1 Unless 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 of 1986, as amended.

T.C. Memo. 2005-105

UNITED STATES TAX COURT

KENNETH P. KRUEGER, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 11938-04L. Filed May 11, 2005.

Kenneth P. Krueger, pro se.

Travis Vance III, for respondent.

MEMORANDUM OPINION

HAINES, Judge: This matter is before us on respondent’s

motion for summary judgment filed pursuant to Rule 121 and to

impose a penalty pursuant to section 6673.1 
- 2 -

2 Amounts are rounded to the nearest dollar.

Background

At the time this petition was filed, petitioner resided in

Warner Robins, Georgia.

On August 22, 2001, petitioner and his wife, Sandra C.

Krueger, filed a joint Federal income tax return for 2000 (2000

tax return), i.e., Form 1040, U.S. Individual Income Tax Return,

reporting a total income of zero. Petitioner and his wife

attached to their 2000 tax return a two-page letter that asserted

basic tax-protester arguments. Petitioner and his wife claimed

the Federal income tax shown as withheld on Forms W-2, Wage and

Tax Statement, totaling $3,965,2 as a refund on the 2000 tax

return. 

The 2000 tax return was received by the Examination Division

of the Internal Revenue Service on September 4, 2001, and on

January 24, 2002, Form 4549, Income Tax Examination Changes, was

sent to petitioner and his wife. Petitioner responded to the

Form 4549 by a letter dated February 27, 2002, in which he

stated:

ONLY I can make a “self-assessment” concerning what my

income tax liability might be for 2000. Since I

concluded that my 2000 income tax liability is “zero”

for that year, I did not “self-assess” myself with any

income tax liability for that year; therefore, no

income tax liability is shown on my 2000. * * * 

Therefore, you have no legal authority to “change” my

return, nor to assess any amount other than what is
- 3 -

 shown on my return - and if any IRS employee attempts

to do otherwise, they will do so at their own criminal

and/or civil peril.

* * * * * * *

I am requesting an office audit/meeting at which time you

should have available:

1. The “text of any written determination and

any background file documents relating to

(the) determination” that my “zero” return

was not correct as provided in 26 USC 6610.

2. Since Sections 6001 and 6011 (as referred to

in the Privacy Act Notice that is contained

in the 1040 booklet) only direct me to comply

with Treasury regulations, I will expect you

to have the Treasury regulation that imposes

upon me a legal obligation to treat seriously

the “changes” you have proposed in my 2000

return.

3. The statute and implementing regulation that

allowed you to “change” my 2000 return, and

4. Your Delegation Order from the Secretary of

Treasury authorizing you to act in his

behalf.

On May 1, 2002, respondent mailed to petitioner and his wife

a notice of deficiency for 2000, in which respondent determined

that petitioner and his wife owed a deficiency of $4,574 and a

$915 accuracy-related penalty under section 6662(a) based upon

reported wages received from Southeastern Telephone Systems,

Inc., and the U.S. Air Force of $24,812 and $23,005,

respectively, and miscellaneous income received from Nutrition

for Life International, Inc., of $657.
- 4 -

Petitioner and his wife did not file a petition with the

Court to redetermine the deficiency. Instead, petitioner mailed

a letter dated July 25, 2002, to the contact person named in the

notice of deficiency with copies to the Secretary of the

Treasury, the Commissioner of Internal Revenue, Senator Baucus,

Chairman of the Senate Finance Committee, Senator Conrad,

Chairman of the Tax and IRS Oversight Sub-Committee, and

Congressman Thomas, Chairman of the House Ways and Means

Committee, stating that he would not file a petition with the Tax

Court until it was established that respondent had the legal

authority to send the notice of deficiency in the first place.

Respondent assessed the tax, penalty, and interest on

November 18, 2002. On March 4, 2003, respondent mailed to

petitioner a Final Notice--Notice of Intent to Levy and Notice of

Your Right to a Hearing. The final notice was not addressed to

petitioner’s wife, Sandra C. Krueger. On April 2, 2003,

petitioner timely filed a Form 12153, Request for a Collection

Due Process Hearing. Petitioner’s wife did not sign the Form

12153 and was not involved in the subsequent section 6330 hearing

or in the proceedings herein.

On April 8, 2004, respondent sent a letter to petitioner

advising him that a face-to-face conference would not be allowed

if petitioner continued making frivolous and groundless

arguments. The letter further stated: “If you wish to have a
- 5 -

face-to-face conference, please write me within 15 days from the

date of this letter and describe the legitimate issues you will

discuss.” In the same letter respondent proposed that a

telephone conference be held on April 28, 2004. Petitioner

acquiesced to the telephone conference and subsequently

rescheduled it for May 11, 2004. 

During the May 11, 2004, telephone conference, the

settlement officer advised petitioner of the appeals process and

his rights as a taxpayer. Petitioner raised only frivolous

arguments consistent with those found in the attachments appended

to the 2000 tax return and incorporated in prior correspondence.

During the morning of the conference, petitioner faxed to

respondent’s settlement officer a copy of an offer in compromise

he intended to file. Petitioner did not pay the $150 processing

fee at the time of filing, and it was not processed. 

Petitioner’s offer was based on “Doubt as to Liability” and was

accompanied by an attachment reciting that wages are not income

and that no section of the Internal Revenue Code establishes an

income tax liability.

In the June 4, 2004, Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330 for 2000 

(notice of determination) sent to petitioner, the Appeals officer

determined:
- 6 -

During Appeals consideration of your case, you did

not raise any non-frivolous collection alternatives or

any non-frivolous issues.

Appeals has obtained verification from the

Secretary that the requirements of any applicable law

or administrative procedure have been met, considered

any relevant issues relating to the unpaid tax raised

at the hearing, and taken into consideration whether

the proposed collection action balances the need for

the efficient collection of taxes with the legitimate

concern of the person that any collection action be no

more intrusive than necessary. Therefore, it is the

determination in this case the issuance of the Notice

of Intent to Levy is sustained.

On July 8, 2004, petitioner filed a petition with the Court

for judicial review of respondent’s notice of determination. In

his petition, petitioner contends that he did not receive a

hearing as required by section 6330 because: (1) He was not

allowed to have a face-to-face conference; (2) the hearing officer

had no authority to limit what was to be discussed during a

telephone conference; and (3) he was not allowed to challenge the

existence of the underlying tax liability.

On March 9, 2005, respondent filed a motion for summary

judgment seeking a decision that collection can proceed and to

impose a penalty pursuant to section 6673. By order dated March

10, 2005, petitioner was given until April 11, 2005, to file a

response to the motion for summary judgment. Petitioner filed a

response on April 11, 2005, which stated in part:

Petitioner was denied a face-to-face hearing unless

petitioner discussed only issues allowed by the

settlement officer. By letter dated April 8, 2004,

petitioner was advised that Appeals does not hold face-
- 7 -

 to-face hearings if only items subject to discussion

 include items that are frivolous such as those

 attributed to moral, religious, political,

 constitutional, conscientious, or similar grounds. 

Petitioner never raised any of these issues, the issue

 raised by petitioner is tax liability. Nowhere in the

 “THE TRUTH ABOUT FRIVILOUS [sic] TAX ARGUMENTS” is tax

 liability listed. * * *

Discussion

A decision granting summary judgment may be rendered if the

pleadings and other materials in the record 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(b); Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir.

1994). We have considered the pleadings and other materials in

the record and conclude that there is no genuine issue of any

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

law.

Petitioner argues that respondent erred by not allowing

petitioner to challenge the merits of the underlying tax

liability, by not conducting a face-to-face hearing, and by

limiting the subject matter that could be discussed during the

hearing.

When petitioner received a notice of deficiency, he did not

follow the specific instructions contained in the notice which

allowed him to petition this Court if he disagreed. Instead,

petitioner sent a letter to respondent, the Secretary of the

Treasury, the Chairman of the Senate Finance Committee, the
- 8 -

Chairman of the Tax and IRS Oversight Sub-Committee, and the

Chairman of the House Ways and Means Committee, stating that he

would not file a petition with the Tax Court until it was

established that the Government had the legal authority to send

the notice of deficiency in the first place. We have held in

numerous cases that the approach taken by petitioner is without

merit. See, e.g., Nestor v. Commissioner, 118 T.C. 162, 165

(2002); Rewerts v. Commissioner, T.C. Memo. 2004-248; Israel v.

Commissioner, T.C. Memo. 2003-338; Bethea v. Commissioner, T.C.

Memo. 2003-278; Fink v. Commissioner, T.C. Memo. 2003-61; Koenig

v. Commissioner, T.C. Memo. 2003-40. By taking this approach,

petitioner closed the door on his ability to contest the

underlying tax liability. See sec. 6330(c)(2)(B). 

Where the underlying tax liability is not at issue, we review

the Commissioner’s determination to proceed with collection for

abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610

(2000). An abuse of discretion may be defined as an action that,

taking into account all the facts and circumstances, is

unreasonable, arbitrary or capricious, clearly unlawful, or

lacking sound basis in law. See, e.g., Ewing v. Commissioner, 122

T.C. 32, 39-40 (2004); Swanson v. Commissioner, 121 T.C. 111, 119

(2003).

The May 11, 2004, telephone conference between petitioner and

respondent’s Appeals officer was agreed to by petitioner and

constituted an appropriate hearing for purposes of section
- 9 -

6330(b)(1). See Burbridge v. Commissioner, T.C. Memo. 2004-88;

Day v. Commissioner, T.C. Memo. 2004-30. At the section 6330

hearing, the matters petitioner could raise were limited by

section 6330(c)(2) to include appropriate spousal defenses,

challenges to the appropriateness of collection actions, and

offers of collection alternatives.

During the May 11, 2004, telephone hearing petitioner

asserted only tax-protester arguments. Although an offer-incompromise was faxed to the Appeals officer, the premise of “Doubt

as to Liability” was based on the assertions that wages are not

income and no section of the Internal Revenue Code requires the

payment of tax, both tax-protester arguments.

Respondent properly verified that the requirements of

applicable law and administrative procedures were met and 

balanced the need for efficient collection of taxes with the

legitimate concern that the collection action be no more intrusive

than necessary. See sec. 6330(c)(3). Respondent did not abuse

his discretion in sustaining the notice of intent to levy as to

petitioner.

Respondent, in his motion for summary judgment, has asked the

Court to impose a penalty under section 6673(a) against

petitioner. Section 6673(a)(1) authorizes the Court to require a

taxpayer to pay the United States a penalty in an amount not to

exceed $25,000 whenever it appears to the Court the taxpayer’s
- 10 -

position in a proceeding is frivolous or groundless. Sec.

6673(a)(1)(B). 

Petitioner has continuously asserted throughout these

proceedings only tax-protester arguments in an effort to avoid

paying any income tax at all. Courts have held in previous cases

that these arguments are without merit. See, e.g., United States

v. Connor, 898 F.2d 942, 943 (3d Cir. 1990); Coleman v.

Commissioner, 791 F.2d 68, 70 (7th Cir. 1986); Sauers v.

Commissioner, 771 F.2d 64, 66 (3d Cir. 1985) (as to petitioner’s

claim that wages and salaries are not taxable income), affg. T.C.

Memo. 1984-367; Nestor v. Commissioner, supra at 167 (as to the

argument that a tax return reporting zero taxable income cannot be

changed to reflect income received); Dashiell v. Commissioner,

T.C. Memo. 2004-210 (as to petitioner’s claim that no Internal

Revenue Code section makes him liable). We reject petitioner’s

boilerplate tax-protester arguments as frivolous and without

merit.

Petitioner attached as Exhibit A to his response to the

motion for summary judgment the index to the publication “The

Truth about Frivolous Tax Arguments”, issued by the Internal

Revenue Service, and claimed that “Nowhere * * * is tax liability

listed”. Nevertheless, the publication covers every tax-protester

argument that he has made in these proceedings. Because we find

petitioner’s arguments to be frivolous and groundless, we shall 
- 11 -

grant respondent’s motion and impose a penalty on petitioner

pursuant to section 6673(a)(1) in the amount of $1,500. 

In reaching our holding herein, we have considered all

arguments made by petitioner, and, to the extent not mentioned

above, we conclude that they are irrelevant and without merit.

To reflect the foregoing,

An appropriate order and

decision will be entered.