TAX COURT OPINION

Case: W. James Kubon
Docket Number: 1795-04L
Judge: Haines
Opinion Type: memo
Filed: 04/04/2005
Pages: 12

SERn:E CAL, SnL T.C. Memo. 2005-71 UNITED STATES TAX COURT W. JAMES KUBON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 1795-04L. Filed April 4, 2005. W. James Kubon, pro se. Gavin L. Greene, for respondent. MEMORANDUM OPINION HAINES, Judge: This case is before the Court on respondent's motion for summary judgment filed pursuant to Rule 121 and to impose a penalty under section 6673.¹ ¹ Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure. SERVED APR 4 2005 - 2 - Background At the time of the filing of the petition, petitioner resided in San Jose, California. On his 1999 tax return, petitioner reported zero income and requested a full refund of all taxes withheld. Petitioner attached to his tax return two pages of tax-protester boilerplate which asserted that no section of the Internal Revenue Code made him liable for income taxes. Petitioner's Form W-2, Wage and Tax Statement, reported that petitioner received wages of $163,908.87 from Web TV Networks, Inc. in 1999. On July 12, 2002, respondent sent petitioner a notice of deficiency for 1999 to 560 Hobie Lane, San Jose, California 95127. Petitioner resided at this address from July 12, 2002 to January 30, 2004. Petitioner failed to petition the Court to review the notice of deficiency. On April 7, 2003, respondent issued to petitioner a Final Notice--Notice of Intent to Levy and Notice of Your Right to a Hearing. On April 14, 2003, petitioner mailed respondent a Form 12153, Request for a CDP Hearing, and attached a page of tax- protester arguments, which disputed the validity of and requested that the Appeals officer have at the hearing copies of documents pertaining to, among other things, the underlying tax liability, the assessment, the notice and demand for payment, and the - 3 - verification from the Secretary that the requirements of any applicable law or procedure had been met. On September 12, 2003, respondent sent petitioner a letter to request that petitioner complete a Form 433A, Collection Information Statement for Individuals, to assist in considering collection alternatives. Petitioner did not complete and return the Form 433A to respondent. On October 6, 2003, respondent sent petitioner a letter outlining respondent's policy at the time of not granting face- to-face hearings to individuals raising only frivolous arguments. A telephonic interview was offered and scheduled for November 5, 2003. On October 22, 2003, petitioner responded to the October 6, 2003, letter by stating: "to summarize your position you are NOT going to allow me to have a hearing,that I can record and you will NOT permit me to bring up relevant issues that I covered in (cid:16)042my CDP request". Petitioner refused to participate in a telephonic interview with respondent. On December 31, 2003, respondent issued to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) with regard to 1999. The notice of determination stated: Appeals considered whether the collection action taken the taxes with the legitimate concern of the taxpayer or proposed balances the need for the efficient collection of that any collection action be no more intrusive than necessary. more intrusive than necessary because the Automated We find that enforced collection action is not - 4 - Collection System and Appeals attempted to solicit Mr. Kubon's cooperation in proposing an alternative to enforced collection actions. Mr. Kubon has not voluntarily filed income tax returns for 2000, 2001 or 2002. Mr. Kubon failed to provide any financial information, and did not propose an acceptable collection alternative. Service may proceed with enforced collection actions. The Internal Revenue On January 30, 2004, petitioner filed with the Court a Petition for Lien or Levy Action Under Code Section 6320(c) or 6330(d), in which petitioner disputes the notice of determination because he was allegedly denied a section 6330 hearing. On September 1, 2004, respondent filed a Motion for Summary Judgment and To Impose Penalty Under Section 6673, in which respondent moves for summary adjudication in respondent's favor in this case for all of the legal issues in controversy and requests that the Court impose a penalty pursuant to section 6673 because petitioner instituted these proceedings solely for the purpose of delay and advanced only frivolous arguments. Accompanying the motion for summary judgment, respondent filed a declaration of Settlement Officer Colleen Cahill (Ms. Cahill), which states that she reviewed petitioner's TXMODA transcript for 1999 as part of her verification that all legal and administrative requirements for levy had been met. Respondent attached to Ms. Cahill's declaration the TXMODA transcript that Ms. Cahill reviewed and the Form 4340, Certificate of Assessments, Payments, and Other Specified Matters, for - 5 - petitioner's 1999 tax year., . Petitioner filed.an objection to the :motion for summary.;.judgment . a - . . .. . On September 7, 2004, petitioner filed with the Court a ,, motion..for remand, in..which petitioner,requested that we remand the case-to,the Appeals Office for a section 6330 hearing to be . held. . Respondent filed a response to petitioner'.s- motion .for t remand requesting -that the _Court den petit-ioner's motion for (cid:16)042remand because the failure.to allow an-.audio recording.at the scheduled sectiona6330 hearing was-.hartrless error.. On, November. 3, 2004,, we issued. an Order.granting petitioner' s motion for;remand and remanding the case to respordent's.Appeals Office for the purpose oLaffording petitioner a section -6330 hearing that might .be recorded by either or both part.ies pursuant to our holding..in Keene v. Commissioner, .121 T. C. 8 . (2003) . We,also ordered .the parties to file.'status reports with the.Court on or before January 18, 2005, and ordered that respondent'sçmotion for summary judgment be held in abeyance. The Orderwalso warned petitioner: As,in Keene v. Commissioner,- supra- at 19,, we-admonish that^Ýf- he persists i pe~tÈti~one groundless tax-protester arguments in~any.further proceedings with respect relevant Court will consider granting respcndent' s motion for summary , judgment.- the. Court..would. also be in a position to impose a penalty under section .6673 (a) (1).. issues, as specified in sectionc6330 (c) (2) , ,rather than raising the _ , In such.,an instance, fáakincj"ÈriiroIöus d , to this case, On December 30., 2004, respoñdent filed' with the Court a status report, which 'stated~that an Appeals oÈficer had a face- - 8 - Pursuant tò séction $33 Di(d) 1) , withii2 30 d'ays. of.'the issuance of the notice of déterminatibn, the taxpayer -may appeal that detérmination to' thrs Court rf *we have 7urisdiction over the underlyiñg tax liability. - Van Es v. Commissioner, 115 T.'É. 324 M8329 ( 0 ) . Althodgh section 6330 döes not prescribe the standard of réview that the Court is to apply in reviewing-the Commissioner's adminfstrati've détéYminations, We have stated that, whereatlie valid5.t y òf the uriderlying ~tax liability is properly at issue, the. Court-Will review the matter de novo. Where the validity of the underlying tax*11ability is noteproperly~at.lssue, however, the Court will review the Commissioñer s adminrstrative determination for búse of. dfscre lon. ego v: Commissioner, 114 T:C'. 604, '610 (2000) ;f Góza v. Commissioner,- 114 T.C. 176, 181 (2000) . 1. ~ ChalTenges to7Underl'ying Tax Liability Petitfonér presents a challenge to the' underlying"tax liability wíth-regard to the validity of "the notice of deficiency. - Respondeñt provided a Form 3877, Certified Malling List, which reports that respondênt-sent petitïoner by certified mail a "notice óf déffciéney fór l'999 on July a 2002; to 560 Hobi Lahe S n ó CÀl*i'fbSnÍb51 . he 15Mrties s ip iated that petitioner resided- at this'address from Júly 127 2002 'to January 30, 2004. We 'conclude _that. petitioner received a notice _ 9 _ of deficiency at his last known address for 1999. See sec. 6212(a) and (b). Accordingly, because petitioner received a notice of deficiency for 1999 and did not petition this Court for a redetermination, petitioner is precluded from challenging his underlying tax liability for 1999 in this collection action. Sec. 6330(c)(2) (B). 2. Wages Are Not Income Petitioner argues that his wages are not taxable income. His arguments are indistinguishable from those that have been uniformly rejected, and no further discussion of them is warranted. See 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), affg. T.C. Memo. 1984-367; Connor v. Commissioner, 770 F.2d 17, (cid:16)04220 (2d Cir. 1985); Biermann v. Commissioner, 769 F.2d 707, 708 (11th Cir. 1985); Waters v. Commissioner, 764 F.2d 1389, 1389 (11th Cir. 1985); Perkins v. Commissio er, 746 F.2d 1187, 1188 (6th Cir. 1984), affg. T.C. Memo. 1983 474; Knighten v. Commissioner, 702 F.2d 59, 60 (5th Cir. 1983); Funk v. Commissioner, 687 F.2d 264, 264 (8th Cir.. 1982), affg. T.C. Memo. 1981-506. 3. Verification of Assessment Procedure - 10 - We conclude that Ms. Cahill obtained verification from the Secretary that the requirements of all applicable laws and administrative procedures were met as required by section 6330(c)(1). Ms. Cahill obtained and reviewed a TXMODA transcript of account for petitioner's 1999 taxable year before the scheduled hearing. 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. Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), affd. 329 F.3d 1224 (11th Cir. 2003); Kaeckell v. Commissioner, T.C. Memo. 2002-114. In this regard, the TXMODA transcript of account on which Ms. Cahill relied contained all of the information prescribed in section 301.6203-1, Proced. & Admin. Regs. See Schroeder v. Commissioner, T.C. Memo. 2002-190; Weishan v. Commissioner, T.C. Memo. 2002-88, affd. 66 Fed. Appx. 113 (7th Cir. 2003); Lindsey v. Commissioner, T.C. Memo. 2002-87, affd. 56 Fed. Appx. 802 (9th Cir. 2003); Tolotti v. Commissioner, T.C. - 11 - Memo. 2002-86, affd. 70 Fed. Appx. 971 (9th Cir. 2003); Duffield v. Commissioner, T.C. Memo. 2002-53; Kuglin v. Commissioner, T.C. Memo. 2002-51. Petitioner has not alleged any ir egularity in the assessment procedure that would raise a question about the validity of the assessments or the information contained in the transcript of account relied on by Ms. Cahill. See Davis v. Commissioner, 115 T.C. 35, 41 (2000); Mann v. Commissioner, T.C. Memo. 2002-48. Accordingly, we conclude that there is no question that the Appeals officer satisfied the verification requirement of section 6330(c)(1). 4. Delegation Order Petitioner's allegations regarding the authority of the individual issuing the notice of intent to levy are meritless. The Secretary or his delegate (including the Commissioner) may issue collection notices, and authority to issue notices regarding liens and to levy upon prope ty has in turn been delegated to specified collection and compliance personnel. Secs. 6320(a), 6330(a), 7701(a)(11) (B) and 12(A)(i), 7803(a)(2); secs. 301.6320-1(a)(1), 301.6330-1(a)-(1), Proced. & Admin. Regs.; Delegation Order No. 191 (Rev. 3, June 11, 2001); Delegation Order No. 196 (Rev. 4, Oct. 4, 2000); see also Craig v. Commissioner, 119 T.C. 252, 263 (2002);' Everman v. Commissioner, T.C. Memo. 2003- 137. 5. Receipt of Notice and Demand - 12 - Petitioner also argues that respondent failed to send petitioner a statutory notice and demand for the unpaid tax. As shown in the record of the case, a notice and demand was sent to petitioner. The transcripts, i.e., TXMODA and Form 4340, report that the first notice and demand was sent on December 9, 2002. The transcripts also report that another notice and demand was sent on February 24, 2003. There is no question that respondent sent a notice and demand to petitioner; therefore, petitioner's argument must fail. Petitioner makes no other arguments against the validity of the notice of determination. In particular, petitioner fails to make a valid challenge to the appropriateness of respondent's intended collection action, raise a spousal defense, or offer alternative means of collection. We conclude that respondent did not abuse his discretion in determining that collection should proceed and that respondent is entitled to judgment as a matter of law. 6. Section 6673 Penalty Section 6673(a)(1) authorizes the Court to require a taxpayer to pay to the United States a penalty in an amount not to exceed $25,000 whenever it appears to the Court that the taxpayer's position in the proceeding is frivolous or groundless. Sec. 6673(a)(1) (B). - 13 - The parties stipulated that petitioner has been provided with a copy of an IRS Notice which outlines common frivolous arguments and has been advised by respondent that the Court may require a taxpayer to pay a penalty up to $25,000 pursuant to section 6673 if it appears to the Court that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position is frivolous or groundless. In our November 3, 2004, Order, we gave petitioner the opportunity to present proper issues, as specified in section 6330(c)(2), during his section 6330 hearing. We warned petitioner, however, that if he persisted in making frivolous and groundless arguments, with respect to this case, the Court would be in a position to impose a penalty under section 6673(a)(1). Petitioner ignored the Court's warning and simply pursued his arguments, which the Court has held to be frivolous, groundless, and meritless in numerous cases. Unde the circumstances, we shall grant respondent's motion and impose a penalty on petitioner pursuant to section 6673(a)(1) in the amount of $10,000. I - 14 - We have considered all of petitioner's contentions, arguments, and requests that are not discussed herein, and we conclude that they are without merit or irrelevant. To reflect the foregoing, An appropriate order and decision will be entered.