discretion in sustaining
the proposed levy.
Respondent has moved to impose a penalty under section
6673(a)(1), which authorizes this 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. In Holmes I, we found that petitioner was liable for
a $2,000 penalty under section 6673 because he “took frivolous
positions before and during trial despite ample warnings before
trial from respondent.” Holmes v. Commissioner, supra.
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Notwithstanding the sanctions imposed in Holmes I, issued more
than a year before petitioner filed his petition in this case,
and notwithstanding respondent’s ample warnings in this
proceeding about the possibility of additional sanctions under
section 6673, petitioner has persisted in his misguided course of
conduct.3 In furtherance of the purpose of section 6673(a)(1) to
deter such conduct, we believe a more significant sanction is now
appropriate. Pursuant to section 6673(a)(1), we shall require
petitioner to pay to the United States a penalty of $10,000.
To reflect the foregoing,
An order and decision
will be entered for
respondent.
3
The current case is the third to date in which petitioner
has pursued frivolous and groundless positions. Recently, in
Holmes v. Commissioner, T.C. Memo. 2010-42, we imposed a $10,000
penalty under sec. 6673(a)(1) because petitioner asserted
frivolous positions with respect to his 2003 tax year.