TAX COURT OPINION

Case: Christian Silver
Docket Number: 3372-20L
Judge: Carluzzo
Opinion Type: bench
Filed: 05/22/2023
Pages: 7

CHRISTIAN SILVER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent United States Tax Court Washington, DC 20217 Docket No. 3372-20L. ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Chief Special Trial Judge Lewis R. Carluzzo at Los Angeles, California, on April 20, 2023, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Lewis R. Carluzzo Chief Special Trial Judge Served 05/22/23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Bench Opinion by Judge Lewis R. Carluzzo April 20, 2023 3 Christian Silver v. Commissioner of Internal Revenue Docket No. 3372-20L THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion (bench opinion). Section references contained in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period. Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. This section 6330(d) case was assigned to me by Order served September 29, 2021. See sec. 7443A(b)(4) and Rule 182. This case was tried in Los Angeles, California, on April 20, 2023, which is where petitioner requested the trial to be held. James D. Lyon appeared on behalf of respondent. There was no appearance by or on behalf of petitioner. At the time the petition was filed, petitioner lived in California. In a notice of determination dated January 21, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2020, (notice), respondent determined that a levy is an 4 appropriate collection action with respect to two section 6702 penalties. The issue for decision is whether the petitioner is liable for either of them. The burden of proof with respect to the issue rests with respondent. See sec. 6703. On April 2, 2016, petitioner sent by certified mail his 2011 Form 1040, U.S. Individual Income Tax Return, to respondent's service center in Fresno, California. The return reported zero income. Attached to the return were multiple self-prepared information returns claiming withheld social security tax. The Forms 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pension, Annuities, Retirement or Profit-Sharing Plans, IRS, Insurance Contracts, etc., contained a statement on line 9 asserting that payments made to petitioner by his employers did not constitute "wages"; that petitioner did not constitute an "employee"; and that petitioner's "earnings are NOT based on activities of Federal privilege for which the taxes are devised (as upheld by the Supreme Court)." The self- prepared Form 1099-C, Cancellation of Debt, and Form 1099- MISC, Miscellaneous Income, each contained a similar statement asserting that each form was prepared "to rebut" an information return filed by the creditor/taxpayer. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 On December 12, 2016, petitioner mailed a 5 photocopy of his 2011 return to the respondent's National Office at 1111 Constitution Avenue, Washington, DC, addressed to the Commissioner of Internal Revenue. This document was received on December 15, 2016. Also on December 12, 2016, petitioner mailed a photocopy of his 2011 return to the U.S. Treasury Department at 1500 Pennsylvania Avenue, in Washington, DC, addressed to the "Internal Revenue Service General Counsel." There is no such position within the Internal Revenue Service; petitioner apparently meant the Treasury General Counsel. That document was received December 19, 2016. Attached to each of these documents is a letter requesting a refund of various amounts withheld from wages. Among other things, the letter states, "The return I was compelled to file for the year 2011 (attached) shows a zero tax liability and I demand your records reflect this amount." Petitioner's submissions were referred to the respondent's Frivolous Return Program. The assessment narrative included in respondent's exhibits details the assessment of frivolous return penalties against petitioner. An entry for April 3, 2017, states, "Frivolous Form 1040 received 12/15/2016 and 12/19/2016, ARG 44, TP has attached F4852. Letter 3176 was sent 2/2/2017 and no response has been received. Sending F8278 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to be approved for assessment of civil penalty on these 6 two returns." An IRS supervisor signed the civil penalty approval form on April 4, 2017, approving two $5,000 penalties for two frivolous returns dated December 15, 2016. An entry in the assessment narrative for April 5, 2017, states, "F8278 approved, IRC section 6702 penalty assessed on the frivolous Form 1040 received 12/15/2016 and 12/19/2016." Petitioner did not pay the penalties; consequently on June 6, 2018, respondent mailed him a notice of proposed collection action that advised him of his right to an administrative hearing to dispute that collection action, which he did on June 19, 2018. In his request for the administrative hearing, petitioner challenged only the assessment of the section 6702 penalties. At the time there were three section 6702 penalties assessed, but one was abated as a result of the review of the administrative file by the settlement officer who was assigned to the matter. Petitioner did not request a collection alternative; instead, his only claim on the request for administrative hearing is that he is "not liable for the taxes and penalties." For reasons more fully described below, no meaningful administrative hearing was conducted. On September 5, 2018, the settlement officer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assigned to the case sent petitioner a letter scheduling a 7 telephonic administrative hearing for November 8, 2018. The letter requested that petitioner provide an explanation for why he believed the penalties should be abated or why he was not liable for the penalties. The letter also asked petitioner to submit documents, if he wanted the settlement officer to consider a collection alternative. Petitioner did not respond. On November 8, 2018, the settlement officer sent petitioner a follow-up letter providing him an additional opportunity to submit the information necessary to consider the issues raised in his request for a hearing. The follow-up letter gave petitioner 14 days to provide the settlement officer with the information needed to consider the issues raised in his request for a hearing. Petitioner did not respond to this letter either. According to petitioner, he did not receive these letters. Under the circumstances, whether he did or not makes no difference, and we turn our attention to his liability for the two penalties here in dispute. Petitioner's submissions clearly confirm what respondent's records show, that is, he was employed during 2011 and he was paid wages by his employer(s). After all, it stands to reason that by claiming refunds for amounts withheld from his wages petitioner has admitted to the 1 2 3 4 5 6 7 8 9 10 11 12 13 existence of those wages. His 2011 return showing zeros 8 where his wages and other items should have been reported is frivolous and nothing else need be said on the point. The only matter that deserves attention is petitioner's claim made in the petition that a sec. 6702 penalty has been imposed on a copy of his original return as we have held that the imposition of a section 6702 penalty on the copy of a frivolous return is not appropriate. See Kestin v. Commissioner, 153 T.C. 14, 19 (2019). On the forms themselves, however, neither document is expressly identified as a "copy" of the other, and both are considered purported returns as each claims a refund. See Callahan v. Commissioner, 130 T.C. 44, 53 14 (2008). 15 16 17 18 19 20 21 22 23 24 25 It follows, and we hold, that respondent has met his burden of proof in this case with respect to the imposition of both penalties, and petitioner is liable for both section 6702 penalties here in dispute. In all other respects respondent has shown that the provisions of section 6330(d) have been satisfied, and petitioner has offered nothing but frivolous arguments otherwise. To reflect the foregoing, decision will be entered for respondent. (Whereupon, at 1:43 p.m., the above-entitled matter was concluded.)