Court Opinion

ID: 4332962
Source: CourtListenerOpinion
Date Created: 2018-11-14 00:57:09.489026+00
Date Added: 2024-06-11T14:46:54.630963
License: Public Domain

115 T.C. No. 25

                UNITED STATES TAX COURT

         HENRY HERMANUS VAN ES, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 1134-00L.              Filed October 13, 2000.

     With regard to P’s 1994 tax year, R assessed a tax
deficiency (along with penalties and interest) and
three sec. 6702, I.R.C., frivolous return penalties
(along with related interest), of which R collected a
portion. As to the uncollected portion of those
amounts, R issued a levy notice. Pursuant to sec.
6330(b), I.R.C., P requested an Appeals hearing from
R’s Appeals Office. After review, an Appeals officer
issued to P a notice of determination pursuant to sec.
6330, I.R.C., stating that the levy should proceed.
With respect to the Appeals officer’s determination, P
thereafter filed a petition with this Court challenging
the merits of R’s assessment of the (collected and
uncollected) frivolous return penalties and related
interest amounts.

     Held, P is not entitled to the protections of sec.
6330, I.R.C., for amounts collected before the
effective date of the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206,
sec. 3401, 112 Stat. 685, 746-750.
                                 - 2 -

          Held, further, the Court lacks jurisdiction to
     review the Appeals officer’s determination that the
     levy with regard to the uncollected frivolous return
     penalties and related interest should proceed. See
     Moore v. Commissioner, 114 T.C. 171 (2000).

     Henry H. Van Es, pro se.

     Thomas R. Mackinson, for respondent.

                                OPINION

     VASQUEZ, Judge:   Petitioner filed a petition in response to

respondent’s Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 (notice of

determination).1   In the petition, petitioner disputes

respondent’s assessment of section 6702 frivolous return

penalties (and related interest) and alleges that respondent has

violated his Fifth Amendment rights as a result of that

assessment.   Because under section 6703 we lack jurisdiction to

review assessments of section 6702 frivolous return penalties,

respondent filed a motion to dismiss the petition for lack of

jurisdiction.   Petitioner concedes the issue to the extent that

he can file a petition with a U.S. District Court within 30 days

of the dismissal of the instant case.2

     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.
     2
        For purposes of respondent’s motion, petitioner does not
dispute various factual allegations that are part of the record.
                                   - 3 -

                                Background

     At the time the petition was filed, petitioner resided in

San Francisco, California.       The amounts for which petitioner

seeks relief relate to his 1994 tax year.

     The Internal Revenue Service (IRS) assessed an income tax

deficiency (along with penalties and interest) and three section

6702 frivolous return penalties (and related interest) with

regard to petitioner’s 1994 tax return.          On February 4, 1999,

after previously collecting and applying $1,019 to the

outstanding liability related to the section 6702 frivolous

return penalties and related interest (prior collection

activities), respondent issued a Notice of Intent to Levy and

Notice of Your Right to a Hearing (levy notice) to petitioner

with regard to the outstanding balance of the income tax

deficiency (and related penalties and interest) and the section

6702 frivolous return penalties (and related interest).             See sec.

6330(a).   In the levy notice, among other items, the IRS asserted

that petitioner had an outstanding balance of $500 for the

section 6702 frivolous return penalties and $59 for interest

related to those penalties.       The outstanding balance for the 1994

tax year as presented in the levy notice is reproduced below:

  Form       Tax        Unpaid Amount          Additional
 Number     Period    from Prior Notices   Penalty & Interest   Amount You Owe
  1040     12/31/94       $1,227.91             $498.85           $1,726.76
civ pen    12/31/94          500.00               58.56              558.56

     Pursuant to section 6330(b), petitioner requested a hearing
                               - 4 -

(Appeals hearing) from the Internal Revenue Service Office of

Appeals (Appeals Office).   Petitioner contested all amounts

listed in the levy notice by making constitutional arguments,

including the violation of his Fifth Amendment rights.

     On December 17, 1999, an Appeals officer sent petitioner a

notice of determination pursuant to section 6330.   In the notice

of determination, the Appeals officer determined that because

petitioner raised only constitutional issues (and did not raise

issues listed in section 6330(c)(2)(A)) with regard to the unpaid

amounts, the levy should proceed.

     Petitioner thereafter appealed the Appeals officer's notice

of determination to this Court, using a preprinted “Petition”

form available to taxpayers seeking review of deficiency

determinations made by the Commissioner.   Under the headings

“Amount of Deficiency Disputed” and “Addition to Tax (Penalty) if

any, Disputed”, petitioner wrote “All penalties and interest” and

“$1,000 + interest and penalties from date of assessment”,

respectively.   Petitioner also provided an explanation for

instituting the suit:

     All IRS forms submitted for the 1994 Tax year were
     signed under “Reservation of Rights”. Two frivolous
     tax return penalties were assessed against me. These
     two penalties violate my 5th Amendment right. In
     addition the statement attached to my 1994 return
     stated clearly that the return was filed
     “involuntarily”. Also violated was 42 USC 1983.
                                 - 5 -

                             Discussion

     Section 6331(a) provides that, if any person liable to pay

any tax neglects or refuses to do so within 10 days after notice

and demand, the Secretary can collect such tax by levy upon

property belonging to such person.       Pursuant to section 6331(d),

the Secretary is required to give the taxpayer notice of his

intent to levy and within that notice must describe the

administrative review available to the taxpayer, before

proceeding with the levy.    See also sec. 6330(a).

     Section 6330(b) describes the administrative review process,

providing that a taxpayer can request an Appeals hearing with

regard to a levy notice.    At the Appeals hearing, the taxpayer

may raise certain matters set forth in section 6330(c)(2), which

provides in pertinent part as follows:

          SEC. 6330(c). Matters Considered at Hearing.–-In
     the case of any hearing conducted under this section--

                 *     *     *     *      *    *   *

          (2) Issues at hearing.--

               (A) In general.–-The person may raise
          at the hearing any relevant issue relating to
          the unpaid tax or the proposed levy,
          including–-

                    (i) appropriate spousal
               defenses;

                    (ii) challenges to the
               appropriateness of collection
               actions; and

                     (iii) offers of collection
                                - 6 -

                 alternatives, which may include the
                 posting of a bond, the substitution
                 of other assets, an installment
                 agreement, or an offer-in-
                 compromise.

                 (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.

Pursuant to section 6330(d)(1), within 30 days of the issuance of

the notice of determination, the taxpayer may appeal that

determination to this Court if we have jurisdiction over the

underlying tax liability.    If we do not have jurisdiction over

the underlying tax liability, then the appeal is to be made to a

U.S. District Court.    See sec. 6330(d)(1).

      Respondent interprets the petition as seeking review of the

section 6702 frivolous return penalties and not the “unpaid

income tax assessment.”    Petitioner does not object to that

interpretation of the petition.    After reviewing the petition and

the record, we conclude that petitioner seeks review of all of

respondent’s collection activities with regard to the section

6702 frivolous return penalties assessed, including related

interest.

     We view the references to “$1,000" and “two frivolous tax

return penalties” in the petition as petitioner’s attempt to

contest respondent’s prior collection activities which were not
                                - 7 -

the subject of the levy notice or the notice of determination.

Because the prior collection activities were initiated and

completed before the effective date of section 6330, petitioner

is not entitled to the protections of that section for those

collection activities.    See Internal Revenue Service

Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401,

112 Stat. 685, 746-750 (which created new section 6330 and

provided for an effective date of 180 days after July 22, 1998).

To the extent that the petition refers to respondent’s prior

collection activities, we dismiss that part of the petition for

lack of jurisdiction.

     Pursuant to section 6330(d)(1), respondent moves to dismiss

the petition on the basis that we lack jurisdiction to review

respondent’s assessment of the uncollected section 6702 frivolous

return penalties.    Section 6330(d)(1) provides the following:

     SEC. 6330(d).   Proceeding After Hearing.--

          (1) Judicial review of determination.–-The person
     may, within 30 days of a determination under this
     section, appeal such determination–-

               (A) to the Tax Court (and the Tax Court
          shall have jurisdiction to hear such matter);
          or

               (B) if the Tax Court does not have
          jurisdiction of the underlying tax liability,
          to a district court of the United States.

     If a court determines that the appeal was to an
     incorrect court, a person shall have 30 days after the
     court determination to file such appeal with the
     correct court. [Emphasis added.]
                                 - 8 -

In Katz v. Commissioner, 115 T.C. ___, ___ (2000) (slip op. at

17), we interpreted the term “underlying tax liability” as

including any amounts owed by a taxpayer pursuant to the tax laws

that are the subject of the Commissioner’s collection activities.

     Pursuant to our recent decision in Moore v. Commissioner,

114 T.C. 171 (2000), respondent argues that we do not have

jurisdiction over the underlying tax liability; i.e., the section

6702 frivolous return penalties.    In Moore v. Commissioner, supra

at 175, we observed that our deficiency jurisdiction generally is

limited to the redetermination of income, estate, and gift taxes.

See secs. 6211, 6213(a).   We interpreted section 6330(d)(1)(A)

and (B) as not expanding the Court’s jurisdiction beyond the

types of taxes over which the Court has jurisdiction.    See Moore

v. Commissioner, supra at 175.     We concluded that because we did

not have jurisdiction to redetermine Federal trust fund taxes

determined by the Commissioner under section 6672, we did not

have jurisdiction to review an Appeals officer’s determination

pursuant to section 6330 with regard to those taxes.    See id.

     Just as in Moore, in which we held that we did not have

jurisdiction to redetermine Federal trust fund taxes, we hold

that we do not, in the instant case, have jurisdiction to

redetermine the frivolous return penalties assessed pursuant to

section 6702.   See sec. 6703(b) and (c); Hansen v. Commissioner,

T.C. Memo. 1996-158; Nephew v. Commissioner, T.C. Memo. 1989-32.
                                 - 9 -

Because we do not have jurisdiction over the assessment of the

section 6702 frivolous return penalties, we also dismiss for lack

of jurisdiction the part of the petition challenging the

collection of the outstanding amounts listed in the levy notice

for the frivolous return penalties and related interest.3

Pursuant to section 6330(d), petitioner has 30 days after the

entry of our order of dismissal to file his appeal with the

appropriate U.S. District Court.

     To reflect the foregoing,

                                         An appropriate order of

                                 dismissal will be entered.

     3
        Petitioner does not make an argument that he is not
liable for the interest. Cf. Katz v. Commissioner, 115 T.C. ___,
___ (2000) (slip op. at 7-8, 19). We therefore interpret
petitioner’s challenge to respondent’s collection activities as
being based solely on petitioner’s view that the section 6702
frivolous return penalties were illegally assessed.