T.C. Memo. 2009-82

UNITED STATES TAX COURT

RICKY L. SPAIN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 15162-07L. Filed April 27, 2009.

Ricky L. Spain, pro se.

Heather D. Horton, for respondent.

MEMORANDUM OPINION

GERBER, Judge: This matter is before the Court on

respondent’s motion for summary judgment on the determination to 
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1Unless 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.

file a notice of Federal tax lien (NFTL) and regarding whether a 

section 66731 penalty should be imposed on petitioner. 

Respondent seeks summary judgment on the question of whether

collection may proceed in accordance with a notice of

determination sent to petitioner. Respondent made the

determination to proceed to collect, by filing an NFTL covering

petitioner’s 1990, 1991, and 1992 unpaid tax liabilities. 

Petitioner seeks review of that determination under sections

6320(c) and 6330(d). 

The issues for consideration are: (1) Whether respondent’s

determination to proceed with collection was an abuse of

discretion and (2) whether a section 6673 penalty should be

imposed on petitioner.

Background

Petitioner failed to file Forms 1040, U.S. Individual Income

Tax Return, for the taxable years 1990, 1991, and 1992. 

Respondent prepared and filed substitutes for returns under

section 6020(b). Respondent then mailed notices of deficiency

for those years to petitioner’s last known address. Petitioner

did not appeal to this Court from those notices, and respondent

assessed the income tax deficiencies. 
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When petitioner failed to pay the assessed deficiencies, he

was sent notice of respondent’s intent to levy. Petitioner

requested a hearing before Appeals but was not given one because

he insisted on tape-recording the hearing. Respondent issued a

notice of determination on July 30, 2002. On September 3, 2002,

petitioner filed a petition with the Court for review under

section 6330(d) in docket No. 14090-02L.

While that case was pending in this Court, petitioner, on

March 10, 2003, filed for bankruptcy under chapter 7 of the

Bankruptcy Code. The bankruptcy proceeding was adjudicated and

closed on June 19, 2003. Petitioner’s tax liabilities were not

discharged, because he failed to file tax returns for the years

in issue. 

On March 29, 2004, respondent filed a motion to remand the

case at docket No. 14090-02L to respondent’s Appeals Office to

provide petitioner with a section 6330 administrative hearing

(section 6330 hearing) to discuss petitioner’s underlying tax

liabilities. Respondent’s motion was granted on April 5, 2004. 

Petitioner was afforded a section 6330 hearing, and he was given

an opportunity to challenge his underlying tax liability. 

Petitioner raised three issues: (1) The substitutes for returns

respondent prepared should have been considered tax returns by

the bankruptcy court; (2) the failure to file penalty should be
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limited to $100; and (3) the notice of deficiency was improperly

issued because it was sent to the wrong address. 

Respondent advised petitioner that his arguments had been

rejected by the courts. Therefore, according to the relevant

authority, respondent concluded that petitioner’s unpaid tax

liability had not been discharged in the bankruptcy proceeding,

the failure to file penalty was appropriate, and the notice of

deficiency was properly issued because it was mailed to

petitioner’s last known address. On January 19, 2005, respondent 

issued a supplemental notice of determination sustaining the

intent to levy. 

This Court entered a decision in docket No. 14090-02L that

was agreed to by petitioner and respondent on March 25, 2005,

sustaining respondent’s determinations to proceed with the levy. 

As of the date of the entry of decision, petitioner owed the

following amounts:

Additions to Tax

Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)

1990 $1,951 $487.75 $128

1991 2,360 590.00 125

1992 2,383 595.75 104

On January 3, 2006, respondent mailed notice of the NFTL

filing (CDP notice) to petitioner’s last known address. The NFTL

indicated that petitioner owed $2,656.87, $7,998.88, and
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2The increased amounts over the deficiency determinations

are likely attributable to accrued interest.

$7,484.19 for his 1990, 1991, and 1992 tax years, respectively.2 

Petitioner made a timely request for a section 6320 hearing on

February 7, 2006, in which he stated that the lien was improper

because: (1) Taxes were not assessed in 1997; (2) the notices of

deficiency were mailed to the wrong address, if at all; 

(3) petitioner did not receive the notices of deficiency; (4) the

amount of the alleged assessment was significantly different from

the amount determined on audit; (5) the penalties were

inappropriate because petitioner acted in good faith; (6) the

interest amounts were inappropriate because they were caused by

respondent’s errors and delays; (7) respondent did not notify

petitioner within 5 days after the NFTL was executed; and (8)

petitioner filed a bankruptcy petition before the NFTL was filed.

On May 3, 2006, Settlement Officer Irma Hernandez sent

petitioner a letter stating that petitioner qualified for a faceto-face hearing with respondent’s Appeals Office. On April 10,

2007, Settlement Officer Beverly J. Prawl wrote to petitioner

requesting that he call her within 14 days to schedule the

section 6320 hearing. Her letter instructed petitioner to call

during her office hours of 8 a.m. to 4:30 p.m. and in the event

he reached her voicemail, to leave a phone number where he could

be reached during those hours. The letter also indicated that
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petitioner was eligible for a face-to-face hearing. Petitioner

was notified that he was precluded from disputing the underlying

tax liability because he had a prior opportunity to dispute the

liability, a decision had been entered in Tax Court, and a notice

of determination had been mailed by Appeals. Furthermore,

petitioner was informed that he could not propose collection

alternatives unless he submitted a collection information

statement, filed returns for tax years 1993 through 2005, and

made estimated tax payments for 2007.

On April 25, 2007, petitioner left Ms. Prawl a voicemail

message at 6:17 a.m. Petitioner reiterated his desire to resolve

his issues in person, and he stated that he was not available to

speak by phone and, instead, left a number for his voicemail. On

April 30, 2007, Ms. Prawl left a voicemail message for petitioner

apprising him that he was precluded from disputing the underlying

tax liability or proposing collection alternatives. She also

informed petitioner that he was not eligible for a face-to-face

hearing unless he presented an issue that was not precluded. She

asked him to call back the next day during office hours and again

requested that he leave his phone number if he reached her

voicemail.

Instead of calling during office hours, petitioner faxed a

letter to Ms. Prawl after normal office hours on May 1, 2007. In

the letter petitioner restated his preference for a face-to-face
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hearing but acquiesced to a correspondence hearing. In his

letter petitioner did not raise any issue that was not precluded.

The following day Ms. Prawl left a voicemail for petitioner

requesting that he send any correspondence regarding the hearing

by May 14, 2007. She warned petitioner that a determination

letter would otherwise be issued. On May 15, 2007, Ms. Prawl

received a letter from petitioner in which he refused to agree to

a correspondence hearing and again demanded a face-to-face

hearing.

On May 22, 2007, Ms. Prawl obtained a copy of petitioner’s

bankruptcy report. Ms. Prawl noted that the bankruptcy case had

been closed on June 19, 2003.

On May 31, 2007, respondent issued petitioner a notice of

determination finding the filing of the NFTL was appropriate. 

The notice of determination also concluded that the CDP notice

was timely sent and that petitioner had no pending bankruptcy

case at that time or at the time the CDP notice was sent. 

Petitioner’s remaining arguments were not considered because he

had a prior opportunity to dispute his tax liability and was

therefore precluded from raising those issues. 

On July 3, 2007, petitioner filed a petition with this Court

seeking review of respondent’s determination sustaining the

filing of the NFTL. On March 3, 2008, respondent moved for
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summary judgment on the filing of the NFTL and for the imposition

of a section 6673 penalty upon petitioner.

Discussion

I. Motion for Summary Judgment

Summary judgment may be granted when there is no genuine

issue of material fact and a decision may be rendered as a matter

of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C.

518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994). The opposing

party cannot rest upon mere allegations or denials in his

pleadings and must “set forth specific facts showing that there

is a genuine issue for trial.” Rule 121(d). The moving party

bears the burden of proving there is no genuine issue of material

fact, and factual inferences will be read in a manner most

favorable to the party opposing summary judgment. Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,

79 T.C. 340, 344 (1982).

If a taxpayer neglects or refuses to pay a tax owed after

demand for payment, the unpaid tax will be a lien in favor of the

United States upon all property and rights to property belonging

to that person. Sec. 6321. If the Commissioner files a notice

of that lien under section 6323, the taxpayer must be notified of

the filing in writing no more than 5 business days afterwards. 

Sec. 6320(a).
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3For determinations made after Oct. 16, 2006, this Court

would have jurisdiction irrespective of the type of tax liability

involved. Pension Protection Act of 2006, Pub. L. 109-280, sec.

855, 120 Stat. 1019; Callahan v. Commissioner, 130 T.C. 44

(2008).

Upon request, the taxpayer is entitled to an administrative

review hearing before an impartial officer or employee of the

Appeals Office. Sec. 6320(b). The hearing is conducted

according to the procedures under section 6330(c), (d), and (e). 

At the hearing, the taxpayer may raise any relevant issue

regarding the Commissioner’s collection activities. Sec.

6330(c)(2)(A). However, if a taxpayer received a statutory

notice of deficiency for the years in issue or otherwise had a

prior opportunity to dispute the underlying tax liability, the

taxpayer is precluded from challenging the existence or amount of

the underlying tax liability. Sec. 6330(c)(2)(B).

Following the hearing, the Appeals officer must determine

whether the collection action is to proceed, taking into account

the verification the Appeals officer has made, the issues the

taxpayer raised at the hearing, and whether the collection action

balances the need for the efficient collection of taxes with the

legitimate concern of the taxpayer that any collection action be

no more intrusive than necessary. Sec. 6330(c)(3). 

We have jurisdiction to review the determination if we have

jurisdiction over the type of tax involved in the case.3 Sec.

6330(d)(1); Iannone v. Commissioner, 122 T.C. 287, 290 (2004). 
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We review under an abuse of discretion standard when the

underlying tax liability is not in issue. Goza v. Commissioner,

114 T.C. 176, 182 (2000). 

Petitioner had a prior opportunity to dispute the underlying

tax liabilities at the section 6330 hearing. He was therefore

precluded from disputing his underlying tax liability at the 

section 6320 hearing. Consequently, we do not consider that

issue. Id. at 182-183.

 Under the abuse of discretion standard, petitioner is

required to show that respondent’s actions were arbitrary, 

capricious, or without sound basis in fact. See Knorr v.

Commissioner, T.C. Memo. 2004-212.

In making the determination to sustain the NFTL filing,

respondent verified that there was compliance with all legal and

procedural requirements. Respondent determined that the CDP

notice was timely sent and that there was no pending bankruptcy

action that would have proscribed the filing of the NFTL. 

Moreover, petitioner’s underlying tax liability was not

discharged in the bankruptcy proceeding because he had not filed

tax returns for the years in issue.

Petitioner raised no other issues which respondent could

have considered because petitioner was precluded from raising the

issue of his underlying tax liability. Petitioner did not

propose any collection alternatives. 
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Respondent’s issuance of the notice of determination was not

arbitrary or capricious. The determination was made after

careful consideration of the issues properly raised by

petitioner. Accordingly, we hold that there was no abuse of

discretion in determining to proceed with collection, and

respondent’s motion for summary judgment will be granted.

II. Section 6673 Penalty

Section 6673(a)(1) authorizes this Court to impose a penalty

not to exceed $25,000 if a taxpayer took frivolous or groundless

positions in a proceeding or instituted a 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. Coleman v. Commissioner, 791

F.2d 68, 71 (7th Cir. 1986); Sicalides v. Commissioner, T.C.

Memo. 1989-164. A taxpayer’s position is groundless when the

only evidence he tries to support it with is evidence that he

knows to be false. Bagby v. Commissioner, 102 T.C. 596, 615

(1994).

Petitioner claims that he is ready and willing to pay his

correct tax liability but that it was respondent who delayed

resolution of the matter by refusing to grant him a face-to-face

hearing. Petitioner stipulated this Court’s earlier decision

sustaining respondent’s determination to proceed with the levy. 

At that point petitioner knew the correct amount of his tax
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liability. Petitioner’s actions since then confirm that he is

merely attempting to delay collection.

On brief, petitioner claims, for the first time, that he was

pressured into signing the decision document entered by this

Court and that he did not understand what he was agreeing to. We

are unconvinced by petitioner’s explanation. Petitioner did not

take any action to be relieved from the decision entered and did

nothing until respondent filed the NFTL.

In his request for an administrative hearing, petitioner

raised issues which he had already addressed in his previously

resolved section 6330 hearing and proceeding before this Court. 

He had already unsuccessfully claimed that his bankruptcy case

prohibited respondent from taking collection action on his unpaid

tax liability and that he never received notices of deficiency

for the years in issue. Yet, he made exactly the same arguments

again in his current challenge to respondent’s collection action. 

Petitioner also contended that the NFTL filing was not sent

timely because he received the notice on January 10, 2006. 

Petitioner’s argument is frivolous and groundless because the

notice had been sent within the statutorily required 5-day

period.

Petitioner then deliberately impeded the scheduling of the

section 6320 hearing by contacting Ms. Prawl outside her normal

office hours. 
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Petitioner also continued to demand a face-to-face hearing even

after being informed that he was ineligible for such a hearing.

 In further pursuit of delay, petitioner filed a petition

with this Court after respondent issued a notice of

determination. In litigating his claim, petitioner has continued 

the same pattern of presenting repetitive frivolous and

groundless arguments.

In his petition, petitioner asserted numerous affirmative

defenses. With the exception of his claim of discharge in

bankruptcy petitioner has not presented arguments or evidence

concerning any of the other allegations made either in his

pleadings or the administrative or Court proceedings. 

Petitioner claims that he should not be liable for the

section 6673 penalty because he acted in good faith in that he

believed that there was an error in the underlying tax liability. 

He distinguishes between income tax and self-employment tax,

claiming that the tax liability reflected in the stipulated

decision is entirely attributable to self-assessed selfemployment tax. He argues that his correct income tax was

therefore zero and the filing of the NFTL was thus inappropriate. 

This position is also frivolous as there is no basis in law for

making such a distinction.

Petitioner has so far succeeded in delaying collection of

taxes he has owed for as long as 17 years. Despite stipulating 
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a levy regarding his tax liability 4 years ago, petitioner has

attempted to forestall collection of that agreed liability using

the same failed arguments. We therefore hold petitioner is

liable for a $2,500 penalty under section 6673(a)(1).

To reflect the foregoing,

An appropriate order and

decision will be entered.