1 Unless otherwise indicated, all section references are to

(continued...)

T.C. Memo. 2002-263

UNITED STATES TAX COURT

DANNEY R. LAND, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 185-02L. Filed October 10, 2002.

Danney R. Land, pro se.

Alan T. Tomsic and Stuart Murray, for respondent.

MEMORANDUM OPINION

ARMEN, Special Trial Judge: This matter is before the Court

on respondent’s Motion For Summary Judgment And To Impose A

Penalty Under I.R.C. Section 6673, as supplemented, filed

pursuant to Rule 121.1 Respondent contends that there is no
- 2 -

1(...continued)

the Internal Revenue Code, as amended, and all Rule references

are to the Tax Court Rules of Practice and Procedure.

dispute as to any material fact with respect to this levy action

and that respondent’s determination to proceed with collection of

petitioner’s outstanding tax liability for 1998 should be

sustained as a matter of law. 

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); see

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The

moving party bears the burden of proving that 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).
- 3 -

As explained in detail below, there is no genuine issue as

to any material fact, and a decision may be rendered as a matter

of law. Accordingly, we shall grant respondent’s motion for

summary judgment, as supplemented.

Background

The record establishes and/or the parties do not dispute the

following:

A. Petitioner’s Form 1040 for 1998

On or about April 15, 1999, Danney R. Land (petitioner), a

resident of Boulder City, Nevada, submitted to respondent a Form

1040, U.S. Individual Income Tax Return, for the taxable year

1998. On the Form 1040, petitioner listed his occupation as

“slot tech”.

Petitioner entered zeros on applicable lines of the income

portion of the Form 1040, specifically including line 7 for

wages, line 21 for other income, line 22 for total income, line

33 for adjusted gross income, and line 39 for taxable income. 

Petitioner made no entry on line 40 for tax, but he did enter a

zero on line 56 for total tax. Petitioner then claimed a refund

in the amount of $1,450.43, which was equal to the amount of

Federal income tax that had been withheld from his wages.

Petitioner attached to his Form 1040 a Form W-2, Wage and

Tax Statement, disclosing the payment of wages to him during the

taxable year in issue. The Form W-2 was from Lakeview Co.,
- 4 -

d.b.a. Gold Strike Inn & Casino, of Boulder City, Nevada; it

disclosed the payment of wages to petitioner in the amount of

$17,401.20 and the withholding of Federal income tax in the

amount of $1,450.43. 

Petitioner also attached to his Form 1040 a two-page

typewritten statement that stated, in part, as follows: 

I, Danney Land, am submitting this as part of my 1998

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;

* * * * * * *

5) Please note, that my 1998 return also constitutes a

claim for refund pursuant to Code Section 6402.

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

according to the Supreme Court’s definition of income 

* * * .

7) I am also putting the IRS on notice that my 1998 tax

return and claim for refund does not constitute a

“frivolous” return pursuant to Code Section 6702. * * *

* * * * * * *

10) In addition, don’t notify me that the IRS is
- 5 -

2 Insofar as his ultimate tax liability was concerned,

respondent gave petitioner credit for the amount withheld from

his wages. However, we note that the determination of a

statutory deficiency does not take such withheld amounts into

account. See sec. 6211(b)(1). 

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

allows the IRS to do that. You might prepare a return

(pursuant to Code Section 6020(b)) where no return is

filed, but as in this case, a return has been filed, no

statute authorizes IRS personnel to “change” that

return.

* * * * * * *

* * * The word “income” is not defined in the Internal

Revenue Code. * * * But, as stated above, it can only

be a derivative of corporate activity. * * *

B. Respondent’s Deficiency Notice and Petitioner’s Response

On August 11, 2000, respondent (acting through Deborah

Decker, Director of the Service Center in Ogden, Utah) issued a

notice of deficiency to petitioner for the taxable year 1998. In

the notice, respondent determined a deficiency in petitioner’s

Federal income tax in the amount of $36,178 and an accuracyrelated penalty under section 6662(a) and (b)(1) for negligence

or disregard of rules or regulations in the amount of $6,945.51.2

The deficiency in income tax was based on respondent’s

determination that petitioner failed to report income in the

aggregate amount of $139,183, determined as follows:

 Income Amount 

 Wages (Lakeview Co.) $17,401

 Unemployment compensation 6,708

 Capital gain 115,000

 Interest income 74

 139,183 
- 6 -

3 In this regard, petitioner’s letter dated Nov. 1, 2000,

stated as follows: 

According to your “Deficiency Notice” of above date

(cover sheet attached), there is an alleged deficiency

with respect to my 1998 income tax * * *, and if I

wanted to “contest this deficiency before making

payment, I must “file a petition with the United States

Tax Court.”

By registered letter dated November 1, 2000, petitioner

wrote to the director of respondent’s Service Center in Ogden,

Utah, acknowledging receipt of the notice of deficiency dated

August 11, 2000, but challenging respondent’s authority “to send

me the Notice in the first place.” Petitioner sent copies of his

letter by registered mail to Lawrence H. Summers, Secretary of

the Treasury, and Charles O. Rossotti, Commissioner of Internal

Revenue. 

Petitioner knew that he had the right to contest

respondent’s deficiency determination by filing a petition for

redetermination with this Court.3 However, petitioner chose not

to do so. Accordingly, on February 26, 2001, respondent assessed

the determined deficiency and accuracy-related penalty, as well

as statutory interest. On that same day, respondent sent

petitioner a notice of balance due, informing him that he had a

liability for 1998 and requesting that he pay it. Petitioner 

failed to pay the amount owing.
- 7 -

C. Respondent’s Final Notice and Petitioner’s Response

On April 19, 2001, respondent mailed to petitioner a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing in respect of his outstanding tax liability for 1998. 

On or about May 13, 2001, petitioner filed with respondent

Form 12153, Request for a Collection Due Process Hearing. The

request, which was accompanied by a lengthy, typewritten

statement, included, inter alia, a challenge to the existence of

the underlying tax liability, as well as allegations that

petitioner was never provided with a valid notice of deficiency

or notice and demand for payment. Petitioner also alleged:

I claim there is no statute requiring me “to pay” the

income taxes at issue. No law authorizes the IRS to

claim that I owe more in income taxes than the “zero” I

reported on my 1998 income tax return.

In addition, petitioner requested verification from the Secretary

that all applicable laws and administrative procedures were

followed with regard to the assessment and collection of the tax

liability in question.

D. The Appeals Office Hearing

On October 4, 2001, petitioner attended an administrative

hearing in Las Vegas, Nevada, conducted by Appeals Officer Tony

Aguiar (the Appeals officer). Prior to the hearing, the Appeals

officer obtained and reviewed Form 4340, Certificate of

Assessments, Payments, and Other Specified Matters, pertaining to

petitioner’s account for 1998. At the hearing, the Appeals
- 8 -

officer provided petitioner with a copy of that document.

During the hearing, petitioner requested that the Appeals

officer provide verification from the Secretary of the Treasury

that all applicable laws and administrative procedures had been

followed in the assessment and collection process. Petitioner

was informed that Form 4340 was sufficient to satisfy the

verification requirement of section 6330(c)(1). Petitioner also

alleged that he never received “the statutory notice and demand

for payment” and challenged the Appeals officer to 

show me the law that requires me to pay the tax. You

show me the law that makes me liable for the tax in the

Internal Revenue Code [placing Internal Revenue Code in

front of Appeals officer] it’s right here in front of

you, on the table. You point to the Code, and I

brought my checkbook with me, I will write you a check

today.

The Appeals officer terminated the hearing after petitioner

declined to discuss collection alternatives.

E. Respondent’s Notice of Determination

 On October 16, 2001, respondent’s Appeals Office issued to

petitioner a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 with regard to his tax

liability for 1998. In the notice, the Appeals Office concluded

that respondent’s determination to proceed with collection by way

of levy should be sustained.
- 9 -

4 Petitioner’s petition arrived at the Court in an envelope

bearing a U.S. Postal Service postmark date of November 7, 2001.

During the fall/winter of 2001-2002, the Court experienced

significant delays in the receipt of mail because of anthrax. 

At the time that the petition was filed, petitioner resided

in Boulder City, Nevada.

5 Although petitioner speaks of his returns for the years

in issue, only the taxable year 1998 is involved in the present

(continued...)

F. Petitioner’s Petition

On January 2, 2002, petitioner filed with the Court a 

Petition for Lien or Levy Action seeking review of respondent’s

notice of determination.4 The petition includes 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 “valid” notice of deficiency; i.e.,

“one signed by the Secretary or someone with delegated authority

from him”; (4) petitioner never received “the statutory ‘Notice

and Demand’ for payment”; and (5) petitioner was denied the

opportunity to challenge the existence or amount of his

underlying tax liability. Petitioner also alleged that because

he “did not show a tax due on any of his returns for the years in

issue, no ‘deficiency’ pursuant to the provisions of [section]

6211 for those years was legally possible.”5
- 10 -

5(...continued)

proceeding.

Petitioner attached to his petition several documents,

including copies of the cover page of the notice of deficiency

dated August 11, 2000, the notice of balance due dated February

26, 2001, and the Form 4340 that was furnished to him by the

Appeals officer at the administrative hearing on October 4, 2001.

G. Respondent’s Motion For Summary Judgment

As stated, respondent filed a Motion For Summary Judgment

And To Impose A Penalty Under I.R.C. Section 6673. Respondent

contends that petitioner is barred under section 6330(c)(2)(B)

from challenging the existence or amount of his underlying tax

liability in this collection review proceeding because petitioner

received a notice of deficiency for the tax in question. 

Respondent also contends that the Appeals officer’s review of

Form 4340 for petitioner’s account for the taxable year 1998

satisfied the verification requirement of section 6330(c)(1). 

Finally, respondent contends that petitioner’s behavior warrants

the imposition of a penalty under section 6673.

Petitioner filed an Objection to respondent’s motion,

alleging, inter alia, that “no statutory notice and demand was

sent” and that “no statute establishes a liability for the income

tax or requires the payment of the income tax”. Thereafter,

pursuant to notice, respondent’s motion was called for hearing at
- 11 -

the Court's motions session in Washington, D.C. Petitioner did

not attend the hearing; however, he did file a written statement

pursuant to Rule 50(c), which incorporated by reference certain

of his prior filings. 

Discussion

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 on the person’s property. Section

6331(d) provides that at least 30 days before enforcing

collection by levy on the person's property, the Secretary is

obliged to provide the person with a final notice of intent to

levy, including notice of the administrative appeals available to

the person.

Section 6330 generally provides that the Commissioner cannot

proceed with collection by levy until the person 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).

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

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

provides that a person may raise collection issues such as
- 12 -

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 can 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. Section 6330(d) provides for judicial

review of the administrative determination in the Tax Court or a

Federal District Court, as may be appropriate.

A. Summary Judgment

Petitioner challenges the assessment made against him on the

ground that the notice of deficiency dated August 11, 2000, is

invalid. However, the record conclusively shows that petitioner

received the notice of deficiency and disregarded the opportunity

to file a petition for redetermination with this Court. See sec.

6213(a). It follows that section 6330(c)(2)(B) bars petitioner

from challenging the existence or amount of his underlying tax

liability in this collection review proceeding. See Nestor v.

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

Even if petitioner were permitted to challenge the validity

of the notice of deficiency, petitioner’s argument that the

notice is invalid because respondent’s Service Center director is
- 13 -

not properly authorized to issue notices of deficiency is

frivolous and groundless. See id. at 165; Goza v. Commissioner,

supra. Likewise, petitioner’s argument that no statute

establishes an individual’s liability for income tax or requires

the payment of income tax is frivolous and groundless. As the

Court of Appeals for the Fifth Circuit has remarked: "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, 737

F.2d 1417, 1417 (5th Cir. 1984); see Tolotti v. Commissioner,

T.C. Memo. 2002-86. Suffice it to say: 

(1) Petitioner is a taxpayer subject to the Federal income

tax, see secs. 1(c), 7701(a)(1), (14); 

(2) compensation for labor or services rendered constitutes

income subject to the Federal income tax, sec. 61(a)(1); United

States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981); 

(3) petitioner is required to file an income tax return,

sec. 6012(a)(1); and 

(4) a taxpayer’s failure to report tax on a return does not

prevent the Commissioner from determining a deficiency in that

taxpayer’s income tax, secs. 6211(a), 6212(a); see Monaco v.

Commissioner, T.C. Memo. 1998-284.

We likewise reject petitioner’s argument that the Appeals

officer failed to obtain verification from the Secretary that the
- 14 -

requirements of all applicable laws and administrative procedures

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

that prior to the administrative hearing on October 4, 2001, the

Appeals officer obtained and reviewed Form 4340 for petitioner’s

taxable year 1998.

Federal tax assessments are formally recorded on a record of

assessment. Sec. 6203. “The summary record, through supporting

records, shall provide identification of the taxpayer, the

character of the liability assessed, the taxable period, if

applicable, and the amount of the assessment.” Sec. 301.6203-1,

Proced. & Admin. Regs.

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

on a particular document to satisfy the verification requirement

imposed therein. Roberts v. Commissioner, 118 T.C. 365, 371 n.10

(2002); Weishan v. Commissioner, T.C. Memo. 2002-88; Lindsey v.

Commissioner, T.C. Memo. 2002-87; Tolotti v. Commissioner, supra;

Duffield v. Commissioner, T.C. Memo. 2002-53; Kuglin v.

Commissioner, T.C. Memo. 2002-51. In this regard, we observe

that the Form 4340 on which the Appeals officer relied contained

all the information prescribed in section 301.6203-1, Proced. &

Admin. Regs. See Weishan v. Commissioner, supra; Lindsey v.

Commissioner, supra; Tolotti v. Commissioner, supra; Duffield v.
- 15 -

6 To the extent that petitioner may still be arguing that

the Appeals officer failed to provide him with a copy of the

verification, we note that sec. 6330(c)(1) does not require that

the Appeals officer provide the taxpayer with a copy of the

verification at the administrative hearing. Nestor v.

Commissioner, 118 T.C. 162, 166 (2002). In any event, the

Appeals officer provided petitioner with a copy of Form 4340 for

the taxable year 1998. Indeed, petitioner attached a copy of

this form as an exhibit to his petition.

Commissioner, supra; Kuglin v. Commissioner, supra.

6

Petitioner has not alleged any irregularity in the

assessment procedure that would raise a question about the

validity of the assessment or the information contained in the

Form 4340. See Davis v. Commissioner, 115 T.C. at 41; Mann v.

Commissioner, T.C. Memo. 2002-48. Accordingly, we hold that the

Appeals officer satisfied the verification requirement of section

6330(c)(1). Cf. Nicklaus v. Commissioner, 117 T.C. 117, 120-121

(2001).

Petitioner also contends that he never received a notice and

demand for payment of his tax liability for 1998. The

requirement that the Secretary issue a notice and demand for

payment is set forth in section 6303(a), which provides in

pertinent part:

SEC. 6303(a). General Rule.-–Where it is not

otherwise provided by this title, the Secretary shall,

as soon as practicable, and within 60 days, after the

making of an assessment of a tax pursuant to section

6203, give notice to each person liable for the unpaid

tax, stating the amount and demanding payment thereof. 

* * * 

In particular, the Form 4340 on which the Appeals officer relied
- 16 -

7 Petitioner stated to the Appeals officer at the

administrative hearing on Oct. 4, 2001, that “I brought my

checkbook with me, I will write you a check today” if the Appeals

officer would only “show me the law that requires me to pay the

tax.” The statutory citations sought by petitioner are

identified supra p. 13 of this opinion.

during the administrative process shows that respondent sent

petitioner a notice of balance due on the same date that

respondent made assessments against petitioner for the tax and

accuracy-related penalty determined in the notice of deficiency. 

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); Newman v.

Commissioner, T.C. Memo. 2002-135; Weishan v. Commissioner,

supra; see also Hansen v. United States, 7 F.3d 137, 138 (9th

Cir. 1993). Notably, petitioner attached a copy of the notice of

balance due dated February 26, 2001, as an exhibit to his

petition.

Petitioner has failed to raise a spousal defense, make a

valid challenge to the appropriateness of respondent’s intended

collection action, or offer alternative means of collection.7

These issues are now deemed conceded. Rule 331(b)(4). In the

absence of a valid issue for review, we conclude that respondent

is entitled to judgment as a matter of law sustaining the notice

of determination dated October 16, 2001.
- 17 -

8 E.g., Roberts v. Commissioner, 118 T.C. 365 (2002)

(imposing a penalty in the amount of $10,000); Davich v.

Commissioner, T.C. Memo. 2002-255 (imposing a penalty in the

amount of $5,000); Schmith v. Commissioner, T.C. Memo. 2002-252

(imposing a penalty in the amount of $1,000); Schroeder v.

Commissioner, T.C. Memo. 2002-190 (imposing sua sponte a penalty

in the amount of $1,000); Wagner v. Commissioner, T.C. Memo.

2002-180 (imposing a penalty in the amount of $4,000); Perry v.

Commissioner, T.C. Memo. 2002-165 (imposing a penalty in the

amount of $2,500); Crow v. Commissioner, T.C. Memo. 2002-149

(imposing a penalty in the amount of $1,500); Smeton v.

Commissioner, T.C. Memo. 2002-140 (imposing a penalty in the

amount of $1,000); Newman v. Commissioner, T.C. Memo. 2002-135

(imposing a penalty in the amount of $1,000); Williams v.

Commissioner, T.C. Memo. 2002-111 (imposing sua sponte a penalty

in the amount of $1,000); Yacksyzn v. Commissioner, T.C. Memo.

2002-99 (imposing a penalty in the amount of $1,000); Watson v.

Commissioner, T.C. Memo. 2001-213 (imposing a penalty in the

amount of $1,500); Davis v. Commissioner, T.C. Memo. 2001-87

(imposing a penalty in the amount of $4,000).

B. Imposition of a Penalty Under Section 6673

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

for 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. 576, 580-581 (2000), and has in fact

imposed a penalty in a number of such cases.8
- 18 -

We are convinced that petitioner instituted the present

proceeding primarily for delay. In this regard, it is clear that

petitioner regards this proceeding as nothing but a vehicle to

protest the tax laws of this country and to espouse his own

misguided views, which we regard as frivolous and groundless. 

E.g., Tolotti v. Commissioner, T.C. Memo. 2002-86. In short,

having to deal with this matter wasted the Court's time, as well

as respondent's, and taxpayers with genuine controversies may

have been delayed.

Under the circumstances, we shall grant that part of

respondent’s motion that moves for the imposition of a penalty in

that we shall impose a penalty on petitioner pursuant to section

6673(a)(1) in the amount of $5,000.

In order to give effect to the foregoing,

An appropriate order granting

respondent's motion, as

supplemented, and decision for

respondent will be entered.