1 The notice of determination was issued for, and this

petition was filed for, 1997 and 1999. The parties subsequently

(continued...)

T.C. Memo. 2003-260

UNITED STATES TAX COURT

JAMES BENSON DUNHAM AND MELANIE A. DUNHAM, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 7029-02L. Filed September 8, 2003.

Jerry Arthur Jewett, for petitioners.

Michelle M. Lippert, for respondent.

MEMORANDUM OPINION

HAINES, Judge: The petition in this case was filed in

response to the Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330. After concessions,1
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1(...continued)

stipulated that respondent incorrectly assessed petitioners’

income tax liability for 1999, and respondent has abated the

assessment for that year. 

the issues for decision are whether respondent abused his

discretion in determining that collection action could proceed

for 1997 and whether the Court should impose a penalty under

section 6673.

Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue. 

Amounts are rounded to the nearest dollar.

Background

All of the facts have been stipulated. The stipulated facts 

and the attached exhibits are incorporated herein by this

reference.

Petitioners resided in Havelock, North Carolina, at the time

they filed their petition.

Petitioners untimely filed a Form 1040, U.S. Individual

Income Tax Return, for 1997, reporting a tax liability of $8,826

and income tax withheld of $1,462. No payment accompanied the

return.

Respondent assessed petitioners’ 1997 income tax, together

with statutory penalties and interest, on the basis of

information contained in the filed return. Although petitioners
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entered into an installment agreement with respondent to pay the

tax liabilities, no payments were made.

On April 16, 2000, petitioners filed a claim for refund for

1997 based on zero entries for all categories of income.

Respondent denied the claim by letter dated June 21, 2000,

stating: “The amounts you received are gross income, as defined

by the Internal Revenue Code”. On July 15, 2000, petitioners

sent respondent a letter requesting information and demanding

proof of respondent’s authority. Petitioners also requested that

a meeting be scheduled.

On December 13, 2000, Jerry Arthur Jewett (Mr. Jewett)

executed a Form 2848, Power of Attorney and Declaration of

Representative, on behalf of petitioners.

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

Right to a Hearing was sent to petitioners on March 13, 2001. 

The tax owed for 1997 with penalties and interest, as set forth

in the final notice, was $13,378. On April 7, 2001, petitioners

filed a Form 12153, Request for a Collection Due Process Hearing,

that included a 19-page letter signed by Mr. Jewett. The letter

asserted tax-protester boilerplate, including:

1. The individual or individuals named above are

not “persons or a person” liable for the income tax or

required to file a Form 1040, by virtue of nonresidence in, or lack of income earned within, or

effectively connected to, any U.S. Territory,

Possession and/or enclave deriving authority from

Article I, Sec. 2 Cl. 17 or Article 4, Sec. 3, Cl.2 of

the Constitution of the United States. The individual
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or individuals named herein are natural born Citizens

of one of the 50 Republic states, under the

Constitution and Law.

A hearing pursuant to petitioners’ request was conducted on

February 12, 2002, with a court reporter present. A transcript

of the proceedings was made. A Certificate of Assessments and

Payments for 1997 had been mailed to petitioners before the

hearing. At the hearing attended by petitioner James Benson

Dunham (Mr. Dunham), Mr. Jewett repeated his frivolous arguments. 

Among other things, Mr. Jewett argued:

MR. JEWETT: * * * Most importantly, and of course,

we’ll get around to this, but I think that it’s

important to make sure that it’s clear from the

beginning that one of the arguments that my clients are

making is that they’re not liable for the so-called

income tax. And I would point out that if one opens

the index to the code, a copy of which I have in front

of me, one will find a listing of many different types

of taxes for which there is liability in the Internal

Revenue Code. Nowhere, therein, is there a liability

listed for an income tax.

HEARING OFFICER GEORGE: Those arguments that your

clients raise in their appeal request and on their form

1040s have been refuted by the judicial authorities and

have been called frivolous. And I’m going to hand to

you and your client News Release Number IR-2001-59. 

That gives you an idea and lists the cases that have

made similar arguments such as those that you’re making

today and those that you have made. The Tax Court has

determined that those types of arguments are frivolous

and it could cost your client more money if you

advocate in court the same arguments that you’re

advocating today because the taxpayers and their

representatives who make those kinds of arguments are

being sanctioned.

MR. JEWETT: Well, let me just say this, in

response to that, Ms. George. I think you’ll agree

with me that James and Melanie Dunham’s name is not
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anywhere on this, that there have been no

determinations made with regard to James and Melanie

Dunham. I don’t know what the facts are in the cases

and I’m not going to address each of these arguments in

any great exhausting detail, but there’s a reason why

horse races are held, because you never know who’s

going to win that race until the race is over.

On February 27, 2002, a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 was sent to

petitioners. The notice indicated the frivolous nature of

petitioners’ arguments and stated:

All statutory, administrative and procedural

requirements have been met by the Internal Revenue Service

prior to proposing the Notice of Levy.

No viable alternatives to such action were established

during Appeals consideration; accordingly, such action is

not considered to be overly intrusive at this time.

In the petition in this case, petitioners asserted: (1) No

provision of the Internal Revenue Code makes them liable for the

income tax and penalties determined in the statutory notice; (2)

there was “no valid assessment” of taxes; (3) they did not

receive a “notice and demand for payment” of the taxes at issue; 

(4) they did not receive a valid notice of deficiency; and (5) at

the hearing they did not receive “verification from the Secretary

that the requirements of any applicable law or administrative

procedure have been met”. The same arguments were repeated in

petitioners’ trial memorandum signed by Mr. Jewett and filed with

the Court.
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2 James Benson and Melanie A. Dunham, docket No. 7029-02L;

Gregory R. Brown, docket No. 8368-02L; Harold V. and Imogene N.

Pahl, docket No. 11572-02L; Charles and Teresa Brodman, docket

No. 16598-02L.

Before the calendar call, Mr. Jewett had been advised by the

Court in a conference call with respondent’s counsel, in an

essentially identical case, that the arguments presented were

frivolous and that petitioners could have penalties imposed

against them under section 6673.

At the call of the calendar, Mr. Jewett acknowledged the

Court’s warning to him. Mr. Jewett also confirmed that he had

informed petitioners of the possibility that penalties could be

imposed against them. Petitioners authorized Mr. Jewett to

proceed with the same arguments in spite of the warning.

Discussion

During the trial session held in Cleveland, Ohio, beginning

June 2, 2003, four cases, including the instant case, were

submitted on the basis of fully stipulated facts.2 Mr. Jewett

represented the taxpayers in each of the four cases.

Brodman v. Commissioner, T.C. Memo. 2003-230, was the first

of the four cases to be decided. We held in Brodman that no bona

fide issues were raised, no alternatives to collection were

proposed, and the arguments presented were frivolous. No abuse

of discretion was found, collection was allowed to proceed, and a
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3 Sec. 6673(a)(1) provides:

(1) Procedures instituted primarily for delay, etc.--

Whenever it appears to the Tax Court that--

(A) proceedings before it have been instituted or

(continued...)

penalty of $5,000 under section 6673 was imposed upon the

taxpayers.

Similarly, petitioners did not raise any bona fide issues or

collection alternatives. Rather, petitioners presented a

“hodgepodge of unsupported assertions, irrelevant platitudes and

legalistic gibberish” similar to those previously rejected by

this Court. Crain v. Commissioner, 737 F.2d 1417, 1418 (5th Cir.

1984); see Brodman v. Commissioner, supra; Kish v. Commissioner,

T.C. Memo. 1998-16; Fisher v. Commissioner, T.C. Memo. 1996-277. 

“We 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, supra at 1417. The Court rejects these

boilerplate tax-protester types of arguments as frivolous and

without merit. As a result, we hold that respondent did not

abuse his discretion in determining that collection should

proceed.

In the instant case, petitioners were specifically warned on

two occasions of the likelihood of a penalty under section

6673(a)(1) if they continued with these arguments.3 Despite the
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3(...continued)

maintained by the taxpayer primarily for delay,

(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.

4 Sec. 6673(a)(2) provides, in part:

(2) Counsel’s liability for

excessive costs.--Whenever it appears to

(continued...)

warning given at the section 6330 hearing and the warning given

by the Court, petitioners did not abandon their frivolous

arguments but authorized Mr. Jewett to continue to assert them.

Petitioners should be treated the same as other taxpayers

similarly situated. As we stated in Brodman v. Commissioner,

supra: “The taxpayers who continue to pursue those claims are

not entitled to a free ride.” As a result, we hold that a

penalty of $5,000 against petitioners should be awarded to the

United States pursuant to section 6673(a)(1).

Moreover, we are concerned by the representation of Mr.

Jewett, an experienced attorney, in petitioners’ pursuit of these

frivolous claims. All of Mr. Jewett’s arguments on behalf of

petitioners had been rejected by the Court in numerous cases.

Although, as in Brodman, we have decided not to impose a

penalty against Mr. Jewett under section 6673(a)(2),4 he is
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4(...continued)

the Tax Court that any attorney or other

person admitted to practice before the

Tax Court has multiplied the proceedings

in any case unreasonably and

vexatiously, the Tax Court may require--

(A) that such attorney or other person

pay personally the excess costs, expenses,

and attorneys’ fees reasonably incurred

because of such conduct * * *

reminded of the consequences if he repeats or persists in similar

claims in the future. See sec. 6673(a)(2); Takaba v.

Commissioner, 119 T.C. 285, 296-305 (2002); Edwards v.

Commissioner, T.C. Memo. 2003-149.

In reaching our holdings herein, we have considered all

arguments made, and to the extent not mentioned above, we

conclude them to be moot, irrelevant, or without merit.

To reflect the foregoing,

An appropriate

decision will be entered.