TAX COURT OPINION

Case: Gregory Stover
Docket Number: 8093-09L
Judge: Colvin
Opinion Type: bench
Filed: 05/12/2010
Pages: 14

Plvl-le) UNITED STATES TAX COURT WASHINGTON, D.C. 2021 7 GREGORY STOVER, Petitioner, v . ) Docket No . 8093-09L COMMISSIONER OF INTERNAL REVENUE , Respondent . O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of the proceedings of the above case before Judge Diane L . Kroupa at San Francisco, California, on April 21, 2010, containing,her oral findings of fact and opinion . In accordance with the .oral findings of fact and opinion, decision will be entered for petitioner as to the year 2000 and for respondent as to the years 2001, 2002, 2003 and the civil penalty for 2001 . (Signed) Diane L. Kroupa Judg e Date : Washington, D .C . May 12, 2010 3 1 Bench Opinion by Judge Diane L . Kroupa April 21, 2010 2 Gregory Stover v . Commissioner Docket No . 8093-09 L 3 4 THE COURT : The Court has decided to render ora l 5 findings of fact and opinion in this case, and the following 6 represents the Court's oral findings of fact and opinion . 7 These oral findings of fact and opinion shall not 8 be relied upon as precedent in any other case . This bench 9 opinion is made pursuant to the authority granted by section 10 7459(b) and Rule 152 . All section references are to th e 11 Internal Revenue Code, as amended, and in effect for 200 0 12 through and including 2003, the years at issue, and all rule 13 references are to the Tax Court Rules of Practice & 14 Procedure 15 This is a collection review case involving th e 16 filing of a notice of federal tax lien as well as a proposed 17 levy to collect Petitioner's unpaid liabilities for each of 18 the years at issue . This collection review matter is before 19 the Court on Petitioner's motion for summary judgment filed 20 on March 31st, 2010 . 21 Petitioner appeared pro se . Kim Kazda appeared on 22 behalf of Respondent . 23 FINDINGS OF FACT 24 The record establishes or the parties do not 25 dispute the following : Heritage Reporting Corporation (202) 628-4888 4 1 Petitioner resided in California at the time he 2 filed the collection review petition in this case . 3 Petitioner failed to file a return for any of the four years 4 at issue . Respondent prepared substitutes for return fo r 5 those years based upon information from third-party payors . 6 Respondent also issued a statutory notice o f 7 deficiency to Petitioner for the years at issue, bu t 8 Petitioner failed to file a petition timely . Respondent 9 thereafter assessed the tax liabilities for the years at 10 issue, along with the additions to tax and interest . 11 Respondent issued to Petitioner a letter entitled 'Fina l 12 Notice, Notice of Intent to Levy and Notice of Your right to 13 a Hearing', dated September 29th, 2008, for the outstanding 14 tax liabilities for each of the years at issue, including 15 the civil penalty for filing a false withholding certificate 16 for 2001, which notice shall be referred to as the lev y 17 notice . 18 Petitioner requested a hearing in response to the 19 levy notice . Petitioner sought to contest the underlying 20 tax liabilities at issue, including the civil penalty . In 21 his hearing request, Petitioner raised no relevant issue but 22 merely parroted the language of section 6330 . Specifically, 23 he stated that 'there are a few issues I wish to addres s 24 which are, but not limited to, the following : to verify 25 whether or not the IRS followed all proper procedures a s Heritage Reporting Corporation (202) 628-4888 5 1 required by law, and to discuss what collection alternatives 2 are available to me, to include, but not limited to, offer- 3 in-compromise, installment agreement, and any other payment 4 arrangements that may be available to me' . 5 He went on further to say 'that it is not my 6 intention to discuss any issues that the IRS or the court s 7 have considered to be frivolous . If you have considered any 8 of my prior issues to be frivolous, I hereby renounce them' . 9 This is the same language verbatim that the Cour t 10 has seen in other cases where the taxpayer is raising only 11 frivolous arguments . The settlement officer assigned t o 12 Petitioner's hearing wrote a letter to Petitioner explaining 13 that he would conduct a correspondence hearing becaus e 14 Petitioner failed to provide a telephone number on hi s 15 hearing request . The settlement officer also explained that 16 Petitioner would be allowed a face-to-face conference only 17 on any non-frivolous issue . Petitioner was told that h e 18 must provide the non-frivolous issue in writing or by 19 calling the settlement officer within a date certain . 20 The settlement officer also explained tha t 21 Petitioner needed to file delinquent tax returns for 2004, 22 2005, and 2007, and needed to complete a form 433-A , 23 entitled Collection Information Statement, so that they 24 could consider collection alternatives . The settlemen t 25 officer informed Petitioner that if he failed to provide th e Heritage Reporting Corporation (202) 628-4888 6 1 necessary information, the settlement officer would b e 2 unable to consider any collection alternatives and would 3 issue a determination notice based on the information in 4 Respondent's administrative file . . 5 Petitioner failed to respond timely, so th e 6 settlement officer sent an additional letter with the same 7 information . Petitioner responded to the settlemen t 8 officer's two letters by writing a letter that failed to 9 specify what issues he wanted to raise as non-frivolous 10 issues . Petitioner also failed to submit the delinquent 11 returns or submit the requested financial information . The 12 settlement officer sustained the proposed collection action 13 by levy in a notice of determination concerning collection 14 actions under section 6320 and/or 6330, dated March 5th , 15 2009 . 16 Petitioner wrote a letter to the Tax Court that 17 was filed as a petition, and stated that his 'hearin g 18 request was ignored and unjustly executed' . Petitioner 19 filed a summary judgment motion asking for summary judgment 20 in Respondent's favor (emphasis added), which again i s 21 identical to the language used by other taxpayers who wish 22 to make frivolous arguments to the Court and waste th e 23 Court's and Respondent's limited time and resources . 24 Respondent filed a response to Petitioner's motion 25 and concedes the liability for 2000, as Respondent has bee n Heritage Reporting Corporation (202) 628-4888 1 unable to locate the deficiency notice for that year . 2 At the hearing, Respondent orally moved to impose 3 sanctions against Petitioner for raising frivolou s 7 4 arguments . 5 OPINION 6 We are asked to decide whether to grant summar y 7 judgment in this collection review matter . Summary judgment 8 is intended to expedite litigation and avoid unnecessary and 9 expensive trials . See, e .g ., FPL Group, Inc . v . 10 Commissioner , 116 T .C . 73, 74 (2001) . 11 A motion for summary judgment will be granted if 12 the pleadings, answers to interrogatories, depositions , 13 admissions and other acceptable materials, together with the 14 affidavits, if any, show that there is no genuine issue as 15 to any material fact and that a decision may be rendered as 16 a matter of law . See Rule 121(b) ; Elect . Arts, Inc . v 17 Commissioner , 118 T .C . 226, 238 (2002) . 18 The moving party has the burden of proving that no 19 genuine issue of material fact exists and that it i s 20 entitled to judgment as a matter of law . See, e .g ., 21 Rauenhorst v . Commissioner , 119 T .C . 157, 162 (2002) . 22 The party opposing summary judgment must set forth 23 specific facts that show that a genuine issue of materia l 24 fact exists and may not rely merely on allegations o r 25 denials in the pleadings . Casanova Co . v, Commissioner , 8 7 Heritage Reporting Corporation (202) 628-4888 8 1 T .C . 214, 217 (1986) . 2 We begin with the standard of review .- Where the 3 validity of the underlying tax liability is properly a t 4 issue, the Court will review the matter on a de novo basis . 5 Sego v . Commissioner , 114 T .C . 604, 610 (2000) . 6 Where, as is the case here, the validity of the 7 underlying tax liability is not properly placed at issue, 8 the Court will review Respondent's determination for abuse 9 of discretion . Sego v . Commissioner , supra ; Goza v . 10 Commissioner , 114 T .C . 176, 181-182 (2000) . 11 We must decide whether Respondent exercised hi s 12 discretion arbitrarily, capriciously, or without sound basis 13 in fact or law . See Woodral v . Commissioner , 112 T .C . 19, 14 23 (1999) . 15 We turn now to an overview of the collectio n 16 proceedings . If any person liable for federal tax liability 17 neglects or refuses to make payment within 10 days of notice 18 and demand, the Commissioner is authorized to collect th e 19 tax by levy on that person's property . See sec . 6331(a) . 20 At least 30 days before enforcing collection by 21 levy on the person's property, the Secretary is obliged to 22 provide the person with a final notice of intent to levy, 23 including notice of the administrative appeals available to 24 the person . See sec . 6331(d) . . 25 The person is entitled upon request to a n Heritage Reporting Corporation (202) 628-4888 9 1 administrative review hearing before appeals . Sec . 2 6330(b)(1) . 3 If the taxpayer requests a hearing, he or she may 4 raise at that hearing any relevant issues relating to the 5 unpaid tax or the proposed levy . Sec . 6330(c)(2) . 6 Relevant issues include any appropriate spousa l 7 defenses , challenges to the appropriateness of collection , and possible alternative means of collection, such as a n 9 installment agreement or an offer-in-compromise . Sec . 10 6330 (c) (2) (A) . 11 After the hearing, the appeals officer is required 12 to make a determination that addresses issues the taxpayer 13 raised, verifies that all requirements of applicable law and 14 administrative procedures have been met, and balances th e 15 need for the efficient collection of taxes with th e 16 legitimate concern of the person that any collection action 17 be no more intrusive than necessary . Sec . 6330(c)(3)(C) . 18 Respondent concedes that the assessment for 2000 19 is invalid . The record reflects, however, that th e 20 settlement officer properly verified that all the legal and 21 procedural requirements have been met for 2001, 2002, and 22 2003, as well as a civil penalty for 2001 . The settlement 23 officer confirmed using a transcript of Petitioner' s 24 accounts that assessments were properly made for 2001, 2002, 25 and 2003, and that appropriate and timely notices were sen t Heritage Reporting Corporation (202) 628-4888 10 1 regarding the assessments , and that Petitioner was properly 2 informed of his rights with respect to the proposed lev y 3 action . 4 The record also reflects that Petitioner did no t 5 provide the settlement officer with any non-frivolous issues 6 he wished to discuss, nor did he provide financia l 7 information or become compliant with his delinquent filing 8 obligations . We have frequently and consistently held that 9 an officer does not abuse any discretion if the taxpaye r 10 fails to submit the required and requested financial 11 information . Sapp v . Commissioner , T .C . Memo 2006-104 . 12 Petitioner also asserts that Respondent denied him 13 the right to a CDP hearing . 14 We disagree . 15 A CDP hearing may consist of one or more written 16 or oral communications between an appeals officer and the 17 taxpayer . Sec . 301 .6320-1)d)(2), Q&A-D6, Procedure & 18 Administration Regs . ; see Katz v . Commissioner , 115 T .C . 329 19 (2000) ; Dining v . Commissioner , T .C . Memo 2009-284 . 20 This Court and other courts have held that a face- 21 to-face CDP hearing is not required under section 6330 . 22 Katz v . Commissioner , supra, telephone conferenc e 23 procedurally proper ; Williamson v . Commissioner , T .C . Memo 24 2009-188, taxpayer not entitled to face-to-face hearin g 25 after asserting only meritless arguments ; Stockton v . Heritage Reporting Corporation (202) 628-4888 11 1 Commissioner , T .C . Memo 2009-186, upholding denial of face- 2 to-face conference after the taxpayer failed to raise non- 3 frivolous issue after multiple opportunities ; Leineweber v . 4 Commissioner , T .C . Memo 2004-17, prior telephon e 5 conversations constitute CDP hearing ; Tilley v . United 6 States , 270 F . Supp . 2d 731 (Middle District for Nort h 7 Carolina 2003), telephone conversations suffice, affd . 85 8 Fed . Appx . 333 (4th Cir 2004) . 9 All communications between the taxpayer and the 10 appeals officer between the time of the hearing request and 11 the issuance, of the determination notice constitute part of 12 the CDP hearing . See Middleton v . Commissioner , T .C . Memo 13 2007-120 ; see also Dining v . Commissioner , su ra . 14 Here the settlement officer exchanged writte n 15 correspondence with Petitioner . The settlement officer gave 16 Petitioner ample opportunity to raise non-frivolous issues . 17 Finally, the record reflects that the settlement 18 officer properly balanced the need for efficient collection 19 of taxes with Petitioner's legitimate concern that an y 20 collection be no more intrusive than necessary . Petitioner 21 has not asserted any spousal defenses or otherwise offered 22 any additional collection alternatives . See sec . 23 6330(c)(2) . 24 Accordingly, these issues are deemed conceded . 25 Rule 331(b)(4) . Heritage Reporting Corporation (202) 628-4888 12 1 Petitioner has not presented any evidence o r 2 persuasive arguments to convince us that Respondent abused 3 his discretion . In this proceeding now before the Court, 4 Petitioner asserts nothing but frivolous and groundles s 5 arguments . It is apparent from the entire record that 6 Petitioner instituted or maintained this proceedin g 7 primarily if not exclusively as a protest against the 8 federal income tax system, and his proceeding in this Court 9 is merely a continuation of Petitioner ' s refusal t o 10 acknowledge and satisfy his tax obligations . 11 Based upon our examination of the entire record 12 before us, we find that Respondent did not abuse hi s 13 discretion in determining that the collection action should 14 proceed with respect to Petitioner ' s unpaid liabilities for 15 2001, 2002 , 2003, as well as a civil penalty for filing a 16 false withholding certificate for 2001 . 17 The Court on its own motion therefore grant s 18 summary judgment to Respondent with respect to these issues 19 and sustains Respondent ' s determinations as to 2001, 2002, 20 2003, and the civil penalty for 2001 . 21 Courts have the inherent authority to issue orders 22 as they deem necessary and prudent to achieve the orderly 23 and expeditious disposition of their cases . See Roadwa y 24 25 Experience, Inc . v Piper , 447 US 752 , 764-765 ( 1980 ) ; Link '' v . Wabash Railroad Co . , 370 US 626,,-&, ( 1962) ; Oak- - -2 Heritage Reporting Corporation (202) 628-4888 1 3 1 Williams v . Commissioner , 92 T .C . 920, 932, 933 (1989) . 2 We may enter an order for summary judgment on our 3 own motion . See, e .g ., Wong v . Commissioner , T .C . Memo 4 2000-236 . 5 We shall deny Petitioner's motion for summary 6 judgment except with respect to 2000, the year for which 7 Respondent concedes . 8 We now address whether it is appropriate to impose 9 a penalty against Petitioner under section 6673, whic h 10 authorizes the Tax Court to require a taxpayer to pay to the 11 United States a penalty up to $25,000 whenever it appear s 12 that proceedings have been instituted or maintained by the 13 taxpayer primarily for delay or that the taxpayer's position 14 in such proceedings is frivolous or groundless . 15 We note that the type of arguments Petitione r 16 raises have been deemed by this Court to be frivolous and/or 17 sanctionable under section 6673 . The Court warne d 18 Petitioner that he is at risk of being subject to th e 19 penalty if he continued to raise only frivolous arguments 20 and waste the Court's and Respondent's limited time and 21 resources . Petitioner's tactics have consumed valuabl e 22 government resources . These tactics should not be condoned . 23 They damage the integrity of the federal tax litigatio n 24 system because of the time and attention the Court an d 25 Respondent must devote to these frivolous arguments deprive s Heritage Reporting Corporation (202) 628-4888 14 1 other taxpayers with genuine controversies . See Abrams v . 2 Commissioner , 82 T .C . 403, 412 (1984) . 3 When the Court has been faced with meritles s 4 arguments that waste the Court's and Respondent's limited 5 time and resources, we have consistently found that th e 6 taxpayer deserves a penalty under section 6673(a)(1), and 7 that penalty should be substantial if it is to have th e 8 desired deterrent effect . The purpose of section 6673 is to 9 compel taxpayers to think and to conform their conduct t o 10 settled tax principles . Coleman v . Commissioner , 791 F .2d 11 68, 71 (7th Cir . 1986) ; see also Grasselli v . Commissioner , 12 T .C . Memo 1994-581 . 13 We reluctantly do not impose a penalty agains t 14 Petitioner at this time, primarily because of the timing of 15 Respondent's oral motion, and the requisite notice t o 16 Petitioner . We strongly caution Petitioner that should he 17 bring similar arguments before this Court in the future, he 18 is at risk that the Court is likely to impose such a penalty 19 up to $25,000 . 20 To reflect the foregoing, decision will be entered 21 for Petitioner as to 2000, but for Respondent as to 2001 , 22 2002, 2003, and the civil penalty for 2001 . An appropriate 23 order will be issued sustaining the determination set forth 24 in the notice of determination concerning collection actions 25 under section 6320 and/or 6330, dated March 5th, 2009, upon Heritage Reporting Corporation (202) 628-4888 15 1 which this case is based, regarding the unpaid liabilitie s 2 for the taxable years 2001 through and including 2003, as 3 well as a civil penalty for 2001 . The order will gran t 4 Petitioner's motion for summary judgment as to 2000 because 5 Respondent conceded that the assessment was invalid for that 6 year . The order will also deny Respondent's oral motion for 7 sanctions under section 6673 . 8 This concludes the Court's oral findings of fac t 9 and opinion in this case . -ei ed? . 1 0 11 g~-I-~34-~ e 12 (Whereupon, at 3 :30 p .m ., the bench opinion in the 13 above-entitled matter was concluded . ) 14 15 // 1 6 17 18 19 20 2 1 22 23 24 25 Heritage Reporting Corporation (202) 628-4888