Court Opinion

ID: 4333594
Source: CourtListenerOpinion
Date Created: 2018-11-14 01:16:21.733655+00
Date Added: 2024-06-11T14:46:52.161676
License: Public Domain

117 T.C. No. 18

                 UNITED STATES TAX COURT

     DAVID J. AND JO DENA JOHNSON, Petitioners v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No.   12616-00L.                Filed November 30, 2001.

     Ps filed returns for 1994, 1995, and 1996, in
which they reported their wages as income. Ps later
filed amended returns for those years in which they
reported no income and contended that wages are not
taxable. R assessed the frivolous return penalty
imposed by sec. 6702, I.R.C., for those years. After
offering Ps an opportunity to attend a prelevy hearing,
R issued a notice of determination under secs. 6320
and/or 6330, I.R.C.

     Ps contend that R’s determination is invalid
because R failed to comply with the hearing requirement
provided by sec. 6330(b)(1), I.R.C. R contends that we
lack jurisdiction under sec. 6330(d)(1)(A), I.R.C., to
review the determination because it relates to the
frivolous return penalty.

     Held: We lack jurisdiction to review R’s lien and
levy determination to proceed with collection of the
                                 - 2 -

     frivolous return penalty.     Van Es v. Commissioner, 115
     T.C. 324, 328-329 (2000).

          Held, further, in a case in which we lack
     jurisdiction to review a lien and levy determination,
     we will no longer decide whether the hearing
     requirement was met. We will no longer follow Meyer v.
     Commissioner, 115 T.C. 417 (2000), to the extent it
     holds to the contrary.

     David J. and Jo Dena Johnson, pro se.

     Horace Crump, for respondent.

                                OPINION

     COLVIN, Judge:     On November 2, 2000, respondent sent

petitioners a Notice of Determination Concerning Collection

Action(s) Under Sections 6320 and/or 63301 (the lien or levy

determination), in which respondent determined to proceed with

collection from petitioners of the frivolous return penalty for

1994, 1995, and 1996.    In this opinion we decide:

     1.   Whether we have jurisdiction under section 6330(d)(1)(A)

to review respondent’s determination under sections 6320 and/or

6330 to proceed with a collection action following respondent’s

assessment of the frivolous return penalty under section 6702 for

1994, 1995, and 1996.    We hold that we do not.   Van Es v.

     1
        Unless otherwise stated, references to secs. 6320 and
6330 are to the Internal Revenue Code in effect in 2000, and
other section references are to the Internal Revenue Code in
effect for the years in issue.
                                - 3 -

Commissioner, 115 T.C. 324, 328-329 (2000).     Thus, we will

dismiss this case for lack of jurisdiction.

     2.   Whether we will decide if the hearing requirement under

section 6330(b) has been met.   We hold that we will not.    We will

no longer follow Meyer v. Commissioner, 115 T.C. 417 (2000), to

the extent that it holds to the contrary.

     References to petitioner are to David J. Johnson.

                            Background

     Petitioners lived in Milton, Florida, when they filed the

petition in this case.

A.   Petitioners’ Tax Returns

     Petitioners filed returns for 1994, 1995, and 1996, in which

they reported their wages as income.     They later filed amended

returns for those years in which they did not report any income,

and contended that wages and salary reported as income on their

original returns are not taxable.   In attachments to each of

those amended returns, petitioners stated:

     1.    No section in the Internal Revenue Code makes
           petitioners liable for the income taxes at issue.

     2.    Income is not defined in the Internal Revenue Code.

     3.    The Supreme Court defines income as corporate profit.

     4.    Wages are not corporate profit; thus, petitioners have
           no income.

     5.    Section 61 is invalid because it defines “gross income”
           by using the word “income”.
                                 - 4 -

     6.      Section 6702(b) states that the penalty imposed by
             subsection (a) shall be in addition to some other
             penalty being imposed, thus it cannot be imposed alone.

B.   The Lien and Levy Proceeding

     Petitioners received a “Final Notice - Notice of Intent to

Levy & Your Notice of a Right to a Hearing” and filed a Request

for a Collection Due Process Hearing (Form 12153), dated June 19,

2000.     In their request for a hearing, petitioners asked that the

Appeals officer have at the hearing: (1) The name of respondent’s

employee who imposed the frivolous return penalty and his or her

Federal ID number; (2) the delegation of authority from the

Secretary authorizing persons to impose the frivolous return

penalty; (3) official job descriptions of respondent’s employees

who imposed the frivolous return penalty; (4) copies of the

regulations that allow Internal Revenue Service (IRS) employees

to impose the frivolous return penalty; and (5) copies of the

Code section that makes petitioners liable for income tax.

     By letter dated July 7, 2000, respondent’s Appeals officer,

Gayla L. Owens (Owens), told petitioners that their case had been

assigned to her.    She asked them whether they wanted a face-to-

face conference in Mobile, Alabama, which is respondent’s Appeals

Office closest to their residence, or whether they preferred to

handle the matter by telephone or correspondence.

     By letter dated July 19, 2000, petitioner asked that the

hearing not be scheduled before September 15, 2000, in part
                               - 5 -

because he said he was obtaining documents under the Freedom of

Information Act that he said he might need in the hearing.

Petitioner also asked for copies of the Code section and

implementing legislative regulations that establish his

liability.

     By letter dated July 26, 2000, Owens scheduled a hearing for

September 15, 2000, and again asked petitioner whether he

preferred a face-to-face conference or to handle it by telephone.

By letter dated August 18, 2000, petitioner told Owens that he

would not attend a hearing for which he was not allowed to

prepare, and that Owens had not responded to points he raised in

earlier letters to her.   In that same letter, petitioner stated,

among other things, his views that:    (1) The frivolous return

penalties are illegal; (2) respondent’s employees are subject to

punishment under section 7214(a) for violating the Internal

Revenue Service Restructuring and Reform Act of 1998, Pub. L.

105-206, 112 Stat. 685; (3) the IRS is required to sue him for

payment of the penalty; and (4) the IRS was harassing him.

Petitioner also asked for a statement acknowledging that he did

not question the constitutionality of the income tax when he

filed his amended returns for the years in issue.    He wrote in

part:

     Therefore, I am requesting that you comply with IRS
     Code Section 6065 and send me a statement which “is
     verified by a written declaration that is made under
                              - 6 -

     the penalties of perjury”.    Your statement should
     include the following:

     Acknowledgment that you have the following documents in
     your possession so that I can review them at the
     hearing:

          a. Verification from the Secretary of the
          Treasury that the requirements of any applicable
          law or administrative procedure have been met.
          6330(c)(1), 6703(a)

          b. The Treasury Regulation which allows IRS
          employees to impose the “frivolous” penalty, and
          the Treasury Regulation which requires me to pay
          it. 6703(a)

          c. The specific code section that makes me liable
          for the tax. 6330(c)(2)(B) (I am questioning the
          underlying liability.)

           *      *      *        *      *      *      *

     By letter dated September 6, 2000, Owens told petitioners

that their claim that wages are not taxable income has been

rejected by courts and is frivolous, and, thus, a return based on

that theory is subject to the frivolous return penalty.    Owens

also told petitioners she would consider other items such as

arranging for the payment of the penalty and asked petitioners to

provide those items to her by September 21, 2000.

     By letter dated September 22, 2000, petitioner said, among

other things, that section 6330(c)(3) requires verification from

the Secretary that requirements of applicable law and procedure

have been met, and that he would not attend a hearing unless (1)

Owens told petitioner in writing before the hearing, under

penalty of perjury, that Owens had all of the documents
                                - 7 -

petitioner had requested, and (2) Owens arranged for the

attendance at the hearing by the person who declared petitioners’

Forms 1040X, Amended U.S. Individual Income Tax Return, to be

frivolous and by the person who made the decision to levy

petitioners’ property without a court order.

C.   Respondent’s Notice of Determination

     On November 2, 2000, respondent sent petitioners a notice of

determination concerning collection actions in which respondent

determined to proceed with collection from petitioners of the

frivolous return penalty for 1994, 1995, and 1996, and told

petitioners that they have 30 days to file a complaint in the

appropriate U.S. District Court for a redetermination.   The

notice of determination appeared valid on its face.    Petitioners

timely filed in this Court an appeal of respondent’s

determination.   On January 2, 2001, petitioners filed with the

Court an amended petition for lien or levy action under section

6320(c) or section 6330(d).

                              Discussion

A.   Whether the Tax Court Has Jurisdiction To Review
     Respondent’s Determination Under Sections 6320 and 6330

     We have previously held that we lack jurisdiction under

section 6330(d)(1)(A) to review the Commissioner’s determination

to collect by levy the frivolous return penalty under section

6702.   Van Es v. Commissioner, 115 T.C. at 328-329.   That case
                                - 8 -

controls this issue, and thus we will dismiss this case for lack

of jurisdiction.

B.   Whether We Will Decide If Respondent Failed To Hold a
     Hearing as Required by Section 6330(b) in a Case in Which We
     Lack Jurisdiction To Review the Lien and Levy Determination

     Petitioners contend that respondent’s determination is

invalid because, according to petitioners, respondent failed to

comply with the hearing requirement provided by section

6330(b)(1).

     In Meyer v. Commissioner, 115 T.C. 417 (2000), as here, the

taxpayers contended that we lacked jurisdiction to review the

lien and levy determination on the ground that the section

6330(b) hearing requirement was not met.     The Commissioner moved

to dismiss for lack of jurisdiction on the grounds that we lacked

jurisdiction over the underlying tax liability (frivolous return

penalty), see Van Es v. Commissioner, supra, and that the

petitions were not filed within the 30-day period prescribed by

section 6330(d)(1)(A).   We held in Meyer that we lacked

jurisdiction on the ground that the determination letters were

invalid because the Appeals Office did not provide the taxpayers

with an opportunity for a hearing.      Meyer v. Commissioner, supra

at 422-423; see sec. 6330(b).

     Here, we lack jurisdiction to review respondent’s lien and

levy determination to proceed with collection of the frivolous

return penalty.    Van Es v. Commissioner, supra at 328-329.
                               - 9 -

Because we lack jurisdiction to review respondent’s lien and levy

determination to proceed with collection of the frivolous return

penalty, we will not decide whether the hearing requirement under

section 6330(b) was met.   This is consistent with the principle

that we need not decide whether a valid notice of deficiency was

issued where we lack subject matter jurisdiction.2   See Yuen v.

Commissioner, 112 T.C. 123, 130 (1999) (we need not decide

whether a document sent by the Commissioner is a final

determination where we lack jurisdiction over a claim for

interest abatement).   We will no longer follow Meyer v.

Commissioner, supra, to the extent it holds to the contrary.

     The doctrine of stare decisis is important to this and other

Federal courts.   Hesselink v. Commissioner, 97 T.C. 94, 99-100

(1991).   When we decided Meyer v. Commissioner, supra, lien and

levy cases under section 6330 were new to this Court.    After an

additional year of experience with section 6330, we no longer

believe it is appropriate for us to decide whether the hearing

requirement was met in a case over which we lack subject matter

     2
        Although it is not necessary for the holding herein, we
note that in Lunsford v. Commissioner, 117 T.C.    (2001), we
held that we have jurisdiction under sec. 6330(d)(1)(A) when we
have a facially correct notice of determination and a timely
filed petition.
                              - 10 -

jurisdiction.   We conclude that stare decisis does not prevent us

from reconsidering Meyer v. Commissioner, supra.

     Accordingly,

                                         An order will be entered

                                    granting respondent’s

                                    motion to dismiss for lack of

                                    jurisdiction.

Reviewed by the Court.

     WELLS, COHEN, SWIFT, GERBER, RUWE, WHALEN, LARO, GALE, and
THORNTON, JJ., agree with this majority opinion.

     CHIECHI, FOLEY, and MARVEL, JJ., concur in result only.
                                - 11 -

     VASQUEZ, J., concurring:    While I agree with the majority’s

conclusion that we lack jurisdiction under section 6330(d) to

review the Commissioner’s determination in this case, see Van Es

v. Commissioner, 115 T.C. 324, 328-329 (2000), I write separately

because I disagree with the majority’s discussion of Meyer v.

Commissioner, 115 T.C. 417 (2000).

     In Lunsford v. Commissioner, 117 T.C. ___ (2001) (Lunsford

I), which also was released today, the majority undermined the

clear language of section 6330 and the will of Congress by

overruling the Court’s holding in Meyer that a taxpayer is

entitled to a section 6330 hearing prior to there being a

determination upon which this Court’s jurisdiction is predicated.

In doing so, the majority in Lunsford I concluded that the

hearing statutorily mandated by section 6330(b)(1) is not

required prior to our obtaining jurisdiction.   Contrary to the

majority’s opinion in the instant case, Majority op. p. 9, after

Lunsford I, there is nothing left in Meyer for the Court to

follow.   Therefore, the majority’s discussion of Meyer and stare

decisis is unnecessary.

     Additionally, I disagree with Judge Beghe’s dissent that we

should no longer follow our jurisprudence in Moore v.

Commissioner, 114 T.C. 171 (2000), and Van Es v. Commissioner,

115 T.C. 324 (2000).

I.   Interpreting Section 6330(d)

     First, Judge Beghe suggests that section 6330(d) is

susceptible to the interpretation--indeed, one that he claims is
                               - 12 -

preferable--that the Tax Court has jurisdiction pursuant to

section 6330(d)(1)(A) in all collection cases.     I disagree.

     Section 6330(d) provides:

          (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 with respect to 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.

Judge Beghe fails to explain how his interpretation is an

acceptable, let alone preferred, reading of the statute.

     A.   Section 6330(d)(1) Must Be Read as a Whole

     A cardinal rule of statutory construction is that a statute

is to be read as a whole because the meaning of language depends

on its context.   See King v. St. Vincent’s Hosp., 502 U.S. 215,

221 (1991).   The flush language contained at the end of the

section 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.”       Sec.

6330(d)(1) (emphasis added).     Thus, the district court can

determine that appeal should have been to this Court, and we can

determine that appeal should have been to the district court.
                               - 13 -

     B.     Congress Knows How To Grant Unlimited Jurisdiction to
            One Court and Limited Jurisdiction to Another

     With regard to jeopardy assessments, section 7429(b)(2)

provides:

          (A) IN GENERAL.--Except as provided in
     subparagraph (B), the district courts of the United
     States shall have exclusive jurisdiction over any civil
     action for a determination under this subsection.

          (B) TAX COURT.--If a petition for redetermination
     of a deficiency under section 6213(a) has been timely
     filed with the Tax Court before the making of an
     assessment or levy that is subject to the review
     procedures of this section, and 1 or more of the taxes
     and taxable periods before the Tax Court because of
     such petition is also included in the written statement
     that is provided to the taxpayer under subsection (a),
     then the Tax Court also shall have jurisdiction over
     any civil action for a determination under this
     subsection with respect to all the taxes and taxable
     periods included in such written statement. [Emphasis
     added.]

As the above shows, Congress knows how to give unlimited

jurisdiction to one court and limited jurisdiction to another.

     Section 7429(e)(2) further provides:

     If a civil action is filed under subsection (b) with
     the Tax Court and such court finds that there is want
     of jurisdiction because of the jurisdiction provisions
     of subsection (b)(2), then the Tax Court shall, if such
     court determines it is in the interest of justice,
     transfer the civil action to the district court in
     which the action could have been brought at the time
     such action was filed. * * *

In stating which court is an incorrect court, in section

7429(e)(2) Congress used the proper noun “Tax Court” whereas in

the flush language of section 6330(d)(1) Congress instead chose
                                 - 14 -

to precede the noun “court” with the indefinite article “a”.        The

use of the indefinite article, which does not fix the identity of

the noun modified, supports the conclusion that the flush

language of section 6330(d)(1) applies to both the Tax Court and

the district courts.     See Webster’s II New Riverside University

Dictionary 621 (1994).

       C.    Section 6330(d)(1) Must Be Read in the Context of the
             Statute

       The section 6330(d)(1)(A) parenthetical language must be

read in the context of the statute.       See Norfolk S. Corp. v.

Commissioner, 104 T.C. 13, 41 (1995).       Section 6015(e)(1)

contains the same parenthetical language as section

6330(d)(1)(A); however, this same parenthetical language does not

provide the Court with unlimited jurisdiction over section 6015

cases.      Our jurisdiction to review section 6015 cases is not

unlimited--in some cases the district court or United States

Court of Federal Claims has jurisdiction and the Tax Court does

not.    Sec. 6015(e)(3)(C).    Similarly, the language of section

6330(d)(1)(B) and the flush language limit and explain the

parenthetical language contained in section 6330(d)(1)(A).

       D.     District Courts Agree With Van Es and Moore

       Several district courts have explicitly agreed with our

holdings in Moore and Van Es that our jurisdiction in lien and

levy cases is not unlimited.      The United States District Court

for the Southern District of Texas held:       “Courts have
                               - 15 -

interpreted these provisions [6330(d)(1)] to mean that district

courts have jurisdiction under section 6330 only if the Tax Court

lacks jurisdiction.”    Lewis v. IRS, 86 AFTR2d 2000-6839, 2000-2

USTC par. 50,837 (S.D. Tex. 2000) (emphasis added).   The United

States District Court for the Northern District of Texas held:

“a district court has jurisdiction to hear this type of suit [a

claim under 6330] only if the Tax Court lacks jurisdiction. * * *

District Courts have jurisdiction under section 6330 only if the

Tax Court lacks jurisdiction.”    McCune v. United States, 85

AFTR2d 2000-1240, 2000-1 USTC par. 50,279 (N.D. Tex. 2000)

(emphasis added).   The United States District Court for the

Eastern District of Pennsylvania held that section 6330(d)(1)

“provides for review to the Tax Court, unless the Tax Court does

not have jurisdiction, in which case the appeal goes to a

district court”.    Hart v. IRS, 87 AFTR2d 2001-1531, 2001-1 USTC

par. 50,328 (E.D. Pa. 2001) (emphasis added).

II.   “Opening the Backdoor”

      Historically, the Tax Court has been a court of limited

jurisdiction, and we may exercise our jurisdiction only to the

extent authorized by Congress.   See sec. 7442; Naftel v.

Commissioner, 85 T.C. 527, 529 (1985).   The grant of jurisdiction

to review deficiencies determined by the Commissioner does not

provide us with jurisdiction to review taxes imposed under

subtitle C, subtitle D (with the exception of excise taxes
                                - 16 -

imposed by chapters 41, 42, 43, and 44), subtitle E, and various

additions to tax and penalties.    See secs. 6211(a), 6214;

Medeiros v. Commissioner, 77 T.C. 1255, 1259-1260 (1981) (section

6672 addition to tax); Judd v. Commissioner, 74 T.C. 651 (1980)

(section 6652(c) addition to tax); Chatterji v. Commissioner, 54

T.C. 1402 (1970) (overpayment of FICA taxes); see also Fischer v.

Commissioner, T.C. Memo. 1994-586 n.3 (section 6682 penalty);

Hintz v. Commissioner, T.C. Memo. 1981-425 (overpayment of

Railroad Retirement taxes), affd. 712 F.2d 281 (7th Cir. 1983).

     Concluding that we had jurisdiction in this case would have

allowed the Court to reach the merits of whether petitioners are

liable for the frivolous return penalty pursuant to section 6702.

Petitioners, however, could not have directly petitioned the

Court to review whether they were liable for this penalty.     Sec.

6703(b), (c)(2).     Judge Beghe’s interpretation would provide a

backdoor through which taxpayers could slip through by waiting

until collection to litigate liability for taxes, additions to

tax, and penalties that they are prevented from petitioning this

Court to review via our deficiency jurisdiction.

III. Stare Decisis

     Principles of stare decisis weigh against overruling

Moore and Van Es.     With regard to stare decisis, the Supreme

Court has stated as follows:

     the important doctrine of stare decisis [is] the means
     by which we ensure that the law will not merely change
                              - 17 -

     erratically, but will develop in a principled and
     intelligible fashion. * * * While stare decisis is not
     an inexorable command, the careful observer will
     discern that any detours from the straight path of
     stare decisis in our past have occurred for articulable
     reasons, and only when the Court has felt obliged “to
     bring its opinions into agreement with experience and
     with facts newly ascertained.” * * * every successful
     proponent of overruling precedent has borne the heavy
     burden of persuading the Court that changes in society
     or in the law dictate that the values served by stare
     decisis yield in favor of a greater objective. * * *
     [Vasquez v. Hillery, 474 U.S. 254, 265-266 (1986);
     citation omitted.]

Stare decisis is the preferred course because it promotes the

evenhanded, predictable, and consistent development of legal

principals, fosters reliance on judicial decisions, and

contributes to the actual and perceived integrity of the judicial

process.   Hesselink v. Commissioner, 97 T.C. 94, 99 (1991).

     A.    Test for Overruling Prior Opinions

     The U.S. Supreme Court has set forth the following four part

test for use in determining whether to overrule a prior decision:

(1) Whether the rule has proven to be intolerable simply in

defying practical workability, (2) whether the rule is subject to

a kind of reliance that would lend a special hardship to the

consequences of overruling and add inequity to the cost of

repudiation, (3) whether related principles of law have so far

developed as to have left the old rule no more than a remnant of

abandoned doctrine, and (4) whether facts have so changed, or

come to be seen so differently, as to have robbed the old rule of
                              - 18 -

significant application or justification.   Planned Parenthood v.

Casey, 505 U.S. 833, 854-855 (1992).

     The rules set forth in Moore and Van Es and followed by

several opinions1 and orders have not proven to be unworkable.

Furthermore, in the months that have passed since the release

of these opinions and orders, principles of law have not changed

so much as to leave those cases as no more than a remnant of

abandoned doctrine.   Additionally, facts have not so changed as

to have robbed Moore and Van Es of significant application or

justification.   Thus, the factors set forth by the Supreme Court

in Planned Parenthood do not support Judge Beghe’s suggestion

that there are exceptional circumstances such that Moore and Van

Es should be overruled.

     B.   Stare Decisis and Statutory Construction

     Stare decisis assumes increased importance when the

antecedent cases involved the construction of a statute.

Brewster v. Commissioner, 607 F.2d 1369, 1373-1374 (D.C. Cir.

1979), affg. 67 T.C. 352 (1976).   In such cases, Congress can

cure any error made by the Court, and until it does the bar and

     1
        See Landry v. Commissioner, 116 T.C. 60, 62 (2001); Meyer
v. Commissioner, 115 T.C. 417, 421 (2000); Katz v. Commissioner,
115 T.C. 329, 338 (2000); Offiler v. Commissioner, 114 T.C. 492,
498 n.6 (2000); Goza v. Commissioner, 114 T.C. 176, 181 (2000);
Merriweather v. Commissioner, T.C. Memo. 2001-88; Boone Trust v.
Commissioner, T.C. Memo. 2000-350; Loadholt Trust v.
Commissioner, T.C. Memo. 2000-349; MacElvain v. Commissioner,
T.C. Memo. 2000-320; Howard v. Commissioner, T.C. Memo. 2000-319;
Anderson v. Commissioner, T.C. Memo. 2000-311.
                              - 19 -

the public are justified in expecting the Court, except in the

most egregious cases, not to depart from the previous

interpretation.   Hesselink v. Commissioner, supra at 100; Burnet

v. Coronado Oil & Gas Co., 285 U.S. 393, 406-408 (1932)

(Brandeis, J., dissenting).

      On December 21, 2000, in the Community Renewal Tax Relief

Act of 2000 (CRTRA), Pub. L. 106-554, sec. 314(f), 114 Stat.

2763A-643, Congress legislatively overruled Henry Randolph

Consulting v. Commissioner, 112 T.C. 1 (1999).   In CRTRA,

Congress also amended section 6330(d)(1) and chose to let the

holdings in Moore and Van Es stand.2   CRTRA sec. 313(d).    The

fact that Congress amended section 6330(d)(1) and chose not to

overrule Moore and Van Es weighs heavily against overruling them.

See, e.g., Hesselink v. Commissioner, supra at 100 (Congress can

cure any error made by the Court).

IV.   Petitioners’ “Delay Tactics”

      I am not convinced that petitioners are delay seekers whose

sole purpose in bringing this case was to gum up the works by

unreasonably and vexatiously multiplying the proceedings.

      I agree that the notice of determination instructed

petitioners to bring their case in the district court.

      2
        The only change Congress made to sec. 6330(d)(1) was to
alter the language in the subsection (1)(A) parenthetical from
“and the Tax Court shall have jurisdiction to hear such matter”
to “and the Tax Court shall have jurisdiction with respect
to such matter”. CRTRA sec. 313(d), 114 Stat. 2763A-643
(emphasis added).
                              - 20 -

Petitioners, however, decided to petition the Tax Court based on

our decision in Meyer v. Commissioner, 115 T.C. 417 (2000).    In

both their petition and amended petition, petitioners state that

in a similar case (Meyer) this Court assumed jurisdiction.    Their

argument is not that we have jurisdiction to review a

determination regarding a section 6702 penalty but that they were

not provided a hearing.   Further, petitioners contend that in a

similar case involving a section 6702 penalty (Meyer) the Court

held that we had jurisdiction to review whether the taxpayer was

provided a hearing.

     The following colloquies took place at the hearing on the

motion:

THE COURT:     That’s right. I’ve seen the file. Do you want to
               say anything this morning on behalf of the motion
               or in opposition to the motion?

PETITIONER:    Judge, I’ve sent in an objection to the motion
               that technically the Court does not have
               jurisdiction regarding frivolous penalties, but it
               does have jurisdiction based on the Meyer case,
               which I cited in my objection, that this is a
               matter of not receiving a due-process hearing * *
               * We did ask for the hearing within the 30 days
               and did not get the hearing when a determination
               was made.

                               * * *

THE COURT:     Mr. Johnson is not speaking this morning to the
               merit of the position he’s taking. He’s saying
               that, regardless of the merit of the position,
               he’s entitled to a hearing. Is that correct Mr.
               Johnson?
                            - 21 -

PETITIONER:   That’s correct sir.    Yes, sir.

                             * * *

THE COURT:    Okay. Now, what else--Mr. Johnson, do you want to
              say anything else in opposition to the
              Government’s motion?

PETITIONER:   Judge, my position is strictly that this whole
              case has to do with whether or not the Tax Court
              has jurisdiction to rule on a violation of Section
              6330 of the Internal Revenue Code, and it is not
              addressing the frivolous penalty as such, even
              though that is the underlying part of this case.
              This motion to dismiss is based upon frivolous
              penalty; my objection has to do with Section 6330
              of the Code, that I’ve not had a due-process
              hearing and that the Government has admitted that
              I’ve not had a due-process hearing.

                             * * *

THE COURT:    Mr. Crump, do you think that the Tax Court has
              jurisdiction to decide the Johnsons’ claim
              relating to the hearing?

RESPONDENT:   Based on my reading of Meyer, I would--I think so.

                             * * *

THE COURT:    All right. Now, Mr. Johnson, * * * if the hearing
              requirement was not met, what do you think the
              Court should do here?

PETITIONER:   As requested in my petition, I believe that the
              determination should be vacated and that it should
              go back to due-process hearing. * * * If I could
              have a due-process hearing * * * [and a
              determination is made against me] then I will
              appeal to district court, which then it would be
              the proper place, but I think that I do have to
              have that hearing in order to fulfill the
              requirements here in Code Section 6330.

THE COURT:    All right. * * * If the hearing requirement was
              met--if I decide the hearing requirement was met,
              what action do you think the Court should take
              here?
                             - 22 -

PETITIONER:    Well, then I would suppose that the only action
               you could take would be to honor the request to
               dismiss for lack of jurisdiction * * * and then I
               would have to appeal to district court.

     On this record, I am not convinced petitioners petitioned

this Court in an attempt to delay the proceedings.    If a taxpayer

instituted the proceedings for delay, the proper action is to

sanction the taxpayer pursuant to section 6673(a) as we warned in

Pierson v. Commissioner, 115 T.C. 576, 581 (2000).    See also

Davis v. Commissioner, T.C. Memo. 2001-87 (imposing a $4,000

penalty pursuant to section 6673(a) for frivolous and groundless

arguments).

     LARO, J., agrees with this concurring opinion.
                               - 23 -

     BEGHE, J., dissenting:    I respectfully dissent from the

granting of respondent’s motion to dismiss for lack of

jurisdiction.   The Court’s action perpetuates needless

inefficiency in judicial administration of the new collection

provisions and plays into the hands of tax protesters.

Petitioners have gummed up the works, created delay in the

collection of relatively small amounts obviously due, and

multiplied the proceedings with respect to frivolous return

penalties whose assessment properly bypassed the deficiency

procedures of the Tax Court.

     The Court should have denied the motion and taken

jurisdiction, overruled Van Es v. Commissioner, 115 T.C. 324

(2000), and put an end to the matter by holding that the hearing

requirement was satisfied and that respondent’s determination to

collect the assessments should be upheld.   By electing to

petition the Tax Court, rather than the appropriate district

court, petitioners should have been held to have waived their

right to appeal the Appeals officer’s determination that they

were liable for the frivolous return penalties.1

     1
       Applying the doctrine of waiver would have been especially
appropriate in the case at hand, where the arguments made in the
attachments to petitioners’ amended returns are patently
frivolous and have been repeatedly rejected in our published
opinions. Petitioners argued that no section of the Internal
Revenue Code makes them liable for income taxes on their wages.
See United States v. Connor, 898 F.2d 942, 943-944 (3d Cir. 1990)
(“Every court which has ever considered the issue has
unequivocally rejected the argument that wages are not income”);
see also Reading v. Commissioner, 70 T.C. 730 (1978), affd. 614
                                                   (continued...)
                             - 24 -

     Section 6330 is susceptible to the interpretation--indeed,

in my view, it’s the preferred reading--that the Tax Court has

jurisdiction under section 6330(d)(1)(A) in all collection cases,

with a district court having concurrent jurisdiction under

section 6330(d)(1)(B) in cases in which the Tax Court lacks

jurisdiction of the underlying tax liability.   The delays

encountered in judicial administration of the new collection

     1
      (...continued)
F.2d 159 (8th Cir. 1980) (entire amount received for services
constitutes income); United States v. Richards, 723 F.2d 646, 648
(8th Cir. 1983) (argument that wages and salaries are not income
is “totally lacking in merit”). Petitioners argued they owe no
taxes because “income” is not separately defined in the Internal
Revenue Code, or because the definition of “gross income” in sec.
61 uses the word “income.” Commissioner v. Glenshaw Glass Co.,
348 U.S. 426, 429-430 (1955) made clear that the language of sec.
61 is entirely appropriate for “Congress to exert in this field
‘the full measure of its taxing power.’” In Liddane v.
Commissioner, T.C. Memo. 1998-259, affd. without published
opinion 208 F.3d 206 (3d Cir. 2000), and Fox v. Commissioner,
T.C. Memo. 1993-277, affd. without published opinion 69 F.3d 543
(9th Cir. 1995), we found these arguments to be frivolous and
imposed a penalty on the taxpayer under sec. 6673(a)(1) for
making them. Petitioners’ syllogism that the Supreme Court
defines income as corporate profit, and that since wages are not
corporate profit he did not have any income, was rejected as
frivolous in Ghalardi Income Tax Educ. Found. v. Commissioner,
T.C. Memo. 1998-460. Petitioners’ final argument that a penalty
under sec. 6702(b) cannot be imposed independently of another
penalty because the statute says that “the penalty imposed by
subsection (a) shall be in addition to any other penalty provided
by law” is textually absurd. These frivolous arguments, combined
with the petition to this Court for a redetermination of assessed
frivolous return penalties after written notice from the
Commissioner that the appeal is properly filed in an appropriate
district court, evidence intent to cause unnecessary delay and
expense. In these circumstances, the election to file a petition
in this Court should have been held a waiver of the right of
access to remedies the majority holds we are unable to provide.
                              - 25 -

provisions, delays we take notice of in the companion case of

Lunsford v. Commissioner, 117 T.C.       (2001) (jurisdictional

opinion) (slip op. at 10), satisfy the exceptional circumstances

conditions set forth in Planned Parenthood v. Casey, 505 U.S.

833, 854-855 (1992), for reconsideration and repudiation of

recent precedent.

     Against this background of judicial abstention, what next?

At the risk of presumptuousness in drawing additional attention

to ambiguities in the statute, I hope that this case will lead to

congressional reconsideration and enactment of a more explicit

grant of jurisdiction to this Court to provide one-stop shopping

in all cases under sections 6320 and 6330.   In the aftermath of

September 11, 2001, the reminder that “taxes are the life-blood

of government, and their prompt and certain availability an

imperious need”,2 should trump self-imposed Alphonse and Gaston

jurisdictional niceties.

     Finally, let me lay to rest any concerns that this

dissenting opinion publicizes ambiguities other tax protesters

will exploit to create unjustified delays in collection of

assessments.   From now on until the ambiguities are cured, any

taxpayer who files a petition with the Tax Court in a collection

case in which the Tax Court does not have jurisdiction of the

     2
       Bull v. United States, 295 U.S. 247, 259 (1935); see also
Tyler v. United States, 281 U.S. 497, 503 (1930).
                              - 26 -

underlying tax liability may be found to have done so “primarily

for delay” and hit with a penalty of up to $25,000 under section

6673(a)(1)(A).   Anyone admitted to practice in this Court who

files such a petition may be found to have “multiplied the

proceedings * * * unreasonably and vexatiously” under section

6673(a)(2) and required to “pay personally the excess costs,

expenses, and attorneys’ fees reasonably incurred because of such

conduct”.3

     It’s beyond cavil that courts of limited jurisdiction,

including the Tax Court, have inherent power to protect their

processes from abuse by awarding sanctions and costs even though

they lack jurisdiction over the underlying dispute.   Willy v.

Coastal Corp., 503 U.S. 131 (1992) (sanctions under Fed. R. Civ.

P. 11, allowed even though case dismissed for want of subject

matter jurisdiction); Cooter & Gell v. Hartmarx Corp., 496 U.S.

384 (1990) (same where complaint voluntarily dismissed before

     3
       Taxpayers in frivolous return penalty and employment tax
penalty cases who wish to dispute the Commissioner’s collection
determination are already being put on notice that they should
file a complaint with the appropriate district court. Following
our opinion in Van Es v. Commissioner, 115 T.C. 324 (2000), the
Commissioner apparently changed the form of notice of
determination in frivolous return penalty collection cases to
tell the taxpayer to file a complaint in the appropriate district
court. The notice of determination in the case at hand so
stated, but petitioners disregarded the notice and filed a
petition with the Tax Court. Similarly, the taxpayer in Moore v.
Commissioner, 114 T.C. 171 (2000), an employment tax penalty
collection case, disregarded the instruction in the notice of
determination to file a complaint in the appropriate district
court.
                             - 27 -

answer filed); Sponza v. Commissioner, 844 F.2d 689 (9th Cir.

1988)(approving award of section 7430 litigation costs after

determination that Tax Court lacked jurisdiction); Weiss v.

Commissioner, 88 T.C. 1036 (1987), affd. sub silentio 850 F.2d

111 (2d Cir. 1988) (same); see also Dang v. Commissioner, 259

F.3d 204 (4th Cir. 2001).

     HALPERN, J., agrees with this dissenting opinion.