T.C. Memo. 2013-128
UNITED STATES TAX COURT
JULIE BEILER ZOOK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9773-12L. Filed May 20, 2013.
Julie Beiler Zook, pro se.
Kristina L. Rico, for respondent.
MEMORANDUM OPINION
RUWE, Judge: This matter is before the Court on respondent’s motion for
summary judgment (motion) pursuant to Rule 121.1 Respondent contends that no
1
Unless otherwise indicated, all Rule references are to the Tax Court Rules of
Practice and Procedure, and all section references are to the Internal Revenue Code
in effect at all relevant times.
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[*2] genuine dispute exists as to any material fact and that the determination to
maintain a notice of Federal tax lien filed under section 6323 should be sustained.
In the motion respondent has also requested the Court to admonish or penalize
petitioner under section 6673 for raising frivolous arguments.
Background
At the time the petition was filed, petitioner resided in Pennsylvania.
Petitioner failed to file Federal income tax returns for the taxable years 2004,
2005, and 2006 (years at issue). Respondent prepared substitutes for returns (SFRs)
for the years at issue pursuant to section 6020(b). On February 11, 2009,
respondent mailed a notice of deficiency to petitioner’s last known address.2
Petitioner did not petition the Court with respect to the deficiencies. On June 29,
2009, respondent assessed the tax liabilities, additions to tax, and interest for the
years at issue.
Respondent filed a notice of Federal tax lien regarding petitioner’s unpaid
tax liabilities for the years at issue. Respondent sent petitioner a Letter 3172,
Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320,
dated February 1, 2011. Petitioner submitted a timely letter requesting a separate
collection due process (CDP) hearing for each of the three taxable years in the
2
We note that petitioner acknowledged she received the notice of deficiency.
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[*3] notice of Federal tax lien. Petitioner’s CDP hearing request did not request a
collection alternative. By letter dated August 23, 2011, respondent acknowledged
receipt of petitioner’s CDP hearing request and scheduled a telephone hearing for
September 27, 2011. On August 30, 2011, petitioner sent respondent a letter
demanding that the CDP hearing be held in person in or near Intercourse,
Pennsylvania. The settlement officer scheduled a face-to-face hearing for January
24, 2012, in Philadelphia, Pennsylvania. On that date petitioner’s husband, Isaac
Zook, called the settlement officer and informed him that petitioner could not attend
the CDP hearing.
On February 27, 2012, a face-to-face CDP hearing was held. Petitioner
attended the CDP hearing with her husband and two other family members.
Petitioner acknowledged that she received the notice of deficiency. Petitioner did
not request a collection alternative. Petitioner’s husband argued that she did not
receive proper notice from the Commissioner and that the assessments were not
constitutional.3
3
In a prior proceeding petitioner’s husband had made frivolous and
groundless arguments and had been warned that a sec. 6673(a)(1) penalty might be
imposed if he pursued similar arguments to this Court in the future. Zook v.
Commissioner, T.C. Dkt. No. 17807-07 (Oct. 16, 2008) (Zook I) (order and
decision).
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[*4] Respondent issued petitioner a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330, dated March 16, 2012,
determining that all legal and procedural requirements in the filing of the notice of
Federal tax lien had been followed and that the notice of Federal tax lien was
appropriate. The notice of determination advised petitioner of the section
6673(a)(1) penalty for frivolous or groundless arguments. Petitioner timely filed a
petition.
Discussion
Summary judgment is intended to expedite litigation and to avoid unnecessary
and expensive trials. Shiosaki v. Commissioner, 61 T.C. 861, 862 (1974).
Summary judgment may be granted where the pleadings and other materials show
that there is no genuine dispute as to any material fact and that a decision may be
rendered as a matter of law. Rule 121(a) and (b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994). The
burden is on the moving party to demonstrate that no genuine dispute as to any
material fact remains and that he is entitled to judgment as a matter of law. FPL
Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). In all cases,
the evidence is viewed in the light most favorable to the nonmoving party.
Bond v. Commissioner, 100 T.C. 32, 36 (1993). However, the nonmoving party is
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[*5] required “to go beyond the pleadings and by her own affidavits, or by the
‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific
facts showing that there is a genuine issue for trial.’” Celotex Corp. v. Catrett, 477
U.S. 317, 324 (1986); see also Rauenhorst v. Commissioner, 119 T.C. 157, 175
(2002); FPL Grp., Inc. & Subs. v. Commissioner, 115 T.C. 554, 559 (2000). We
conclude that there is no dispute as to any material fact and that a decision may be
rendered as a matter of law.
Section 6321 provides that if any person liable to pay any tax neglects or
refuses to do so after demand, the amount shall be a lien in favor of the United
States upon all property and rights to property, whether real or personal, belonging
to such person. Section 6323 authorizes the Commissioner to file a notice of
Federal tax lien. Pursuant to section 6320(a) the Commissioner must provide the
taxpayer with notice of and an opportunity for an administrative review of the
propriety of the filing. See Katz v. Commissioner, 115 T.C. 329, 333 (2000). If a
taxpayer requests a CDP hearing, she may raise at that hearing any relevant issue
relating to the unpaid tax or the lien. Secs. 6330(c)(2), 6320(c). Relevant issues
include challenges to the underlying liability or possible alternative means of
collection. Sec. 6330(c)(2).
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[*6] If a taxpayer’s underlying liability is properly at issue, the Court reviews any
determination regarding the underlying liability de novo. Goza v. Commissioner,
114 T.C. 176, 181-182 (2000). Pursuant to section 6330(c)(2)(B) a person may not
raise the underlying liabilities if she received a notice of deficiency. Petitioner
acknowledged that she received a notice of deficiency. Furthermore, in her
opposition to motion for summary judgment petitioner did not deny that the notice
of deficiency was sent to her last known address. We therefore find that petitioner
received a notice of deficiency and is thereby precluded from raising an issue
regarding the underlying liabilities.
A taxpayer is also precluded from disputing the underlying liability if it
was not properly raised in the CDP hearing. See Giamelli v. Commissioner, 129
T.C. 107, 114 (2007). An issue is not properly raised in the CDP hearing if “the
taxpayer fails to present to Appeals any evidence with respect to that issue after
being given a reasonable opportunity to present such evidence.” Sec. 301.6320-
1(f)(2), A-F3, Proced. & Admin. Regs.; see also Lee v. Commissioner, T.C.
Memo. 2011-112, 2011 Tax Ct. Memo LEXIS 111, at *15-*16. In the amended
petition, petitioner asserted that she “received no ‘income’ in the years
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[*7] alleged.”4 Petitioner failed to provide the settlement officer with any
documentation of the disputed liabilities. As discussed later, petitioner’s position
that she received no income was based on frivolous arguments. As a result,
petitioner did not properly raise her underlying liabilities in the CDP hearing.
Consequently, petitioner’s underlying tax liabilities are not properly before the
Court.
The Court reviews administrative determinations by the Commissioner’s
Office of Appeals regarding nonliability issues for abuse of discretion. Hoyle v.
Commissioner, 131 T.C. 197, 200 (2008); Goza v. Commissioner, 114 T.C. at 182.
The determination of the Office of Appeals must take into consideration: (1) the
verification that the requirements of applicable law and administrative procedure
have been met; (2) issues raised by the taxpayer; and (3) whether any proposed
collection action balances the need for the efficient collection of taxes with the
legitimate concern of the person that any collection be no more intrusive than
necessary. Secs. 6320(c), 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C.
183, 184 (2001). The settlement officer properly based his determination
on the factors required by section 6330(c)(3). Petitioner did not request any
4
Respondent determined that petitioner had taxable income of $220,608 for
2004, $298,760 for 2005, and $275,542 for 2006.
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[*8] collection alternatives. Furthermore, nothing in petitioner’s pleadings indicates
that the settlement officer abused his discretion. Accordingly, we hold that the
settlement officer did not abuse his discretion. As a result, respondent’s
determination is sustained.
Section 6673 Penalty
In the motion respondent has requested the Court to admonish or impose a
penalty on petitioner under section 6673(a)(1). Section 6673(a)(1) authorizes the
Court to impose a penalty not to exceed $25,000 if the taxpayer took frivolous
positions in the proceeding or instituted the proceeding primarily for delay. A
taxpayer’s position is frivolous if it is “‘contrary to established law and unsupported
by a reasoned, colorable argument for change in the law.’” Williams v.
Commissioner, 114 T.C. 136, 144 (2000) (quoting Coleman v. Commissioner, 791
F.2d 68, 71 (7th Cir. 1986)).
The notice of determination advised petitioner that this Court may impose
the section 6673(a)(1) penalty against her if she raises frivolous or groundless
arguments. Petitioner did not heed this advice and made the following arguments in
her amended petition and in her opposition to motion for summary judgment:
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[*9] (1) she was not properly served with notice under section 6001;5 (2) the SFRs
constitute evidence of computer fraud and are a fraud on this Court; (3) the notice
of deficiency is a nullity and constitutes evidence of mail fraud; (4) the notice of
Federal tax lien is a nullity and constitutes evidence of mail fraud; (5) respondent
is “exercising such powers through an officer other than the officer specified in
law” and “in the absence of proof of jurisdiction”; and (6) “[p]etitioner received
no ‘income’”, citing Eisner v. Macomber, 252 U.S. 189 (1920), Doyle v. Mitchell
Bros. Co., 247 U.S. 179 (1918), and Merchants’ Loan & Trust Co. v. Smietanka,
255 U.S. 509 (1921). The amended petition included many of the same arguments
the Court deemed frivolous in Zook I (“The petition set forth various frivolous
arguments”.). As to the various arguments that petitioner has raised, “[w]e
perceive no need to refute these arguments with somber reasoning and copious
citation of precedent; to do so might suggest that these arguments have some
colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984); see
also Holliday v. Commissioner, T.C. Memo. 2005-240, 2005 Tax Ct. Memo
LEXIS 239, at *8. We find that petitioner advanced frivolous arguments primarily
5
Sec. 6001 requires that taxpayers “shall keep such records, render such
statements, make such returns, and comply with such rules and regulations as the
Secretary may from time to time prescribe.” Sec. 6001 does not require the
Secretary to serve notice upon a taxpayer.
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[*10] for the purpose of delay and require that she pay a penalty of $2,000 to the
United States pursuant to section 6673(a)(1). We also warn petitioner that we will
consider imposing a larger penalty if she returns to the Court and advances frivolous
or groundless arguments in the future.
In reaching our decision, we have considered all arguments made by the
parties, and to the extent not mentioned or addressed, they are irrelevant or without
merit.
To reflect the foregoing,
An appropriate order and
decision will be entered.