T.C. Memo. 2005-81

UNITED STATES TAX COURT

WILLIAM B. AND DIANE S. MEYER, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 6901-03L. Filed April 11, 2005.

William B. and Diane S. Meyer, pro sese.

Ann M. Welhaf, Nancy C. Carver, and Warren P. Simonsen, for

respondent.

MEMORANDUM OPINION

WELLS, Judge: This matter is before the Court on

respondent’s motion for summary judgment, pursuant to Rule 121. 

All 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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1Stipulations of fact signed by petitioners’ former counsel

on Feb. 13, 2004, were submitted by respondent as an exhibit to

the instant motion for summary judgment. In their response to

the motion, petitioners stated:

Due to the uncompleted process regarding the

stipulations, and since there are inadvertent errors in

the list that has been signed by both counsels,

petitioners respectfully request permission to withdraw

all stipulations attached to respondent’s motion for

summary judgment.

Because the foregoing stipulations of fact have not been filed

with this Court pursuant to Rule 91, we do not consider

petitioners’ request for withdrawal and we do not consider the

stipulations of fact contained in the exhibit.

Background1

Petitioners are husband and wife. At the time of the filing

of the petition, petitioners resided in Las Vegas, Nevada.

On or about May 12, 1998, petitioners filed a 1997 Form

1040, U.S. Individual Income Tax Return (tax return), reporting

zero gross income for the 1997 tax year. With the tax return,

petitioners submitted a 1997 Form 1099-R, Distributions from

Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,

Insurance Contracts, etc., and a 1997 Form W-2, Wage and Tax

Statement. The Form 1099-R reported a gross distribution from

E.I. Dupont Pension Fund of $27,504, and the Form W-2 reported

compensation from E.I. Dupont De Nemours and Co. of $342. 

Petitioners also submitted with the tax return a document making

the following assertions: (1) The Internal Revenue Code does not

establish an income tax liability; (2) the tax return is not
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being filed voluntarily but out of fear of illegal governmental

prosecution; (3) the “Privacy Act Notice” contained in the Form

1040 booklet informed petitioners that they are not required to

file a return; (4) laws requiring taxpayers to provide

information to the Federal Government violate taxpayers’ Fifth

Amendment rights; (5) courts have held that a Form 1040 with

zeros inserted in the spaces provided qualifies as a tax return;

(6) petitioners had zero income according to the Supreme Court’s

definition of income; (7) petitioners’ 1997 tax return does not

constitute a “frivolous” return for purposes of section 6702; and

(8) no statute allows the IRS to change petitioners’ tax return.

On August 13, 1998, respondent mailed a statutory notice of

deficiency to petitioners. In the notice, respondent determined

a corrected taxable income of $1,088,854, a deficiency of

$408,247, a section 6651(a)(1) failure-to-file addition to tax of

$40,824.70, and a section 6662 accuracy-related penalty of

$81,649. Petitioners received the notice but did not file a

petition with this Court for a redetermination of the deficiency

pursuant to section 6213. Consequently, respondent issued a

Final Notice--Notice of Intent to Levy and Notice of Your Right

to a Hearing, informing petitioners of respondent’s intent to

levy and of petitioners’ right to a hearing before respondent’s

Appeals Office pursuant to section 6330. In response, 
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petitioners timely filed a Form 12153, Request for a Collection

Due Process Hearing. 

On March 19, 2003, petitioners attended a section 6330

hearing with Appeals Officer Michael A. Freitag, who had no prior

involvement with respect to petitioners’ unpaid tax for 1997. 

Respondent had denied petitioners’ request to record the hearing. 

Appeals Officer Freitag provided petitioners with a Form 2866,

Certificate of Official Record, and a Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters. The Form

4340 certified a deficiency of $408,247, a section 6651(a)(1)

failure-to-file addition to tax of $40,824.70, and a section 6662

accuracy-related penalty of $81,649. The Form 4340 certified

that respondent assessed the foregoing amounts and issued a

“statutory notice of balance due” on February 7, 2000. The Form

4340 further certified that respondent issued a “notice of

balance due” on May 21, 2001 and a “statutory notice of intent to

levy” on June 25, 2001. Respondent’s Supervisory Investigative

Analyst Lee Hansen signed the Form 4340 on February 7, 2003. 

Appeals Officer Freitag also provided petitioners with the

following documents:

(1) A memorandum issued by respondent on May 2, 2002,

stating that respondent will not permit audio and stenographic

recordings of hearings before respondent’s Appeals Office;
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2The foregoing contentions include the following: “To the

best of my knowledge, I am not, nor have I ever been, statutorily

liable or made liable for any tax pursuant to 26 USC.”

(2) a copy of Pierson v. Commissioner, 115 T.C. 576 (2000); 

(3) respondent’s publication entitled “Why I Have to Pay

Taxes”;

(4) respondent’s publication entitled “The Truth About

Frivolous Tax Arguments”;

(5) a list of Internal Revenue Code sections; and 

(6) a copy of a news release from the Justice Department

asking the court to stop promoters of abusive tax schemes.

Petitioners submitted a joint affidavit that contained a record

of their contacts with respondent and made various contentions.2 

At the hearing, petitioners were provided an opportunity to but

did not submit a viable collection alternative, such as an

installment agreement or an offer in compromise.

On April 8, 2003, respondent issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330, determining that the proposed levy action was

appropriate. Before issuing the notice of determination, Appeals

Officer Freitag reviewed respondent’s records for petitioners’

1997 tax year, including the Form 4340.

Petitioners timely filed in this Court a petition for lien

or levy action, contending, inter alia, that (1) the Appeals

Office did not consider petitioners’ allegations of
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3Rule 121(b) provides:

A decision shall thereafter 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. * * *

irregularities in the assessment procedure, (2) the Form 4340

relied upon by the Appeals Office is contradicted by respondent’s

records and was not prepared in accordance with Internal Revenue

Manual instructions, (3) respondent did not issue a notice and

demand in compliance with section 6303, and (4) respondent

improperly denied petitioners’ request to record the section 6330

hearing. Respondent filed a motion for summary judgment on April

1, 2004.

Discussion

The purpose of summary judgment is to expedite litigation

and avoid the expense of unnecessary trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988). A motion for summary

judgment may be granted where there is no dispute as to a

material fact and a decision may be rendered as a matter of law. 

See Rule 121(a) and (b).3 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);
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4SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.

(a) Requirement of Notice Before Levy.--

 (1) In general.--No levy may be made on any 

property or right to property of any person unless the 

 Secretary has notified such person in writing of their 

 right to a hearing under this section before such levy 

 is made. * * * 

* * * * * * *

(b) Right to Fair Hearing.--

 (1) In general.--If the person requests a hearing

* * *, such hearing shall be held by the Internal 

Revenue Service Office of Appeals.

5Sec. 6330(c)(1) provides: 

 (1) Requirement of investigation.--The appeals 

officer shall at the hearing obtain verification from 

(continued...)

Jacklin v. Commissioner, 79 T.C. 340, 344 (1982). The party

opposing summary judgment must set forth specific facts which

show that a question of genuine material fact exists and may not

rely merely on allegations or denials in the pleadings. See

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 the person in writing of the right to a hearing

before the Appeals Office.4 Section 6330(c)(1) provides that the

Appeals officer must verify at the hearing that applicable laws

and administrative procedures have been followed.5 The Appeals
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5(...continued)

the Secretary that the requirements of any applicable 

law or administrative procedure have been met.

6Sec. 6330(c)(2)(B) provides:

(B) Underlying liability.--The person may also raise at 

the hearing challenges to the existence or amount of the 

 underlying tax liability for any tax period if the person 

 did not receive any statutory notice of deficiency for such 

 tax liability or did not otherwise have an opportunity to 

dispute such tax liability.

Officer may rely on a Form 4340 for purposes of complying with

section 6330(c)(1). Nestor v. Commissioner, 118 T.C. 162, 166

(2002). At the hearing, the person may raise any relevant issue

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). However, the person may challenge the existence

or amount of the underlying tax liability only if the person 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);6 Sego v. Commissioner, 114

T.C. 604, 610 (2000).

Petitioners received a statutory notice of deficiency. 

Consequently, section 6330(c)(2)(B) precluded petitioners from

challenging the underlying tax liability at the section 6330

hearing. Accordingly, we review the administrative determination 
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7Petitioners’ request to record the sec. 6330 hearing is

discussed below.

8Petitioners’ contentions are substantially similar to

contentions raised by the taxpayer in Hiland v. Commissioner,

T.C. Memo. 2004-225 (“Taxpayer’s complaints with respect to the

administrative proceedings included the following: No legitimate

hearing under sec. 6330 ever took place; taxpayer was denied the

opportunity to raise issues he deemed “relevant” (e.g., the

“existence” of the underlying tax liability); and cited

documentation had not been produced and/or addressed (e.g.,

record of the assessments, statutory notice and demand for

payment, any “valid notice of deficiency”, and verification from

the Secretary that all applicable requirements were met))”. In

(continued...)

for abuse of discretion. See Goza v. Commissioner, 114 T.C. 176,

181-182 (2000); Sego v. Commissioner, 114 T.C. 604, 610 (2000). 

The record establishes that the Appeals Office properly

verified that all applicable laws and administrative procedures

were followed. Appeals Officer Freitag had no prior involvement

with respect to the unpaid tax liabilities before the section

6330 hearing. The Form 4340 shows that proper assessments were

made and that requisite notices had been sent to petitioners. 

Petitioners raised no viable claims of procedural irregularities,7

and respondent properly relied on the Form 4340 during the

administrative process. See Nestor v. Commissioner, supra. 

Petitioners were given the opportunity to but did not discuss

collection alternatives at the sec. 6330 hearing.

Petitioners’ contentions are frivolous and groundless and

will not be refuted with copious citation and extended

discussion.8 See Williams v. Commissioner, 114 T.C. 136, 138-139
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8(...continued)

Hiland, we held that the contentions raised by the taxpayer were

frivolous and/or groundless, and we imposed a penalty pursuant to

sec. 6673. 

(2000) (citing Crain v. Commissioner, 737 F.2d 1417, 1417 (5th

 Cir. 1984)). Consequently, although respondent improperly

denied petitioners’ request to record the section 6330 hearing,

see sec. 7521(a)(1), we conclude that (1) it is unnecessary and

would not be productive to remand the instant case to the Appeals

Office for another section 6330 hearing in order to allow

petitioners to make an audio recording and (2) it is unnecessary

and inappropriate under the circumstances of the instant case to

reject respondent’s determination, see Keene v. Commissioner, 121

T.C. 8, 19-20 (2003); Lunsford v. Commissioner, 117 T.C. 183, 189

(2001); Kemper v. Commissioner, T.C. Memo 2003-195. 

Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay a penalty not in excess of $25,000 whenever the

taxpayer’s position is frivolous or groundless or the taxpayer

has instituted or pursued the proceeding primarily for delay.

SEC. 6673. SANCTIONS AND COSTS AWARDED BY COURTS.

(a) Tax Court Proceedings.--

(1) Procedures instituted primarily for 

delay, etc.--Whenever it appears to the Tax Court 

that–-

(A) proceedings before it have been 

instituted or maintained by the taxpayer 

primarily for delay,
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9Petitioners have made the same frivolous and groundless

contentions in a separate proceeding before this Court, docket

No. 13514-03L, with respect to their 1996 tax year. 

(B) the taxpayer’s position in such 

 proceeding is frivolous or groundless, or

(C) the taxpayer unreasonably failed to 

 pursue available administrative remedies,

the Tax Court, in its decision, may require the 

taxpayer to pay to the United States a penalty not in 

excess of $25,000.

The record demonstrates that petitioners’ contentions are

frivolous and groundless, and we are convinced that petitioners

instituted and maintained the instant proceeding primarily, if

not exclusively, for purposes of delay.9 Petitioners were

provided with a copy of Pierson v. Commissioner, 115 T.C. at 581,

in which we stated:

we regard this case as fair warning to those taxpayers who,

in the future, institute or maintain a lien or levy action

primarily for delay or whose position in such a proceeding

is frivolous or groundless. See White v. Commissioner, 72

T.C. 1126, 1135-1136 (1979) (providing fair warning to

taxpayers in deficiency actions who bring frivolous case

merely for purposes of delay).

Consequently, pursuant to section 6673(a)(1), we shall require

petitioners to pay to the United States a penalty of $15,000. 

To reflect the foregoing,

An appropriate order and

decision for respondent will

be entered.