1 Unless otherwise indicated, all section references are to

(continued...)

T.C. Memo. 2008-196

UNITED STATES TAX COURT

NORMAN P. SCHNELLER, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 1510-08L. Filed August 21, 2008.

Norman P. Schneller, pro se.

Jennifer K. Martwick and Monica J. Miller, for respondent.

MEMORANDUM OPINION

RUWE, Judge: The petition in this case was filed in

response to a Notice of Determination Concerning Collection

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

determination).1 This case is before the Court on respondent’s
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1(...continued)

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

to the Tax Court Rules of Practice and Procedure.

motion for summary judgment and to impose a penalty under section

6673, and respondent’s motion to permit levy. The issues for

decision are: (1) Whether respondent’s Appeals Office abused its

discretion in determining to proceed with the collection action

with respect to petitioner’s unpaid income tax liability for tax

year 2003; (2) whether the Court should impose a penalty in an

appropriate amount, pursuant to section 6673, on the ground that

petitioner instituted these proceedings primarily for delay and

that petitioner’s position is frivolous and/or groundless; and

(3) whether respondent has shown good cause to lift suspension of

the levy pursuant to section 6330(e)(2).

This case was calendared for hearing on respondent’s abovereferenced motions in Atlanta, Georgia, on September 15, 2008. 

Upon further review, it is determined that no material fact is in

dispute and the arguments petitioner raised are unavailing;

therefore a decision on the merits will be entered pursuant to

the information contained in the record.

Background

At the time the petition in this case was filed, petitioner

resided in McDonough, Georgia.
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Prior Proceedings Regarding 2003 Tax Liability

Petitioner failed to timely file a Form 1040, U.S.

Individual Income Tax Return, for the tax year 2003, and

respondent sent petitioner a notice of deficiency. Petitioner

filed a petition with this Court at docket No. 15548-05 that was

replete with frivolous and/or groundless protester-type

arguments. By order and decision, this Court granted

respondent’s motion for summary judgment, finding that petitioner

had continued his efforts to advance the same meritless

contentions he had raised in two previous proceedings and

sustained respondent’s deficiency determinations. The two

previous cases were Schneller v. Commissioner, T.C. Memo. 2006-

100 (sustaining the Commissioner’s notice of determination for

the tax year 2001), and Schneller v. Commissioner, docket No.

384-06L (granting the Commissioner’s motion for summary judgment

and sustaining the Commissioner’s notice of determination for the

tax year 2002).

Present Proceeding

Respondent sent to petitioner a Final Notice, Notice of

Intent to Levy and Notice of Your Right to a Hearing (notice),

regarding the unpaid tax liability that had been assessed for the

2003 tax year. The notice advised petitioner of his option to

schedule a collection due process (CDP) hearing with respondent’s

Appeals Office.
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In response to the notice, petitioner submitted a Form 

12153, Request for a Collection Due Process or Equivalent

Hearing, to respondent’s Appeals Office. Petitioner’s stated

reason for the CDP hearing was:

Return has been filed with the Atlanta Service Center. 

See attached. Request Audit Redetermination. Levy

premature. Request alternative collection procedures

and reduction in penalties based on 1995 PRA [Paperwork

Reduction Act]. OMB [Office of Management and Budget]

# 1545-0074 was not issued in accordance with 44 U.S.C.

3506.

Petitioner did not offer any collection alternatives or spousal

defenses.

By letter dated September 28, 2007, respondent’s Appeals

officer advised petitioner that a telephonic conference call was

scheduled for October 30, 2007, at 1:30 p.m. (central time). Ten

days before the scheduled telephonic conference call, petitioner

sent a letter to the Appeals officer, dated October 20, 2007, in

which he stated: “We will be out of town at the time of the

phone conference. Please continue by correspondence.” Attached

to petitioner’s letter was an “Appeals Protest”. The “Appeals

Protest” contained petitioner’s continued attempt at advancing

the same frivolous and groundless arguments he had asserted in

prior proceedings. Petitioner’s primary argument in this and

prior proceedings revolves around his theory that the Paperwork

Reduction Act (PRA) shields him from tax liability. 
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On December 13, 2007, respondent’s Appeals Office issued to

petitioner a notice of determination sustaining the proposed

levy. Petitioner timely filed a petition with the Court that

contained the same frivolous and groundless arguments that the

“public protection clause” of the PRA shields him from being

assessed any penalties or additions to tax. Petitioner states:

“No person can be subject to any penalty for failing to file a

form not issued in accordance with the Paperwork Reduction Act,

(“PRA”), as delineated at 44 U.S.C. §§ 3506(c)(1)(B) & 3512(a).” 

Respondent filed a motion for summary judgment alleging that

petitioner’s petition is based on frivolous allegations and

arguments and asks for a penalty under section 6673 because

petitioner has instituted these proceedings primarily for the

purpose of delay and petitioner’s petition is frivolous and

groundless. Respondent also filed a motion to permit levy. 

Petitioner has filed notices of objection to respondent’s two

motions relying primarily on the same protester types of

frivolous arguments he had previously asserted in the petition.

Discussion

Motion for 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 where there is no genuine issue as to any material fact,
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and a decision may be rendered as a matter of law. Rule 121(a)

and (b); see also Sundstrand Corp. v. Commissioner, 98 T.C. 518,

520 (1992), affd. 17 F.3d 965 (7th Cir. 1994); 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 are read in a manner most favorable

to the party opposing summary judgment. Dahlstrom v.

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

Commissioner, 79 T.C. 340, 344 (1982), and Espinoza v.

Commissioner, 78 T.C. 412, 416 (1982)); Naftel v. Commissioner,

supra at 529. When a motion for summary judgment is made and

properly supported, the adverse party may not rest upon mere

allegations or denials of the pleadings but must set forth

specific facts showing that there is a genuine issue for trial. 

Rule 121(d). The motion, however, must be granted “if the Court

is satisfied that no real factual controversy is present so that

the remedy can serve ‘its salutary purpose in avoiding a useless,

expensive and time consuming trial where there is no genuine,

material fact issue to be tried.’” Casanova Co. v. Commissioner,

87 T.C. 214, 217 (1986) (quoting Lyons v. Bd. of Educ., 523 

F.2d 340, 347 (8th Cir. 1975)).

In both the motion for summary judgment and the motion to

permit levy, respondent argues that because petitioner’s prior

proceeding in Schneller v. Commissioner, docket No. 15548-05,
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involved the same tax year at issue and because the Court entered

a final decision as to the merits, section 6330(c)(2)(B) prevents

petitioner from raising the underlying tax liability as an issue

in this case. We agree.

Section 6330(c)(2)(B) provides:

SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE

 LEVY.

* * * * * * *

(c) Matters Considered at Hearing.-– In the case

of any hearing conducted under this section–

* * * * * * *

(2) Issues at hearing.--

* * * * * * *

(B) Underlying liability.-- The person

may also raise at the hearing challenges to

the existence or amount of the underlying tax

liability for any tax period if the person

did not receive any statutory notice of

deficiency for such tax liability or did

otherwise have an opportunity to dispute such

tax liability.

Petitioner received a notice of deficiency regarding his 2003

income tax liabilities. Petitioner filed a petition contesting

the deficiency, and our order and decision in that case (docket

No. 15548-05) was entered on August 16, 2006. As a result,

petitioner is barred under section 6330(c)(2)(B) from challenging

the existence or amount of his underlying tax liability for tax
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2 In the motion for summary judgment, respondent notes that

petitioner’s delinquent 2003 Federal income tax return had been

recently processed by respondent’s Audit Reconsideration

Division. After reconsideration, a portion of petitioner’s tax

liability for 2003 was abated as of Mar. 31, 2008. Pursuant to

Form 4340, Certificate of Assessments, Payments, and Other

Specified Matters, petitioner’s 2003 tax liability, including

interest and failure-to-pay penalties, now totals $115,514.09. 

The Appeals officer did not abuse his discretion by declining to

delay his determinations to await the uncertain outcome of

petitioner's 11th hour request for audit reconsideration and the

uncertain outcome of any audit reconsideration that might be

granted. See Jones v. Commissioner, T.C. Memo. 2007-142.

year 2003 in this proceeding. See Burke v. Commissioner, 124

T.C. 189, 194 (2005); see also sec. 6330(c)(2)(B).2 

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

In his responses to respondent’s motions, petitioner has not

presented any plausible arguments or alleged any facts to show

that respondent abused his discretion. Instead petitioner’s

responses are replete with previously rejected tax protester

types of arguments based primarily on the PRA. As petitioner has

previously been told, his reliance on the PRA is frivolous and

groundless. Schneller v. Commissioner, T.C. Memo. 2006-100; see

also Lewis v. Commissioner, 523 F.3d 1272, 1275 (10th Cir. 2008),

affg. T.C. Memo. 2007-44; Wheeler v. Commissioner, 521 F.3d 1289

(10th Cir. 2008), affg. 127 T.C. 200 (2006). We will not address

these arguments “with somber reasoning and copious citation of
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precedent; to do so might suggest that these arguments have some

colorable merit.” Crain v. Commissioner, 737 F.2d 1417, 1417

(5th Cir. 1984). We find that respondent did not abuse his

discretion.

Section 6673 Penalty

Section 6673(a)(1) authorizes this Court to require a

taxpayer to pay to the United States a penalty, not in excess of

$25,000, if the proceedings before it have been instituted or

maintained by the taxpayer primarily for delay, or the taxpayer’s

position in such proceeding is frivolous or groundless. Section

6673(a)(1) applies to collection proceedings. See Pierson v.

Commissioner, 115 T.C. 576 (2000); Hoffman v. Commissioner, T.C.

Memo. 2000-198. “A position maintained by the taxpayer is

‘frivolous’ where it is ‘contrary to established law and

unsupported by a reasoned, colorable argument for change in the

law.’” Williams v. Commissioner, 114 T.C. 136, 144 (2000)

(quoting Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir.

1986)). As this Court has previously stated: “It is

inappropriate that taxpayers who promptly pay their taxes should

have the cost of Government and tax collection improperly

increased by citizens apparently unwilling to obey the law or

shoulder their assigned share of the Government cost.” Burke v.

Commissioner, supra at 197. 
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3 Petitioner’s second warning came in the proceeding at

docket No. 384-06L. Because petitioner had filed his petition at

docket No. 384-06L before the release of Schneller v.

Commissioner, T.C. Memo. 2006-100, the Court did not impose the

sec. 6673 penalty. The Court did, however, again caution

petitioner against raising such meritless contentions.

As indicated above, petitioner advanced the same frivolous

and groundless arguments in three prior proceedings before this

Court. Petitioner was warned that a section 6673(a) penalty

might be imposed in the future if he continued to assert

frivolous claims before the Court. See Schneller v.

Commissioner, T.C. Memo. 2006-100.3 Accordingly, we shall impose

a $10,000 penalty pursuant to section 6673.

Motion to Permit Levy

Section 6330(e) provides:

SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE

 LEVY.

* * * * * * *

(e) Suspension of Collections and Statute of

Limitations.--

(1) In general.-– Except as provided in

paragraph (2), if a hearing is requested under

subsection (a)(3)(B), the levy actions which are

the subject of the requested hearing and the

running of any period of limitations under section

6502 (relating to collection after assessment),

section 6531 (relating to criminal prosecutions),

or section 6532 (relating to other suits) shall be

suspended for the period during which such

hearing, and appeals therein, are pending. * * *

(2) Levy upon appeal.-– Paragraph (1) shall

not apply to a levy action while an appeal is

pending if the underlying tax liability is not at
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issue in the appeal and the court determines that

the Secretary has shown good cause not to suspend

the levy.

As discussed above, petitioner is barred under section

6330(c)(2)(B) from challenging the existence or amount of his

underlying tax liability for tax year 2003 in this proceeding. 

Accordingly, the first requirement that respondent must meet in

order to have suspension of the levy lifted under section

6330(e)(2) is satisfied. The only question is whether respondent

has shown good cause as to why the levy should no longer be

suspended.

We have previously held that “respondent may show good cause

that a levy should not be suspended where, as here, the taxpayer

has used the collection review procedure to espouse frivolous and

groundless arguments and otherwise needlessly delay collection.” 

Burke v. Commissioner, supra at 196-197. 

Petitioner’s use of frivolous and groundless arguments in

this proceeding can only be regarded as an attempt to delay

collection. Accordingly, we shall grant respondent’s motion to

permit levy.

To the extent not herein discussed, we have considered

petitioner’s other arguments and found them to be without merit.

To reflect the foregoing,

An appropriate order and

decision will be entered.