T.C. Memo. 2011-127
UNITED STATES TAX COURT
WARREN THOMAS BARRY, ET AL.,1 Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 4754-07L, 5026-07L, Filed June 7, 2011.
25882-08L.
Warren Thomas Barry, pro se.
Sheri Redeker Barry, pro se.
Miriam C. Dillard, for respondent.
1
Cases of the following petitioner are consolidated herewith
for the purpose of this opinion: Sheri Redeker Barry, docket
Nos. 5026-07L and 25882-08L.
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MEMORANDUM OPINION
WELLS, Judge: The instant cases are before the Court on
respondent’s motions for summary judgment pursuant to Rule 121.2
The issue we must decide is whether petitioners Warren Thomas
Barry and Sheri Redeker Barry (Mr. Barry and Ms. Barry,
respectively) are entitled to a face-to-face collection due
process hearing in each of these cases.
Background
The facts set forth below are based upon examination of the
pleadings, moving papers, responses, and attachments. At the
time they filed their petitions, petitioners resided in Florida.3
Docket No. 25882-08L: Ms. Barry’s 1988, 1989, 1990, 1991, and
1992 Tax Years
Ms. Barry failed to file income tax returns for her 1988,
1989, 1990, 1991, and 1992 tax years. Respondent therefore
prepared returns for Ms. Barry pursuant to section 6020(b).
Respondent subsequently sought to collect by levy Ms. Barry’s
liabilities for those years. Ms. Barry submitted a request for a
collection due process hearing. Respondent issued a notice of
2
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
3
At the time of the instant motions, Mr. Barry was
incarcerated at the Federal Correctional Institution in Miami,
Florida, and Ms. Barry was incarcerated at the Federal
Correctional Institution in Coleman, Florida.
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determination, and Ms. Barry sought review of that determination
in this Court in the case at docket No. 8458-00L. That case was
decided on September 30, 2003, when the Court entered a
stipulated decision sustaining respondent’s determination.
Respondent subsequently mailed to Ms. Barry a Notice of
Federal Tax Lien and Your Right to a Hearing with respect to her
1988, 1989, 1990, 1991, and 1992 tax years, and Ms. Barry
responded by requesting a collection due process hearing. In a
letter attached to her request, dated April 25, 2005, Ms. Barry
contended that the Internal Revenue Service (IRS) is entitled to
impose an income tax only on Federal employees and those who
reside in the District of Columbia or other parts of the “Federal
Zone”, including “IRS Districts”. Ms. Barry argued that because
she has never resided in such an area, the IRS has no
jurisdiction to impose an income tax on her. In closing her
letter, Ms. Barry wrote:
It is high time that Americans secure their Rights from
vicious, malicious, and deceptive government agents who are
acting above the law and blatantly disregard their Oath of
Office. * * *. I am tired of those in public office making
threats, false claims of debt, and false claims of being one
who is made liable by mailing presentments that lack any
reference to an Implementing Regulation(s) which must be
published in the Federal Register as mandated by enacted
federal law on the IRS.
You ma’am, are a liar, a cheat, and a defrauder. By your
actions, you have willfully disregarded and violated enacted
federal law which is evident by your fraudulent Notice of
Federal Tax Lien for all to see.
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Respondent’s Appeals Office informed Ms. Barry that the Appeals
Office considered the arguments she advanced in her request for a
collection due process hearing to be frivolous or groundless and
that Ms. Barry would not be entitled to a face-to-face hearing
unless she was prepared to discuss issues related to the
collection of her tax liability. Ms. Barry subsequently sent
respondent’s Appeals Office a number of other letters contesting
respondent’s determination, none of which substantively addressed
any collection issues or alternatives. The Appeals Office
eventually denied Ms. Barry’s request for a face-to-face hearing
and issued Ms. Barry a Notice of Determination Concerning
Collection Action(s) under Section 6320 and/or 6330 (notice of
determination) dated October 7, 2008.
In its notice of determination, the Appeals Office explained
that the only arguments Ms. Barry advanced were frivolous or
groundless and that Ms. Barry never proposed any collection
alternatives or discussed the payment of her tax liabilities.
The notice of determination also stated that the Appeals Office
had verified that requirements of all applicable laws and
administrative procedures had been met. Ms. Barry timely filed a
petition with this Court.
Docket No. 5026-07L: Ms. Barry’s 1993, 1995, 1996, 1997, 1998,
and 1999 Tax Years
Ms. Barry also failed to file income tax returns for her
1993, 1995, 1996, 1997, 1998, and 1999 tax years. Respondent
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therefore prepared returns for Ms. Barry pursuant to section
6020(b). Respondent subsequently sought to collect by levy Ms.
Barry’s liabilities for those years. Ms. Barry submitted a
request for a collection due process hearing. Respondent issued
a notice of determination, and Ms. Barry sought review of that
determination in this Court at docket No. 8458-00L. As noted
above, the case at that docket number was decided on September
30, 2003, when the Court entered a stipulated decision sustaining
respondent’s determination.
Respondent subsequently mailed to Ms. Barry a Notice of
Federal Tax Lien and Your Right to a Hearing for those years, and
Ms. Barry requested a collection due process hearing. The
Appeals Office conducted a telephone hearing on May 19, 2005. In
a letter dated June 22, 2005, Ms. Barry asked for the opportunity
to submit collection alternatives, asked for verification that
all procedural requirements had been met, and contended that all
the actions taken by the IRS against her were void because the
IRS had not enacted “substantive regulations” applicable to Ms.
Barry. However, Ms. Barry’s letter did not actually propose any
collection alternatives. After additional correspondence,
respondent issued a notice of determination dated June 29, 2005,
which explained that because the Appeals Office considered all of
the arguments Ms. Barry raised to be frivolous, Ms. Barry was not
entitled to the face-to-face hearing she had requested. The
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notice of determination also stated that the Appeals Office had
verified that requirements of all applicable laws and
administrative procedures had been met.
After receiving respondent’s notice of determination, Ms.
Barry filed a complaint in the U.S. District Court for the Middle
District of Florida (the District Court) seeking review of
respondent’s notice of determination. On June 12, 2006, the
District Court dismissed Ms. Barry’s case, holding that the
District Court lacked jurisdiction to review respondent’s notice
of determination pursuant to section 6330(d)(1).4 See Redeker-
Barry v. United States, 97 AFTR 2d 2006-3097, 2006-2 USTC par.
50,459 (M.D. Fla. 2006). Ms. Barry appealed the District Court’s
ruling, but the Court of Appeals for the Eleventh Circuit
affirmed the District Court. See Redeker-Barry v. United States,
476 F.3d 1189 (11th Cir. 2007).
Ms. Barry subsequently timely filed a petition with this
Court.
4
The then-applicable version of sec. 6330(d)(1) granted
exclusive jurisdiction of Ms. Barry’s case to the Tax Court
because of our jurisdiction over the underlying tax liability;
i.e., income tax. Sec. 6330(d)(1) was amended by the Pension
Protection Act of 2006, Pub. L. 109-280, sec. 855(a), 120 Stat.
1019, effective for determinations made more than 60 days after
Aug. 17, 2006, which granted the Tax Court exclusive jurisdiction
over all collection due process appeals, regardless of whether we
have jurisdiction over the underlying tax liability.
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Docket No. 4754-07L: Mr. Barry’s 2000, 2001, and 2002 Tax Years
Mr. Barry filed an income tax return for his 2000 tax year
on which he reported zero income and zero liability.5 Mr. Barry
failed to file income tax returns for 2001 and 2002. Respondent
therefore prepared returns for Mr. Barry’s 2000, 2001, and 2002
tax years pursuant to section 6020(b). Respondent subsequently
mailed to Mr. Barry a Notice of Intent to Levy and Notice of Your
Right to a Hearing. Respondent also mailed to Mr. Barry Notices
of Filing of Federal Tax Lien and Your Right to a Hearing. Mr.
Barry requested a collection due process hearing with respect to
the lien notices.
Mr. Barry requested a face-to-face collection due process
hearing with respondent’s Appeals Office. However, the Appeals
Office informed Mr. Barry that it considered the issues raised in
his request for a hearing to be frivolous and that he would not
be granted a face-to-face hearing unless he provided the Appeals
Office with written notice of the specific relevant issues he
wished to raise at the hearing. The Appeals Office also mailed
Mr. Barry a copy of the IRS publication “The Truth About
Frivolous Tax Arguments”. In reply, Mr. Barry wrote a letter in
5
Pursuant to sec. 6702, the IRS imposed a frivolous return
penalty on Mr. Barry for reporting zero income and zero tax
liability on his 2000 tax return. Mr. Barry challenged that
penalty in the District Court, which upheld the penalty. See
Barry v. United States, 101 AFTR 2d 2008-1460, 2008-1 USTC par.
50,293 (M.D. Fla. 2008).
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which he contended that because he was not a Federal employee, he
was not liable to pay the income tax. In that letter, he also
argued that the IRS’ actions in taxing him were void because
those actions were taken without “substantive regulations”.
Mr. Barry’s letter requested an opportunity for a face-to-face
hearing to discuss collection alternatives, but he proposed no
collection alternatives. The Appeals Office denied Mr. Barry’s
request for a face-to-face hearing and issued a notice of
determination dated August 9, 2005, in which it explained that,
because Mr. Barry had proposed no collection alternatives and had
advanced only frivolous arguments, he was not entitled to a face-
to-face hearing. The notice of determination also stated that
the Appeals Office had verified that requirements of all
applicable laws and administrative procedures had been met.
After receiving the notice of determination, Mr. Barry filed
a complaint in the District Court seeking review of the notice of
determination. The District Court dismissed Mr. Barry’s
complaint on April 19, 2006, holding that it lacked jurisdiction
to review the notice of determination. See Barry v. United
States, 97 AFTR 2d 2006-2174, 2007-1 USTC par. 50,368 (M.D. Fla.
2006). On January 31, 2007, the Court of Appeals for the
Eleventh Circuit affirmed the District Court. See Barry v.
United States, 215 Fed. Appx. 933 (11th Cir. 2007).
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Mr. Barry subsequently filed a petition with this Court.
Respondent moved to dismiss Mr. Barry’s case, contending that his
petition was not timely. However, in an order dated July 1,
2008, we denied respondent’s motion. In that order, we warned
Mr. Barry that this Court has repeatedly rejected the arguments
Mr. Barry raised in his petition and in his arguments before
respondent’s Appeals Office. We also warned him that we would
consider his continued maintenance of those arguments as grounds
for imposing a penalty under section 6673.
Discussion
Rule 121(a) allows a party to move “for a summary
adjudication in the moving party’s favor upon all or any part of
the legal issues in controversy.” Rule 121(b) directs that a
decision on such a motion shall be rendered “if the pleadings,
answers to interrogatories, depositions, admissions, and any
other acceptable materials, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that a decision may be rendered as a matter of law.” The moving
party bears the burden of demonstrating that no genuine issue of
material fact exists and that the moving party is entitled to
judgment as a matter of law. Sundstrand Corp. v. Commissioner,
98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).
Summary judgment is appropriate in the instant case because the
relevant facts are not in dispute. The legal issue we must
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decide is whether petitioners are entitled to face-to-face
collection due process hearings.
Section 6320(a) and (b) provides that a taxpayer shall be
notified in writing by the Secretary of the filing of a notice of
Federal tax lien and provided with an opportunity for an
administrative hearing. An administrative hearing under section
6320 is conducted in accordance with the procedural requirements
of section 6330. Sec. 6320(c). If an administrative hearing is
requested, the hearing is to be conducted by the Office of
Appeals. Secs. 6320(b)(1), 6330(b)(1). At the hearing, the
Appeals officer conducting it must verify that the requirements
of any applicable law or administrative procedure have been met.
Sec. 6330(c)(1).
A taxpayer may raise any relevant issue at the hearing,
including challenges to “the appropriateness of collection
actions” and may make “offers of collection alternatives, which
may include the posting of a bond, the substitution of other
assets, an installment agreement, or an offer-in-compromise.”
Sec. 6330(c)(2)(A). A taxpayer may also challenge the existence
or amount of the underlying tax liability, including a liability
reported on the taxpayer’s original return, if the taxpayer “did
not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
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such tax liability.” Sec. 6330(c)(2)(B); see also Montgomery v.
Commissioner, 122 T.C. 1, 5-6 (2004).
Following the hearing, the Appeals officer must determine
whether the proposed collection action should proceed. In making
the determination the Appeals officer shall take into
consideration: (1) Whether the requirements of any applicable
law or administrative procedure have been satisfied; (2) any
relevant issues raised by the taxpayer during the section 6330
hearing; and (3) whether the proposed collection action balances
the need for efficient collection of taxes with the taxpayer’s
legitimate concern that any collection action be no more
intrusive than necessary. Sec. 6330(c)(3).
In determining whether the requirements of any applicable
law or administrative procedure have been met, an Appeals officer
is not required to rely on any particular document. Craig v.
Commissioner, 119 T.C. 252, 261-262 (2002). In evaluating a
taxpayer’s arguments, an Appeals officer is not required to
consider irrelevant or frivolous arguments. Elias v.
Commissioner, T.C. Memo. 2009-236; Moline v. Commissioner, T.C.
Memo. 2009-110, affd. 363 Fed. Appx. 675 (10th Cir. 2010);
Summers v. Commissioner, T.C. Memo. 2006-219.
Although a section 6330 hearing may consist of a
face-to-face conference, a proper hearing may also occur by
telephone or by correspondence under certain circumstances. Katz
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v. Commissioner, 115 T.C. 329, 337-338 (2000); sec.
301.6330-1(d)(2), Q&A-D6, Proced. & Admin. Regs. Section 6330
hearings have generally been informal. Davis v. Commissioner,
115 T.C. 35, 41 (2000). We have held that it is not an abuse of
discretion for an Appeals officer to deny a taxpayer’s request
for a face-to-face hearing where the taxpayer has raised only
frivolous or groundless arguments. Elias v. Commissioner, supra;
see also Lunsford v. Commissioner, 117 T.C. 183, 189 (2001).
This Court has jurisdiction to review an Appeals officer’s
determination. Sec. 6330(d)(1). Where the taxpayer’s underlying
liability was not properly at issue in the hearing, we review the
determination for abuse of discretion. Sego v. Commissioner, 114
T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182
(2000). An Appeals officer’s determination will not be an abuse
of discretion unless the determination is arbitrary, capricious,
or without sound basis in fact or law. Giamelli v. Commissioner,
129 T.C. 107, 111 (2007); Freije v. Commissioner, 125 T.C. 14, 23
(2005).
In each of the instant cases, respondent’s Appeals Office
verified that respondent followed all applicable laws and
administrative procedures. The record in each case establishes
that, as required by section 6330(c), in making its determination
the Appeals Office properly balanced the need for the efficient
collection of tax with petitioners’ legitimate concerns that
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collection be no more intrusive than necessary. Throughout their
extensive correspondence with respondent’s Appeals Office,
petitioners failed to raise any nonfrivolous arguments and failed
to offer any collection alternatives. Petitioners have not shown
why it would be unfair or unduly intrusive to proceed with the
collection actions.
Petitioners filed notices of objection to respondent’s
motions for summary judgment (notices of objection) that are
identical in all material respects. In each of those notices of
objection, petitioners assert that they abandon the arguments
made in their petitions regarding their rights to a face-to-face
hearing before respondent’s Appeals Office. Instead, petitioners
each claim that he or she is willing, upon his or her release
from prison, to “prepare original returns for the years at issue
* * * and at that time, request collection alternatives.”
However, petitioners note that they “[reserve] an argument for
appeal regarding the authority of the Commissioner to administer
tax laws outside the District of Columbia without internal
revenue districts.” Petitioners then devote five out of the six
pages of their notices of objection to an argument that the IRS
lacks jurisdiction to administer tax laws outside the District of
Columbia.
Petitioners’ good faith in claiming that they are willing to
prepare original tax returns and to discuss collection
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alternatives is belied by their unwillingness to actually abandon
the same frivolous arguments they have continued to press since
the beginning of these proceedings despite warnings that such
arguments are frivolous. Moreover, the time for petitioners to
prepare those returns and suggest collection alternatives is long
past.
On the basis of the foregoing, we conclude that it would not
have been productive for respondent to schedule face-to-face
hearings. Accordingly, we hold that it was not an abuse of
discretion for respondent to determine that it was appropriate to
sustain the notices of Federal tax lien, and no genuine issue of
material fact exists requiring trial. We shall therefore grant
respondent’s motions for summary judgment. We have considered
all of petitioners’ arguments, and to the extent not addressed
herein, we conclude that they are moot, irrelevant, or without
merit.
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. In our order dated July 1, 2008, we warned Mr. Barry
that we have frequently imposed the section 6673 penalty on
taxpayers who have continued to advance arguments similar to
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those he has made throughout these proceedings. Despite the fact
that petitioners received similar warnings from respondent’s
Appeals Office and despite the fact that the District Court and
the Court of Appeals for the Eleventh Circuit rejected similar
arguments advanced by petitioners during their criminal trials,
see United States v. Barry, 371 Fed. Appx. 3 (11th Cir. 2010);
United States v. Barry, No. 2:08-CR-56-FTM-99SPC (M.D. Fla. June
22, 2009), petitioners continued to advance the same frivolous
arguments before this Court. Accordingly, we shall impose a
penalty pursuant to section 6673 of $20,000 in the case at docket
No. 4754-07L, and $10,000 in each case at docket Nos. 5026-07L
and 25882-08L.
To reflect the foregoing,
Appropriate orders and
decisions will be entered for
respondent.