Jones v. Commissioner

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
July 25, 2003
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
__________________________ Clerk

No. 02-60964
Summary Calendar
__________________________

DOYLE JONES; VERONICA JONES ,
Petitioners - Appellants,

versus

COMMISSIONER OF INTERNAL REVENUE,

Defendant - Appellee.

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Appeal from the United States Tax Court

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Before HIGGINBOTHAM, SMITH, and CLEMENT, Circuit Judges.

PER CURIAM:

Taxpayers challenge the Tax Court’s order granting summary judgment to the

Commissioner of Internal Revenue (“Commissioner”) and allowing collection activity to

proceed. The Taxpayers’ legal arguments, including their attempt to avoid paying income

tax, and their attacks on the IRS’ procedures are, for the most part, frivolous. We AFFIRM.
I. FACTS AND PROCEEDINGS

Doyle and Veronica Jones (“Taxpayers”) filed joint income tax returns for 1988, 1992,

1995, 1997, and 1998. With the exception of the return for 1995, each return indicated that

the tax due exceeded the amount of tax paid. Following an audit of the 1995 return,

Taxpayers agreed that taxes due for that year exceeded taxes paid and consented to a

monthly payment plan. Taxpayers also consented to a tax lien, which the government later

placed in 1998. Taxpayers made partial payments but ultimately failed to pay their taxes

for all five years.

On April 24, 2000, the IRS sent Taxpayers a final notice of intent to levy under 26 U.S.C.

§ 6331(d) for a total unpaid balance of $13,417.88. On May 17, 2000, Taxpayers requested

a collection due process (“CDP”) hearing, pursuant to 26 U.S.C. § 6330, to challenge the
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proposed levy. Prior to the hearing, Taxpayers filed amended returns for 1988, 1992, 1995,

1997, and 1998, showing zero taxable income and zero tax due. Each amended return

included a handwritten comment in which Taxpayers asserted:

We also had no statutory liability with respect to income taxes, and pursuant
to code sec. 31(a)(1), we have a constitutional right to have the wage tax
imposed in sec. 3402(a)(1) refunded since it represents an unapportioned,
direct tax on wages and thus would be unconstitutional if we could not have
them refunded. Because of the misleading caption on sec. 3402(a)(1), we did
not realize that what was deducted from our pay was not income tax, but a

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Taxpayers also challenged the lien that arose out of the review of the 1995
return. Because CDP hearings are available only for notices of federal tax liens filed
after January 19, 1999, Taxpayers were unable to challenge the lien, which was filed on
July 24, 1998. See 26 U.S.C. § 6330 Historical and Statutory Notes (“This section applies
to collection actions initiated 180 days after July 22, 1998 . . . .”).

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direct tax on our wages.

At the CDP hearing, held in January 2001, Taxpayers (1) asserted they never received

notice and demand for unpaid tax, see § 6331(a); and (2) questioned whether the appeals

officer could point to any statute under which Taxpayers became liable to pay income tax

(Taxpayers opened their checkbook and offered to write a check if the appeals officer could

point to the law imposing the disputed tax). While it was underway, Taxpayers attacked

the CDP hearing as defective, arguing the appeals officer failed to “obtain verification from

the Secretary that the requirements of any applicable law or administrative procedure

[had] been met.” § 6330(c)(1). The Taxpayers did not present any other arguments

relating to (i) spousal defenses, (ii) the appropriateness of collection actions, or (iii) offers

of collection alternatives. See § 6330 (c)(2)(A)(i)-(iii). After the hearing, the Office of

Appeals issued a notice of determination sustaining the proposed levy. The Office of

Appeals reasoned that because Taxpayers’ arguments against the collection action were

groundless and because Taxpayers had not presented a legitimate collection alternative,

the proposed levy balanced the need for efficient collection of taxes with Taxpayers’

concerns that it be no more intrusive than necessary.

Taxpayers brought a pro se appeal to the Tax Court. The Commissioner responded by

moving for summary judgment. The court held a hearing on the motion and, at the end,

granted the Commissioner’s motion. The court rejected as incredible and unbelievable

Taxpayers’ contention that they never received notice and demand for payment, accepting

instead the Commissioner’s evidence that notice and demand had been given soon after

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each tax return arrived at the IRS: “I’m concluding that your testimony, your allegation is

not credible. It doesn’t overcome the presumption of regularity associated with the

Government’s procedures . . . .”

Taxpayers timely brought a pro se appeal to this Court, arguing (1) summary judgment

was inappropriate because there were genuine issues of material fact; (2) the CDP hearing

was defective because the appeals officer failed to provide verification by the Secretary;

(3) the Tax Court erred by granting summary judgment while a Freedom of Information

Act request was pending; (4) the Tax Court judge’s behavior was “egregious”; (5) the

government placed the 1998 lien illegally; and (6) the IRS violated the stay pending appeal

when a revenue officer contacted the taxpayers at their home.

II. STANDARD OF REVIEW

A grant of summary judgment is reviewed de novo. Perez v. United States, 312 F.3d

191, 193 (5th Cir. 2002). We apply the same standard as the district court. Id. In a

collection due process case in which the underlying tax liability is properly at issue, the

Tax Court (and hence this Court) reviews the underlying liability de novo and reviews the

other administrative determinations for an abuse of discretion. Craig v. Commissioner,

119 T.C. 252, 260 (2002).

III. DISCUSSION

All but two of Taxpayers’ arguments do not require extended discussion. Income tax

laws apply to income earned by individuals. See, e.g., United States v. Burton, 737 F.2d

439, 441 (5th Cir. 1984) (“Beyond dispute, wages are income.”). The IRS has discretion to

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accept or reject an amended return. See Evans Cooperage Co. v. United States, 712 F.2d

199, 204 (5th Cir. 1983). A “notice of deficiency” is only required in situations where there

is a deficiency (e.g. the amount of tax imposed by the IRS exceeds the amount of tax shown
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by the taxpayer on his return) and not in situations where, as here, a taxpayer fails to pay

the amount of tax shown on the returns. Perez, 312 F.3d at 196. Nothing in the transcript

or record indicates the Tax Court judge’s behavior was egregious. To the contrary, the

record is replete with Mr. Jones’ intemperate comments. Finally, we hold that the notice

and demand required under § 6331(a)(1) can be given by forms other than Form 17, such

as a notice of balance due. Cf. Craig v. Commissioner, 119 T.C. 252, 260-61 (2002) (a notice

of balance due satisfies the notice and demand requirement of § 6303(a)).

Taxpayers assert the CDP hearing they received was defective. Section 6330(c)(1),

governing CDP hearings, requires that “[t]he appeals officer shall at the hearing obtain

verification from the Secretary that the requirements of any applicable law or

administrative procedure have been met.” Taxpayers argue the appeals officer was

required to obtain (1) verification from the (2) Secretary of the Treasury (3) during the

hearing. In this case, the appeals officer inspected a Form 4340 and determined the IRS

had followed legal and administrative procedures. The Commissioner, pointing to Tax

Court decisions, maintains these procedures satisfy the statute. We agree. The appeals

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The 1995 return created a deficiency: following an audit, the IRS determined
the amount of tax due exceeded the amount of tax shown on the return. Taxpayers
waived the notice of deficiency when they signed Form 4832. In any event, the Tax
Court correctly did not exercise jurisdiction over this claim because it had already been
disputed. See § 6330(c)(2)(B), (d)(1)(A).

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officer referred to the Form 4340 “at the hearing” and “verified” whether legal and

administrative procedures had been followed. The appeals officer acted as a delegate of

the Secretary. See 26 U.S.C. § 7701 (11)-(12).

At the summary judgment hearing, the tax judge made numerous statements

evaluating the credibility of Taxpayers’ representation that they had not received notices

of balance due. When issues that require the weighing of credibility are material,

summary judgment is not appropriate. The Commissioner argues that whether Taxpayers

received balance-due notices is not material to whether the IRS sent the notices. See

Hansen v. United States, 7 F.3d 137, 138 (9th Cir. 1993) (affirming summary judgment

where taxpayers’ assertion they had not received notice was not material to whether the

IRS had sent notice). We agree, given the facts of this case. Taxpayers have consistently

maintained that Form 17 is the only form by which the IRS can fulfill its requirement to

give notice and demand under § 6331(a). Taxpayers’ core argument is that they never

received notice from the IRS because they never received a Form 17. This contention is not

material to whether the IRS sent a notice other than Form 17. Thus, taxpayers fail to come

forward with “specific facts” to counter the motion for summary judgment. See FED. R.

CIV. P. 56(e).

IV. CONCLUSION

For the foregoing reasons, we AFFIRM the holding of the Tax Court.