1 Unless otherwise indicated, all subsequent section

references are to the Internal Revenue Code, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

T.C. Summary Opinion 2010-24

UNITED STATES TAX COURT

WAYNE J. CONSTANTINE, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 27172-07S. Filed March 2, 2010.

Wayne J. Constantine, pro se.

Russell F. Kurdys, for respondent.

ARMEN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1 Pursuant to section

7463(b), the decision to be entered is not reviewable by any
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other court, and this opinion shall not be treated as precedent

for any other case.

The instant case arises from a petition for judicial review

filed in response to a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 (notice of

determination). The issue presented is whether respondent may

proceed with the collection action as so determined. Before the

Court now is respondent’s Motion For Summary Judgment And To

Impose a Penalty Under I.R.C. Section 6673.

Background

Petitioner resided in the Commonwealth of Pennsylvania when

the petition was filed.

Petitioner’s Income Tax Liability for 2003

Petitioner did not file a Federal income tax return for

2003. Respondent generated a Substitute for Return pursuant to

section 6020(b) and, consistent with deficiency procedures,

assessed the tax due. See secs. 6212, 6213.

Final Notice of Intent to Levy

On April 2, 2007, respondent issued a Final Notice--Notice

of Intent to Levy and Notice of Your Right to a Hearing. See

sec. 6330(a).

On May 2, 2007, petitioner timely submitted a Form 12153,

Request for a Collection Due Process or Equivalent Hearing. On

the Form 12153 petitioner indicated the reason for disagreement
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with the proposed levy as “see attached pages”, but no additional

pages were attached. The Form 12153 also requested the hearing

to be a face-to-face hearing.

Administrative Developments

A settlement officer from respondent’s Appeals Office was

assigned to petitioner’s collection case. In a letter dated

September 4, 2007, the settlement officer offered petitioner a

telephone hearing on September 25, 2007. The settlement officer

also afforded petitioner the opportunity for a correspondence

conference and requested that petitioner submit financial

information so that the settlement officer could consider

collection alternatives. Petitioner did not submit the financial

information, nor did he call for the telephone hearing on

September 25, 2007.

On October 26, 2007, respondent’s Appeals Office issued a

notice of determination sustaining respondent’s proposed levy. 

The notice of determination included a warning that should

petitioner petition this Court, he might be subject to a sanction

for instituting or maintaining an action primarily for delay or

for taking a position that is frivolous or groundless, citing as

precedent Pierson v. Commissioner, 115 T.C. 576 (2000).

On the basis of that notice, petitioner petitioned this

Court, alleging that the levy action was “illegal” because “no

notice of lien was ever filed” and that respondent is without
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authority to collect Federal income taxes “because their Pocket

Commission denies said authority.”

On October 2, 2008, respondent filed a Motion To Remand this

case back to respondent’s Appeals Office so that petitioner could

have the face-to-face hearing he had requested on the Form 12153. 

By Order dated October 20, 2008, the Court granted respondent’s

Motion To Remand and ordered the parties to submit status reports

by January 21, 2009. The Court also ordered that the face-toface hearing be conducted by an Appeals officer (or settlement

officer) with no prior involvement in the case.

On November 6, 2008, a second settlement officer sent

petitioner a letter scheduling a face-to-face conference on

December 4, 2008. Petitioner and the settlement officer met at

the appointed time and petitioner presented only frivolous

arguments, including challenging the Commissioner’s authority to

make Federal income tax assessments.

On December 12, 2008, petitioner telephoned the settlement

officer to request additional information regarding collection

alternatives. Later that same day, the settlement officer sent

petitioner a letter listing collection alternatives and stating

that before respondent could consider a collection alternative,

petitioner must be in compliance with Federal tax laws by filing

all required delinquent tax returns and submitting a Form 433-A,

Collection Information Statement for Wage Earners and Self-
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Employed Individuals. With the letter the settlement officer

included a Form 433-A and a booklet describing offers-incompromise.

By letter dated December 27, 2008, petitioner requested that

the settlement officer place him in currently not collectible

status but did not submit the Form 433-A or file the requisite

delinquent tax returns.

On January 14, 2009, respondent’s Appeals Office issued a

Supplemental Notice of Determination Concerning Collection Action

Under Section 6330 (supplemental notice of determination)

sustaining the proposed levy. The supplemental notice of

determination stated that petitioner is not eligible for a

collection alternative because he had failed to provide the

necessary financial information statements and has not filed tax

returns for 2004, 2005, 2006, and 2007.

Respondent’s Motion for Summary Judgment

On September 22, 2009, respondent filed the Motion For

Summary Judgment And To Impose A Penalty Under I.R.C. Section

6673 that is presently before the Court.
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Hearing on Respondent’s Motion for Summary Judgment

The Court calendared respondent’s motion for hearing on

November 17, 2009, in Pittsburgh, Pennsylvania. Both parties

appeared and were heard.

At the hearing petitioner stated that he had filed tax

returns for 2003, 2004, 2005, 2006, 2007, and 2008 in August 2009

and had submitted an offer-in-compromise on September 15, 2009. 

Petitioner did not bring copies of the filed tax returns or offer

in compromise to the hearing. At that time respondent indicated

that his records did not reflect the filing of the tax returns

and that the offer in compromise had been received but was not

processable because of the present litigation. The Court

adjourned the hearing until the following morning to give

petitioner time to gather the returns and present them to the

Court.

The next morning, November 18, 2009, the Court recalled

respondent’s motion for hearing. At that time petitioner

presented copies of Federal income tax returns for 2003, 2004,

2005, 2006, 2007, and 2008, which he repeated had been filed in

August 2009. The returns appeared to be processable (as opposed

to “zero” returns) and showed an amount due for each year. 

Counsel for respondent admitted that the 2007 and 2008 returns

were reflected on petitioner’s account transcripts for those

years; however, the transcripts for 2003 through 2006 did not
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reflect that returns were filed. Because respondent had

generated substitutes for return for 2003 through 2006, a tax

return subsequently filed by a taxpayer is handled differently

than a subsequently filed tax return for years in which there was

not a substitute for return, as in 2007 and 2008.

In addition to the tax returns, petitioner presented copies

of a completed Form 656, Offer in Compromise, and a completed

Form 433-A, which he had submitted to respondent on September 15,

2009. Petitioner also explained that he had started having

Federal income tax withheld from his paychecks in April 2009.

Discussion

A. Summary Judgment

Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be

granted with respect to all or any part of the legal issues in

controversy “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.” Rule 121(a) and (b).

After carefully reviewing the record, we are satisfied that

there is no genuine issue as to any material fact, and a decision
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may be rendered as a matter of law. Accordingly, we shall grant

respondent’s motion insofar as it pertains to summary judgment.

B. Respondent’s Proposed Levy

Section 6330 generally provides that the Commissioner cannot

proceed with collection by levy until the taxpayer has been given

notice and the opportunity for an administrative review of the

matter (in the form of an Appeals Office hearing) and, if

dissatisfied, with judicial review of the administrative

determination. See Davis v. Commissioner, 115 T.C. 35, 37

(2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).

Hearings conducted under section 6330 are informal

proceedings, not formal adjudications. Katz v. Commissioner, 115

T.C. 329, 337 (2000); Davis v. Commissioner, supra at 41. 

Taxpayers are generally entitled to be offered a face-to-face

hearing at the Appeals Office nearest their residence. However,

a face-to-face meeting is not invariably required, and the

hearing may be conducted by telephone or by correspondence. Katz

v. Commissioner, supra at 337-338; Dorra v. Commissioner, T.C.

Memo. 2004-16; sec. 301.6330-1(d)(2), Q&A-D6 and -D7, Proced. &

Admin. Regs. Furthermore, there is no requirement that a faceto-face hearing must be offered to a taxpayer who merely wishes

to pursue frivolous arguments. Lunsford v. Commissioner, 117

T.C. 183, 189 (2001); Ho v. Commissioner, T.C. Memo. 2006-41.
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2 Even if petitioner did not receive a notice of

deficiency, he did not challenge the existence or amount of the

underlying tax liability at the Appeals hearing but made only

frivolous arguments.

Section 6330(c) prescribes the matters that a taxpayer may

raise at an Appeals Office hearing. In sum, section 6330(c)

provides that a taxpayer may raise collection issues such as

spousal defenses, the appropriateness of the Commissioner’s

intended collection action, and possible alternative means of

collection. Section 6330(c)(2)(B) provides that the existence

and amount of the underlying tax liability may be contested at an

Appeals Office hearing only if the person did not receive a

notice of deficiency for the tax in question or did not otherwise

have an earlier opportunity to dispute the tax liability. See

Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v.

Commissioner, supra at 180-181. It is well settled that where

the validity of the underlying tax liability is properly at issue

in a collection review proceeding, the Court will review the

matter on a de novo basis. Goza v. Commissioner, supra at

181-182. Section 6330(c)(2)(B) bars petitioner from challenging

the existence or amount of his underlying tax liability in this

collection review proceeding because he previously had the

opportunity to dispute the determined deficiency. See Nestor v.

Commissioner, 118 T.C. 162, 165-166 (2002); Thomas v.

Commissioner, T.C. Memo. 2003-231.2
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Where the validity of the underlying tax liability is not

properly at issue, the Court will review the Commissioner’s

administrative determination for abuse of discretion. Goza v.

Commissioner, supra at 181-182. The Court has described the

abuse of discretion standard as meaning “arbitrary, capricious,

or without sound basis in fact or law.” Giamelli v.

Commissioner, 129 T.C. 107, 111 (2007) (citing Woodral v.

Commissioner, 112 T.C. 19, 23 (1999)). In reviewing for abuse of

discretion, we generally consider “only arguments, issues, and

other matter that were raised at the collection hearing or

otherwise brought to the attention of the Appeals Office.” 

Magana v. Commissioner, 118 T.C. 488, 493 (2002). Although

special circumstances might cause us to depart from this

approach, we are unable to discern any such circumstances in the

present case.

Petitioner was given the opportunity for an administrative

hearing on two occasions. By letter dated September 4, 2007, the

first settlement officer offered petitioner a telephone hearing

on September 25, 2007. Additionally, the letter offered

petitioner the opportunity to present his information through

correspondence. Petitioner did not call the first settlement

officer at the appointed time on September 25, 2007, nor did

petitioner submit any correspondence to the settlement officer. 
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Shortly thereafter respondent’s Appeals Office issued the notice

of determination.

The second occasion arose when petitioner’s case was

remanded back to the Appeals Office pursuant to respondent’s

motion for a second administrative hearing. This time petitioner

participated in a face-to-face hearing on December 4, 2008. At

that hearing petitioner made only frivolous arguments, and only

afterward did petitioner request a collection alternative, i.e., 

to be placed in currently not collectible status. Petitioner’s

request was not accompanied by the requisite financial statements

and, at that time, petitioner had not filed tax returns for 2004

through 2007. On January 14, 2009, the second settlement officer

issued the supplemental notice of determination stating that

petitioner was not eligible for a collection alternative because

he did not submit financial information and was not in

compliance. Courts have consistently held that a determination

that a taxpayer is not entitled to a collection alternative does

not constitute an abuse of discretion if the taxpayer did not

provide financial information during the administrative hearing

and was not currently in compliance with Federal tax laws, i.e.,

had not filed all required tax returns. E.g. Olsen v. United

States, 414 F.3d 144 (1st Cir. 2005) (no abuse of discretion in

rejecting an offer-in-compromise when the taxpayer failed to

provide financial information during the administrative hearing);
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Willis v. Commissioner, T.C. Memo. 2003-302 (no abuse of

discretion because the taxpayer failed to provide sufficient

financial documentation); Moorhous v. Commissioner, T.C. Memo.

2003-183 (no abuse of discretion because current financial

information was not provided by the taxpayer during the

administrative hearing); cf. Vinatieri v. Commissioner, 133 T.C.

__ (2009) (release of levy required when the taxpayer

demonstrates financial hardship despite noncompliance with filing

required returns).

In view of the foregoing, respondent’s motion shall be

granted insofar as it pertains to summary judgment.

C. Section 6673 Penalty

We turn now to that part of respondent’s motion that

requests the imposition of a penalty on petitioner under section

6673.

As relevant herein, section 6673(a)(1) authorizes the Tax

Court to require a taxpayer to pay to the United States a penalty

not in excess of $25,000 whenever it appears that proceedings

have been instituted or maintained by the taxpayer primarily for

delay or that the taxpayer’s position in such proceeding is

frivolous or groundless. The Court has indicated its willingness

to impose such penalty in lien and levy cases, Pierson v.

Commissioner, 115 T.C. at 580-581, and has in fact imposed a
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3 At the hearing petitioner stated:

Your Honor, the only thing I can say is I made a

mistake. I’m just looking for a second chance to

correct things and just get on with my life. Like I

said, the only I guess excuse I have is I should have

read things for myself instead of relying on others. 

* * * I should have been paying from all those years. 

Like I said, I just made a mistake. There’s not much

more I can say other than that.

penalty in many such cases, e.g., Cipolla v. Commissioner, T.C.

Memo. 2004-6.

We are inclined to think that petitioner commenced the

present case primarily for delay given the meritless arguments in

his petition and in his statements at the December 4, 2008

hearing. However, petitioner has since reformed his ways by

filing processable tax returns, having Federal income tax

withheld from his paychecks, and indicating that he now agrees

that he is subject to Federal income tax.3 Because petitioner

changed his position since instituting these proceedings we shall

not impose a penalty under section 6673.

As a result, we shall deny respondent’s motion insofar as it

pertains to imposition of a penalty under section 6673.

Conclusion

We have considered all of the arguments made by petitioner,

and, to the extent that we have not specifically addressed them,

we conclude that they are unpersuasive.
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To reflect the foregoing,

An appropriate order

and decision will

be entered granting

respondent’s motion as it

pertains to summary judgment

and denying it as it pertains

to imposition of a penalty

under section 6673.