The opinion
T.C. Memo. 2008-95
UNITED STATES TAX COURT
LEO P. CONNOLLY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11165-07L. Filed April 14, 2008.
Leo P. Connolly, pro se.
Andrea D. Haddad, for respondent.
MEMORANDUM OPINION
HALPERN, Judge: This case is before the Court to review a
determination made by respondent’s Appeals Office (Appeals) that
respondent may proceed to collect by levy amounts assessed but
unpaid with respect to petitioner’s 2001, 2002, and 2003 Federal
income tax liabilities (the years in issue and the unpaid
assessments, respectively). Petitioner has moved to dismiss for
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lack of jurisdiction (the motion to dismiss). Respondent
objects. Respondent has moved for summary judgment and to impose
a penalty under section 6673(a)(1) (the summary judgment/penalty
motion).1 Petitioner objects. We shall deny the motion to
dismiss and grant the summary judgment/penalty motion.
Background
The following undisputed facts are established by the
pleadings, the summary judgment/penalty motion, the declaration
and four exhibits attached to that motion, the motion to dismiss,
and respondent’s response thereto.
Respondent determined deficiencies in petitioner’s Federal
income taxes for the years in issue and, on April 26, 2005,
mailed to petitioner statutory notices of deficiency (statutory
notices) with respect to those years. Petitioner did not
petition the Tax Court in response to any of the statutory
notices. On October 10, 2005, respondent assessed $6,889.40,
$15,814.27, and $6,393.33 with respect to the tax liabilities
(including additions to tax, and applicable interest) for the
years in issue, respectively. On July 20, 2006, respondent
issued to petitioner a Final Notice of Intent to Levy and Notice
of Your Right to a Hearing, advising him that respondent intended
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and applicable to
this case, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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to levy to collect the unpaid assessments and informing him of
his right to a hearing before Appeals. On August 21, 2006,
respondent timely received from petitioner an Internal Revenue
Service (IRS) Form 12153, Request for a Collection Due Process
Hearing (the hearing request). In the hearing request,
petitioner set forth the following reasons for disagreeing with
respondent’s proposed levy: He has not engaged in any trade or
business having to do with tobacco or distilled spirits for the
years in question. The only types of taxes that can be collected
by distraint are those on cotton and distilled spirits, and he
was not involved in cotton or distilled spirits for the years in
question. Sections 6201 and 6331 deal with excise taxes and not
income taxes. The IRS has not promulgated any implementing
regulations for sections 6201 and 6331. Therefore, no statutory
authority exists to assess or to levy on his property.
On or about November 29, 2006, an Appeals employee,
Settlement Officer Maria Russo (Ms. Russo), was assigned to
conduct petitioner’s Appeals hearing. On March 5, 2007, Ms.
Russo sent petitioner a letter (the March 5 letter or, simply,
the letter) informing him that Appeals had received the hearing
request and that she had “scheduled a telephone conference call
for you on Monday, April 2, 2007 at 9 a.m.” The letter states
that petitioner raised items in the hearing request that the
courts have determined are frivolous or groundless, and Appeals
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does not provide a face-to-face conference if the only items the
taxpayer wants to discuss are such items. It advises him that,
if he is interested in having a face-to-face conference, he must
be prepared to discuss issues relevant to paying his tax
liability, such as collection alternatives; e.g., an offer-in-
compromise or an installment agreement. It cautions him that, if
he wishes to have a face-to-face conference, he must write Ms.
Russo within 14 days describing the specific legitimate issues he
will discuss. It continues: “If you do not qualify for a face-
to-face hearing, you will have a telephone hearing/conference or
discuss with us by correspondence any relevant challenges to the
filing of the * * * proposed levy.” It warns petitioner that, if
he wishes Ms. Russo to consider collection alternatives, he must
file all Federal tax returns required to be filed (there was no
record of his 2005 return), and he must submit a complete Form
433A, Collection Information Statement for Individuals. It
further warns him that, in the event he takes his case to Tax
Court, the Court is empowered to impose monetary sanctions
against him for instituting or maintaining an action before it
primarily for delay or for taking a position that is frivolous or
groundless.
Additional telephone and written communications between Ms.
Russo and petitioner followed. On March 20, 2007, Ms. Russo
received a letter from petitioner in which he claims that he is
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not aware of any revenue taxable activity that he is engaged in
that makes him liable for an excise tax measured by his income.
He attaches an affidavit stating that he is “of competent age and
mind”, is “a private-sector, non-federally-connected individual”,
has “not refused or neglected to render any federal-tax-related
list of return within the time required upon being notified or
required to do so”, is “not, and never have been, required to
deliver a monthly or other return of objects subject to tax”, and
is “not, and never have been, engaged in the administration or
enforcement of any internal revenue laws.”
By April 2, 2007, Ms. Russo had received no collection
information from petitioner. Nevertheless, on that date, at 9
a.m., Ms. Russo telephoned petitioner. Petitioner asked for a
face-to-face hearing. Ms. Russo explained that, on the basis of
the issues he had raised, he did not qualify for one. Petitioner
did not propose any collection alternatives. Ms. Russo told
petitioner that she would consider anything he wanted to send
her; if he qualified, she would schedule a face-to-face
conference; and, if he did not qualify for a face-to-face
conference, she would make her determination on the material
before her.
On April 9, 2007, Ms. Russo received a letter from
petitioner providing no collection information, protesting the
lack of a fair hearing, and listing various attached documents,
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including excerpts from court cases and regulations.
On April 24, 2007, Appeals Team Manager Matthew N.
McLaughlin, adopting Ms. Russo’s recommendation, issued
petitioner a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 (the notice of
determination), determining the proposed levy regarding
petitioner’s tax liability for the years in issue to be
appropriate. The notice of determination summarizes Ms. Russo’s
recommendation as follows:
Based on the information in the case file, the Notice
of Intent to Levy was appropriate at the time it was
issued. Despite several requests to do so, the
taxpayer failed to submit any financial information and
a repayment proposal. Collection action would be
appropriate to collect this debt. The action is now
necessary to provide for the efficient collection of
the taxes despite the potential intrusiveness of
enforced collection.
In response to the notice of determination, petitioner
petitioned the Court for review, and the petition was filed on
May 21, 2007.
Discussion
I. Motion To Dismiss
Section 6331(a) authorizes the Secretary to levy against
property and property rights where a taxpayer liable for taxes
fails to pay those taxes within 10 days after notice and demand
for payment is made. Section 6331(d) requires the Secretary to
send the taxpayer written notice of the Secretary’s intent to
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levy, and section 6330(a) requires the Secretary to send the
taxpayer written notice of his right to a hearing (a section 6330
hearing) at least 30 days before any levy is begun. If a section
6330 hearing is requested, it is to be conducted by Appeals.
Sec. 6330(b)(1). The matters to be considered are specified in
section 6330(c). At the conclusion of the section 6330 hearing,
Appeals must determine whether and how to proceed with
collection, taking into account, among other things, collection
alternatives proposed by the taxpayer and whether any proposed
collection action balances the need for the efficient collection
of taxes with the legitimate concern of the taxpayer that the
collection action be no more intrusive than necessary. See sec.
6330(c)(3). We have jurisdiction to review Appeals’s
determination. Sec. 6330(d)(1).
As we understand petitioner’s argument in support of the
motion to dismiss, it is that the Secretary’s authority to levy
under section 6331(a) without a court order does not extend to
his property because he is not a government worker. Petitioner
is wrong. Section 6331(a) empowers the IRS to levy upon the
property of all taxpayers. James v. United States, 970 F.2d 750,
755 n.9 (10th Cir. 1992) (citing Sims v. United States, 359 U.S.
108, 112-113 (1959), for the following: “all taxpayers are
subject to levy for deficiencies under section 6331; section 6331
specifically names government employees and agents in response to
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earlier Supreme Court case [Smith v. Jackson, 246 U.S. 388
(1918)] which held that ‘federal disbursing officer might not, in
the absence of express congressional authorization, set off an
indebtedness of a federal employee to the Government against the
employee’s salary’”). In the James case, the Court of Appeals
for the Tenth Circuit considered the taxpayer’s argument (similar
to petitioner’s argument here) to be frivolous. James v. United
States, supra. We reach the same conclusion with respect to
petitioner’s argument.2 See also Craig v. United States, 30 F.3d
139 (Table), text at 1994 WL 408250 (9th Cir. 1994); Creamer v.
Commissioner, T.C. Memo. 2007-266.
Appeals issued the notice of determination pursuant to
section 6330. In response thereto, petitioner timely petitioned
the Court. We have jurisdiction to review the petition pursuant
to section 6330(d)(1). The motion to dismiss is not well
founded, and, as stated, we shall deny it.
II. Summary Judgment/Penalty Motion
A. Summary Judgment
Petitioner assigns error to respondent’s failure to grant
him a face-to-face hearing. In support of his assignment, he
avers that he was not informed that he would receive only a
2
A taxpayer's position is frivolous if it is contrary to
established law and unsupported by a reasoned, colorable argument
for a change in the law. E.g., Takaba v. Commissioner, 119 T.C.
285, 294 (2002).
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hearing by telephone and that none of his submissions were
frivolous. Respondent asks for summary judgment in his favor on
the ground that Ms. Russo did not abuse her discretion in
rejecting petitioner’s request for a face-to-face hearing since
he raised only frivolous arguments.
Summary judgment may be granted “if the pleadings, answers
to interrogatories, depositions, admissions, and any other
acceptable materials, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that a
decision may be rendered as a matter of law.” Rule 121(b). The
moving party has the burden of proving that there is no genuine
issue of material fact, and factual inferences will be read in a
manner most favorable to the party opposing summary judgment.
E.g., Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).
Petitioner does not deny he received the March 5 letter.
The March 5 letter schedules a telephone conference for April 2,
2007, and clearly informs petitioner that he would not receive a
face-to-face conference if the only items he wished to discuss
were frivolous or groundless. Nor does petitioner deny he did
have a telephone conference with Ms. Russo on April 2, 2007.
Petitioner also does not contradict respondent’s claim that,
during that telephone conference, petitioner proposed no
collection alternatives. By the hearing request, and by his
communications with Ms. Russo, petitioner raised no substantive
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issues. He made only frivolous legal arguments against the
Federal income tax that we need not “refute * * * 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) (per
curiam). Ms. Russo clearly told petitioner that he would get no
face-to-face conference if he wished to discuss only frivolous
issues.
The only question is whether Ms. Russo erred in denying
petitioner a face-to-face conference. Although a hearing may
consist of a face-to-face conference, a proper section 6330
hearing may also occur by telephone or by correspondence under
certain circumstances. See Katz v. Commissioner, 115 T.C. 329,
337-338 (2000); sec. 301.6330-1(d)(2), Q&A-D6, Proced. & Admin.
Regs. Petitioner was offered and received a telephone
conference. Moreover, petitioner was offered a face-to-face
conference if he would identify legitimate, relevant, and
nonfrivolous issues he intended to discuss. Petitioner did not
do so. Under those circumstances, we conclude that Ms. Russo did
not err in denying him a face-to-face conference. See Lunsford
v. Commissioner, 117 T.C. 183, 189 (2001) (“[T]here may be
cases, where taxpayers were not given a proper opportunity for an
Appeals hearing, where it will be appropriate for this Court to
require that an Appeals hearing be held. However, we do not
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believe that this should be done where, as in this case, the only
arguments that petitioners presented to this Court were based on
legal propositions which we have previously rejected.”). Summary
adjudication in respondent’s favor is appropriate.
B. Penalty
Respondent urges us to impose a section 6673 penalty upon
petitioner. In pertinent part, 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 a proceeding before it was instituted or maintained
primarily for delay, sec. 6673(a)(1)(A), or that the taxpayer's
position in such a proceeding is frivolous or groundless, sec.
6673(a)(1)(B).
We have already determined that petitioner’s argument in
support of the motion to dismiss is frivolous. The hearing
request and the history of petitioner’s communications with Ms.
Russo during the course of her consideration of his case are
replete with frivolous legal arguments. Moreover, the March 5
letter warns petitioner that his arguments are frivolous, thereby
exposing him to the Court’s imposition of a section 6673(a)
penalty. We can see no reason for the petition but to delay the
collection of the unpaid assessments. Petitioner has not only
wasted his time, but he has also wasted the time of respondent’s
employees, officers, and counsel, not to mention the waste of the
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Court’s time in disposing of this case. “The purpose of section
6673 is to compel taxpayers to think and to conform their conduct
to settled principles before they file returns and litigate.”
Takaba v. Commissioner, 119 T.C. 285, 295 (2002). We shall
exercise our authority under section 6673(a)(1) and require
petitioner to pay to the United States a penalty of $2,500.
An appropriate order and
decision will be entered.