Court Opinion

ID: 4336448
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:50:03.951884+00
Date Added: 2024-06-11T14:19:54.835106
License: Public Domain

T.C. Memo. 2007-100

                      UNITED STATES TAX COURT

                HUBERT W. N. CHANG, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 12008-05L.              Filed April 25, 2007.

     Hubert W. N. Chang, pro se.

     Jonathan J. Ono, for respondent.

                        MEMORANDUM OPINION

     HAINES, Judge:   Petitioner filed a petition with this Court

in response to a Notice of Determination Concerning Collection

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

determination) for 1996 through 2002 (years at issue).1   Pursuant

     1
      Unless otherwise indicated, all section references are to
                                                   (continued...)
                               - 2 -

to section 6330(d), petitioner seeks review of respondent’s

determination.   The issue for decision is whether respondent’s

determination that collection action could proceed for Federal

income tax liabilities for the years at issue was an abuse of

discretion.

                            Background

     The stipulation of facts and attached exhibits are

incorporated herein by this reference.2   Petitioner resided in

Honolulu, Hawaii, when he filed his petition.

     Petitioner did not file Federal income tax returns for 1996,

1997, and 1998 and did not make estimated tax payments for these

years.   Respondent filed substitutes for return on September 4,

2000, for 1996, 1997, and 1998.   On February 23, 2001, respondent

mailed petitioner three notices of deficiency determining income

tax deficiencies of $22,037, $14,690, and $15,244 for 1996, 1997,

1998, respectively, and additions to tax under sections 6651(a)

     1
      (...continued)
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
     2
       On May 16, 2006, this Court’s order to show cause under
Rule 91(f), dated Apr. 28, 2006, was made absolute, and
the facts and evidence set forth in respondent’s proposed
stipulation of facts attached as Exhibit A to respondent’s motion
for order to show cause under Rule 91(f), filed on Apr. 27, 2006,
were deemed stipulated pursuant to Rule 91(f)(3) for purposes of
this case.
                               - 3 -

of $5,509, $3,673, $3,811 for 1996, 1997, 1998, respectively, and

6654(a) of $1,173, $786, $698 for 1996, 1997, 1998, respectively.

     In response to respondent’s notices of deficiency,

petitioner filed a petition with this Court in Chang v.

Commissioner, docket No. 5674-01.   The Court dismissed

petitioner’s case for lack of prosecution and entered a decision

on June 25, 2002, which held that petitioner was liable for the

income tax deficiencies along with additions to tax for 1996,

1997, and 1998.   On December 9, 2002, respondent assessed the

deficiencies along with additions to tax and interest for 1996,

1997, and 1998.

     Petitioner also failed to file Federal income tax returns

for 1999, 2000, 2001, and 2002 and did not make estimated tax

payments for these years.   Respondent filed substitutes for

return on July 14, 2003, for 1999, 2000, and 2001 and filed a

substitute for return on June 28, 2004, for 2002.   On October 10,

2003, respondent mailed petitioner three notices of deficiency

determining income tax deficiencies of $16,604, $28,482, and

$17,084 for 1999, 2000, 2001, respectively, and additions to tax

under sections 6651(a) of $4,151, $7,121, $4,271 for 1999, 2000,

2001, respectively, and 6654(a) of $804, $1,521, $683 for 1999,

2000, 2001, respectively.   On July 27, 2004, respondent mailed

petitioner a notice of deficiency determining an income tax

deficiency of $12,976 and additions to tax under sections
                                 - 4 -

6651(a)(1) and 6654(a) of $3,828 and $434, respectively, for

2002.

     Petitioner received, but did not file a petition with

respect to, the notices of deficiency for 1999, 2000, 2001, and

2002.   Respondent assessed the deficiencies along with additions

to tax and interest for 1999, 2000, 2001, and 2002 on March 22,

May 17, March 22, and December 20, 2004, respectively.

     Petitioner’s assessed tax liabilities for 1996 through 2002

have not been fully paid.   On March 22, 2005, respondent mailed

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

Right to a Hearing Under IRC 6320 (notice of Federal tax lien),

with respect to the years at issue.

     On March 28, 2005, petitioner submitted Form 12153, Request

for a Collection Due Process Hearing, in which he argued the

Internal Revenue Service did not have the authority to file a

lien and asserted other frivolous tax-protester arguments.

Petitioner’s request did not address any alternative methods of

collection.

     On May 13, 2005, a hearing was held by telephone between

petitioner and respondent’s Appeals Office.   On June 3, 2005,

Appeals mailed petitioner a notice of determination sustaining

the filing of the notice of Federal tax lien.   The notice of

determination stated, in part:

     The taxpayer has filed an appeal under * * * 6320. He
     has appealed the filing of the Notice of Federal Tax
                                - 5 -

     Lien filed for the delinquent accounts * * * . The
     taxpayer has raised only frivolous issues in his
     appeals and in correspondence he submitted since he
     made his appeal. He has not raised any non-frivolous
     issues.

     All the legal and procedural requirements for the
     filing [of] the lien have been met. The taxpayer has
     not made any non-frivolous arguments in his appeal. He
     has declined our offer to discuss legitimate
     alternatives to the proposed [lien filing] action.

     In response to the notice of determination, petitioner

timely filed his petition on June 29, 2005, in which petitioner

alleges:

     The basis of my complaint is what I believe to be the
     lack of a valid Summary Record of Assessment Form 23-C
     Assessment Certificate pursuant to 26 CFR section
     301.6203-1. Without a valid assessment there is no
     liability. Without a liability there can be no lien.

                           Discussion

     Where the validity of the underlying tax liability is

properly at issue, the Court will review the matter de novo.

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

Commissioner, 114 T.C. 176, 181 (2000).   The underlying tax

liability is properly at issue if the taxpayer did not receive a

statutory notice of deficiency or otherwise have an opportunity

to dispute the tax liability.   Sec. 6330(c)(2)(B); see Behling v.

Commissioner, 118 T.C. 572, 576-577 (2002).

     Where the validity of the underlying tax liability is not

properly at issue, the Court will review the Commissioner’s

determination for abuse of discretion.    Sego v. Commissioner,
                                 - 6 -

supra at 610; Goza v. Commissioner, supra at 181.     The abuse of

discretion standard requires the Court to decide whether

respondent’s determination was arbitrary, capricious, or without

sound basis in fact or law.   Woodral v. Commissioner, 112 T.C.
19, 23 (1999); Keller v. Commissioner, T.C. Memo. 2006-166;

Fowler v. Commissioner, T.C. Memo. 2004-163.

     Petitioner received a notice of deficiency for each year at

issue but filed a petition with this Court only for 1996, 1997,

and 1998, which resulted in a decision for respondent.

Petitioner did not file a petition to redetermine the deficiency

for 1999, 2000, 2001, or 2002.    Therefore, petitioner cannot

contest the validity of the underlying income tax liability for

any of the years at issue, and this Court will review

respondent’s determination for abuse of discretion.

     Because petitioner is barred from contesting his underlying

liability for the years at issue, he was permitted at the hearing

only to raise other matters, e.g., to challenge the

appropriateness of the intended method of collection, offer

alternatives to collection, or raise a spousal defense to

collection.   See sec. 6330(c)(2)(A).

     Petitioner contends that before respondent may proceed with

the lien action, respondent must demonstrate that the underlying

tax assessments for the years at issue were valid.    Petitioner

argues that respondent’s Appeals Office failed to verify or prove
                                - 7 -

that the assessments in question were valid inasmuch as

respondent failed to produce Forms 23 C, Assessment Certificate

-- Summary Record of Assessments, for each year at issue.

     Although Federal tax assessments are formally recorded on

Form 23 C, this Court has held that Forms 4340, Certificate of

Assessments, Payments, and Other Specified Matters, are

presumptive evidence on which respondent’s Appeals Office may

rely to verify that an assessment has been made against a person

for purposes of sections 6320 and 6330.    Davis v. Commissioner,

115 T.C. 35, 40-41 (2000).    Where the taxpayer is provided with

Forms 4340 after the hearing and before trial, and the taxpayer

does not show any irregularity in the assessment procedure that

would raise a question about the validity of the assessments, the

taxpayer is not prejudiced.   See Nestor v. Commissioner, 118 T.C.
162, 167 (2002).

     In this case, respondent provided to petitioner and this

Court Forms 4340 for each year at issue reflecting the assessment

of each tax liability.   This Court finds that the Forms 4340

respondent prepared with respect to petitioner’s tax liabilities

for the years at issue establish respondent properly assessed

those liabilities and that those liabilities remain unpaid.

Petitioner has not shown any irregularity in respondent’s

assessment procedures that raises a question about the validity

of respondent’s assessments of those tax liabilities.
                               - 8 -

     Throughout this case, petitioner also presented

tax-protester arguments, including:    (1) Respondent has no

jurisdiction over him; (2) the Internal Revenue Service has not

complied with the Paperwork Reduction Act; and (3) respondent

lacks authority to assert income tax deficiencies.    Petitioner’s

assertions have been rejected by this Court and other courts, and

“We perceive no need to refute these arguments with somber

reasoning and copious citation of precedent; to do so might

suggest that these arguments have some colorable merit.”       Crain

v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984); see, e.g.,

Wheeler v. Commissioner, 127 T.C. 200, 204 n.9 (2006) (rejecting

as without merit the argument that the requirement to file a tax

return is in violation of the Paperwork Reduction Act); Nunn v.

Commissioner, T.C. Memo. 2002-250 (rejecting as without merit the

argument that the Federal income tax is unconstitutional).      This

Court rejects petitioner’s tax-protester arguments as frivolous

and without merit.   Because petitioner did not raise a valid

claim, such as a spousal defense or an alternative means of

collection, such claims are deemed to be conceded.    See Rule

331(b)(4).

     Petitioner’s arguments do not present justiciable issues;

they ignore established law and give no basis for his claim that

respondent abused his discretion in sustaining the Federal tax

lien.   This Court concludes that respondent’s determination to
                                 - 9 -

proceed with collection of the tax liabilities assessed against

petitioner for the years at issue was not an abuse of discretion.

     In reaching these holdings, the Court has considered all

arguments made and, to the extent not mentioned, concludes that

they are moot, irrelevant, or without merit.

     To reflect the foregoing,

                                               Decision will be

                                         entered for respondent.