T.C. Memo. 2010-25

UNITED STATES TAX COURT

KLE MANJARO, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 26386-08L. Filed February 16, 2010.

Kle Manjaro, pro se.

Alicia E. Elliott, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COHEN, Judge: This case was commenced in response to a

notice of determination concerning collection action sent to

petitioner with respect to a levy to collect unpaid taxes for

2000, 2001, 2002, 2003, 2005, and 2006. Petitioner has failed to

raise any bona fide issue about his underlying liabilities or to

identify any abuse of discretion by the Appeals Office. 
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Therefore, the issue for decision is whether a penalty should be

imposed under section 6673 on the grounds that petitioner’s

arguments are frivolous and that the proceeding was commenced and

maintained primarily for delay. All section references are to

the Internal Revenue Code, and all Rule references are to the Tax

Court Rules of Practice and Procedure.

FINDINGS OF FACT

Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner resided in Arizona at the time that he filed his

petition. 

Petitioner filed Federal income tax returns for 2000, 2001,

2002, 2003, 2005, and 2006, reporting taxable income and balances 

owing after withholding credits that were insufficient to pay the

reported income taxes. The reported amounts were duly assessed,

along with interest and penalties. Petitioner failed to file a

Federal income tax return for 2007 or 2008.

On February 21, 2008, the Internal Revenue Service sent

petitioner Letter 1058, Final Notice of Intent to Levy and Notice

of Your Right to a Hearing. Petitioner requested a hearing under

section 6330, asserting that he disagreed with the amount of tax

due. On July 1, 2008, the Appeals Office sent a letter to

petitioner scheduling a hearing and requesting that petitioner

provide documentation, including a completed Form 433-A,
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Collection Information Statement for Wage Earners and SelfEmployed Individuals, a signed Federal income tax return for

2007, and a completed Form W-4, Employee’s Withholding Allowance

Certificate. 

Petitioner did not provide the requested documents, he did

not identify any specific disagreement with the underlying

liabilities, and he did not offer any collection alternatives. 

He did not accept an offer of a face-to-face hearing. He

indicated that he was unemployed and suggested financial

hardship. After a telephone hearing, the Appeals settlement

officer reviewed transcripts of petitioner’s account and verified

that legal and procedural requirements had been met. The Appeals

Office, therefore, determined that the proposed levy was

appropriate.

In the petition filed October 29, 2008, petitioner indicated

his belief that he did not owe the assessed amounts and that he

desired to file amended returns “based on IRS Code”. The

petition also claimed financial hardship.

By notice served July 1, 2009, the case was set for trial on

December 7, 2009. Attached to the notice was the Court’s

standing pretrial order. Petitioner did not file the pretrial

memorandum specified by the standing pretrial order, but he did

enter into a stipulation as required by that order and Rule 91.
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OPINION

Section 6331(a) provides that, if any person liable to pay

any tax neglects or refuses to pay such tax within 10 days after

notice and demand for payment, the Secretary is authorized to

collect such tax by levy upon property belonging to the taxpayer. 

Section 6331(d) provides that the Secretary is obliged to provide

the taxpayer with notice, including notice of the administrative

appeals available to the taxpayer, before proceeding with

collection by levy on the taxpayer’s property.

Section 6330 generally provides that the Commissioner cannot

proceed with the collection of taxes by way of a levy on a

taxpayer’s property until the taxpayer has been given notice of

and the opportunity for an administrative review of the matter

(in the form of a section 6330 hearing) and, if dissatisfied,

with judicial review of the administrative determination. 

Section 6330(c)(2) specifies the issues that the taxpayer may

raise at the hearing. The taxpayer is allowed to raise “any

relevant issue relating to the unpaid tax or the proposed levy”

including spousal defenses, challenges to the appropriateness of

collection actions, and alternatives to collection. Sec.

6330(c)(2)(A). Section 6330(c)(3) provides that the

determination of the settlement officer shall take into

consideration the verification under section 6330(c)(1), the

issues raised by the taxpayer, and whether the proposed
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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.

Petitioner filed this action under section 6330(d), seeking

judicial review of the notice of determination. When the case

was called from the calendar for trial, petitioner sought a

continuance, which was denied. He began his testimony by reading

a statement as follows: “I do not believe that I owe taxes on my

wages because Article I, Section 9, Clause 4 of the U.S.

Constitution, which has never been repealed, prevents direct

taxes without apportionment on natural persons born within the 50

states.” The Court interrupted petitioner’s prepared statement

to admonish him that he was risking a penalty under section 6673

because he was making frivolous arguments. The argument that

wages are exempt from taxation has been described as “beyond

frivolous” and “frivolous squared”. See, e.g., United States v.

Cooper, 170 F.3d 691, 691 (7th Cir. 1999). Over 20 years ago the

Court of Appeals for the Ninth Circuit, to which our decision in

this case is appealable, observed that “We hardly need comment on

the patent absurdity and frivolity of such a proposition [that

direct nonapportioned income taxes are unconstitutional].” 

United States v. Nelson (In re Becraft), 885 F.2d 547, 548 (9th

Cir. 1989). 
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Petitioner then attempted to raise procedural questions and

statutory arguments--a common dilatory tactic employed by tax

defiers. See, e.g., Huntress v. Commissioner, T.C. Memo. 2009-

161, regarding the “laundry list” of objections frequently

invoked in section 6330 cases. Petitioner, however, had

stipulated that “the settlement officer verified that all legal

and administrative procedures were followed.” At no time did

petitioner raise any bona fide issues specified in section

6330(c)(2)(A).

So far as the record reflects, petitioner filed valid

returns for the years subject to the collection action in

question. The assessments were based on the returns that he

filed. He became noncompliant with the filing requirements when

he failed to file a Federal income tax return for 2007, and he

also failed to file a return for 2008. His failure to file those

returns or to provide the financial information requested by the

Appeals officer precluded consideration of collection

alternatives. See, e.g., Huntress v. Commissioner, supra. As a

result, he has forgone the opportunity to present arguments based

on his alleged financial hardship.

The record does not clearly reflect when petitioner decided

to pursue frivolous arguments, but he did so at trial after his

request for a continuance was denied. At that time the case had
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been pending for over a year, and it had been set for trial for

over 5 months. No further delays were justified.

Section 6673(a)(1) provides:

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,

(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.

We have decided not to impose a penalty in this case, but

petitioner is warned that a penalty may be imposed if he pursues

a similar course in the future. See Pierson v. Commissioner, 115

T.C. 576, 581 (2000). In view of the foregoing,

Decision will be entered

for respondent.