Court Opinion

ID: 4336409
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:49:01.738523+00
Date Added: 2024-06-11T14:20:06.215010
License: Public Domain

T.C. Memo.   2007-83

                          UNITED STATES TAX COURT

                       GEORGE E. HARP, Petitioner v.
               COMMISSIONER OF INTERNAL REVENUE, Respondent

        Docket No. 14176-05L.              Filed April 9, 2007.

        George E. Harp, pro se.

        Elke B. Esbjornson, for respondent.

                  MEMORANDUM FINDINGS OF FACT AND OPINION

        HAINES, Judge:    This case is before the Court on

respondent’s motion for summary judgment filed pursuant to Rule

121.1       The issues for decision are whether respondent abused his

        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. Amounts
                                                   (continued...)
                               - 2 -

discretion in sustaining the proposed collection actions and

whether the Court should impose against petitioner a penalty

under section 6673(a).

                         FINDINGS OF FACT

     At the time he filed his petition, petitioner resided in

Shreveport, Louisiana.

     Petitioner is an attorney admitted to practice before this

Court.   He has represented at least two taxpayers before the

Court.   See Olmos v. Commissioner, T.C. Memo. 2007-82; Heers v.

Commissioner, T.C. Memo. 2007-10.

     Petitioner failed to timely file Federal income tax returns

for 1995 through 2000 (years at issue).     During the examination

of the years at issue, petitioner submitted tax returns reporting

all zeroes and attached documents entitled “Asseveration of

Claimed Gross Income” and “Statement and Asseveration of

Exclusion of Remuneration from Gross Income”.    In the returns and

attachments, petitioner argued that his income was not includable

in gross income and raised various tax-protester arguments.

After respondent received petitioner’s returns, respondent used

the bank deposits method to reconstruct petitioner’s income.2

     1
      (...continued)
are rounded to the nearest dollar.
     2
        Respondent issued summonses to various banks, ordering
the banks to produce petitioner’s bank records for the years at
issue. Prior to the issuance of the notice of deficiency,
                                                   (continued...)
                                - 3 -

       On November 22, 2003, respondent issued petitioner a notice

of deficiency, which petitioner received.      Respondent determined

the following deficiencies in Federal income tax, additions to

tax under section 6651(a)(1) for failure to timely file returns,

and penalties under section 6663 for civil tax fraud:

Year         Tax            Additions to tax      Penalties
                            Sec. 6651(a)(1)       Sec. 6663
1995        $9,158              $2,290              $6,869
1996         9,496               2,374               7,122
1997         5,033               1,258               3,775
1998         3,245                 811               2,434
1999         1,666                 417               1,250
2000         3,544                 886               2,658

Petitioner did not file a petition with this Court in response to

the notice of deficiency.

       On March 22, 2004, respondent assessed the tax due, the

additions to tax, and the penalties for the years at issue.      On

the same day, respondent issued petitioner a notice of balance

due and demand for payment.

       2
      (...continued)
petitioner requested to cross-examine the parties who submitted
documentation in response to the summonses. Respondent denied
petitioner’s request. Respondent also denied petitioner’s
request that the examining officer submit a request for technical
advice regarding the cross-examination issue to respondent’s
National Office.
                               - 4 -

     On December 18, 2004, respondent issued petitioner a Final

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

(notice of intent to levy).   On January 13, 2005, respondent

issued petitioner a Notice of Federal Tax Lien Filing and Your

Right to a Hearing Under I.R.C. § 6320 (notice of Federal tax

lien).   On January 18 and February 23, 2005, respectively,

respondent received two Forms 12153, Request for a Collection Due

Process Hearing, in response to the notice of intent to levy and

the notice of Federal tax lien.   In the Forms 12153, petitioner

argued that respondent violated petitioner’s due process rights

by not allowing him “to confront and cross-examine the witnesses”

who provided respondent with petitioner’s bank records and by not

requesting technical advice from respondent’s National Office.

     On March 4, 2005, Appeals Officer Catherine Smith (Ms.

Smith) was assigned to petitioner’s case.   On April 13, 2005, Ms.

Smith sent petitioner a letter stating that courts have

considered petitioner’s arguments to be frivolous or groundless.

Ms. Smith explained what issues could be addressed during the

section 6330 hearing, requested that petitioner submit financial

information and any desired collection alternatives, and

scheduled a telephonic section 6330 hearing for May 11, 2005.

Petitioner’s section 6330 hearing was held on May 11, 2005,

during which petitioner made the same arguments raised in the
                                - 5 -

Forms 12153.   Petitioner did not provide financial information,

nor did he propose any collection alternatives.

     On July 1, 2005, respondent issued petitioner a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination) with respect to the years

at issue.   Respondent determined that petitioner’s arguments were

frivolous, that the arguments went to the underlying tax

liability, and that petitioner was precluded from challenging the

underlying tax liability because he had received a notice of

deficiency.3   After verifying that all administrative and

statutory requirements were met, respondent sustained the

proposed collection actions.4   Respondent warned petitioner that,

if he continued to raise frivolous arguments, the Court could

impose a penalty under section 6673(a)(1).

     3
        Apparently, during the sec. 6330 hearing, petitioner also
argued that the Federal tax lien should be withdrawn because
petitioner submitted at least two sec. 6330 hearing requests
before the notice of intent to levy and the notice of Federal tax
lien were issued. Respondent determined that petitioner’s right
to a sec. 6330 hearing did not arise until after the notice of
intent to levy and the notice of Federal tax lien were issued,
that the previous sec. 6330 hearing requests were premature, and
that petitioner did not otherwise establish why the Federal tax
lien was improperly filed. In his petition, petitioner does not
argue that the Federal tax lien was improperly filed. Thus, we
find petitioner has conceded the issue. See Rule 331(b)(4).
     4
        To determine whether assessment procedures were followed
and whether all administrative and statutory requirements were
met, Ms. Smith relied on TXMODA transcripts of account for
petitioner’s tax years at issue.
                               - 6 -

     In response to the notice of determination, petitioner filed

a petition with this Court on August 1, 2005.   Petitioner argued

that Ms. Smith abused her discretion “in relying on ‘cherry

picked’ documentation to determine that the requirements of

applicable law and administrative procedures had been met” and

that “The assessments for each of the tax years in question were

made and a notice of deficiency was issued in violation of

Taxpayer’s due process * * * rights”.

     On July 14, 2006, the Court filed respondent’s motion for

summary judgment.   On September 18, 2006, the Court filed

petitioner’s response and heard arguments on respondent’s motion.

                              OPINION

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.    Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).    The Court may grant

summary judgment when there is no genuine issue of material fact

and a decision may be rendered as a matter of law.   Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988).   We conclude that there are no genuine issues of

material fact and a decision may be rendered as a matter of law.

     When, as is the case here, the taxpayer received a notice of

deficiency and did not petition the Court, the validity of the

underlying tax liability is not at issue, and the Court will
                                - 7 -

review the notice of determination for abuse of discretion.    Sego

v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,

114 T.C. 176, 181-182 (2000).

     Petitioner argues that, prior to the issuance of the notice

of deficiency, he was improperly denied his Sixth Amendment right

to “confront and cross-examine” the parties who provided

respondent with petitioner’s bank records.   Further, petitioner

argues that, prior to the issuance of the notice of deficiency,

respondent improperly refused to apply for technical advice on

the Sixth Amendment issue.   Petitioner concludes that “The

assessments for each of the tax years in question were made and a

notice of deficiency issued in violation of Taxpayer’s due

process rights”.   While petitioner characterizes his arguments

otherwise, these arguments are challenges to the notice of

deficiency and the underlying tax liability.   Because he received

a notice of deficiency but did not petition the Court, petitioner

is precluded as a matter of law from challenging the validity of

the underlying tax liability.   See Sego v. Commissioner, supra at

610; Goza v. Commissioner, supra at 181-182; see also sec.

6330(c)(2)(B).   Even if petitioner’s arguments could be properly

characterized as something other than a challenge to the

underlying tax liability, we find that petitioner’s arguments are

frivolous and groundless.    “We perceive no need to refute these

arguments with somber reasoning and copious citation of
                                - 8 -

precedent; to do so might suggest that these arguments have some

colorable merit.”    Crain v. Commissioner, 737 F.2d 1417, 1417

(5th Cir. 1984).

     Petitioner also argues that Ms. Smith abused her discretion

by “cherry-picking” documentation to verify that the assessment

procedures were followed and to determine that the requirements

of applicable law and administrative procedures were satisfied.

Petitioner’s argument is without merit.

     Section 6330(c)(1) provides that “The appeals officer shall

at the hearing obtain verification from the Secretary that the

requirements of any applicable law or administrative procedure

have been met.”    Section 6330(c)(1) does not require the Appeals

officer 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.2d 1224 (11th Cir. 2003); Kubon v.

Commissioner, T.C. Memo. 2005-71.    Generally, the Appeals officer

may rely on TXMODA transcripts of account to satisfy the

verification requirement.   See Kubon v. Commissioner, supra;

Schroeder v. Commissioner, T.C. Memo. 2002-190; Weishan v.

Commissioner, T.C. Memo. 2002-88, affd. 66 Fed. Appx. 113 (9th

Cir. 2003); Lindsey v. Commissioner, T.C. Memo. 2002-87, affd. 56
Fed. Appx. 802 (9th Cir. 2003).

     Ms. Smith obtained and reviewed TXMODA transcripts of

account for petitioner’s tax years at issue to verify that the
                               - 9 -

assessments were properly made and that all other requirements of

applicable law and administrative procedure had been met.

Petitioner has not alleged any irregularity which would raise a

question about the information contained in the TXMODA

transcripts relied on by Ms. Smith.    Accordingly, we conclude

there is no question that Ms. Smith satisfied the verification

requirement of section 6330(c)(1).     See Kubon v. Commissioner,

supra.

     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 actions, raise a spousal defense, or offer

alternative means of collection.   See sec. 6330(c)(2)(A).   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.

     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

proceedings have been instituted or maintained primarily for

delay or that the taxpayer’s position in the proceeding is

frivolous or groundless.   Sec. 6673(a)(1)(A) and (B).   Respondent

does not ask the Court to impose a penalty on petitioner under
                               - 10 -

section 6673(a)(1).    However, the Court may sua sponte determine

whether to impose such a penalty.

     We find that petitioner instituted and maintained this case

primarily for delay.    During the examination prior to the

issuance of the notice of deficiency, the section 6330 hearing,

and the trial of this case, petitioner raised no arguments of

merit.   Instead, he advanced only frivolous and groundless

arguments.    In the notice of determination, respondent warned

petitioner of the possibility of a penalty under section

6673(a)(1).   Additionally, petitioner is an attorney who is

admitted to practice before this Court and has represented at

least two taxpayers before the Court.    See Olmos v. Commissioner,

T.C. Memo. 2007-82; Heers v. Commissioner, T.C. Memo. 2007-10.

Under the circumstances, it is reasonable to assume that

petitioner understood the potential consequences of maintaining

an action primarily for delay and of raising frivolous and

groundless arguments.    On the basis of the above, we shall impose

a penalty on petitioner pursuant to section 6673(a)(1) in the

amount of $5,000.

     We have considered all arguments made, and, to the extent

not mentioned, we conclude that they are moot, irrelevant, or

without merit.
                        - 11 -

To reflect the foregoing,

                                An appropriate order

                            and decision will be entered.