Court Opinion

ID: 4335379
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:13:46.356515+00
Date Added: 2024-06-11T14:47:07.151997
License: Public Domain

124 T.C. No. 11

                UNITED STATES TAX COURT

             KEVIN P. BURKE, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17684-03L.                 Filed April 12, 2005.

     R issued to P statutory notices of deficiency for
1993, 1994, 1995, 1996, and 1997. P filed with the
Court a petition for redetermination at docket No.
13410-00. By Order and Order of Dismissal and Decision
entered Apr. 10, 2002, the Court dismissed the case on
the ground P failed properly to prosecute the case. In
addition, the Court imposed a penalty on P pursuant to
sec. 6673(a), I.R.C. The Court’s Decision was affirmed
on appeal and became final.

     R issued to P a Final Notice of Intent to Levy and
Notice of Your Right to Hearing and a Notice of Federal
Tax Lien Filing and Your Right to a Hearing with regard
to his unpaid taxes for 1993 to 1997. P submitted to R
a request for an administrative hearing, and R
subsequently issued to P a Notice of Determination
Concerning Collection Action(s). P filed with the
Court a Petition for Lien or Levy Action Under Section
6320 and/or 6330.
                               - 2 -

          P’s case was called for trial. R subsequently
     filed a Motion to Permit Levy pursuant to sec.
     6330(e)(2), I.R.C.

          Held: P's challenges to R's notice of
     determination are frivolous and groundless.   R's notice
     of determination is sustained.

          Held, further, P is barred from challenging the
     existence or amount of the underlying tax liabilities
     for the years in issue, and R has shown good cause for
     lifting the suspension of the levy. R’s Motion to
     Permit Levy is granted.

          Held, further, a penalty under sec. 6673, I.R.C.,
     is due from P and is awarded to the United States in
     the amount of $2,500.

     Kevin P. Burke, pro se.

     Robin M. Ferguson and Stephen S. Ash, for respondent.

     WHERRY, Judge:   Petitioner invoked the Court’s jurisdiction

under sections 6320 and 6330 in response to a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 regarding his unpaid Federal income taxes for 1993,

1994, 1995, 1996, and 1997.1   Respondent’s Office of Appeals

(Appeals Office) determined that it was appropriate to file a

Federal tax lien against petitioner and that petitioner’s unpaid

taxes should be collected by levy.

     1
        Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended. Rule references are
to the Tax Court Rules of Practice and Procedure.
                              - 3 -

     This case was submitted to the Court following a trial.

Thereafter, respondent filed a Motion to Permit Levy pursuant to

section 6330(e)(2).

     As discussed in detail below, we shall sustain the notice of

determination upon which this case is based.   In addition,

respondent has shown good cause for lifting the suspension of the

proposed levy, and we shall grant respondent’s Motion to Permit

Levy, and shall impose a penalty under section 6673.

                        FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The parties’ stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time the petition

was filed, petitioner resided in Phoenix, Arizona.

     On September 27, 2000, respondent issued to petitioner

notices of deficiency for 1993, 1994, 1995, 1996, and 1997.

Petitioner filed with the Court a timely petition for

redetermination at docket No. 13410-00.    On April 10, 2002, the

Court entered an Order and Order of Dismissal and Decision at

docket No. 13410-00, denying petitioner’s motion to dismiss,2

dismissing the case on the ground that petitioner failed properly

to prosecute, sustaining the income tax deficiencies and

     2
        The Court rejected petitioner’s argument that the notices
of deficiency were invalid because they were issued before the
Commissioner complied with the requirements of the partnership
provisions set forth in secs. 6221 to 6234.
                               - 4 -

additions to tax that respondent determined in the notices of

deficiency, and imposing a penalty on petitioner pursuant to

section 6673.3   The Court’s decision was affirmed on appeal

without published opinion and is now final.   See Burke v.

Commissioner, 65 Fed. Appx. 170 (9th Cir. 2003).4

     On October 7, 2002, respondent entered assessments against

petitioner for the income taxes, additions to tax, and penalty

under section 6673(a) as set forth in the Court's decision at

docket No. 13410-00, as well as statutory interest.   On October

7, 2002, respondent issued to petitioner notices of balance due

for the years 1993 to 1997.   Petitioner failed to remit to

respondent the amounts due.

     On March 6, 2003, respondent issued to petitioner a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing

requesting that petitioner pay his outstanding income taxes for

the years 1993 to 1997.   On or about March 7, 2003, respondent

     3
        The Court’s Order and Order of Dismissal and Decision
entered Apr. 10, 2002, stated in pertinent part:

          Petitioner failed to comply with the Court’s Rules
     and Orders concerning stipulation. He has neither
     identified nor proven any deductions to which he might
     be entitled. He has not shown in any way that
     respondent’s determination is erroneous, and he has
     presented only frivolous long-discredited arguments to
     the Court. He has not properly prosecuted this case,
     and dismissal is appropriate.
     4
        Petitioner did not file an appeal bond, see sec. 7485,
and, therefore, respondent was free to proceed with assessment
and collection for the years in issue.
                               - 5 -

filed with the County Recorder, Maricopa County, Arizona, a

Notice of Federal Tax Lien regarding petitioner’s unpaid income

taxes for 1993 to 1997.   On March 13, 2003, respondent issued to

petitioner a Notice of Federal Tax Lien Filing and Notice of Your

Right to Hearing for the years 1993 to 1997.   On April 4, 2003,

petitioner submitted to respondent a Form 12153, Request for

Collection Due Process Hearing, challenging the validity of the

assessments for the years in issue.

     On August 20, 2003, petitioner appeared at respondent’s

Appeals Office for an administrative hearing under sections 6320

and 6330.   However, the hearing was aborted when the Appeals

officer informed petitioner that he would not be permitted to

make an audio recording of the hearing.

     On September 9, 2003, the Appeals Office issued to

petitioner a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 sustaining the filing of

the tax lien and determining that it was appropriate to proceed

with the proposed levy.   The Appeals Office concluded that

petitioner had previously challenged respondent's notices of

deficiency for 1993 to 1997 in the Tax Court, and, therefore, he

was barred from challenging the existence or amount of those tax

liabilities pursuant to section 6330(c)(2)(B).   The Appeals

officer verified that all administrative and legal procedures
                               - 6 -

governing the assessment and collection of petitioner's

outstanding tax liabilities for 1993 to 1997 were met.

     Petitioner filed with the Court a timely Petition for Lien

and Levy Action.   Citing Keene v. Commissioner, 121 T.C. 8

(2003), petitioner argued that respondent abused his discretion

in issuing a notice of determination without permitting

petitioner to make an audio recording of the administrative

hearing.

     After filing an answer to the petition, respondent filed a

Motion for Summary Judgment and to Impose a Penalty Under I.R.C.

§6673.   Citing Kemper v. Commissioner, T.C. Memo. 2003-195,

respondent asserted that petitioner’s arguments were frivolous

and groundless, and, therefore, it was harmless error to deny

petitioner the opportunity to make an audio recording of the

administrative hearing.   Although the Court denied respondent’s

motion, the Court cautioned petitioner that if he persisted in

making frivolous and groundless arguments the Court would

consider imposing a penalty on petitioner under section 6673.

     This case was called for trial in Phoenix, Arizona.    At the

start of the trial, the Court reminded petitioner of the Court’s

earlier admonishment that he should abandon all frivolous

arguments.   Contrary to the Court’s warning, petitioner continued

to assert during the trial that the notices of deficiency that

the Court sustained in the deficiency case at docket No. 13410-00
                                 - 7 -

were invalid and that proper assessments were not entered for

several of the years in issue.    During the trial, and over

petitioner’s objection, the Court allowed respondent to offer

into evidence Forms 4340, Certificate of Assessments, Payments

and Other Specified Matters, regarding petitioner’s account for

the years 1993 to 1997.   Following the trial, on March 11, 2005,

respondent’s Motion to Permit Levy was filed with the Court.

                              OPINION

I.   Collection Actions

A.   Lien and Levy

      Sections 6320 (pertaining to Federal tax liens) and 6330

(pertaining to levies) establish procedures for administrative

and judicial review of certain collection actions.    As an initial

matter, the Commissioner is required to provide a taxpayer with

written notice that a Federal tax lien has been filed and/or that

the Commissioner intends to levy; the Commissioner is also

required to explain to the taxpayer that such collection actions

may be challenged on various grounds at an administrative

hearing.   See Davis v. Commissioner, 115 T.C. 35, 37 (2000); Goza

v. Commissioner, 114 T.C. 176, 179 (2000).

      Section 6330(c)(1) imposes on the Appeals Office an

obligation to obtain verification that “the requirements of any

applicable law or administrative procedure have been met.”

Section 6330(c)(2) prescribes the matters that a person may raise
                                - 8 -

at an administrative hearing.    Section 6330(c)(2)(A) provides

that a person may raise issues such as spousal defenses, the

appropriateness of the Commissioner's intended collection action,

and possible alternative means of collection.       See Sego v.

Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,

supra.   In addition, section 6330(c)(2)(B) establishes the

circumstances under which a person may challenge the existence or

amount of his or her underlying tax liability.      Section

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

           (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 not otherwise have an
           opportunity to dispute such tax liability.

     When the Appeals Office issues a Notice Of Determination

Concerning Collection Action(s) to a taxpayer following an

administrative hearing, section 6330(d)(1) provides that the

taxpayer has 30 days following the issuance of such notice to

file a petition for review with the Tax Court or, if the Tax

Court does not have jurisdiction over the underlying tax

liability, with a Federal District Court.     See Offiler v.

Commissioner, 114 T.C. 492, 497-498 (2000).     The procedure

established under section 6330(d)(1) is made applicable to a
                               - 9 -

proceeding regarding a Federal tax lien by way of the

cross-reference contained in section 6320(c).

     Petitioner's conduct in his earlier deficiency case at

docket No. 13410-00, coupled with his actions in this proceeding,

clearly demonstrates that petitioner exploited the collection

review procedures primarily for the purpose of delay.   As

discussed below, petitioner’s arguments have absolutely no merit.

Moreover, petitioner ignored the opportunity that the Court

extended to him at trial to assert a legitimate claim for

relief.5

     As previously mentioned, petitioner asserted that the

notices of deficiency that respondent issued to him for 1993 to

1997 are invalid.   This precise issue was previously considered

and rejected by the Court when the Court denied petitioner’s

motion to dismiss filed at docket No. 13410-00.   The Court’s

Order and Order of Dismissal and Decision entered at docket No.

13410-00 was affirmed on appeal and is now final.   Sec. 7481.   It

follows that petitioner is barred from challenging either the

validity of the notices of deficiency or the existence or amount

     5
        Under the circumstances, petitioner has given us no
reason to believe that remanding this matter to respondent's
Appeals Office would be productive or otherwise advance the
policies underlying secs. 6320 and/or 6330. Consistent with our
reasoning in Keene v. Commissioner, 121 T.C. 8, 19-20 (2003), and
in Kemper v. Commissioner, T.C. Memo. 2003-195, we conclude that
a remand is unwarranted.
                              - 10 -

of his underlying tax liabilities for 1993 to 1997 in this

proceeding.   See sec. 6330(c)(2)(B).

     In addition, contrary to petitioner’s position, the Forms

4340 offered into evidence at trial show that respondent (1)

properly assessed the tax liabilities that respondent intends to

collect from petitioner, and (2) properly notified petitioner of

those assessments by way of notices of balance due.   See, e.g.,

Hughes v. United States, 953 F.2d 531, 535-536 (9th Cir. 1992).

     Numerous cases establish that no particular form of

verification of an assessment is required, that no particular

document need be provided to a taxpayer at an administrative

hearing conducted under section 6330, and that a Form 4340 (such

as that included in this record) and other transcripts of account

satisfy the verification requirements of section 6330(c)(1).    See

Roberts v. Commissioner, 118 T.C. 365, 371 n.10 (2002), affd. 329

F.3d 1224 (11th Cir. 2003); Nestor v. Commissioner, 118 T.C. 162,

166 (2002); Lunsford v. Commissioner, 117 T.C. 183 (2001).

     Petitioner has not alleged any irregularity in the

assessment procedure that would raise a question about the

validity of the assessments or the information contained in the

Forms 4340.   Moreover, petitioner has failed to raise a spousal

defense, make a valid challenge to the appropriateness of

respondent's intended collection action, or offer alternative
                                - 11 -

means of collection.    These issues are now deemed conceded.     Rule

331(b)(4).

      The record reflects that the Appeals Office properly

verified that all applicable laws and administrative procedures

governing the assessment and collection of petitioner’s tax

liabilities were met.    Accordingly, we hold that the Appeals

Office did not abuse its discretion in determining to proceed

with collection against petitioner.

B.   Levy Upon Appeal

      We turn now to respondent’s Motion to Permit Levy.     Section

6330(e) provides in pertinent part:

           SEC. 6330(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 * * * shall
             be suspended for the period during which such
             hearing, and appeals therein, are pending. In no
             event shall any such period expire before the 90th
             day after the day on which there is a final
             determination in such hearing. Notwithstanding
             the provisions of section 7421(a), the beginning
             of a levy or proceeding during the time the
             suspension under this paragraph is in force may be
             enjoined by a proceeding in the proper court,
             including the Tax Court. The Tax Court shall have
             no jurisdiction under this paragraph to enjoin any
             action or proceeding unless a timely appeal has
             been filed under subsection (d)(1) and then only
             in respect of the unpaid tax or proposed levy to
             which the determination being appealed relates.

                  (2) Levy upon appeal.–-Paragraph (1) shall
             not apply to a levy action while an appeal is
                              - 12 -

          pending if the underlying tax liability is not at
          issue in the appeal and the court determines that
          the Secretary has shown good cause not to suspend
          the levy.

     In sum, section 6330(e)(1) sets forth the general rule that

respondent may not proceed with collection by levy if an

administrative hearing is timely requested under section

6330(a)(3)(B) and while any appeals from such administrative

hearing are pending.6   The Court is vested with jurisdiction to

enjoin an improper collection action so long as a timely petition

has been filed with the Court and then only in respect of the

proposed levy that is the subject of such petition.   Section

6330(e)(2) provides an exception to the suspension of the levy

imposed under subsection (e)(1) if the person’s underlying tax

liability is not at issue in the appeal and the Court determines

that good cause is shown not to suspend the levy.7

     We further observe that, in the absence of any other

limiting language, the “court” referred to in section 6330(e)(2)

is best read as a reference to the court to which a collection

     6
       See sec. 301-6330-1(g)(2), Q&A-G1, Proced. & Admin. Regs.
(“The suspension period continues until * * * the Notice of
Determination resulting from the CDP hearing becomes final upon
either the expiration of the time for seeking judicial review or
upon exhaustion of any right to appeals following judicial
review.”).
     7
        Much like the statute, the legislative history of section
6330 simply states that “Levies will not be suspended during the
appeal if the Secretary shows good cause why the levy should be
allowed to proceed.” H. Conf. Rept. 105-599, at 266 (1998),
1998-3 C.B. 747, 1020.
                              - 13 -

review determination is appealed under section 6330(d); i.e, the

Tax Court or Federal District Court.   Consistent with the

foregoing, the Tax Court has jurisdiction to entertain

respondent’s Motion to Permit Levy.

     As previously discussed, petitioner is barred under section

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

underlying tax liabilities for 1993 to 1997 in this proceeding.

See Goza v. Commissioner, 114 T.C. 176 (2000).   Accordingly, the

first element that respondent must establish to obtain relief

under section 6330(e)(2) is satisfied.   The question that remains

is whether respondent has shown good cause why the levy should no

longer be suspended.

     Section 6330 does not include a definition of the term “good

cause”.   Giving due consideration to the public policies

underlying section 6330, we believe 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.

     Petitioner is no stranger to the Court.   As outlined above,

he abused the Court’s procedures in the deficiency case at docket

No. 13410-00, and he has exploited the collection review

procedure primarily to delay collection.   To permit any further
                                - 14 -

delay in the collection process would be unconscionable.

Accordingly, we shall grant respondent’s Motion to Permit Levy.

II.   Section 6673 Penalty

      Section 6673(a)(1) authorizes the Tax Court to require a

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

$25,000 whenever it appears that proceedings have been instituted

or maintained by the taxpayer primarily for delay or that the

taxpayer's position in such proceeding is frivolous or

groundless.   We warned taxpayers in Pierson v. Commissioner, 115

T.C. 576, 581 (2000), that abusing the procedural protections

afforded by sections 6320 and 6330 by pursuing frivolous lien or

levy actions for purposes of delaying the tax payment process

would result in sanctions under section 6673 when that section

was applicable.   We have since repeatedly warned taxpayers

regarding section 6673, as we did petitioner here, and have

repeatedly disposed of cases premised on arguments akin to those

raised here summarily and with imposition of the section 6673

penalty.   See Craig v. Commissioner, 119 T.C. 252, 265 (2002).

      Petitioner was previously penalized for his frivolous

arguments and delay perpetrated on the Court in connection with

docket No. 13410-00 concerning his tax liability for the tax

years 1993 through 1997.     Although in this action petitioner was

polite and eliminated several frivolous issues at trial, he

nevertheless wasted judicial resources on other frivolous
                              - 15 -

arguments at the proceedings and in his brief.   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.

     This Court’s order of October 4, 2004, explicitly addressed

petitioner’s substantive arguments, stating:

          As respondent correctly notes in the motion for
     summary judgment, issues raised by petitioner during
     the administrative process, i.e., in his request for a
     collection due process hearing, have been repeatedly
     rejected by this and other courts or are refuted by the
     documentary record. Moreover the Court observes that
     maintenance of similar arguments has served as grounds
     for imposition of penalties under section 6673.

     At the time of that order, the Court declined to grant

summary judgment or impose a section 6673 penalty because

respondent had denied petitioner the right to record the

administrative hearing, see Keene v. Commissioner, 121 T.C. 8

(2003), and as a result no face-to-face administrative conference

ever occurred.   Thus, the Court afforded petitioner a trial and

at it an opportunity to raise any legitimate permitted issues,

but none were raised, and the previously addressed frivolous

issues were perpetuated.   Hence, the Court concludes a section

6673 penalty of $2,500 shall be awarded to the United States in

this case.
                        - 16 -

To reflect the foregoing,

                            An order and decision will

                    be entered granting respondent's

                    Motion to Permit Levy, and a decision

                    will be entered for respondent

                    including the imposition of a penalty

                    under section 6673.