1 Unless otherwise indicated, all section references are to

the Internal Revenue Code as amended.

T.C. Memo. 2004-6

UNITED STATES TAX COURT

MICHAEL CIPOLLA, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 7131-02L. Filed January 5, 2004.

Michael Cipolla, pro se.

Theresa G. McQueeney, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

HALPERN, Judge: Pursuant to section 6330(d), petitioner

seeks review of respondent’s determination to proceed with

collection of his 1997 income tax.1 On December 2, 2002,

respondent orally moved to have the Court impose against
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petitioner a penalty pursuant to section 6673.

FINDINGS OF FACT

Some of the facts have been stipulated and are found

accordingly. The stipulation of facts, with attached exhibits,

is incorporated herein by this reference.

At the time he filed his petition, petitioner resided in

Brooklyn, New York.

Petitioner’s Form 1040 for 1997

On or about April 15, 1998, petitioner submitted to

respondent a Form 1040, U.S. Individual Income Tax Return, for 

1997. Petitioner did not describe his occupation on the Form

1040, although he did attach a Form W-2, Wage and Tax Statement,

identifying him as an employee.

Petitioner entered zeros on all lines of the income portion

of his Form 1040, specifically including line 7, for wages, line

9, for dividends, line 11, for alimony received, line 22, for

total income, and lines 32 and 33, for adjusted gross income. He

also indicated his taxable income to be zero. Petitioner entered

a zero on line 39 for tax. Petitioner then claimed a refund in

the amount of $6,988.40, which was equal to the amount of Federal

income tax that had been withheld from his wages by his employer. 

The Form W-2 attached to the above Form 1040 disclosed the

payment of wages to petitioner during 1997. The Form W-2 was

from New York Telephone Company; it disclosed the payment of
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$60,833.32 of wages to petitioner and the withholding of Federal

income tax in the amount of $6,988.40.

Petitioner also attached to his Form 1040 a two-page

typewritten statement that stated, in part:

I, Michael Cipolla, am submitting this as part of my

1997 income tax return.

Even though I know that no section of the Internal

Revenue Code:

1) establishes an income tax “liability” * * *;

2) provides that income taxes “have to be paid on the

basis of a return” * * *;

3) In addition to the above, I am filing even though

the “Privacy Act Notice” as contained in a 1040 booklet

clearly informs me that I am not required to file. It

does so in at least two places.

a) In one place it states that I need only file a

return for “any tax” I may be liable for. Since no

Code section makes me “liable” for income taxes, this

provision notifies me that I do not have to file an

income tax return;

 * * * * * * *

7) It should also be noted that I had “zero” income

according to the Supreme Court’s definition of income

(See note #1) * * *

8) Please note that my 1997 return also constitutes a

claim for refund pursuant to Code Section 6402.

9) I am also putting the I.R.S. on notice that my 1997

tax return and claim for refund does not constitute a

“frivolous” return pursuant to Code section 6702. 

* * *

11) In addition, don’t notify me that the I.R.S. is

“changing” my return, since there is no statute that

allows the I.R.S. to do that. You might prepare a

return (pursuant to Code section 6020b) where no return

is filed, but where, as in this case, a return has been

filed, no statute authorizes I.R.S. personnel to

“change” that return.

 * * * * * * *

Note #1: The word “income” is not defined in the

Internal Revenue Code. * * * But, as stated above,
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2 Respondent determined the deficiency without taking into

account the tax withheld from petitioner’s wages, as a statutory

notice of deficiency does not take such withheld amount into

account. See secs. 31(a), 6211(b)(1). However, insofar as

petitioner’s ultimate tax liability is concerned, respondent

gives petitioner credit for the amount withheld from his wages. 

it can only be a derivative of corporate activity. 

* * *

Respondent’s Notice of Deficiency

On February 23, 2000, respondent (acting through Carol M.

Landy, Director of the Brookhaven Customer Service Center in

Holtsville, New York) issued a notice of deficiency to petitioner

for 1997. In the notice of deficiency, respondent determined a

deficiency of $12,113 in Federal income tax.2 Respondent

determined that petitioner failed to report wages of $60,833, as

well as dividends of $20, a gross distribution of $222, interest

of $33, and a prior year refund of $341.

Petitioner received the notice of deficiency. Petitioner

did not file a petition for redetermination with the Tax Court.

On September 11, 2000, respondent assessed the determined

deficiency, plus statutory interest. On that same date,

respondent sent petitioner a notice of balance due. Petitioner

failed to pay the amount owing.

Respondent’s Notice of Intent To Levy and Petitioner’s Response

On January 18, 2001, respondent sent petitioner a notice

entitled: “Final Notice--Notice of Intent to Levy and Notice of

Your Right to a Hearing.”
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On January 29, 2001, petitioner submitted to respondent Form

12153, Request for a Collection Due Process Hearing. In the

request, petitioner stated that he would explain all his reasons

for opposing the proposed levy at the hearing.

The Appeals Office Hearing

In communications and correspondence between petitioner and

respondent’s Appeals Office from June 5, 2001, through December

4, 2001, petitioner raised several tax protestor arguments

regarding his 1997 tax liability. 

By letter dated December 5, 2001, Appeals Officer Phyllis

Cayenne (the Appeals officer) scheduled an administrative hearing

with petitioner at respondent’s Manhattan Appeals Office in New

York City. In her letter to petitioner, the Appeals officer

continued and stated, in part:

Our jurisdiction in * * * [this case] is limited to

hearing relevant issues relating to unpaid tax,

including appropriate spousal defenses, challenges to

the appropriateness of collection actions, offer[s] of

collection alternatives and challenges to the

underlying tax liability, if you did not receive a

statutory notice of deficiency or did not otherwise

have an opportunity to dispute the liability. Your

letter dated 6/5/2001 to * * * [respondent’s Appeals

Office] only provided constitutional arguments and did

not include relevant issues that we may consider.

 * * * * * * *

The arguments raised in your letter of 6/5/2001 are

frivolous and your positions have no basis in law. 

Arguments such as yours have been considered and

rejected repeatedly as being without merit by Federal

courts, including the Supreme Court of the United

States. Pursuing them in a Federal court could lead to
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monetary sanctions being imposed against you. * * *

On or about December 7, 2001, petitioner sent a letter to

the Appeals officer, responding to her December 5 letter. That

response by petitioner included, inter alia, a challenge to the

underlying tax liability for 1997, as well as allegations

including: (1) Petitioner never received a “valid” notice of

deficiency; (2) no valid assessment of an income tax liability

for 1997 had been made against petitioner; and (3) petitioner had

not been issued a notice and demand for payment as required under

section 6303. Petitioner also requested verification from the

Secretary that all applicable laws and administrative procedures

were followed with respect to the 1997 tax liability. 

On December 20, 2001, petitioner attended an administrative

hearing in New York City conducted by the Appeals officer. At

the hearing, the Appeals officer provided petitioner with a

literal transcript of petitioner’s account for 1997.

Respondent’s Notice of Determination

On March 14, 2002, respondent’s Appeals Office issued

petitioner a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330, determining that the

proposed levy against him for 1997 should be sustained. 

Petitioner’s Petition and Respondent’s Motion To Have a Penalty

Imposed Against Petitioner Pursuant to Section 6673

On April 8, 2002, petitioner filed with the Tax Court his

petition seeking review of respondent’s notice of determination. 
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The petition included allegations that: (1) The Appeals officer

failed to obtain verification from the Secretary that the

requirements of any applicable law or administrative procedure

were met as required under section 6330(c)(1); (2) the Appeals

officer failed to identify the statutes making petitioner liable

for Federal income tax; (3) petitioner never received a “proper”

notice of deficiency; (4) petitioner was not lawfully assessed a

tax liability for 1997; (5) petitioner never received a notice

and demand for payment; and (6) petitioner was denied the

opportunity to challenge the existence or the amount of the

underlying tax liability for 1997. 

On December 2, 2002, at the trial in this case, respondent

orally moved to have this Court impose against petitioner a

penalty pursuant to section 6673 in the amount of $25,000.

OPINION

If any person neglects or refuses to make payment of any

assessed Federal tax liability within 10 days of notice and

demand, the Secretary is authorized to collect the assessed tax

by levy on that person’s property. Sec. 6331(a). As a general

rule, at least 30 days before taking such action, the Secretary

must provide the person with a written final notice of intent to

levy that describes, among other things, the administrative

appeals available to the person. Sec. 6331(d)(1), (4).
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Upon request, the person is entitled to an administrative

review hearing before respondent’s Appeals Office. Sec.

6330(b)(1). If dissatisfied with the Appeals Office

determination, the person may seek judicial review in the Tax

Court or a Federal District Court, as appropriate. Sec. 6330(d). 

Generally, action on the proposed levy is suspended during the

pendency of the administrative review hearing and any judicial

review proceeding. Sec. 6330(e)(1).

Section 6330(c) prescribes the relevant matters that a

person may raise at an Appeals Office hearing, including spousal

defenses, the appropriateness of respondent’s proposed collection

action, and possible alternative means of collection. A taxpayer

may contest the existence or amount of the underlying tax

liability at an Appeals Office hearing only if the taxpayer did

not receive a statutory notice of deficiency with respect to the

underlying tax liability or did not otherwise have an opportunity

to dispute that liability. Sec. 6330(c)(2)(B). 

Where the underlying tax liability is not at issue, we

generally review determinations made by the Appeals Office for an

abuse of discretion. E.g., Magana v. Commissioner, 118 T.C. 488,

493 (2002).

Notice of Deficiency

Petitioner received a notice of deficiency for 1997. He is,

therefore, not entitled to challenge the underlying tax liability
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at the hearing conducted under section 6330. Sec. 6330(c)(2)(B). 

Nonetheless, he argues that the notice of deficiency was not

signed by someone in authority and was invalid. This position is

frivolous and groundless. Nestor v. Commissioner, 118 T.C. 162,

165-166 (2002) (noting that Directors of Service Centers have

been delegated the authority to issue notices of deficiency);

Koenig v. Commissioner, T.C. Memo. 2003-40 n.4; see Schmith v.

Commissioner, T.C. Memo. 2002-252 (taxpayer’s denial of receiving

“valid” notice of deficiency did not mean the taxpayer failed to

receive notice of deficiency).

Verification Requirement

We likewise reject petitioner’s argument that the Appeals

officer failed to obtain verification from the Secretary that the

requirements of all applicable laws and administrative procedures

were met as required by section 6330(c)(1). The record shows

that the Appeals officer obtained and reviewed a literal

transcript of petitioner’s account for 1997, and that she

provided this transcript of account to petitioner at his Appeals

hearing. The information in this transcript is also contained in

the Form 4340, Certificate of Assessments, Payments and Other

Specified Matters, that the parties stipulated in evidence. 

Section 6330(c)(1) does not require the Commissioner to rely on a

particular document (e.g., the summary record itself rather than

a transcript of account) to satisfy the verification requirement
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3 As indicated above, the Appeals officer provided

petitioner at his Appeals hearing with the literal transcript of

his account that she reviewed. Sec. 6330(c)(1) does not even

require an Appeals officer, at or prior to a collection due

process hearing, to give the taxpayer a copy of the verification

that the requirements of any applicable law or administrative

procedure have been met. Sec. 301.6330-1(e)(1), Proced. & Admin.

Regs., requires that the Appeals officer obtain verification

before issuing the determination, not that he or she provide it

to the taxpayer. Nestor v. Commissioner, 118 T.C. 162, 166-167

(2002).

imposed therein. See Roberts v. Commissioner, 118 T.C. 365, 371

n.10, and cases cited thereat; Standifird v. Commissioner, T.C.

Memo. 2002-245, affd. 72 Fed. Appx. 729 (9th Cir. 2003); Weishan

v. Commissioner, T.C. Memo. 2002-88. In this regard we note that

the transcript provided all the information prescribed in section

301.6203-1, Proced. & Admin. Regs. See Weishan v. Commissioner,

supra; Lindsey v. Commissioner, T.C. Memo. 2002-87, affd. 56 Fed.

Appx. 802 (9th Cir. 2003).3

Petitioner has not raised any irregularity in the assessment

procedure that would raise a legitimate question about the

validity of the assessment or the information contained in the

transcript and the Form 4340. Accordingly, we conclude that the

Appeals officer here satisfied the verification requirement of

section 6330(c)(1).

Notice and Demand

We similarly reject petitioner’s argument that he never

received a notice and demand for payment of his unpaid tax

liability for 1997. The Form 4340 shows that respondent sent
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petitioner a notice of balance due on the date that respondent

assessed the tax and interest for 1997. A notice of balance due

constitutes a notice and demand for payment within the meaning of

section 6303(a). See, e.g., Hughes v. United States, 953 F.2d

531, 536 (9th Cir. 1992); Schaper v. Commissioner, T.C. Memo.

2002-203; Weishan v. Commissioner, supra. The notice of balance

due was sufficient to constitute notice and demand within the

meaning of section 6303(a) because it informed petitioner of the

amount owed and requested payment. Standifird v. Commissioner,

supra; see Elias v. Connett, 908 F.2d 521, 525 (9th Cir. 1990)

(“The form on which a notice of assessment and demand for payment

is made is irrelevant as long as it provides the taxpayer with

all the information required under 26 U.S.C. section 6303(a).”)

Conclusion

Based upon our examination of the record before us, we find

that respondent did not abuse his discretion in determining to

proceed with the collection action as determined in the notice of

determination with respect to petitioner’s unpaid income tax

liability for taxable year 1997. In making that finding, we have

considered all arguments made by petitioner, and to the extent

not mentioned above, conclude them to be irrelevant or without

merit.

In respondent’s motion, respondent requests that the Court

impose against petitioner a penalty pursuant to section 6673 in
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the amount of $25,000. In pertinent part, section 6673(a)(1)

authorizes the Court to require a taxpayer to pay to the United

States a penalty in an amount not to exceed $25,000 whenever it

appears to the Court that a proceeding before it was instituted

or maintained primarily for delay, sec. 6673(a)(1)(A), or that

the taxpayer’s position in such a proceeding is frivolous or

groundless, sec. 6673(a)(1)(B).

As evidenced by the petition and petitioner’s subsequent

arguments, petitioner’s legal arguments are frivolous and he has

no grounds justifying his claim that the Appeals officer erred in

any manner. We can see no reason for the petition but to delay

the collection of the 1997 income tax owing from petitioner. 

Petitioner has not only wasted his time, but he has wasted the

time of respondent’s agents, officers, and counsel, not to

mention the waste of the Court’s time in disposing of this case. 

We shall not penalize petitioner in the amount, $25,000,

requested by respondent, but we do believe that petitioner

deserves a significant section 6673 penalty. We shall therefore

require petitioner pursuant to section 6673(a)(1) to pay to the

United States a penalty in the amount of $7,500.

To reflect the foregoing,

An appropriate order and

decision will be entered.